Josh’s Shark Pool: meet the Treasurer’s tax advisors

Finance & Tax||
Hello, would you care for some advice on water safety?

Look who’s advising Treasurer Josh Frydenberg on tax. The Australian Government’s “High Level Advisory Panel” is stacked with five tax types from EY, three from Deloitte, five from KPMG and seven from PwC. Michael West reports.

For the uninitiated, the reason this High Level Advisory Panel is funny is because a key activity of the Big Four accounting firms is advising their multinational clients on how to skive out of paying tax in Australia, a task which they undertake with flair, and by the billions.

It is akin to the Government appointing Crown Casino’s Victorian wombat-hunting associates to advise the Wildlife Protection Agency, or recruiting the services of Ivan Milat to counsel the Crime Task Force on how to deal with serial killers … leniently.

Who Guards the Guards? Big Four prepare for war as beach-side senator brings corporate inquiry

Josh Frydenberg’s tax advisory phalanx – that is, the Panel which advises the Government’s Board of Tax – is not only replete with this coven of 20 Big Four tax wizards, it also boasts emissaries from the creme-de-la-creme of Australia’s multinational tax dodging elite.

Among those providing “real time policy advice” to the Treasurer is Chevron Australia’s tax chief. Chevron is likely to have leapfrogged even Rupert Murdoch’s News Corp as the country’s Number One “tax risk”, following an historic Federal Court won by the Tax Office.

Chevvers in the US had been borrowing money in the US at a bit over 1% and lending it to Chevvers in Australia at 9%, ripping hundreds of millions of dollars offshore in interest payments. Then it had the hide to fight the Tax Office in the courts, soaking up millions more in taxpayer money.

Also advising the Treasurer on the “quality and effectiveness of tax legislation” is the tax manager from Lendlease, Lendlease is yet to sally forth to explain how it and its auditors from KPMG managed to pay no tax in ten years in Australia while “doubling dipping” on tax deductions in its retirement village division.

Taxman closes in on Lendlease’s “magnificent” $1 billion tax dodge


Then there is the Origin Energy delegate. Origin is yet to forthrightly explain how the $7 billion it received from the sale of an LNG terminal was actually an “unrealised gain”. Surely this must be among this nation’s most throbbing unrealised gains. The ATO pursued the case for a while before its prosecution also, quietly, became unrealised.

When a sale is not a sale – Origin Energy’s unreal unrealised gain

Not to be outdone by its civic-minded rivals in so selflessly assisting the Government with little pointers on tax policy, Shell in Australia also has a representative of its own on the Tax Board. Only last week came news that the Tax Office has pinged Shell with a $755 million tax bill. Besides fighting the ATO on this one for six years, Shell’s coal seam gas business has racked up almost $10 billion in total income over the past four years without paying one red cent in income tax.

We are somewhat crestfallen that one of the world’s most egregious tax cheats, Exxon, is not represented in this advisory shark pool. Its peer BP Australia is there among the chosen however; and although BP is a far bigger taxpayer than Exxon – the best of the oil majors to be fair – it is no clean-skin either. In fact, BP misled Parliament over its tax havens during a Senate inquiry. One can only pray that it is not misleading Josh as well.

Chevron: A hornswoggler of the highest order

The Treasurer’s tax advisory board would not be complete without an envoy from the Big Four’s professional association Chartered Accountants Australia and New Zealand (CAANZ), and of course a rep from the Corporate Tax Association (CTA).

The CTA is the peak body for multinational tax dodgers in Australia. Its presence on the Tax Panel is the equivalent of appointing Namibia’s number one poacher of rare White Rhinos to the gamekeeping advisory panel of the Erindi Game Reserve.

A taxing time for Rupert Murdoch

It is to be hoped that Senator Deborah O’Neill and her parliamentary colleagues pass their ruler over this pulsating conflict of interest when the Inquiry into audit failures and advisory conflicts kicks off later this year. While the Big Four attempt to shut it down, those wishing to make a submission to the inquiry can do so here.

The Government’s audit advisory outfit, the Financial Reporting Council, is also stacked with Big Four types, as is the Australian Accounting Standards, Board, and of course much of the public service … which is how the Big Four manage to garner $700 million a year in consulting fees.

It is yet another irony that all these delegates on the Board of Taxation’s Advisory Panel will have personally benefitted from the Government’s mega tax cut package. Phase 3 of the package, the high income tax relief component that is, will have helped our helpful tax advisers to many millions in prospective tax relief.

The Government doesn’t have a lot in the way of policies – with tax cuts and bagging Labor notable exceptions – so it’s number one policy has delivered millions into the pockets of those men and women who advise it on tax policy.

Big Four: inquiry into government consultancy binge gets buried

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