As Australia's richest Prime Minister (with an estimated net worth of around $200 million) it was inevitable Malcolm Turnbull would sooner or later face arch questioning from Labor about his financial arrangements. On Wednesday, during Senate Question Time, opposition frontbencher Sam Dastyari linked the Prime Minister's holdings in two hedge funds in the Caribbean tax haven of the Cayman Islands to new regulations exempting wealthy business owners from tax disclosure requirements, claiming those who invested in tax havens do not "play by the same rules" on tax as ordinary Australians. It was a claim quickly dismissed by Mr Turnbull, who told parliament that income accrued from his investments was "brought to account fully – and tax paid on it – and fully in Australia", and that this arrangement "actually increases the tax that is paid in Australia".
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
Assistant treasurer Andrew Leigh took up the running for Labor on Thursday, arguing that the suggestion Mr Turnbull had deliberately chosen an investment vehicle in the Caymans to maximise his Australian tax was hard to credit, adding that "I don't believe it is appropriate for someone who is looking to do the right thing on multinational tax avoidance to be investing in one of the biggest tax havens in the world".
The bulk of Mr Turnbull's personal fortune was earned from the 1999 sale of internet service provider OzEmail, of which he was a founding director. Further successful entrepreneurial ventures followed the rumoured $60 million payout from the OzEmail sale. Since Mr Turnbull's entry into parliament, his business activities have been limited largely to investments administered by blind trusts, as parliamentary rules dictate. A large mansion on Sydney Harbour aside, Mr Turnbull does not flaunt his wealth particularly, but nor is he self-effacing about it. Responding to Labor's querists, including Bill Shorten, Mr Turnbull told parliament on Thursday that he and his wife had "more wealth than most Australians, that is true. We've worked hard, we've paid our taxes, we've given back. If the honourable member wants to go round wearing a sandwich board saying 'Malcolm Turnbull's got a lot of money' feel free – I think people know that I've got a lot of money".
Mr Turnbull's tactic in making his wealth rather than his tax and investment affairs the central issue was clever – as was his admission that an element of good luck had been involved in the accumulation of that fortune. If Australians deplore the fact that some companies and high net-worth individuals routinely transfer profits and income overseas in order to evade their tax obligations, they're generally admiring of people who've succeeded in business through hard work and a preparedness to take a risk, particularly if said individuals retain their common touch. With his enthusiasm for social media and his penchant for catching the bus or train to appointments, Mr Turnbull's public persona is nothing like that of a snooty plutocrat – though paradoxically cartoonists continue to draw him with a top hat.
Labor's strategy of trying to link Mr Turnbull with the Caymans was sound in theory. Australian Tax Commissioner Chris Jordan has described it as a "tax haven" and it is notorious for the secrecy of its banking and financial provisions. Revelations that Mitt Romney invested millions there helped sink his US presidential ambitions in 2012. Nonetheless, there was always a risk that attacking Mr Turnbull would be characterised as the "politics of envy".
There's no reason to suspect Mr Turnbull has not paid all the tax due on his investment returns. Nor can he be accused, by implication, of being a grasping politician with an eye out for the main chance. Indeed, it might be argued that Mr Turnbull's decision to abandon a successful corporate career to seek elected office indicates he's far less likely to be given to venality than his opponents.
Given the Coalition's stated aim of reducing corporate tax avoidance, in part by cracking down on the use of secrecy jurisdictions like the Caymans, Labor had grounds for drawing attention to Mr Turnbull's overseas investments. While these seem to have been above board, Mr Turnbull ought, for the sake of appearances, to divest himself of his Cayman holdings. But the more pressing requirement is for Labor to abandon its politics of petty character assassination and to engage in things that matter to voters – like alternative ideas and policies for government.
