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Thursday, 29 May 1997
Page: 3976


Senator MARGETTS(12.47 p.m.) —The International Tax Agreements Amendment Bill (No. 1) is one of those generally innocuous bills that gets non-controversial status because they are effectively putting into legislation agreements made with other nations to recognise tax paid and avoid double taxing in various cases. These bills rarely attract much attention or objection, but occasionally it is worth taking a second glance at them.

In this bill, for example, we are recognising that a tax incentive scheme in Vietnam should be given a tax credit here. Under normal foreign tax credit rules, companies operating here and in another country are given a tax credit for tax paid in the other country for an activity. The rule is basically that the tax paid is recognised and then topped up to Australian standards.

In the case where tax concessions are given overseas, the risk is that it will not be considered tax paid, so the concession in Vietnam will simply result in a greater tax obligation here. This bill seeks to extend a tax credit for unpaid tax under the concession scheme so that the concession offered is actually received.

Where does that leave us? There is a justice issue involved in this sort of bill, which is the reason they generally pass without question. However, such bills reflect and support a general trend by both ex-imperial and ex-colonial nations to attempt to win the investment of transnational corporations by offering incentives such as cheap power and infrastructure, tax concessions, cooperative environmental programs, and so on—cooperative governments that hold down wages and overlook environmental problems. Of course, the more nations there are which are willing to cut tax, offer incentives or overlook exploitative practices the greater the competitive pressure becomes. Here we are talking about competition between governments to attract capital—and capital rules.

It is interesting that this is an agreement with Vietnam, a nation that has a minimum wage in foreign corporations of about $1 a day. A couple of years ago, BHP—the big Australian—was in the news because it was basically demanding subsidised natural gas before it would invest. Vietnam has also been getting a lot of investment from Thailand and other nations for its textile, clothing and footwear industries.

A few years back, Thai manufacturers found it was cheaper to have clothes made in Vietnam and simply have them relabelled in Thailand to get around the sanctions that were then in place. International competitiveness was also used at the time to oppose any increase in the minimum wage for Thai workers, which was then about $4 a day. Unfortunately for Thai workers, Thailand was also busy promoting its export markets for food, so the food prices rapidly began to reach international standards.

Thai workers were competing as consumers directly with Australians and American workers. If the prices for food skyrocketed—they did—that is the free market. It has obviously reflected consumer choice that the Thai workers `chose' not to buy so much food.

Also, unfortunately for Thai workers the minimum wage was not always obtainable. Real unemployment was high enough that workers working within a system without a social safety net were desperate and would pay big fees to unscrupulous employment agencies in the hopes of getting a job. They did get a job. It was often paid at around 25 per cent less than the minimum wage—that was if they were lucky. The unlucky ones, especially women, found themselves held captive in textile factories, fed swill and sleeping in rags in the corners of work rooms. The Thai press was full of stories of both the exploitative employment rackets and the periodic escapes or discoveries of workers basically being held prisoner and treated as slaves.

Vietnam is seen as a mecca for transnational corporations. Labour is dirt cheap; environmental protection is at the level of an ex-communist satellite—that is to say, virtually non-existent. The World Bank and others, including Australia, are involved in supporting Vietnamese infrastructure so that corporations can get a better deal. Incidentally, if villages of the Vietnamese get in the way they are sacrificed to progress and the greater good.

Vietnam has a cooperative government and even offers tax incentives. What is not seen is that support for this kind of market-driven, transnational orientated development of Vietnam creates a tremendous toll on workers and ordinary people in Thailand, Malaysia and other developing nations. It also does little for actually improving the status of workers in Vietnam.

People do not realise the significance of these bills. Investment of so-called Australian transnational corporations are also flowing heavily to Vietnam. BHP, Kambrook, Wesfarmers, Telstra, Australian Consolidated Press, the Australian Wheat Board and the Australian Manufacturing, Engineering and Construction Industry Association—even law firms and media companies—are all flocking to Vietnam to grab their share of that market. We wonder why saving ratios go down here and investment does not seem to happen.

The whole process is incredibly ugly. The corporate world looks at Vietnam and sees a fertile area for exploitation. The World Bank and other development agencies are so convinced of the correctness of free market fundamentalism that they support the notion that transnational investment based on exploitation equals development, and they must facilitate development. We see no justice in supporting continued handouts to those who dominate the investment in transnational corporations and control the transnational corporate agendas. The consequence is a further squeeze on ordinary people everywhere from Thailand to Australia in the interest of surviving in this exploitative international marketplace we are busy creating and supporting.

It is not good enough. There is nothing good or just in it. It increases the inequity within each nation and between nations and, most basically, it serves the global rich, who are no longer remotely nationally aligned. This is what this bill is about: making provisions for yet another turn of the screw, which is tightening on ordinary people in all nations.

I oppose this bill. I do so not because I oppose the principle of tax justice, but because I oppose the underlying agenda of this—and all similar measures and their agenda—devoted to exploitation and the dominance of the transnational new international ruling class.