Malcolm Turnbull has launched a forceful defence of his investments in funds registered in the Cayman Islands, while condemning Labor for mounting a “shabby smear campaign” about his personal wealth, based on “the politics of envy”.
The prime minister said he and his wife, Lucy, had been very fortunate in their lives and had “more wealth than most Australians”, but they had sought to give back to the community and had not dodged their tax obligations.
And he invited Labor MPs who were asking pointed questions about his investments to “go round wearing a sandwich board saying, ‘Malcolm Turnbull’s got a lot of money’,” because most people already knew that to be the case.
After two days of questions about his investments in three funds domiciled in the Cayman Islands, Turnbull reiterated that he had structured his financial affairs to avoid conflicts of interest in Australia, but all the income attracted Australian tax.
“Well, it is a very sad day that the Labor party, which could be talking today about the economy, could be asking about growth, could be proposing some new ideas on innovation or enterprise, spends most of today’s question time and most of yesterday’s question time on just another shabby smear campaign – just another wander down the avenue of the politics of envy, just another smear,” Turnbull said on Thursday.
“The fact is that Lucy and I have been very fortunate in our lives. We have more wealth than most Australians, that is true. That is absolutely true. We’ve worked hard, we’ve paid our taxes, we’ve given back.
“I don’t believe that my wealth, or frankly most people’s wealth, is entirely a function of hard work. Of course hard work is important but, you know, there are taxi drivers that work harder than I ever have and they don’t have much money. There are cleaners that work harder than I ever have, or you ever have, and they don’t have much money.”
Turnbull provoked interjections from Labor MPs when he implied the opposition leader, Bill Shorten, had questions to answer about the deals he presided over when he headed the Australian Workers’ Union.
“The honourable leader of the opposition could think about some of those cleaners and how he looked after them,” he said.
Turnbull was responding to a question from Labor’s finance spokesman, Tony Burke, who focused on the Bowery Opportunity Fund, “which has a minimum buy-in in the Cayman Islands of US$1m”.
Burke suggested the prime minister was out of touch for “claiming that people who have chosen Australian Super as their default fund are doing the same thing he did when he actively invested in an exclusive fund registered in the Cayman Islands”.
Turnbull said his point was simply that “big funds, big companies, small funds invest in these offshore vehicles and when they do, the income comes back to Australia and all of the tax – not most of it, all of it – goes to the Australian taxation office”.
“This country is built upon hard work, people having a go and enterprise,” the prime minister said.
“Some of us will be more successful than others, some of us are fortunate in the turn of business, some of us are fortunate in the intellect we inherit from our parents.
“There is lot of luck in life and that’s why all of us should say, when we see somebody less fortunate then ourselves, ‘There but for the grace of God goes me’. I have always taken that view and honourable members opposite who know me know that is true ... so really, 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.”
Labor has repeatedly said it is making no accusations of illegality, but has sought to put its questions in the context of the government’s policies on tax transparency and profit-shifting.
The shadow attorney general, Mark Dreyfus, had earlier asked Turnbull whether it was appropriate “to actively invest in this exclusive fund registered in a notorious tax haven when the Australian government is claiming to the working in the G20 to address profit-shifting and tax evasion”.
Turnbull said he had taken care when he became the communications minister to ensure no investments presented conflicts of interest. He said he had not invested in large managed funds in Australia because they had a very large exposure to Telstra.
He said many hedge funds had an onshore US-based entity and and offshore one located in a place like the Cayman Islands so that non-US-based investors would receive their income without US withholding tax.
“If the Australian investor invested in a managed fund that was located in the United States there would be 15% US withholding tax, so at least 15% of the tax paid would go to the United States government, so the choice of the offshore vehicle actually means that more tax is paid in Australia than otherwise,” Turnbull said.
“The same amount of tax is paid but more of it is paid in Australia. That is the consequence of the arrangements. There is no tax avoided in Australia, in fact more tax is paid in Australia as a consequence.”
