Browsing articles in "Law"
Sunday 3rd May 2015 - 12:26 pm
Comments Off on A rate cut:more likely?

A rate cut:more likely?

by Alan Thornhill

Analysis

The Federal government has made another interest rate cut more likely.

And we might see that as early as Tuesday, when the Reserve bank board next meets.

The government’s intervention came at the weekend.

That happened when it announced a crackdown on foreign purchases of existing homes, farms and agricultural businesses in Australia.

It promised both tighter rules – and a closer watch – in these markets.

This follows fears that Chinese investors, in particular, have been driving Sydney’s house price boom.

Home prices, in the Harbour City, rose by 14.5 per cent over the past year, with prices in “hot” suburbs, like Homebush, soaring by 41.9 per cent in that time.

That left Australia’s general inflation rate – of 1.3 per – wage growth of 2.6 per cent – and economic growth of just 2.3 per cent – in very deep shade.

The Sydney property price boom, which had begun to spill over to Melbourne, had presented the Reserve Bank with a serious problem.

What if its Board wanted to cut Australia’s official interest rates again, on Tuesday, as it last did in February, to spur the economy?

The bank then reduced its official marker rate by 25 basis points, to a new low of 2.25 per cent.

But the bank, itself, has acknowledged since then that Australia still faces the less than encouraging prospect of several months slow growth, over the rest of this year.

So the temptation to cut rates again is real.

However the Bank is also well aware that it might push Sydney house prices even higher, if it goes down that path.

The government’s intervention at the weekend, though, has lifted a lot of weight the bank’s shoulders.

The Prime Minister, Tony Abbott, who announced it jointly with his Treasurer, Joe Hockey, chose his words carefully.

He – and Mr Hockey – noted that Australia’s existing foreign investment regime generally does not allow foreign investors to purchase existing residential properties.

And they stressed that the government would continue to welcome foreign investment that is good for Australia.

But Mr Abbott admitted that foreigners, buying homes in Australia “illegally” can distort local property markets.

He avoided singling out the Chinese investors,though, at this point.

But he did say:”There is no doubt that if we have foreigners illegally coming into the existing residential property market, that is driving up prices.

“So, what we want to do is ensure that illegal foreign investment is not unnecessarily driving up prices.”

Mr Abbott also found a way to blame Labor.

“… the problem under the former government was that the rules about foreign investment were simply not enforced,” he said.

“There was not a single prosecution, there was not a single divestment order in the whole six years of the former government.

“This Government takes the rules seriously,” he said.

“We believe they are good rules and that they are rules which will be enforced.

“So, the Treasurer and I are here today to announce that from the end of this year, there will be tougher penalties for illegal foreign investment in existing residential properties.

“There will be tougher penalties, there will be tougher enforcement, there will be broader enforcement of the rules.

“Because it is really important – really important – that Australians understand that the foreign investment we need is in our national interest and that means having a good system of rules and ensuring that the rules are enforced.”

Please visit our sponsor
Saturday 2nd May 2015 - 6:11 pm
Comments Off on Feds act to curb Sydney’ house price boom

Feds act to curb Sydney’ house price boom

by Alan Thornhill

The Federal government has responded sharply to fears that Chinese investors have been driving up Sydney and Melbourne house prices.

It has also signalled that it will be keeping a much closer watch in future on sales of Australian farms and agricultural businesses to foreigners.

House prices in Sydney have surged by 14.5 per cent over the past year, far outstripping Australia’s general inflation rate of just 1.3 per cent.

The Reserve Bank board is due to review Australia’s interest rates on Tuesday.

And there have also been fears that it would stoke the Sydney Housing boom to new heights, if it decided to cut rates again, as it last did in February.

But in joint statement today The Prime Minister, Tony Abbott, and the Treasurer, Joe Hockey,
moved to avert that risk.

They noted that Australia’s foreign investment regime generally does not allow foreign investors to purchase existing residential properties.

They said the government would act to strengthen the integrity of the foreign investment framework.

“We will ensure stronger enforcement of new and existing foreign investment rules by transferring all residential real estate functions to the Australian Taxation Office.

“The ATO will use its data-matching systems to identify possible breaches and the Commonwealth will pursue those foreign investors who break the rules,” they said.

However Mr Abbott and Mr Hockey avoided mentioning Chinese investors, in particular, in their statement.

They did say, though,that the government would act to strengthen the integrity of its foreign investment framework.

“Foreign investment is integral to Australia’s economy and we welcome all investment that is not contrary to our national interest,” they said.

“After extensive consultations on our Options Paper, we are announcing important reforms to foreign investment that will help to demonstrate that it is for our country’s benefit,” they said.

“We will ensure stronger enforcement of new and existing foreign investment rules by transferring all residential real estate functions to the Australian Taxation Office.

“The ATO will use its data-matching systems to identify possible breaches and the Commonwealth will pursue those foreign investors who break the rules.

“Australia’s foreign investment regime generally does not allow foreign investors to purchase existing residential properties,” they said.

“There will now be stricter penalties to make it easier to pursue foreign investors who breach the rules.

“Criminal penalties will be increased to $127,500 or three years imprisonment for individuals and to $637,500 for companies.

“Divestment orders will be supplemented by civil pecuniary penalties and infringement notices for less serious breaches.

“The Government will also ensure that people who break the rules do not profit by introducing a civil penalty to capture any capital gain made on divestment of a property.

“Third parties who knowingly assist a foreign investor to breach the rules will also now be subject to civil and criminal penalties, including fines of $42,500 for individuals and $212,500 for companies.

“Australian taxpayers will no longer foot the bill for screening foreign investment application applications.

“Fees will be levied on all foreign investment applications. For residential properties valued at $1 million or less, foreign investors will pay a fee of $5,000.

“Higher fees will apply to more expensive residential properties as well as business, agriculture and commercial real estate applications,” they declared.

“Australia’s foreign investment policy for residential real estate is designed to increase Australia’s housing stock, but lack of enforcement over recent years has threatened the integrity of the framework,” they said.

“We will enforce the rules, ensuring that all foreign investors follow the rules and don’t profit from breaking them.

“The Government will introduce legislation into Parliament in the Spring Sittings to ensure that the reforms will commence on 1 December 2015.

“There will also be increased scrutiny around foreign investment in agriculture and increased transparency on the levels of foreign ownership in Australia through a comprehensive land register,” they said.

The National Party Leader – and Deputy Prime Minister – Warren Truss welcomed Mr Abbott’s announcement that sales of farm land and agricultural businesses would also be covered by tighter restrictions – and watched more closely – in future.

“At last, the public will have reliable information about the real levels of foreign ownership of agriculture land and agribusiness,” Mr Truss said.
The Federal government is responding sharply to fears that Chinese investors have been driving up Sydney and Melbourne house prices.

Home prices in Sydney have surged by 14.5 per cent over the past year, far exceeding Australia’s general inflation rate of just 1.3 per cent.

In joint statement today The Prime Minister, Tony Abbott, and the Treasurer, Joe Hockey noted that Australia’s foreign investment regime generally does not allow foreign investors to purchase existing residential properties.

They said the government would act to strengthen the integrity of the foreign investment framework.

“We will ensure stronger enforcement of new and existing foreign investment rules by transferring all residential real estate functions to the Australian Taxation Office.

“The ATO will use its data-matching systems to identify possible breaches and the Commonwealth will pursue those foreign investors who break the rules,” they said.

However Mr Abbott and Mr Hockey avoided mentioning Chinese investors, in particular, in their statement.

However they said the government would act to strengthen the integrity of the foreign investment framework.

“Foreign investment is integral to Australia’s economy and we welcome all investment that is not contrary to our national interest,” they added.

“After extensive consultations on our Options Paper, we are announcing important reforms to foreign investment that will help to demonstrate that it is for our country’s benefit,” they said.

“We will ensure stronger enforcement of new and existing foreign investment rules by transferring all residential real estate functions to the Australian Taxation Office.

“The ATO will use its data-matching systems to identify possible breaches and the Commonwealth will pursue those foreign investors who break the rules.

“Australia’s foreign investment regime generally does not allow foreign investors to purchase existing residential properties.

“There will now be stricter penalties to make it easier to pursue foreign investors who breach the rules.

“Criminal penalties will be increased to $127,500 or three years imprisonment for individuals and to $637,500 for companies.

“Divestment orders will be supplemented by civil pecuniary penalties and infringement notices for less serious breaches.

“The Government will also ensure that people who break the rules do not profit by introducing a civil penalty to capture any capital gain made on divestment of a property.

“Third parties who knowingly assist a foreign investor to breach the rules will also now be subject to civil and criminal penalties, including fines of $42,500 for individuals and $212,500 for companies.

“Australian taxpayers will no longer foot the bill for screening foreign investment application applications.

” Fees will be levied on all foreign investment applications. For residential properties valued at $1 million or less, foreign investors will pay a fee of $5,000.

“Higher fees will apply to more expensive residential properties as well as business, agriculture and commercial real estate applications,” they declared.

“Australia’s foreign investment policy for residential real estate is designed to increase Australia’s housing stock, but lack of enforcement over recent years has threatened the integrity of the framework,” they said.

“We will enforce the rules, ensuring that all foreign investors follow the rules and don’t profit from breaking them.

“The Government will introduce legislation into Parliament in the Spring Sittings to ensure that the reforms will commence on 1 December 2015.

“There will also be increased scrutiny around foreign investment in agriculture and increased transparency on the levels of foreign ownership in Australia through a comprehensive land register,” they said.

Sunday 19th April 2015 - 1:11 pm
Comments Off on Joe Hockey sees progress

Joe Hockey sees progress

by Alan Thornhill

Joe Hockey is talking of progress on two of the biggest problems he faces, profit shifting and squabbling States.

The Treasurer, who is in Washington, told the ABC Insiders program today that he had raised the issue of profit shifting from the floor of a G20 meeting there.

He had told the G20 that Australia had joined – “..with other countries in expressing a concern, a deep concern about profit-shifting by multinationals.

“Whilst we recognise that the OECD is undertaking work which Australia initiated and promoted last year, we obviously want to go further and faster,” he added.

“So, the (British) Chancellor of the Exchequer, George Osborne – and myself – have announced that Australia and the United Kingdom will work together to drive the global agenda.”

Mr Hockey said this would involve:” ..going after multinationals that are shifting profits away from the countries where they earn the income.

” We are going to work with them on their diverted profits tax, which is already implemented,” he added.

“But we are going to send officials over to the United Kingdom as soon as their election is complete and we are going to (move) together.”

Australia and Britain would then lead the world in this area.

That would also ensure that Australia’s work with the OECD would lead to the very best practices.

“That will absolutely ensure that companies earning profits pay tax in the jurisdictions where they earn the profits,” Mr Hockey said.

Premiers, attending a Council of Australian Government meeting in Canberra last week, broke up without reaching agreement on a new formula to distribute GST revenue.

The West Australian Premier, Colin Barnett, was very unhappy about that, accusing other premiers of ganging up on him.

But Mr Hockey said today: “well, it’s something that’s going to be considered in the context of the Federation White Paper.

“And it’s something that I’ve discussed with the State Treasurers.

” Clearly it is unfair to have one State receiving less than one third of the GST paid by its citizens.”

But he added: “If we’re going to support Western Australia, then Western Australia also needs to undertake some of the economic reform that other States have undertaken, which over time will help to further strengthen their economy.

” But I also want to point out that Western Australia has done a lot of heavy
lifting for the Australian economy more generally over the last few years.

“And as a Federation and as a nation, we have an obligation to take that into account now.”

Sunday 19th April 2015 - 6:37 pm
Comments Off on God help me, I was only 18

God help me, I was only 18

by Alan Thornhill

Analysis

“These people arrested today are not people of faith, they don’t represent any culture,” the Victorian Premier, Daniel Andrews, said.

A fascinating observation.

And on a case that promises to become even more intriguing, in the weeks and months ahead.

The reference, of course, is to the weekend arrests of five men, including two 18 year olds, said to be planning a violent attack on ANZAC Day celebrations in Melbourne, next Saturday, to disrupt those ceremonies.

Assuming that all is as it seems to be, this poses very deep questions.

If not faith – however misguided – what is it that drives young men like Sevdet Besim to involve themselves in plots like that?

Besim is the only person, so far, to be charged over this alleged plot, although police are also holding another teenager in custody, without charge.

Obviously, there is much more of this story yet to be told.

But that question is not easily dismissed.

The two central figures in this affair are only 18.

Still a year short of the age of the Vietnam war soldier at the heart of the 1983 Redgum hit, “God help me, I was only 19.”

That soldier, at least, had a reason for going to Vietnam.

He had been conscripted by a government, which had made the second worst military decision it is possible to make.

That is getting involved in a land war in Asia.*

Those on both sides of the Crusades – and the present Middle East wars that have descended from them – know – only too well – that religion can be a very powerful motivation for armed – and other – conflict.

Despite Mark Twain’s cynical comment that “faith is believing what you know ain’t so.”

But what if the erudite Victorian premier is right – and our young plotters aren’t “men of faith.”

What’s left?

Teenage rebellion?

A sense of alienation?

A lack of acceptance into Australia’s less than perfect multi-cultural society?

There is, of course, another possible back-story to all this.

The two young men – at the heart of this alleged plot -are said to have been followers of Abdul Numan Haider, at the Al Furqan Islamic study centre in South Springvale.

Haider was shot and killed by counter- terrorism police last September.

None of these things, though, would come close to justifying plans anything like those said to have been involved here.

Even if we add the powerful natural passions, that so often arise in our teenage years.

However, the trials, over coming weeks and months, will – nevertheless – be well worth watching.

They might, after all, teach us lessons about ourselves that we have, so far, been unwilling to face.

So keep watching.

* Foot note (The worst, according to the late Kim Beazley senior, is “to invade Russia in winter.”That’s a fascinating story. Remind me to tell it, some time).

Saturday 18th April 2015 - 7:06 pm
Comments Off on Show your defiance:PM & Opposition Leader

Show your defiance:PM & Opposition Leader

by Alan Thornhill

Political leaders are urging Australians to turn out in great numbers for ANZAC Day, defying terrorists who planned to disrupt the day’s celebrations in Melbourne.

The terrorists’ plot was foiled this morning, when police launched raids in Melbourne, arresting five men.

The Prime Minister, Tony Abbott, and Opposition Leader, Bill Shorten, later urged Australians to respond by attending ANZAC Day celebrations next Saturday in great numbers.

Speaking to reporters in Sydney, Mr Abbott said:” … people should turn up at Anzac Day events in the largest possible numbers.”

He said that is “….the best thing you can do in the face of those who would do us harm is live your life normally.

“The best sign of defiance that we can give to those who would do us harm is to go about a normal, peaceful, free and fair Australian life.

“…I say to everyone who is thinking of going to an Anzac Day event: please don’t be deterred.

“Turn up in the largest possible numbers to support our country, to support our values and to support our armed forces.”

Mr Shorten endorsed those remarks.

“I know Australians will not let these events disrupt the commemoration of the 100 year anniversary of the first ANZAC landing in Gallipoli,” the Opposition Leader said.

The ABC is reporting that police arrested five men in Melbourne this morning, in a major counter-terrorism operation.

They said two of the men they were planning an Islamic State-inspired terrorist attack on an Anzac Day ceremony.

These two men were identified as an 18-year-old Hallam man and an 18-year-old Hampton Park man.

Another man was arrested for weapons offences and two other men were in custody assisting police with their inquiries.

All were arrested after seven search warrants were executed as part of Operation Rising.

The Australian Federal Police said they believed the two 18-year-olds were plotting an attack to take place on Anzac Day.

AFP Acting Deputy Commissioner Neil Gaughan said it was believed the attacks were to have involved the use of “edged knives.”

“It is alleged both men were undertaking preparations for a terrorist attack at an Anzac Day activity in Melbourne which included targeting police officers,” he said.

Victorian Police Deputy Commissioner Shane Patton described the plot as being inspired by Islamic State (IS).

“At this stage we’re comfortable that we have this threat fully contained,” Mr Patton said.

“…we have no information that it was a planned beheading.

” But there was reference to an attack on police,” he told a news conference in Melbourne.

“Some evidence that was collected at a couple of the scenes and some other information we have leads us to believe that this particular matter was ISIS-inspired.”

Acting Deputy Commissioner Gaughan said this morning’s operation involved 200 police officers and was the culmination of Operation Rising.

The ABC said it understands that a number of the arrested men attended the Al Furqan Islamic study centre in South Springvale and were associates of Abdul Numan Haider, who also attended the centre.

Haider was shot and killed by counter-terrorism police in September last year.

Monday 13th April 2015 - 5:22 pm
Comments Off on Allow asylum seekers to work:Greens

Allow asylum seekers to work:Greens

by Alan Thornhill

The Federal Immigration Minister, Peter Dutton, says he has approved interim visas for “literally thousands” of asylum seekers.

He told the ABC this allows them to work or study in Australia, while their applications for permanent residence are assessed.

And he said this “will continue.”

Mr Dutton was responding to an earlier statement by the Greens, alleging that asylum seekers are having to wait at least three years, even for interim visas.

Green Senator Sarah Hanson-Young described the present system as cumbersome and urged the government to provide quick relief.

She said she would move in the Senate next month to give thousands of asylum seekers work and study rights much more swiftly, if it didn’t.

” I urge the Government to support the move,” she said.

“Work rights are currently not allowed for asylum seekers unless the Minister gives his personal approval,” she said.

“Asylum seekers living in the community should have the right to work and study, allowing them to provide for themselves and contribute to the economy,” Senator Sarah Hanson-Young added.

“Putting these people to work or study rather than leaving them to sit around for three years with nothing to do is a no-brainer,” she said.

Friday 10th April 2015 - 8:58 am
Comments Off on Tax: why everybody’s talking about it

Tax: why everybody’s talking about it

by Alan Thornhill

Analysis

It’s not often that a parliamentary committee’s inquiry takes fire.

But something very like that is happening with the inquiry the Senate Economics Committee is holding into the complex tax structures many wealthy companies are using, to cut their tax bills.

As The Sydney Morning Herald writer, Michael West, points out:” Tax avoidance relies on secrecy.

“The chicanery of some of the world’s biggest tax dodgers is all over the airwaves this week.

“Surely they now realise that there is a reputational cost for their aggressive tax practices.”

In that sense, the inquiry might already be said to be more successful than the Treasurer, Joe Hockey’s attempt, to launch a national “conversation” on tax, with a paper he issued last month.

That now seems feeble by comparison.

There’s a reason for that.

A rare exposure of the amounts involved, in this aggressive corporate behaviour, is catching the public’s imagination, this time.

Even the OECD has chipped in.

Its head of tax, Pascal Saint Amans, told the Senate inquiry, on its second sitting day in Canberra yesterday, that the amount of profits multinationals are channelling through Singapore, would be “significantly reduced” under a global plan his organisation is proposing, to fight profit shifting.

Singapore’s corporate tax rate, like those of most of our Asian neighbours, is well below Australia’s rate of 30 per cent.

Mr Hockey has said, bluntly, that he believes profits made in Australia should be taxed in this country.

The Australian Tax Office tries hard to enforce laws, broadly based on that view.

But the 4,400 job cuts it has sustained, since the Abbott government took office, isn’t making that job any easier.

The Community and Public Service Union, which also appeared before the inquiry yesterday, was adamant about that.

A CPSU member, Cathy Pugh, who worked in the ATO’s international branch in Sydney, said many of her colleagues – officers with “broad and in depth experience” – had been victims of those cuts.

So the ability of the Tax Office to police profit shifting had been hurt.

Treasury officials have also had a lot to say about company tax recently.

One even spoke openly of scrapping company tax altogether.

He argued that Australia’s 30 per cent rate is making us “uncompetitive” in our neighbourhood, when it comes to attracting much needed foreign investment and added that it is an “expensive” tax to collect, anyway.

However deputy Treasury secretary Rob Heferen, who also appeared before the inquiry yesterday, conceded: “This is a huge issue for us.”

He said corporate profit-shifting probably matters more to Australia than almost any other country.

“That’s because Australia has a high dependence on corporate tax, and why it has been a key driver of pursuing the OECD work on so-called base erosion and profit-shifting through the G20.”

So the committee continued to inspire debate on tax policy yesterday, even though that was just the second day of its inquiry.

Australia’s big miners, BHP Billiton, Fortescue and Rio Tinto, will get their chance to explain their tax strategies, on the third – and final – day of the committee’s hearings, in Melbourne today.

With their once lush finances now pushed into the pits, by catastrophic falls in their prices, its a fair bet that they will be looking for a little sympathy from our politicians.”

They are unlikely to get it.

The money Joe Hockey has lost, through profit shifting, would have helped a lot, in his struggle to cut the Federal deficit.

Labor, as always, is also looking for ways of raising more revenue.

And as for the Greens, well.

This entire inquiry was their idea, wasn’t it?

Thursday 9th April 2015 - 7:20 am
Comments Off on What Joe Hockey didn’t tell us

What Joe Hockey didn’t tell us

by Alan Thornhill

Analysis

Joe Hockey hasn’t been completely frank with us.

The inquiry the Senate Economics Committee is holding into corporate tax minimisation and avoidance has at least established that.

On its first day.

As regular readers will know, the Treasurer has consistently maintained that the problems the government now faces with the budget flow, overwhelmingly, from its predecessor’s loose spending habits.

Not revenue shortfalls.

Three IT giants, Google, Apple and Microsoft, all denied tax avoidance, when they appeared before the Committee’s hearing, in Sydney yesterday.

But those present were left with the clear impression that they aren’t paying the full 30 per cent rate corporate tax rate, set by Australia, either.

Profits are being routed, instead, through low tax places like Singapore, or repatriated to the US, before being taxed.

The Tax Commissioner, Chris Jordan, told the inquiry that the Tax Office is conducting “deep audits” into such practices.

And while he refused to “name and shame” the companies being investigated in this way, Mr Jordan did confirm that high-tech companies are among these Tax Office targets.

Two conclusions can be drawn, confidently, from all this.

Firstly, a lot of money is at stake.

“Deep audits” are expensive, both in money and time.

(The Tax Office doesn’t like wasting either).

Secondly, the revenue being lost, through corporate tax minimisation and avoidance, might well have made a significant difference to the Federal budget.

Mr Hockey, himself, argues that profits made in Australia should be taxed in this country.

Google disagrees.

The Managing Director of Google Australia, Maile Carnegie, told the Committee yesterday, that in 2013 the company had paid just $7.1 million in tax on revenue of $58 million and profits of a little more than $46 million.

Her explanation was fascinating.

Ms Carnegie said most of the company’s taxes were paid in the US because that was where the global headquarters was based, and where the company generated the most investment in research and development, and also where it undertook the most risk.

“And that in turn is what drives our profits,” Ms Carnegie said.

“It’s very easy to underestimate the risks and also the costs that are required … to develop that intellectual capital,” she added.

If that is right, then its our tax system that is out of date – and needs fixing.

Mr Hockey supported Mr Jordan, in his refusal to name and shame the companies now dealing with “deep audits.”

But he must, at least, have had a broad idea of the billions of dollars worth of potential revenue lost through corporate tax minimisation and avoidance.

The Committee will take evidence from tax accountants, the Federal Treasury, the Australian Securities and Investments Commission and the Business Council of Australia, among others, when it resumes its hearings in Canberra today.

It should be the best show in town.

Pages:«12345»

My book

wx 2

Weathercoast by Alan Thornhill

A novel on the murder of seven young Anglican Christian Brothers in the Solomon Islands.

Available now on the iTunes store.

Profile

Alan Thornhill

Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.

Please visit our sponsor

THE MARKETS

All Ordinaries5936.80  chart+36.10  chart +0.61%
S&P 5002395.11  chart+6.50  chart +0.27%
Aud/usd0.7455  chart-0.0078  chart -1.04%

Bhp Blt Fpo24.08  chart+0.14  chart +0.58%
Amp Fpo5.31  chart+0.10  chart +1.92%
Anz Bank Fpo32.40  chart+0.42  chart +1.31%
N/aN/A  chartN/A  chartN/A
Origin Ene Fpo7.53  chart+0.06  chart +0.80%
Please visit our sponsor

Topics

News Archives