by Alan Thornhill
A new report says big miners – and tobacco companies – would be among the main winners from the Federal government’s proposed tax cuts.
The report, funded by the Get Up organisation, concluded that shareholders in the USA, UK and Japan would collect 15 per cent of the offshore benefits.
The authors described these as the “most significant” gains produced by the proposed scheme, which they described as the “centerpiece” of the Turnbull government’s economic plan.
It was produced in consultation with corporate tax experts, including Associate Professor Roman Lanis, Dr Brett Govendir and Mr Ross McClure from the University of Technology Sydney, with help from to Mikhail Shashnov.
The government has yet to comment on the report.
Its authors reviewed the 250 largest payers of corporate tax in 2013-14 – the most recent year for which Tax office data was available.
It was used to identify the percentage of overseas-based shareholders and calculate the proportion of the corporate tax cut that would flow to them in the form of increased dividend payments.
A detailed analysis of the top 20 corporations was then undertaken.
The results were then assessed to determine who the main beneficiaries of the corporate tax cut were.
This had shown that if the corporate tax rate was cut to 25 per cent, in the planned five year period, those companies would get a total tax benefit of $5.526 billion per annum.
The report also said: “an astonishing 40 per cent – at least $2.176 billion – would be lost to offshore investors in dividend payments.”
It said too, that:- : “corporations operating in the finance and materials sectors receive the lion’s share of total tax benefits at 38 per cent and and 30 per cent respectively.
“This includes banks, insurance, and mining companies.
“Seven of the top 20 corporations are mining and energy corporations.
“They receive a $1.56 billion windfall, of which 63 per cent would flow offshore.
“This is on top of the $7.7 billion the industry receives each year in taxpayer-funded fossil fuel subsidies.
It also said two of the top 20 beneficiaries are Big Tobacco companies – British American Tobacco and Philip Morris.”
The report said these companies stand to receive a combined benefit of $88.5 million, of which 100 per cent would flow offshore.
by Alan Thornhill
Malcolm Turnbull says: “the shockwaves in the past 48 hours from Britain’s vote to exit the European Union are a sharp reminder of the volatility in the global economy.”
Delivering his policy speech in Sydney for the July 2 elections, the Prime Minister also spoke of the need for stable majority government, experienced economic leadership and a national economic plan.
An edited copy of his 4,000 word speech is reproduced below.
After praising senior Liberals who attended the launch, Mr Turnbull said Australia needs a national economic plan which “recognises the nature of our times – both the opportunities and challenges – and gives us the resilience we need to succeed.”
“Only the Liberal National Coalition can deliver that plan, that security, that leadership,” he added.
“Everything we seek to achieve, all of our hopes, our dreams depend on strong economic growth, “ Mr Turnbull said.
In a strong economy, business is confident and prepared to risk investing, expanding and hiring.”
Mr Turnbull said: “Our business tax cuts encourage small and medium businesses to do just that.
“A strong economy means a mum whose kids are now at school and wants to work a few more days, or work full time, will have plenty of opportunities to do so,” Mr Turnbull said.
“And our childcare reforms will make it easier for her to do so too,” he added.
“It means that young men and women who have left school and are looking for a job will find an employer who is hiring and is happy to give them a start.”
“Our PaTH program with job training and internships will provide additional support to youth employment,”Mr Turnbull added.
A strong economy means we can fund our Innovation and Science Agenda to ensure our kids learn the digital skills of the 21st century, our research is commercialised to create jobs here at home and investors support start-up companies.
A strong economy means that senior Australians know their children will be in good jobs, their investments will deliver better returns and that Government will have growing revenues to support their pensions and health care.
It means that the farmer is getting much better prices for his cattle and can afford to hire a local contractor to replace his fences, clean out a dam or build a new hay shed.
It means the cafe, the restaurant, the hotel has more tourists and they hire more staff to cater for them.
All thanks to our export trade deals.
A strong economy means that builders will be hard at work on new homes and tradesmen will have more jobs.
It means that a manufacturer has more export orders, can buy more equipment, hire more workers and expand their business.
A stronger economy means we can fund over $50 billion in 21st century road, rail and other infrastructure including the Western Sydney Airport and the 39,000 jobs it will create.
“A stronger economy means we can afford to fund world-class education and health services, including Medicare, without weighing down our children and grandchildren with more debt and deficits,” Mr Turnbull said.
A strong economy means we can meet and beat our international obligations to address climate change and do so without massive hikes in electricity prices as Labor would do.
“We have a national economic plan because the prosperity and security of 24 million Australians depend on it,” he said.
Mr Turnbull said success in the 21st Century cannot be taken for granted.
“Always expect the unexpected.”
“We will need to renegotiate vital trade deals with Europe and Britain,” Mr Turnbull said.
“We concluded five in the last three years – Japan, Korea, China, Singapore and the Trans Pacific Partnership.
“In six years Labor concluded none,” he said.
“We have carefully considered what we need to do to succeed, to make the transition from an economy fired up by a once in a century mining construction boom to one that is more diverse, more innovative, smarter, more productive – an economy that wins, and keeps on winning.”
“So there is a clear cut choice at this election,” Mr Turnbull said.
“We present our fellow Australians with a national economic plan every element of which supports more investment, stronger economic growth and more jobs.
“Our plan invests $1.1 billion to promote leading-edge innovation in our industries and to prepare our children for the jobs of the future.”
Our plan promotes export trade deals to generate 19,000 new export opportunities, giving our businesses premium access to the biggest economies in our region.
Our plan invests in local defence industries to ensure every defence dollar possible supports advanced manufacturers and thousands of Australians jobs.
Our Enterprise Tax Plan provides tax relief to tens of thousands of small-to-medium family businesses now and to all companies over time so they can invest, grow and hire more Australians.
“On the other hand, our opponents in the Labor Party have no economic plan.”
“Labor believes its best hope of being elected is to have trade union officials phone frail and elderly Australians in their homes at night, to scare them into thinking they are about to lose something which has never been at risk,” Mr Turnbull said.
“That’s not an alternative government, that’s an Opposition unfit to govern.”
Every element of Labor’s platform would discourage investment and employment.
He described it as: “a recipe for economic stagnation.”
“If returned at this election, we will convene a joint sitting to restore the rule of law in the construction industry and reinstate the Australian Building and Construction Commission, Mr Turnbull said.
So Australians could have the building infrastructure they need “at a price they can afford.”
He said: “housing values would fall in a fragile property market and rents would rise, because of Labor’s investment destroying ban on negative gearing and 50 per cent hike in capital gains tax.
“This threat is real.
“ So we need to be crystal-clear about what our votes will mean,” Mr Turnbull said.
“If your local vote is for Labor, Greens or an Independent, and you are in one of the 20 or so key battleground seats across the country, it is a vote for the chaos of a hung Parliament, a budget black hole, big Labor taxes, less jobs and more boats,” he warned.
Only a Liberal or National vote ensures stable government, a clear economic plan, real funding for the aged, Medicare and education; more jobs and strong borders.
Mr Turnbull urged Australians to: ““Vote for your local Liberal or National in the House and in the Senate.”
“In the last calendar year, there were 300,000 new jobs,” the Prime Minister said.
“Our unemployment rate of 5.7 per cent is well beneath what was anticipated when the Coalition came to office,” he added.
None of this happens by chance. Strong economic leadership supporting hard-working Australians means that, even with difficult global headwinds, we continue to grow our economy and expand our workforce.
And, today, I can announce additional policies from our Coalition team to support our national economic plan for jobs and growth.
Mr Turnbull said his government is determined to ensure none of our regional communities are left behind as we make the transition to a stronger new economy.
“… our regions must be at the frontline of the drive for innovation, jobs and growth,” Mr Turnbull said.
Our ‘Regional Jobs Fund’ is a major commitment… he added.
“As we build a stronger economy, it is vital that we also do all we can to ensure all Australians, especially young Australians, are not left behind,” he added.
So the Coalition woulds deliver a record $73.6 billion over the next four years for all Australian schools,” he said.
“Today, I can announce an additional $48 million for scholarships under the Smith Family’s Learning for Life program, to help disadvantaged students to complete year 12 and transition to work or further education and training,” he added.
“The Coalition will also invest $31 million in programs to encourage more girls and women to study and work in science, technology, engineering and mathematics,” Mr Turnbull said.
It would also help older Australians get smartphones.
He said only about one household in five, with people aged 60 or above, had a smartphone.
“To make their lives easier, to help them retain their independence, and to keep them connected to families and friends, I am announcing today a $50 million Coalition strategy to assist seniors who want to improve their digital literacy skills,” he said.
“And as announced earlier today, my Government will be investing $192 million more in front line mental health services including twelve suicide prevention sites around Australia and ten more headspace centres; and at the same time using smart phone and other technology to make these services more accessible,” he said.
This complements our support for Veterans’ mental health programs, itself a reminder that we best honour the diggers of Gallipoli and Fromelles by supporting the veterans and their families of today.
Mr Turnbull said; “only a strong Australia can be a safe Australia.
“After six years of abject Labor neglect and indecision, our continuous shipbuilding strategy will ensure Australia retains a sovereign capability to build and sustain naval vessels, securing thousands of advanced manufacturing jobs for decades to come,” he added.
Mr Turnbull said:”Labor’s abandonment of John Howard’s proven border protection policy opened the door to the people-smugglers:
The results had included:-
- 50,000 unauthorised arrivals on 800 boats,
- 1200 deaths at sea, of which we know,
- Over 8000 children put into detention,
- 17 detention centres opened, and
- An $11 billion border protection budget blowout.
“In contrast, the Coalition has restored security at the border, integrity to our immigration program – and with it, public trust,” he said.
“I am proud to announce that today marks 700 days without a successful people-smuggling venture to our country,” he added.
“I am also very proud to announce that we have removed every child from detention in Australia,” Mr Turnbull said.
Labor had failed Australia before.
“The people-smugglers are looking for the earliest sign that an Australian government will waver,” he added.
Mr Turnbull said: “our policies are tough.
“But these policies have stopped the drownings at sea, and restored the integrity of, and trust in, our large but orderly immigration and refugee programs,” he added.
To further strengthen our domestic security I announce initiatives that go to that most fundamental of liberties – the right to live without fear of violence.
Mr Turnbull also said: “my first announcement as Prime Minister was a new $100 million package to encourage all Australians to confront squarely and honestly the ugly truth of violence against women and children in our society.
“Today, I can announce a $64 million commitment to crack down on the trafficking of illegal firearms on our streets, in particular by criminal gangs,” he added.
He said he is asking Australians to make a clear choice — to back a strong and stable Coalition majority government that can press ahead with its plan for a stronger new economy.
That would deliver the economic security that enables Australians to fulfill their aspirations.
“That is why I am asking my fellow Australians at this election to support our Coalition’s National Economic Plan for a Strong New Economy,” he said.
by Alan Thornhill
Bill Shorten says Labor will offer small business tax cuts to create new jobs.
The Labor leader said this policy had been designed to particularly help two groups that have often been finding it very hard to get work.
That is both younger and older workers.
He put the cost at $257 million and said it would help up to 30,000 Australians find a job each year.
But he said the cost of the tax cut would be fully offset from the existing wage subsidy program, which is not working as well as it should be.
So how would it work?
Mr Shorten said under Labor’s New Jobs Tax Cut, small businesses will be able to claim a tax deduction of up to $20,000 per worker to offset the wages of up to five new employees.
Businesses would be able to claim a 40 per cent deduction on top of the amount they can currently claim for their employees.
“Central to Labor’s positive plan to support small business is cutting red tape – making it easier and simpler for small business owners to support Australia’s economy and create jobs,” Mr Shorten said.
“This is a real jobs plan that offers a responsible tax cut to small businesses – the backbone of our economy,” he added.
To qualify for the deduction, the employees will need to be a net addition to the company’s average full-time equivalent staffing level for the previous year.
An employer will deduct 140 per cent of the wages expenses of a new employee when doing their accounts.
Mr Shorten said: “ Labor’s policy will be targeted to small businesses with turnover of less than $2 million which have been operating for more than two years.
“Importantly, the New Jobs Tax Cut will be available to businesses hiring Australians who face real barriers to finding work,” Mr Shorten said.
He said these would include:-
* Unemployed job seekers aged under 25 or over 55 and
* Parents or carers returning to work after more than six months away.
“Just like the previous Labor Government’s instant asset write-off, businesses will be able to claim the New Jobs Tax Cut as part of their regular tax return,” he said .
“ This minimises paperwork for busy employers and means they do not have to deal with yet another agency in order to help someone back into work,” Mr Shorten added.
Labor is arguing that its job creation scheme will be more effective – and much less expensive – than that being offered by the government.
That would cost $50 million over 10 years, mostly in tax cuts going to big companies.
by Alan Thornhill
The Prime Minister, Malcolm Turnbull, told voters tonight that growth is necessary for Australia.
He said that is fundamental.
And – taking care to appear Prime Ministerial – Mr Turnbull said his government had a plan to achieve growth that would produce new jobs and prosperity.
The Opposition Leader, Bill Shorten, responded by saying that fairness is needed for growth.
And he said the government’s plan to give big foreign companies $50 billion worth of tax cuts over the next 10 years is not fair.
He said a well educated population, with access to good health care, is essential.
The two leaders were speaking in the second of their debates in the current election campaign, leading to national elections on July 2.
Tonight’s debate was the first to be televised publicly.
The first was carried only on pay television.
Although both leaders were criticised tonight for not giving enough detail about their policies, both would probably be reasonably happy with their performances.
Both managed to avoid embarrassing mistakes.
And both stuck to carefully considered strategies.
Mr Turnbull sought to re-assure those who share his philosophies and to convince doubters that voting for a reckless spending Labor government on July 2 would be just too risky.
And Mr Shorten, who realises that he is less well known than his rival, took care to present himself as a moderate responsible leader, who will advance thoroughly thought out policies, in this campaign which still has five weeks to run.
by Alan Thornhill
Labor says the Prime Minister, Malcolm Turnbull, still has questions to answer on reports this week that he was a director of a company, Star Mining NL, that is listed in the British Virgin Islands.
Mr Turnbull yesterday dismissed the report, based on the Panama papers, saying that both he and Neville Wran had been directors of the company.
He said, too, that if the Australian arm of the company had owed any tax in Australia it would have been paid in Australia.
However the Shadow Assistant Treasurer, Andrew Leigh, persisted with Labor’s questioning on the issue , listing six questions he said Mr Turnbull still had to answer.
1. Does Mr Turnbull agree that the British Virgin Islands is a tax haven?
2. Yesterday Malcolm Turnbull encouraged journalists to study the accounts of the companies concerned. According to the Financial Secrecy Index, “the British Virgin Islands does not require that company accounts be available on public record”.
Isn’t it impossible for journalists to study corporate accounts of a country that does not publicly report them?
3. Once he agreed to serve as a director of this offshore company, was Mr Turnbull briefed on the relationship between Star Mining’s Australian arm and its British Virgin Islands subsidiary, especially in terms of how revenue and tax were handled?
4. Why was an ASX-listed company, with interests in a Siberian gold mine, holding assets through the British Virgin Islands?
5. Considering how United Kingdom Prime Minister David Cameron has recently fronted the UK media to give a full explanation of his offshore tax affairs, will the Australian Prime Minister front the Australian media to do the same?
6. What steps will Malcolm Turnbull take to ensure that Australia is at the forefront of action against profit-shifting and the use of tax havens?
So far, Mr Turnbull has not replied to these questions.
by Alan Thornhill
Last night’s Federal budget favours the “big end of town” according to the Opposition Leader, Bill Shorten.
The Treasurer, Scott Morrison, concedes that the document he brought into Federal parliament then is not a traditional budget, with easily identified winners and losers.
However, he raised eyebrows by insisting that a modest income tax, for those on high incomes, benefits average wage earners.
But above all, this budget will deliver the one thing the Turnbull government wants most.
That is a clear run to the early election the Prime Minister, Malcolm Turnbull, will almost certainly call on July 2.
The parameters, on which that election will be fought, have now been clearly spelt out.
For Labor, its all about fairness.
The government will make a case for growth and jobs, with the mainly small – and bland – changes it announced in the budget.
And the Reserve Bank asserted its independence – on budget day – by cutting its marker interest rate by 25 basis points, to a new low of 1.75 per cent.
It says the risks of doing that are, at least, lower than those of not doing so.
So what else is the government aiming for, in its budget?
• A deficit of $37.1 billion this financial year.
However, it is also aiming to make big international corporations to pay their full share of tax, on the income they earn in Australia.
• 2.5 per cent economic growth, both this financial year and next.
• A 1 per cent cut in the small business tax rate, to 27.5 per cent.
• Cutting the company tax rate to 25 per cent for all companies, over four years.
by Alan Thornhill
The Reserve bank has cut its cash rate by 25 basis points to 1.75 per cent
In a statement explaining the decision the bank’s Governor, Glenn Stevens, said:”At its meeting today, the Board decided to lower the cash rate by 25 basis points to 1.75 per cent, effective 4 May 2016.
This follows information showing inflationary pressures are lower than expected.
“The global economy is continuing to grow, though at a slightly lower pace than earlier expected, with forecasts having been revised down a little further recently.
” While several advanced economies have recorded improved conditions over the past year, conditions have become more difficult for a number of emerging market economies.
‘”China’s growth rate moderated furthe”r in the first part of the year, though recent actions by Chinese policymakers are supporting the near-term outlook.
“Commodity prices have firmed noticeably from recent lows, but this follows very substantial declines over the past couple of years.
“Australia’s terms of trade remain much lower than they had been in recent years.
“Sentiment in financial markets has improved, after a period of heightened volatility early in the year.
“However, uncertainty about the global economic outlook and policy settings among the major jurisdictions continues. Funding costs for high-quality borrowers remain very low and, globally, monetary policy remains remarkably accommodative.
“In Australia, the available information suggests that the economy is continuing to rebalance following the mining investment boom.
“GDP growth picked up over 2015, particularly in the second half of the year, and the labour market improved.
Indications are that growth is continuing in 2016, though probably at a more moderate pace. Labour market indicators have been more mixed of late.
“Inflation has been quite low for some time and recent data were unexpectedly low. While the quarterly data contain some temporary factors, these results, together with ongoing very subdued growth in labour costs and very low cost pressures elsewhere in the world, point to a lower outlook for inflation than previously forecast.
“Monetary policy has been accommodative for quite some time. Low interest rates have been supporting demand and the lower exchange rate overall has helped the traded sector.
“Credit growth to households continues at a moderate pace, while that to businesses has picked up over the past year or so.
“These factors are all assisting the economy to make the necessary economic adjustments, though an appreciating exchange rate could complicate this.
“In reaching today’s decision, the Board took careful note of developments in the housing market, where indications are that the effects of supervisory measures are strengthening lending standards and that price pressures have tended to abate.
“At present, the potential risks of lower interest rates in this area are less than they were a year ago.
“Taking all these considerations into account, the Board judged that prospects for sustainable growth in the economy, with inflation returning to target over time, would be improved by easing monetary policy at this meeting,”Mr Stevens said.
by Alan Thornhill
A new Morgan Poll once again puts Labor in front, but the pollster adds that if a federal election were held today, the result would probably be too close to call.
Gary Morgan, the Executive Chairman of Roy Morgan research, said it could well result in a hung Parliament.
He said that in early May ALP support was up 1 per cent at 51 per cent.
The Coalition’s support fell 1 per cent, to 49 cent on a two-party preferred basis.
“ This is the best result for ALP since Malcolm Turnbull became Prime Minister in September 2015,” he added.
Significantly the Roy Morgan confidence level also fell, slightly, to its lowest level ince Mr Turnbull became Prime Minister.
It showed that only with 39.5 per cent of Australians believe that Australia is ‘heading in the right direction’ while 41.5 per cent believe the country is ‘heading in the wrong direction’
This week’s Morgan Poll on Federal voting intention was conducted over the last two weekends, April 23-24, and April 30 and May 1, 2016, with an Australia-wide cross-section of 2,951 Australian electors.
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.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
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