Morrison’s plan to use whatever is left in Coalition MPs and Senators electoral communications parliamentary allowance to fund his national election campaign has been scuttled

Australian Senate Hansard, 3 April 2019, excerpt:

REGULATIONS AND DETERMINATIONS Parliamentary Business Resources Amendment (2019 Measures No. 1) Regulations 2019 Disallowance Senator FARRELL (South Australia—Deputy Leader of the Opposition in the Senate) (21:29): I move: That item 4 of the Parliamentary Business Resources Amendment (2019 Measures No. 1) Regulations 2019, made under the Parliamentary Business Resources Act 2017, be disallowed [F2019L00177]. The PRESIDENT: The question is that business of the Senate notice of motion No. 2, standing in the name of Senator Farrell, relating to the disallowance of item 4 of the Parliamentary Business Resources Amendment (2019 Measures No. 1) Regulations 2019, be agreed to. The Senate divided. [21:34] (The President—Senator Ryan)

Ayes ......................34 Noes ......................26 Majority.................8

The New Daily, 4 April 2019:

The Morrison government has lost a bid to allow MPs to use taxpayer-funded electoral allowances to pay for TV and radio advertisements during the looming federal election campaign.

Late on Wednesday night – in one of this parliament’s last votes before the election is called – the Senate dumped a government regulation allowing $22 million of public money to be used for political ads in the lead up to May’s federal poll.

MPs have a budget of about $137,000 for electorate communications, while senators have up to $109,000.

Under existing rules, they cannot use office expenses money to pay for content on television or radio. The government’s changes would have allowed them to use printing entitlements to buy TV and radio ads for the first time.

The Coalition had argued lifting the ban on TV and radio promotions would have put Australian media on a level playing field by ensuring all communities had the same access to information from their federal MP.

But Labor frontbencher Don Farrell, who moved the disallowance motion in the Senate, accused Prime Minister Scott Morrison of wasting taxpayers’ money in a bid to save his job.

“Publicly funded office budgets are for members and senators to communicate with their constituents – not for spamming voters with hollow election slogans from the ad man, Scott Morrison,” he said.

With the support of the Greens and a handful of crossbench senators, Labor won the disallowance vote.... 

The heroes of the hour who saved us all from what was clearly an attempt to create a lasting rort at taxpayer’s expense were:

Bilyk, CL. Carr, KJ. Chisholm, A. Ciccone, R. Di Natale, R. Dodson, P. Farrell, D. Faruqi, M. Gallacher, AM. Griff, S. Hanson-Young, SC. Hinch, D. Ketter, CR.  (teller) Kitching, K. Lines, S. Marshall, GM. McAllister, J. McCarthy, M. McKim, NJ. O'Neill, DM. Patrick, RL. Polley, H. Pratt, LC. Rice, J. Siewert, R. Smith, DPB. Steele-John, J. Sterle, G. Storer, TR. Urquhart, AE. Waters, LJ. Watt, M. Whish-Wilson, PS. Wong, P.

Well done one and all!

Australian Tax Office Excess Franking Credits: “When people next receive their dividend refund cheque from the government, remember the government has had to borrow that money”

The Australian Government's public debt stood at an estimated $541.73 billion and growing on 8 February 2019.

On 8 February 2019 in Sydney economist Stephen Koukoulas made a short three minute statement before the House of Representatives Economics Committee ‘inquiry’ into the Labor Federal Opposition’s policy to eliminate excess franking credits.

Excess franking credits are refundable to a shareholder who receives a dividend but has no tax liability to use those franking credits against. 

It is free money - money for jam - granted to shareholders for the last eighteen years under a Liberal-Nationals federal government tax policy.

By 30 June 2015 these excess franking credit refunds were costing the federal government an est. $2.54 billion annually and, are currently estimated to be costing the Australian Government well in excess of $5.9 billion each year.

Below are the notes Koukoulas used for that oral Statement which boiled down to two issues, the cost to the budget and how the policy is distorting investment decisions from investors and lazy financial planners.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Tax policy is always riddled with trade offs.

No government wants to tax anyone more than it needs to, nor should it impose a tax regime that is unfair if it means cuts to services, a heavy tax impost on others in the community or adds unnecessarily to the budget deficit and government debt.

Labor’s policy on refundable franking credits will impact the budget bottom line by more than $5 billion a year.

Without the change, this $5 billion, or $100 million a week, means less money is available for the government to provide health care, roads, education, disability assistance and defence.

It is disconcerting that every dollar of refundable franking credits is currently borrowed by the government.

When people next receive their dividend refund cheque from the government, remember the government has had to borrow that money:

… every cent of it.

… this adds to government debt that will have to be repaid one day in the future by our children and our grandchildren.

I think this is unfair.

The policy also distorts the way we Australians invest our savings.

Many investors put money into companies that pay high, fully franked dividends regardless of the underlying strength or potential of that business.

Look at Telstra. The banks.

It is blind, uneducated and lazy investing recommended by lazy financial planners.

It is only the dividend, not the underlying strength of the business, that guides the investment decision.

This is one reason why the Australian stock market is still 15 per cent below the 2007 peak, while the US, German and Canadian stock markets are substantially higher.

None of these countries have refundable franking credits.

Investors in those countries provide finance to dynamic growth companies and strong businesses.

In Australia, such companies are often shunned by investors because they pay no or low dividends.

Investors instead place their money with what are average firms that structure their businesses according to tax policy distortions.

Imagine if the ASX was at 10,000 points, not the 6,000 point level prevailing today?

I suspect the concerns about dividend refunds would be trivial.

The Australian tax distortions mean that local entrepreneurial firms have less access to local capital.

The money is instead tied up in dinosaur companies paying high dividends.

It is one reason why so many of the 21st century technology and start up firms in Australia head overseas to pursue their business models.

This costs the Australian economy growth and jobs.

With the policy change on refundable franking credits, there will be a greater incentive to invest in companies and other assets for reasons of growth and entrepreneurial flair…

… which will be a positive for the economy and jobs …

… and it will be good for the long term future of Australia.

Thank you

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Murray-Darling Basin Plan: a $13 billion fraud on the environment

Some home truth about the current Murray-Darling Basin Plan to remember as we enter into the morass of competeing claims in NSW State and Australian Federal election campaigns in the first half of this year....

IN THE MATTER OF THE MURRAY-DARLING BASIN ROYAL COMMISSION, Adelaide South Australia, 23 October 2018:

MR R. BEASLEY SC, Senior Counsel Assisting:

….Commissioner, the Water Act and the Basin Plan have been hailed as ground-breaking reform. They are. What this Commission has learnt, however, from the evidence it has gathered, and from the witnesses that have informed us, is that it’s one thing to enact transformative legislation like the Water Act and the Basin Plan, it’s quite another thing to faithfully implement it. Sadly, the implementation of the Basin Plan at crucial times has been characterised by a lack of attention to the requirements of the Water Act and a near total lack of transparency in an important sense.

Those matters have had, and continue to have, a negative impact on the environment and probably the economies of all the Basin Plan states but the state that will suffer the most is the state at the end of the system, South Australia. The Water Act was a giant national compromise. At its heart was a recognition that all of the Basin states – Queensland, NSW, Victoria and South Australia – were taking too much water from the system and had been for a long time. That, as a matter of statutory fact in the Water Act, and as a matter of reality, has led to serious degradation of the environment of the Basin. The Millennium Drought of 2000s underscored the fact that, if nothing was done, over-allocation of the water entitlements in the Basin would inevitably and quickly lead to irreversible damage to the Basin environment.

The Water Act was a response to that. It was the statutory means by which the process of restoration and protection of environmental assets would begin. I say the Water Act was a compromise because the Act contemplates that water will be taken from our rivers and used consumptively for irrigation, the growing of crops and permanent plants. Of course, also for human water needs. But it sets a limit. That limit is that no more water can be taken beyond the point where key areas of the environment and its ecosystems might be damaged. In an environment that’s already degraded, that means the Water Act requires the environment to have both enough water to restore degraded wetlands and the like and also, of course, to maintain them.

That’s not just the right thing to do. It’s what Australia’s international obligations require. That task, setting a limit on the extraction of water, is to be based on the best available science. Not guided by the best science, not informed by the best science but based on the best available science. It also has to be achieved by taking into account the well-known principles of ecologically sustainable development. What the Commission has learnt from the evidence presented to it is that the implementation of the Basin Plan, at crucial stages, has not been based on the best available science. Further, ecologically sustainable development has either been ignored or, in some cases, in relation to supply measures, actually inverted.

 I want to read to you a peer review of the Guide to the Basin Plan from some international scientists in 2010 because it demonstrates that they were well aware, even back then, of what was actually going on in the early stages of drafting the Basin Plan. This is a peer review report by Professor Gene Likens of the Cary Institute of Ecosystem Studies, Mr Per Bertilsson of the Stockholm International Water Institute, Professor Asit Biswas from the Third World Centre for Water Management and Professor John Briscoe, Gordon McKay Professor from Harvard University. What they said was this, in reviewing the Basin Plan, at page 34 of what became exhibit RCE38:

It is a fundamental tenet of good governance that scientists produce facts and the government decides on values and makes choices. We are concerned that scientists in the Murray-Darling Basin Authority, who are working to develop the facts, may feel they are expected to trim those so that the sustainable diversion limit will be one that is politically acceptable. We strongly believe that this is not only inconsistent with the basic tenets of good governance but that it is not consistent with the letter of the Water Act. We equally strongly believe that government needs to make the necessary trade-offs and value judgments and need to be explicit about these, assume responsibility and make the rationale behind these judgments transparent to the public.

If all the MDBA had been done in the past eight years since that review was written is “trim the facts”, that would be bad enough. But it’s worse than that. The implementation of the Basin Plan has been marred by maladministration. By that I mean mismanagement by those in charge of the task in the Basin Authority, its executives and its board, and the consequent mismanagement of huge amounts of public funds. The responsibility for that maladministration and mismanagement falls on both past and current executives of the MDBA and its board. Again, while the whole of the Basin environment has and will continue to suffer as a result of this, the state whose environment will suffer the most is South Australia.

The principal task of those implementing the Plan is to set the Basin-wide sustainable diversion limit. How much water can be taken from the rivers before the environment suffers? You’ve heard evidence that has been unchallenged that this task was infected by deception, secrecy and is the political fix. The modelling it has been said to have been based on is still not available seven years later. The recent adjustment of the sustainable diversion limit by raising it by 605 gigalitres, on the evidence you’ve heard, is best described as a fraud on the environment. That’s a phrase I used in opening. It was justified then. It’s re-enforced by the evidence you’ve heard subsequently. The so-called 450 gigalitres of upwater, the water that the then South Australian Government fought for, for this State’s environment, is highly unlikely to ever eventuate. The constraints to the system are just one major problem in the delivery of that water.

Like all aspects of the implementation of the Basin Plan, efficiency measures or infrastructure projects that form the basis of how the 450 gigalitres of water is to be attained, and which are funded by public money, lack any reasonable form of transparency and, as the Productivity Commission recently, and witnesses to this Commission, have noted, are hugely more expensive and less reliable than purchasing water entitlements. I will discuss this in detail but I will give you one quote from an expert who can talk with real authority about the extra 450 gigalitres proposed for South Australia under the Basin Plan. That’s the former Commonwealth Environmental Water Holder, David Papps. In his evidence to you said:

 I would bet my house that South Australia is not getting that water.

Mr Papps’ prediction seems safe when one considers the proposed amendments to the Basin Plan by the governments of NSW and Victoria concerning the 450 gigalitres that I will come to shortly. Everything that I have just said to you is based on the views of eminent scientists and other people who have given evidence and lodged submissions. However, neither the Commonwealth Department of Agriculture and Water, the Murray-Darling Basin Authority, or any Commonwealth government agency has provided any answer to anything I have just said or to the evidence before the Commission that I will refer to shortly. They have no answer. The submissions provided to you very recently by the Murray-Darling Basin Authority, and the DAWR, Department of Agriculture and Water Resources, demonstrate, as did their unwillingness to give evidence, culminating in proceedings to the High Court, that they do not have any answer.

The MDBA, you will recall, were even too busy to meet you. The States also have no answer, as demonstrated in their somewhat thin submissions to you, with the exception of the South Australian Government. When I say the MDBA has no answer to the expert evidence given in this Commission, I should emphasise also that it clearly has no answer to the maladministration and unlawfulness of its implementation of the Basin Plan. It is nevertheless a great pity that relevant persons from the Basin Authority, and other Commonwealth agencies, were not required to give answers to you under oath concerning the scientific evidence the Commission gathered.

The opportunity may have been there had the High Court decided those proceedings in your favour. I’m not going to speculate on what the High Court would have done but, regrettably, the South Australian Government chose not to extend your Commission in order to provide you with the opportunity that may have been available to you to question those relevant people. You made it clear to the South Australian Government that was your strong preference. You advised them that the Commission had potential witnesses that wanted to give important evidence, evidence relevant to the South Australian environment, but only if they were compelled by summons. In other words, they were too scared to talk about the implementation of the Basin Plan without the force of a summons. Why the Commission was not extended to explore these crucial matters is something upon which you can draw inferences as you see fit. I will only say that it’s a great opportunity lost……

A tale of NSW Liberal politicians & a printing company with no commercial printer

BuzzFeed, 25 September 2018:

In a perfectly manicured cul-de-sac in Bella Vista, a suburb in the Hills district northwest of Sydney’s CBD, a business called Zion Graphics operates out of a mansion.

Run by Rudy Limantono, the president of the Bella Vista Liberal branch and also a party donor, Zion Graphics is the printer of choice for the local federal member of parliament, Alex Hawke…..

Hawke, 41, was recently promoted to the ministry after the latest Liberal leadership spill that saw Morrison take the top job. Hawke is now the special minister of state, responsible for integrity and parliamentarians’ spending, and is Morrison’s representative on the NSW Liberal state executive.

Hawke uses Zion Graphics to print his newsletters, flyers, community surveys, and more…..

Limantono also would not disclose the amount of business Hawke has sent him, claiming “commercial in confidence”. He said that he has been Hawke’s go-to printer “since his election” but would not specify how many years. Hawke was first elected to federal parliament in 2007.

Zion Graphics has no website or Facebook page. The phone number connected to the business is registered at the Limantonos’ family home.

And BuzzFeed News understands the company doesn’t actually own a commercial printer…..

Hills Banners (which recently merged with Bannerworld in Winston Hills) confirmed to BuzzFeed News that it has been printing material for Zion Graphics for at least the last two years.

Hills Banners said it received electronic files (PDFs) from Zion Graphics and would print tens of thousands of copies. Depending on the size of the order, it would take four to seven working days to complete the job.

NSW Liberal sources say that Zion Graphics charges clients a premium rate, then contracts out the actual printing to Hills Banners, which charges much less for the same service, leaving Zion Graphics with a tidy profit.

Limantono did not deny this, but told BuzzFeed News there was no “impropriety”….

BuzzFeed News asked Zion Graphics how much it would cost to print 30,000 newsletters and received a quote for $7,150 + GST. Hills Banners said it would charge $4,000 + GST for the same job.

BuzzFeed, 26 September 2018:

Hawke isn’t the only Liberal politician that uses Zion Graphics. Limantono refused to reveal who his clients were, claiming "commercial in confidence".

But BuzzFeed News has found at least eight other Liberal politicians who have given hundreds of thousands of dollars of taxpayer funded business to Limantono.

Federal families and social services minister Paul Fletcher; federal backbencher Julian Leeser; NSW treasurer Dominic Perrottet; NSW minister for mental health, women and ageing Tanya Davies; NSW minister for Western Sydney Stuart Ayres; NSW minister for innovation and better regulation Matt Kean; NSW member for Seven Hills Mark Taylor; and NSW member for Baulkham Hills David Elliott use Zion Graphics to print documents including newsletters, flyers and community surveys.

Now customers can't even trust their local bank tellers

It seems schoolchildren are considered fair game by the big banks......

Junkee, 19 May 2018:

Oh boy. This is a tough one. An investigate report by Fairfax Media has found that Commonwealth Bank employees set up thousands of fraudulent children’s savings accounts in order to meet internal targets and earn bonuses.

That’s right folks. Your mates the Dollarmites? They were in it up to their neck.

According to the report by Fairfax reporter Adele Ferguson, the scam involved employees illegitimately activating Youthsaver accounts that had been set up by parents via the Commonwealth Bank’s school banking program (better known at Dollarmites) but did not contain any actual money. Since the sign-up would not count towards internal sales targets unless a deposit was made in the first 30 days, employees would deposit a small amount of money into the account themselves to ensure that it was counted.

The matter first came to the attention of senior management at the bank in 2013. An internal investigation found that at 150 branches, as many as 5347 Youthsaver accounts contained less than $1 in deposits. According to the Fairfax report, “managers were asked to look into them to see if they had been fraudulently set up using illegitimate sources of funds”, but the bank chose not to broaden the investigation to include the almost 900 other branches that were in operation at the time.

Ultimately, no disciplinary action was taken against employees. In an email obtained by Fairfax, one senior manager said “the issue is widespread, it would seem unfair to name a handful when more are involved”.

The bank did not inform any of the customers or schools involved.

The Sydney Morning Herald, 18 May 2018:

The school banking and customer referral scandals came to light inside the bank shortly after CBA's now chief executive, Matt Comyn, was appointed to run the retail operation in 2012….

“While this practice did not financially harm any of our customers, it was a breach of their trust. For that I’m deeply sorry. As CBA’s new chief executive, my number one priority is to expedite changes that will prevent any behaviour that undermines our customers' trust in us – and to remove any CBA employee who knowingly acts against our customers’ interests.”

The country’s largest consumer group, CHOICE, seized on the scandal to renew its calls to ban school banking schemes.

“It's a pretty basic expectation that bank staff will handle money honestly. Whether it involves five cents or $5 million, any mishandling of funds goes to the heart of trust in the institution,” CHOICE chief executive Alan Kirkland said.

He said if senior staff knew it was happening on a mass scale and did nothing about it, they were complicit in that fraud.

 “This raises serious questions about the culture of the entire bank,” he said

While over at the Banking and Finance Royal Commission………

ABC News, 21 May 2018:

The banking royal commission has heard an elderly, seriously ill woman faced homelessness after her daughter's business failed.

Carolyn Flanagan cannot read or write due to blindness caused by glaucoma, she has trouble speaking due to the effects of cancer surgery, suffers memory loss and has osteoporosis, among other medical problems.

The pensioner sought help from Legal Aid NSW when Westpac tried to take her home, which was used to guarantee her daughter's loan. A complaint was taken to the Financial Ombudsman Service, which found in Westpac's favour.

It was only a last-ditch effort by Ms Flanagan's Legal Aid lawyers that managed to keep her in her home.

Solicitor Dana Beiglari told the hearing her manager at the time "contacted another consumer advocate to see if he had a senior contact at Westpac who we could escalate this matter to, given our client was facing homelessness in her old age".

Ms Beiglari sent a letter to Westpac outlining Ms Flanagan's medical circumstances and managed to secure a "life interest" in the property for her, which means she can remain in the home until she dies or decides to sell.

Counsel assisting the inquiry Michael Hodge QC asked Ms Beiglari about the Westpac employee's response to the case.

"What that employee of Westpac expressed to you was surprise with the thought that Westpac would be evicting and it wasn't in line with what Westpac would normally do?" he asked.

"Yes, that's correct," Ms Beiglari answered.

Ms Flanagan maintained a sense of humour under questioning. After Mr Hodge listed off her litany of health issues, including depression, she quipped "that'd depress anybody".

She gave her evidence through a video link as she was too unwell to travel. 

Westpac's lawyers questioned her recollection of events and the amount of the loan.

Westpac executive Alastair Welsh followed Ms Flanagan and Ms Beiglari in giving evidence. He said there was nothing "technically" wrong with Ms Flanagan being allowed to act as a guarantor.

"My review of the file shows we followed the process I would want the bank to follow," Mr Welsh said.

However, he admitted there were some problems with the bank's handling of the case once the loan failed.

The inquiry heard it was Westpac policy to "exercise extreme caution" with parental guarantees.

Mr Welsh admitted there were warning signs in Ms Flanagan's case that should have been observed by the banker.

"She suffers from quite debilitating health conditions. Would that be a relevant factor?" Mr Hodge asked.

Mr Welsh agreed and said there were no comments on Ms Flanagan's file noting her condition.

The bank manager involved is no longer employed by Westpac.

The tweet Malcolm Bligh Turnbull thought it was wise to delete from Twitter

On 22 March 2018 Australian Prime Minister Malcolm Bligh Turnbull deleted this tweet.

@hannj666

The video this tweet contained survives for a limited time elsewhere.

The reason why this tweet came and went so swiftly? Because many of the people with speaking parts are not low-income aged pensioners who just happen to have shares.

They are former business owners who are now self-funded retirees and, a least one of them structured his superannuation now in the pension phase on the premise that he would be receiving a taxpayer-funded cashback payment for unused franking credits - that is cash handouts for tax he never paid - for forever and a day.

One suspects that Turnbull suddenly realised that the video was not the tearjerker he originally thought it was.

Let's talk about excess franking credits and why they have been money for jam for the last 17 years

This is what the Australian Taxation Office (ATO) states about imputation:

Refunding excess franking credits – individuals

Dividends paid to shareholders by Australian resident companies are taxed under a system known as imputation. This is where the tax the company pays is imputed, or attributed, to the shareholders. The tax paid by the company is allocated to shareholders as franking credits attached to the dividends they receive.

Dividends and franking credits

If you receive franking credits on your dividends, you need to let us know your:

* franked amount

* franking credit.

If you are an Australian resident, we will use this information to:

* reduce your tax liability from all forms of income (not just dividends) and from your taxable net capital gain

* refund any excess franking to you after any of your income tax and Medicare levy liabilities have been met.

Eligibility for arefund

You are eligible for a refund of excess franking credits if all of the following apply:

* You receive franked dividends, on or after 1 July 2000, either directly or through a trust or partnership.

* Your basic tax liability is less than your franking credits after taking into account any other tax offsets you are entitled to.

* You meet our anti-avoidance rules, which are designed to ensure everyone pays their fair share of tax.

If you have received a dividend that has Australian franking credits attached from a New Zealand franking company, you may be eligible to claim the Australian sourced franking credits.

The policy of giving cash back for unused franking credits was introduced in 2000 by then Howard Government treasurer Peter Costello and for the last 17 years it has been systematically rorted by superannuation funds, private corporations, trusts and individuals - to the point where Treasury pays out an est. $6 billion per annum under this scheme.

With one individual whopaid no income tax reportedly received millions claiming cash for unused franking credits and the average unused credits cash back payment for people in the top 1% of self-managed super funds being est. $83,000 a year.

In March 2018 Federal Labor announced a policy effective January 2019 which removes claims for franking credits - but only in those years that the prospective claimant has no income tax liability payable.

So ending taxpayer-subsidised money for jam for around est. 9 per cent of the population who were receiving cash refunds for tax they had never paid .

Turnbull, Morrison & Co then came out fighting – accusing Opposition Leader Bill Shorten of robbing low income self-funded retirees and aged pensioners.

At that point, somewhat predictably, embarrassment for the Turnbull Government began…..

What Treasurer and Liberal MP for Cook Scott Morrison considered low income retirees was elucidated.

The Australian, 14 March 2018:

A retired couple living in a $2m house, with $3.2m in super, are classified as ‘‘low income’’. They have no income tax liability. They could also have an investment property and still wouldn’t have a tax liability because of the bizarre “senior and pensioners’ tax offset”, which lifts their effective tax-free threshold to about $58,000.

Turnbull & Co were accused of telling political lies.

The Guardian, 14 March 2018:

You won’t have missed the foghorn blast from the Turnbull government and its media amplifiers that has accompanied Labor’s latest bold foray on tax policy.

Scott Morrison has declared Labor is stealing tax refunds from pensioners and low-income retirees, and Malcolm Turnbull says Bill Shorten “is going after the savings of your parents and their friends and their contemporaries”.

So how do these terrifying-sounding claims stack up?

Let’s bring in the respected economist Saul Eslake, who has no political dog in this race. Eslake is blunt. He says the government’s posturing is “misleading in the same way that most of what Scott Morrison said about Labor’s policy on negative gearing was misleading”.

To understand precisely what is misleading – the first thing to know is when we are talking about Australian retirees having low incomes, often what that means is people have low taxable incomes.

Income from superannuation funds is tax free once people turn 60. Eslake says the decision to make income from super tax free is “top of my list of the dumbest tax policy decisions of the last 25 years”.

It means people with substantial assets, and big super balances – millionaires in fact – are in a position to report low taxable income, and in fact structure their affairs to ensure they have low taxable income.

They were also quite rightly accused of knowing that dividend imputation à la Costello is an expensive rort.

The Sydney Morning Herald, 13 March 2018:

Treasury considered dividend imputation reform in the lead up to Treasurer Scott Morrison's last budget, creating a dossier entitled "Tax Policy - Dividend Imputation" more than a year before Labor announced it would target the tax refunds of more than one million Australians on Tuesday.

The confidential file itemised in a list required to be disclosed by departments as part of freedom of information requirements was opened by Treasury in the first-half of last year.

Fairfax Media understands Treasury has been examining withholding dividend cheques from non-taxpaying shareholders ahead of this year's May budget.

Investigating potential savings needed to fund budget initiatives such as personal income tax cuts is normal practice in the pre-budget period.

Mr Morrison said on Tuesday the "government has never entertained" changes to the way it gives cash back to shareholders in response to a policy he described as a "cruel blow for retirees and pensioners," but his predecessor Joe Hockey first asked how dividend imputation could be improved - not replaced - three years ago. 

A white discussion paper on tax reform commissioned by Mr Hockey and completed by Treasury in 2015 found "there are some revenue concerns with the refundability of imputation credits," indicating the department was receiving lower tax revenues than it expected. 

"It provides a greater incentive for shareholders of closely held companies to delay distributions until a time when individual owners are subject to a relatively low tax rate, to receive a refund of tax paid by the company." 

The list published by Treasury shows the department's work on dividend imputation policy continued after Mr Morrison became Treasurer in 2016…..

Labor, which has not released Parliamentary Budget Office costings of its policy, said it planned on cancelling an average cash refund of $5000 on share dividends from 8 per cent of taxpayers, including 200,000 voters who self-manage their own super funds and 1 per cent of full pensioners..….

Image found on Twitter

"Rethink: Better tax, better Australia" discussion paper information here and submissions here.

Only a handful of NSW landowners to face court over Murray-Darling Basin water theft allegations?

ABC News, 8 March 2018:

The NSW Government will prosecute several people over alleged water theft on the Barwon-Darling, eight months after Four Corners investigated the issue.

WaterNSW has named the people it is taking to the Land and Environment Court over alleged breaches of water management rules.

They are prominent irrigator Peter Harris and his wife Jane Harris, who own a major cotton farm near Brewarrina in the state's north-west and were named in the Four Corners story.

The couple have been accused of taking water when the flow conditions did not permit it, and breaching licence and approval conditions.

Three members of another prominent family are also facing charges: cotton grower Anthony Barlow from Mungindi near Moree and Frederick and Margaret Barlow.

The Barlows have been accused of pumping during an embargo and pumping while metering equipment was not working.

WaterNSW gave false figures: Ombudsman

WaterNSW announced the prosecutions an hour before the NSW Ombudsman released a scathing report saying the agency had given the Government incorrect figures on its enforcement actions.

The state's ombudsman, Michael Barnes, found WaterNSW gave incorrect figures when it provided statistics that showed there had been a significant increase in enforcements between July 2016 and November 2017.

"The information provided to us indicated that the updated statistical information from WaterNSW that we'd published was significantly incorrect," he said.

"There had, in fact, been no referrals for prosecutions and no penalty infringement notices issued in the relevant period."

Mr Barnes said he initiated a separate investigation after his office received complaints about the figures, and he found WaterNSW had inflated the statistics.

"As part of our investigation, we confirmed with Revenue NSW that no penalty infringement notices were issued by WaterNSW in the relevant period," he said.

The ombudsman said he raised the issue with WaterNSW, which has admitted to the mistake and apologised.

Mr Barnes also said he believed the error was unintentional.

The agency's CEO, David Harris, said staff have now manually reviewed all actions taken.

"Some of the detail WaterNSW provided was incorrect and, although it was revised, it is not acceptable and we are acting to ensure it does not happen again," he said……

NSW Ombudsman, Correcting the record: Investigation into water compliance and enforcement 2007-17: A special report to Parliament under sections 26 and 31 of the Ombudsman Act 1974, 8 March 2018, Amended enforcement outcome statistics:

The mess that Barnaby left

Environmental Defender’s Office NSW, undated 2017:

Inland Rivers Network v Harris & Another

EDO NSW, on behalf of its client the Inland Rivers Network, has commenced civil enforcement proceedings in the NSW Land and Environment Court in relation to allegations of unlawful water pumping by a large-scale irrigator on the Barwon-Darling River.

The two water access licences at the centre of these allegations allow the licence holder to pump water from the Barwon-Darling River in accordance with specified licence conditions, as well as rules set out in the relevant ‘water sharing plan’. The conditions and rules specify – amongst other things – how much water can be legally pumped in a water accounting year (which is the same as the financial year) and at what times pumping is permissible (which depends on the volume of water flowing in the river at any given time). 

Our client alleges that the holder of these licences pumped water in contravention of some of these conditions and rules, thereby breaching relevant provisions of the Water Management Act 2000 (NSW) (WM Act). The allegations are based on licence data obtained by EDO NSW earlier in 2017 from Water NSW, a state-owned corporation charged with the responsibility of regulating compliance with the WM Act. 

Analysis of this data, along with the relevant rules and publicly available information on river heights, indicates that the licence holder may have pumped significantly more water than was permissible on one licence during the 2014-15 water year, and taken a significant amount of water under another licence during a period of low flow when pumping was not permitted in the 2015-16 water year. Despite being made aware of these allegations by EDO NSW on two occasions, in April and August 2017, and having had access to the data since at least July 2016, Water NSW has not provided any indication that it intends to take compliance action against the licence holder.

Both allegations concern the potentially unlawful pumping of significant volumes of water, which may have had serious impacts on environmental flows in the river and downstream water users. However, our client is particularly concerned by the alleged over-extraction in the 2014/15 water year, as this period was so dry that the Menindee Lakes – which are filled by flows from the Barwon-Darling River – fell to 4 percent of their total storage capacity. This in turn threatened Broken Hill’s water security and led the NSW Government to impose an embargo on water extractions during part of that year in order to improve flows down the Barwon-Darling into the Lakes and Lower Darling River. 

In these proceedings, the Inland Rivers Network is seeking, amongst other things, an injunction preventing the licence holder from continuing to breach the relevant licence conditions. In addition, and in order to make good any depletion of environmental flows caused by the alleged unlawful pumping, our client is also asking the Court to require the licence holder to return to the river system an equivalent volume of water to that alleged to have been unlawfully taken, or to restrain the licence holder from pumping such a volume from the river system, during the next period of low flows in the river system. Failure to comply with a court order constitutes contempt of court, which is a criminal offence. 

EDO NSW is grateful to barristers Tom Howard SC and Natasha Hammond for their assistance in this matter.

Brendan Dobbie, Senior Solicitor at EDO NSW, has carriage of this matter for IRN.

The Australia Institute, Moving targets: Barnaby Joyce, Warrego valley buybacks and amendments to the Murray Darling Basin Plan, February 2018:

In 2008, then Senator Joyce criticised the Labor government’s purchase of water in the Warrego valley: that is going to have no effect whatsoever in solving the problems of the lower Murray-Darling, and especially the southern states.

Despite the now Deputy Prime Minister and Water Minister’s own fierce criticism of that purchase, he approved the $16,977,600 purchase of another 10.611 gigalitres of water in the Warrego valley in March 2017 at more than twice the price paid by the Labor government. Questions should be raised about what changed the Deputy Prime Minister’s mind and whether that purchase was value for money.

This purchase also has serious implications for the recent amendments to the Basin Plan that was disallowed by the Senate on 14 February 2018.

This purchase was not required to meet the water recovery target in the Warrego under the Murray-Darling Basin Plan. Instead, it was intended to count towards the water recovery target in the Border Rivers. This swap required an amendment to s6.05 of the Basin Plan, which was tabled in parliament and disallowed by the Senate. Yet, the Warrego purchase was not reflected in the Sustainable Diversion Limits (SDLs) put to Parliament as part of the amendments.

Murray-Darling Basin Authority (MDBA) is required to base its recommendations to change SDLs based on best available science, but the proposed amendments allowed MDBA and States to subsequently change the SDLs in a valley without any consideration of the science.

While MDBA was seeking public submissions on changes to valley SDLs, based on science; the Department of Agriculture and Water Resources (DAWR) was in negotiations to change those valley targets, not based on science.

Parliament was asked to pass an amendment to the Basin Plan with SDLs that would have been changed based on a deal agreed over a year earlier, if the amendment had passed.

Given that the new SDLs were known and agreed by governments, it is not apparent why the MDBA did not include the new SDLs in the amendment put to parliament.