Australian Federal Election 2016: we'll all be rooned!

Ever since Labor released the outline of its negative gearing and capital gains tax reform policy, both the Prime Minister and the Treasurer have been thundering on about the catastrophic consequences which would result.

Apparently if implemented this policy will be like one of the seven plagues of Egypt sent to decimate the wealth of the chosen ones.

Malcolm Turnbull telling voters that “every homeowner in Australia has a lot to fear from Bill Shorten” and that removing negative gearing will “smash the residential housing market”. While Scott Morrison informed us that "It's bad news if you own a home, it's bad news if you're an investor in a home, and bad news if you're renting a home…That's three strikes and you're out."

Then the authors of the report Turnbull and Morrison relied on, BIS Shrapnel, came clean……

Financial Review, 3 March 2016:

The government's assault on Labor's negative gearing tax has suffered an embarrassing setback with the authors of a damning report saying it was written late last year and had nothing to do with Labor's policy released just a month ago.

Just hours after Treasurer Scott Morrison used the findings to slam Labor's policy for driving up rents and dragging the economy backwards, BIS Shrapnel associate director Kim Hawtrey made an urgent clarification.

"The assumptions were set several months ago, and the analysis done late last year, well before Labor announced its policy. Therefore the assumptions do not align with Labor's policy," he told The Australian Financial Review.

"The report makes no recommendations and does not purport to be an assessment of any particular policy."…..

This was followed a few days later by further embarrassment for Turnbull & Co…...

Peter Martin: Economics Editor, The Age, 7 March 2016:

Negative gearing encourages excessive use of debt, lifts overseas borrowings and raises real interest rates, according to the economist whose work on the subject has been lauded by the Treasurer Scott Morrison.

Kim Hawtrey, now with consultancy firm BIS Shrapnel, wrote the words more than 20 years ago when he was an academic at Macquarie University in an article in the journal Australian Tax Forum.

"Deductibility of interest payments on debt creates a tax advantage for debt over equity," he wrote. "Negative gearing ensues by way of combining debt interest deductibility with concessional tax treatment of capital gains, encouraging over-investment in property and related asset inflation sectors."

More than two decades on, Dr Hawtrey says he won't divulge his personal position on negative gearing, saying the work his firm released last week was "technical" and "dispassionate".

"I have not commented on my views and I am not going to comment on my personal views, from a policy point of view, or as a voter or whatever," he told Fairfax Media.

"We were simply given a task and we carried out that task, and no attribution or nothing should be read into that as to any policy preference."….

Then matters became a little worse for Liberal and Nationals MPs who were hoping to use the BIS Shrapnel report as strong talking points in their respective electorates – another report surfaced…..

ABC News, 7 March 2016:

A new report on the housing affordability crisis in Sydney and Melbourne calls for the Federal Government to urgently rethink its support of negative gearing.

The report, Sydney and Melbourne's Housing Affordability Crisis – No End in Sight, was written by Dr Bob Birrell and David McCloskey from Monash University's Centre for Population and Urban Research.

Dr Birrell said the report highlighted the seriousness of the problem.

"These governments have abandoned the current generation to a lifetime of rental properties," Dr Birrelll said.

"The situation is much worse than it was a couple of years ago. It is a social catastrophe."

He said governments have created the conditions for major concessions for investors.

"The result has been an enormous increase in investment but it has been primarily in established houses and that has caused these prices to reach levels in Sydney that are among the highest in the western world," Dr Birrell said.

The report revealed the record-high housing prices in Sydney and Melbourne would lead to social problems.

"The PM's stance reveals a monumental insensitivity to the social catastrophe flowing from record-high housing prices for the next generation of home seekers in Sydney and Melbourne," the report stated……

It comes as no surprise that the latest Newspoll reveals that the Coalition and Labor are still neck and neck on a two-party preferred basis, with Turnbull’s net satisfaction rating shrinking to three points. The Australian pointing out on 8 March 2016 that “It was 10 points a fortnight ago and 22 points in January. If it continues to slide on this trajectory, he will sink below zero.”

Nor is it any surprise that the Essential Research opinion poll released that same day also has Labor and the Coalition tied on a two-party preferred basis, with primary votes for Turnbull & Co down 2.6% since the September 2013 federal election and primary votes for Labor up 3.6% in the corresponding period and approval of Malcolm Turnbull's performance as prime minister standing at 45% - down 6% since its February 2016 poll.

In which Australian Attorney-General George Brandis pushes the point that Macolm Turnbull is just like Tony Abbott and Mungo agrees

Image of Tony Abbott (left) & Malcolm Turnbull  (right) found at ABC The Drum

Federal Attorney-General George Brandis being interviewed on Australian Agenda, 6 March 2016:  

Well I wouldn’t adopt that metaphor and I must confess I haven’t read Mr Abbott’s Quadrant article but the point I want to emphasise to you and to your viewers Peter is that Mr Abbott speaks from within the heartland of the Liberal Party, as does Mr Turnbull. They both want the same thing. They both have fundamentally the same approach to public policy.

Mungo MacCallum at The Drum, 29 February 2016:

And so it has come to pass. Malcolm Turnbull as we knew him has all but vanished; in a political sense, it could be said that he has been destroyed. Instead, we have a sort of Abbott avatar - smoother, more articulate, even more plausible, but still undeniably the essence of the previous prime minister. Not only have just about all the old Abbott policies been retained, but new ones - the sort that might have sprung, fully formed, from the head of the precursor - have emerged.

What Nationals MP for Page Kevin Hogan did not tell the Grafton Chamber of Commerce's February breakfast meeting when he was asked about foreign ownership of land and overseas workers

This was the incumbent Nationals MP for Page Kevin Hogan as reported in The Daily Examiner on 22 February 2016:

A member of the chamber executive, Mark Butler, asked Mr Hogan what the government was doing to combat countries like China buying up large tracts of Australian land and the prospect of those owners employing Australian workers……

Mr Hogan said the government, led by the Nationals, was fighting foreign ownership.

This included setting a minimum property sale of $15 million before the sale was brought to the Foreign Investment Review Board.

Mr Hogan said the limit in 2013 had been $250 million.

"Even then I think that's ($15 million) too high, but at least it's cumulative so, if they buy an $8 million and a $7 million property, they appear on the board's radar," he said.

What he didn’t tell this collection of potential voters in the forthcoming federal election is that investors from free trade agreement countries such as Chilean, Chinese (once the trade agreement comes into effect), Japanese, New Zealand, South Korean and United States investors are not automatically held to that $15 million threshold.

Yes, the $15 million threshold for purchase of agricultural land is cumulative for investors from China, Japan, Korea, but the agribusiness threshold for China, Japan, and Korea is $55 million, based on the value of the consideration for the acquisition and the total value of other interests held by the foreign person [with associates] in the entity. While the agribusiness threshold for Chile, New Zealand and United States is $1,094 million.

Other foreign investors can purchase agribusinesses up to a $55 million threshold, based on the value of the consideration for the acquisition and the total value of other interests held by the foreign person [with associates] in the entity.

For investors from non-free trade agreement countries Singapore and Thailand, where agricultural land is to be used wholly and exclusively for a primary production business the threshold is $50 million (otherwise the land is not agricultural land).

In addition, Foreign persons (including foreign government investors) are able to apply for an exemption certificate to cover a program of acquisitions of interests in agricultural land.

Exemption certificates for agricultural land would generally be considered where:

* the total proposed value of acquisitions over a three year period does not exceed $100 million (or if acquiring for use for an activity other than agriculture, $30 million). This includes acquisitions made individually or under an exemption certificate;

* the regions or localities where the agricultural land in which interests are to be acquired are defined clearly.

[Australian Government, Foreign Investment Review Board, Monetary thresholds, 2016]

Potentially this means a private investor from China or a Chinese corporation can buy farm lands valued at up to a cumulative $100 million over three years before appearing on the Turnbull Government's own political radar. 

All of the aforementioned provisions leaving plenty of wriggle room for investment in agricultural land and businesses and definitely not what Kevin Hogan was spinning the good folk of Grafton last month.

UPDATE

Kevin Hogan continues to demonstrate that he either doesn’t understand his government’s own rules concerning foreign ownership or he is deliberately misleading his electorate.

ABC News, 9 March 2016:

A National Party MP is hoping local jobs will not be lost as a result of a Chinese buy-out of north coast NSW macadamia farms.

Four properties covering 380 hectares at Dunoon near Lismore, and formerly run by US-based Hancock Farms, have been bought by a Chinese group known as "Discovery".

The member for Page Kevin Hogan said he was aware of rumours of a sale.

Mr Hogan said a Free Trade Agreement with China did not mean the door was now open to foreign workers.

"It's a well-known fact within the free trade agreements that we do with any country, not just China, because let's not just make this a China thing, that any company and there's been companies that have owned Australian assets for 200 years and with every free trade agreement the work has to be offered to Australians first," Mr Hogan said.

Kevin Hogan said any foreign investment greater than $15 million had to be approved by the Foreign Investment Review Board, and he was waiting on information on whether the macadamia sale was vetted.

"We made an election commitment to lower it from the ridiculous amount of $ 250 million when it used to be triggered to look at a purchase if it was in the national interest, we have lowered that from 250 to 15 [million dollars] so if this entity has triggered over $15 million it would have absolutely gone before the Foreign Investment Review Board," Mr Hogan said.

Are we witnessing the beginning of the end for the global coal industry?

While the Australian Coalition Government keep its head deeply buried in the sand on climate change policy and the future of fossil fuels the world has quietly begun to by-pass coal, one of this country’s biggest exports.

Senate Bill 1547 (ELIMINATION OF COAL FROM ELECTRICITY SUPPLY) passed the Oregon House of Representatives on a 39-20 bipartisan vote on 16 February 2016 and re-passed the Senate on 2 March 2016:

BILL SUMMARY

“Requires each electric company providing electricity to retail electricity consumers located in this state to eliminate coal-fired resources from electric company's electricity supply. 

Clarifies that term "public utility" does not include people's utility district or electric cooperative for purpose of being regulated by Public Utility Commission. Allows Public Utility Commission to consider net gain or loss of sale of coal-fired resources for certain allocations to retail electricity consumers. Modifies qualifying electricity for purposes of renewable portfolio standards. Changes compliance requirements for renewable portfolio standards. Makes other changes to provisions setting forth renewable portfolio standards. Permits carry forward of certain renewable energy certificates for specified periods. Provides rules on application of renewable portfolio standards when electric utilities acquire service territory. Permits commission to approve cost recovery for costs related to renewable energy storage. Provides process to address conflicts between requirements for electric company to comply with renewable portfolio standards and reliability standards of North American Electric Reliability Corporation. Changes goal to acquire electricity from community-based renewable energy projects to requirement to acquire such electricity. Expands sources that qualify for community-based renewable energy projects to include facilities that generate electricity using biomass and that also generate thermal energy for secondary purpose. Directs commission to establish stranded cost obligation associated with condemnation of or transaction related to service territory or property of electric company. Requires public utilities to annually forecast projected state and federal production tax credits received due to variable renewable electricity production. Clarifies that term "public utility" does not include people's utility district or electric cooperative for purposes of being regulated by Public Utility Commission. Requires each electric company to file applications with commission for programs to accelerate transportation electrification. Allows return of and return on investment made by electric company for purposes of program. Directs commission to establish program for creation of community solar projects. Repeals minimum solar energy capacity standard for electric companies. Declares emergency, effective on passage.”

The Guardian, 4 March 2016:

Oregon has become the first US state to pass laws to rid itself of coal, committing to eliminate the use of coal-fired power by 2035 and to double the amount of renewable energy in the state by 2040.

Legislation passed by the state’s assembly, which will need to be signed into law by Governor Kate Brown, will transition Oregon away from coal, which currently provides around a third of the state’s electricity supply.

At the same time, the state will also require its two largest utilities to increase their share of clean energy, such as solar and wind, to 50% by 2040. Combined with Oregon’s current hydroelectric output, the state will be overwhelmingly powered by low-carbon alternatives to fossil fuels.

Climate campaigners said the legislation was a landmark moment and showed that the US was moving rapidly towards renewables, despite the temporary block placed by the supreme court on the Obama administration’s clean power plan…..

In December 2015 the Ontario Ministry of Energy in Canada announced The End Of Coal:

Coal went from 25% of Ontario’s supply mix in 2003 to zero in 2014, all while grid reliability and domestic supply improved. The elimination of coal stands as the single largest GHG emissions reduction action on the continent and was primarily responsible for Ontario achieving its ambitious 2014 emissions reduction target of 6% below 1990 levels.

The elimination of coal-fired electricity was a shared effort between the Ontario Ministry of Energy and two of its agencies:

* Ontario Power Generation (OPG), the largest generator of electricity in the province, primarily through hydroelectric and nuclear sites.

* The Independent Electricity System Operator (IESO), whose duties include both procuring electricity supply and planning the electricity system over the long-term…..

Today….Ontario has more than 14,800 MW of wind, solar, bioenergy, and hydroelectric energy online, and almost 3,000 MW of renewable energy projects contracted and under development. 20,000 MW of renewable energy will be online by 2025, representing about half of Ontario’s installed capacity…..

Federal Election 2016: Malcolm Bligh Turnbull's faux outrage

This was Coalition Prime Minister Malcolm Bligh Turnbull frothing at the mouth in March 2016:

"The 2013 Senate election was really an embarrassment for Australian democracy," he said at the Liberal State Council meeting on the Central Coast.

"People elected through back-room preference whispering deals, elected on a tiny percentage of votes, was a disgrace."

Now at the time writs were issued for the 2013 federal election there were 34 Liberal/Nationals senators, 31 Labor senators, 9 Greens senators and 1 independent.

After that election there were 33 Liberal/Nationals senators, 25 Labor senators, 10 Greens senators, 1 independent senators and 7 minor party senators.

With some senators resigning from minor parties in the first two years the mix is now 33 Liberal/Nationals senators, 25 Labor senators, 10 Greens senators, 4 independent senators and 4 minor party senators.

The Senate still functions - sitting days are per usual, estimate hearings go ahead as normal and committees function as well as they ever did.

So why all this faux outrage on the part of the Turnbull Government, which resulted in it introducing the Commonwealth Electoral Amendment Bill 2016 in the Lower House on 22 February and attempting to ram it through the Senate as I write?

Well it wasn’t because that very large Senate ballot paper led to a high informal vote – in fact 2013 saw the third lowest informal vote since 1977 when it came to casting votes for senators – and it wasn’t because the ballot result meant the Coalition had drastically fewer senators as they went from 37 senators in the 43^rd Parliament to 34 in the 44^th “hung” Parliament.

The real reason that Turnbull & Co are up in arms is because the Senate rejected the most punitive of its 2014-15 budget measures. You know, the ones that were blatant ideological attempts to begin the dismantling of universal healthcare, affordable university education and the welfare safety net.

The fact that the Senate was merely reflecting the outrage of much of the national electorate continues to be ignored, as Malcolm and his cronies blame those pesky minor parties and plot to comprehensively ‘own’ the Senate next time round.

Australian Federal Election 2016: Malcolm Bligh Turnbull's mother of all wars on the poor

If there was any doubt left that Prime Minster Malcolm Bligh Turnbull, who has been a millionaire for the last thirty-three years, is that classic form of well-heeled Liberal Party politician who believes that being poor and/or poorly educated is the personal fault of all individuals in those situations, then this report in New Matilda on 5 March 2016 should lay those doubts to rest:

Unemployed and underemployed Australians can be issued with on-the-spot fines by privately owned job agencies under a tough new Government proposal, writes Owen Bennett.

Later this month the Turnbull Government will be asking the Senate to support one of the most devastating attacks launched against poor and vulnerable Australians in recent memory.

The Bill – entitled Social Security Legislation Amendment (Further Strengthening Job Seeker Compliance) Bill 2015 – proposes to give privately run job agencies unprecedented new powers to financially penalise unemployed and underemployed Australians. If passed, the fines will come into effect on July 1 this year.

Under the proposal, Australians receiving the dole can be fined 10 per cent of their income support – increasing by 10 per cent each day until they ‘re-engage’ – if they:

* Fail to sign a job plan at their first job agency appointment; or

* Are found by their job agency to have behaved inappropriately at an appointment (“inappropriate behaviour” is defined as acting in a manner “such that the purpose of the appointment is not achieved”); or

* Fail to attend a Work for the Dole or Training exercise without an excuse deemed reasonable by the job agency.

All fines (roughly $55) will be deducted immediately. Unemployed Australians who feel they have been unfairly fined will be required to go through Centrelink’s arduous appeals process to get their money back – a procedure that can take up to four months.

This means that even if an unemployed worker successfully appeals against a fine – and thousands do every year – they will still be forced to endure up to four months without a significant portion of their income support.

As privately run job agencies can effectively impose these financial penalties on unemployed workers before having to provide any concrete proof, the Coalition’s proposal gives privately-owned job agencies the power of life and death over unemployed workers.

With the dole already $391 below the poverty line according to the Melbourne Institute, for many unemployed workers a 10 per cent deduction of their income support will place them in severe financial distress.

If this proposal is passed next month, unemployed Australians will be just one unfair penalty away from extreme poverty and even homelessness.….

Here is the Turnbull Government official spin on this bill, circulated by authority of the then Assistant Minister for Employment, Cowper MP Luke Hartsuyker.

Turnbull & Co expect to remove up to a total of $24.5 million from the pockets of the unemployed over the next three and a half years using the provisions in this bill.

Liberal MP for Warringah Tony Abbott on the subject of 'what a great man I am'

This was former prime minister and MP for Warringah Tony Abbott donning his ‘journalist’ hat in The Australian on 27 February 2016 in order to trot out an increasingly tired old defence of his failed leadership.

We have courageous Tony, strong Tony, honest Tony, reforming Tony, fiscally responsible Tony, union busting Tony, tax killing Tony, boat stopping Tony, free trade Tony, war leader Tony, I'm better than Mal Tony,  et cetera, et cetera, et cetera…..

“The first law of governing is that you can’t spend what you can’t raise through taxes and borrowings; and the second law is that today’s borrowings have to be paid for — with interest — by tomorrow’s taxes. Governments, like households and businesses, have to live within their means.

With more than $250 billion of cumulative deficits under the former Labor government, the need for budget repair was the constant refrain of the Abbott opposition and the task of budget repair was the most important work of the Abbott government. We were far from fully successful but made a determined effort. 

Certainly, no fair-minded judge could accuse us of shirking the challenge.

In 2014, launching Paul Kelly’s book on the Rudd-Gillard era, I said that the mission of the Abbott government was to prove that the age of reform had been interrupted, not ended; and that the Rudd-Gillard years were an aberration, not the new normal. To then lose the prime ministership in a partyroom coup was to repeat recent history, not to change it. Still, for two years, the Abbott government squarely faced up to our nation’s challenges and did much that will stand the test of time.

We met new national security challenges at home and abroad with a strength and sureness that was noticed internationally. And we began the critical task of budget repair. This was achieved despite a hysterical opposition, a populist Senate crossbench, a poisonous media — and, as shown by the very well-organised September 2015 spill, some senior members who didn’t want the Abbott government to succeed.

As a citizen paying a mortgage, let alone as a senior minister working to a budget, I had always understood very well that everything has to be paid for. Every single thing that government does — maintaining the police and armed forces, administering justice, paying for social security and facilitating schools and hospitals — all has to be funded by taxpayers. So ensuring that government spends no more than it really must is not just an economic imperative, it’s also a moral one. It’s the respect that government owes to taxpayers for whom every dollar is hard-earned.

The key to a strong and prosperous economy was getting government spending down so that tax cuts could responsibly be delivered. This, in fact, is the constant challenge of government: keeping its own spending under control so that tax can be low and private sector confidence can be high.

Early on, the Abbott government showed its economic mettle.

Refusing to offer further subsidies to chronically unprofitable carmakers when Holden and Toyota announced, around Christmas 2013, the end of production in Australia; declining to extend a loan guarantee to Qantas when it claimed its future was in jeopardy; and telling SPC Ardmona to look to its parent company, rather than to government, for a bailout when its closure was a risk to regional Victoria meant that “the age of entitlement was over”, at least for business welfare.

These were not easy decisions. They were very vigorously debated inside the cabinet.

The Abbott government’s car industry decision will ultimately save taxpayers upwards of half a billion dollars a year. As its latest results show, our Qantas decision forced the unions to accept that their members’ jobs required their employer’s profitability. And our SPC decision forced the company to innovate rather than to continue products that had gone out of fashion.

In workplace relations, the Abbott government swiftly moved to reform the union movement in a pragmatic, two-step process that would lead to reform of workplaces.

At the 2013 election, we’d sought a mandate for a registered organisations commission to subject union officials to the same standards of governance as company directors, and for a re-established Australian Building and Construction Commission to be a tough cop on the beat for large projects regularly subject to union blackmail. We’d also promised a judicial inquiry into union corruption.

Now that the Heydon royal commission has provided an abundance of evidence to justify these policies, it’s hard to see the legislation once more being blocked in the Senate. The crossbenchers have the justification they need; and even a CFMEU-­influenced opposition is unlikely to risk a double-dissolution election defending union thugs.

These aren’t the workplace changes that the most committed reformers typically seek but they were the ones most likely to pass this Senate. Higher-calibre union officials would be more likely to enter into constructive negotiations with vulnerable employers. Further, an intimidation-free building industry, on past evidence, would likely be at least 10 per cent more efficient, saving consumers upwards of $5bn a year.

Wherever the Abbott government had comparative freedom of action — for instance, in national security or foreign policy — it was largely successful. Even in economic policy, which often required the passage of legislation through a difficult Senate, much was achieved. Indeed, one of the strongest endorsements of the Abbott government’s economic policy has been Malcolm Turnbull’s pledge to maintain it.

The abolition of the carbon tax removed a $9bn a year economic handbrake. The abolition of the confidence-killing mining tax was the clearest possible indicator that, under the Abbott government, Australia really was “open for business”. With the scrapping of its predecessor’s tax hits on educational expenses, on vehicle leasing and on bank account deposits, and with its reductions in tax for small business and the small business tax writeoff for assets under $20,000, the Abbott government demonstrated its tax-cutting credentials…….”

If anyone can bear to read further, the full newspaper article is here and an even wordier version is in the March issue of Quadrant here.