Wednesday, January 13, 2016
Stupid Green/Left thinktank wants the rich to pay capital gains tax on their family homes
Touching the family home is touching the third rail of Australian politics. Any government that proposed it would be slaughtered. Even the ALP has walked away from the idea
THE capital gains tax exemption for main residences should be scrapped for properties worth $2 million or more, The Australia Institute says.
In a new report released on Monday, the independent think-tank said the move would raise almost $12 billion in revenues over the next four years — more than half of which could come from the nation’s highest income earners.
It said the change would help the Prime Minister make good on his pledge that taxation reforms would be fair and comes after News Corp revealed a similar CGT concession given to some homeowners was responsible for lost revenues of nearly $24b over the past five years.
According to the report the main residence exemption — which excludes homeowners’ principal place of residence from CGT — cost the budget $46b last year and will result in a further $189b in lost revenues over the next four years.
"Each year the cost of the CGT exemption on the main residence costs the federal budget more than Defence, Education or Medicare," the report said.
The report, based on NATSEM modelling, said Australia’s poorest households — the bottom 30 per cent — received "almost no benefit" from the tax break.
"Almost 90 per cent of the benefit goes to the top half of income earners while the bottom half only get 11 per cent," it said. "High income households (those in the top 20 per cent) get more than half of the benefit (55 per cent)."
"This policy change (would) impact on less than one per cent of home sales while still raising $11.8b over the next four years", the report said.
Australia Institute executive director Ben Oquist said capital gains tax concessions were responsible for lost revenue of nearly $200 billion over the forward estimates.
"It’s more than the entire spending on the aged pension; more than the government spends on Medicare," he told the ABC.
"If you are considering genuine tax reform and if the budget is in strife it would seem nonsensical not to have a look at it.
"And unlike say raising the GST to 15 per cent, tackling the capital gains tax discount and its interaction with negative gearing is likely only to affect the most well off in society and yet give the budget bottom line a big boost."
However, Housing Industry Australia senior economist Shane Garrett the exemption drove demand for new homes and scrapping concession would negatively impact the housing marking.
"The CGT exemption on the family home is one way to encourage demand for new homes and it’s also a way to encourage more new homes to be built," he told the ABC.
"And in the context of supply shortages that are affecting parts of the market around Australia at the moment we think it would have very detrimental impacts from that point of view."
Mr Garrett said the proposed $2 billion threshold was too low.
"In Sydney for example the median house price at the moment is close to $1m so for a $2b situation that would affect some houses that would not be particularly at the extreme end of the (wealth) scale," he said.
"There are many fairly standard houses in Sydney now that would be in that price bracket."
Data from Core Logic shows there are 71 suburbs across the country with a media house sale price of $2m or more. Of these, 61 suburbs are in NSW.
Independent Senator Nick Xenaphon said he was open to considering "carefully calibrated" changes to CGT.
"Obviously any move to remove CGT exceptions to tinker with negative gearing needs to be done very carefully, very cautiously so that you don’t end up putting a massive wet blanket on the housing market around the country," he said.
"The housing market in Sydney is very different from the housing market in Adelaide or Hobart for instance.
"I want to see some modelling on this. I know $2 billion can get you a very nice place in SA, maybe not so luxurious in Sydney.
"I think we need to look at it and look at it on a region-by-region basis and market-by-market basis."
But Minister for International Development and the Pacific Steve Ciobo has poured cold water on the proposal.
"Look, Ben Oquist, who is the CEO of The Australia Institute is a former chief of staff to Bob Brown," he told Sky News. "He’s regarded by the Greens as being a bit of a political hero for them.
"I don’t actually think a lot of what he has to say has much support in terms of economic theory. "I certainly don’t believe it’s got any political support.
"I notice even the Labor Party, as desperate as they are for Greens support, even the Labor Party have walked away from this proposal."
Mr Ciobo said the proposal would penalise the "one industry that is actually providing a strong period of growth".
"The fact is people who are investing for property also provide property for renters," he said.
"They might be purchasing properties and doing redevelopments and putting in place five or six or seven or eight strata titled apartments which of course add to Australia’s housing pool.
"At the end of the day there is no magic formula to this."
Prime Minister Malcolm Turnbull and Treasurer Scott Morrison have previously said everything remained "on the table" when it came to tax reform, while Mr Turnbull has also pledged to keep any changes "fair".
The report said the Federal Budget deficit — predicted to balloon to $37.4b this year — could not be improved through cost cutting alone.
"The government must also look to revenue measures if it wants to effectively reduce the budget deficit," it said.
"If Mr Turnbull’s stated goal of fairness is to be achieved, the government’s next measurers should reduce the budget deficit in ways that don’t impact on low income households."
Analysis of Treasury figures by News Corp last week found the 50 per cent capital gains tax concession given to property investors who hold a property for more than a year was expected to shave $23b from Federal Government coffers over the next three years.
TPP benefits only modest for Australia, World Bank finds
But the farmers like it and they need all the help they can get
Australia will reap fewer benefits from the planned Trans-Pacific Partnership (TPP) trade deal than most of the members, according to the first comprehensive research on the economic impact of the deal since it was agreed last October.
The findings on the main beneficiaries come as the prospects of the deal being implemented appear to have been improved significantly in the new year, with key US business groups endorsing it after earlier equivocation.
New Zealand is also reported to be planning to host a signing ceremony in early February to maintain the momentum towards full implementation, after opposition in the US Congress threatened to delay ratification in the US until after the November presidential election.
US President Barack Obama is expected to push for US ratification before he leaves office in his final State of the Union address on Tuesday, drawing on the new official statements of support from three peak business groups.
Low GDP increase
But research by the World Bank shows that Australia is likely to experience a gross domestic product increase of less than two percentage points by 2030 as a result of the increased business flowing from the trade deal among 12 countries.
This compares with GDP increases of about 10 per cent for Vietnam and 8 per cent for Malaysia. They benefit from getting new access to larger markets in the US and Japan, which Australia already has.
Australia will also have one of the smallest overall increases in exports by 2030 of about 5 per cent, compared with about 30 per cent for Vietnam and 10 per cent for the US.
The US-led TPP was agreed between trade ministers from the 12 members in October after seven years of negotiations, but still needs to be ratified by the parliaments of most member countries. It covers 25 per cent of world trade and 36 per cent of the global economy.
World Bank findings
While the World Bank study released last week underlined how Australia's already open trade regime makes it one of the lesser beneficiaries, it welcomed the agreement as a potentially important offset to declining world trade growth.
"As a new-generation, deep and comprehensive trade agreement, TPP addresses a wide range of complex trade policy issues that go beyond the scope of traditional trade agreements.
"The agreement will reduce tariffs and restrictiveness of non-tariff measures as well as harmonise a range of regulations to encourage the integration of supply chains and cross-border investment."
The World Bank study's findings on the beneficiaries from the final agreement are broadly in line with earlier academic forecasts about the deal.
However the Australian government argues that Australia may reap other longer-term benefits by being on the inside of what might become the main framework for business rule-making across the Asia Pacific region.
The World Bank lends weight to this argument by saying: "Against the background of slowing trade growth,rising non-tariff impediments to trade, and insufficient progress in global negotiations, the TPP represents an important milestone.
"The TPP stands out among FTAs (free trade agreements) for its size, diversity and rulemaking."
It says: "Much will depend on whether the TPP is quickly adopted and effectively implemented, and whether it triggers productive reforms in developing and developed countries.
"Broader systemic effects, in turn, will require expanding such reforms to global trade, whether through TPP enlargement, competitive effects on other trade agreements, or new global rules."
Last week a Chilean official revealed that the New Zealand government was planning a signing ceremony in early February, even though many legislatures are yet to ratify the deal. However, New Zealand has not confirmed the event.
While the US has led the TPP negotiations in recent years, New Zealand claims original ownership of the initiative as the sponsor of the four-member trade deal at the heart of the group.
Lockout laws: How Newcastle stopped the bloodshed
In the once-industrial stronghold of Newcastle, there remained something of an element of the Wild West in 2008.
In a city trying to rebrand itself as a coastal tourism destination, weekends followed a pattern not unfamiliar in many cities across Australia.
Young people would pre-load on alcohol at home before flooding to CBD nightclubs en masse when bottle shops closed, where they would commence reloading until 5am.
When security staff turfed them into the street, all bloodied, violent hell would break loose.
Newcastle had the highest rates of alcohol-fuelled assaults and injuries in New South Wales, along with the highest rates of assaults on police officers and drink driving, according to Tony Brown, an inner city resident who led the community push to curb the problem.
"It was a literal blood bath, most residents were too afraid to leave their houses, the hospital emergency department was stretched to its limit," Mr Brown said.
"The only winners were the late trading premises. We had approximately 20,000 young people every weekend at the CBD able to drink until 5am uninterrupted.
"There were too many lives lost as a result of that and the (alcohol) industry exhibited a pathological incapability of accepting responsibility.
"They were making a motza out of loading young people up in the licensed premises, kicking them out and making the public bear the costs."
Mr Brown led the charge for what was initially known as the Newcastle experiment and has, in the eight years since it was implemented, since become known as the Newcastle solution.
In the face of a massive backlash from the 12 to 14 nightclub operators who were crying economic catastrophe, the Newcastle coalition, comprised of police, community and local council members, scaled trading hours back to 3am in the CBD and instituted a lockout that prevented patrons entering licensed venues after 1am.
Assault rates dropped almost immediately and other cities and towns quickly followed suit in establishing the measures.
Not only that, according to Mr Brown, in the eight years since it has been established, the city's night-time economy has improved.
It is now, he said, a safe place people want to venture out for a drink. "It has totally transformed the Newcastle nightlife," he said.
"In surveying the community, they have said there is much improved safety, more diversity of venues and more inclusiveness.
"Not only that it has led to a much, much more prosperous night time economy. "There has been a 100 per cent increase in the number of licensed premises, which has led to more jobs."
This week, Queensland Attorney-General Yvette D'Ath reaffirmed the Labor Government's election commitment to instituting similar measures across the Sunshine State, after the issue of alcohol-fuelled violence was again thrust into the spotlight following the death of 18-year-old Cole Miller.
But while the approach has many backers, particularly among the law enforcement and medical fraternities, it also has its detractors, fuelled largely by what outspoken Queensland MP and maxillofacial surgeon Anthony Lynham has this week termed a "scare campaign" on the part of the alcohol industry.
Lockouts loosely based on the Newcastle approach were trialled in Melbourne in 2008 but abandoned in what many point to as a spectacular failure, when assaults and ambulance call outs in the area increased.
In a 2013 study, British anthropologist Anne Fox examined Australia's night-time economy, reaching the conclusion the problem of violence in the country's nightclub precincts was cultural, not attributable to alcohol.
"In a nutshell, the central point of my report is that it is the wider culture that determines behaviour while drinking, not the drinking per se," she wrote.
"While there are very good health reasons to reduce excessive drinking, you must influence culture if you want to change behaviour."
The study was commissioned by alcohol production giant Lion, which, among it's array of beverages, produces Queensland's XXXX.
Vivienne Crompton, a researcher at the Institute of Public Affairs Legal Rights project urged the Queensland Government to take the increased enforcement approach in 2013, saying in regards to lockout laws it should "take heed from Melbourne's own unmitigated failure".
"Increased police presence is the only way we can hope to reduce fighting on our streets," she said.
"The proposed curfew is just a nanny-state, knee-jerk response that has no hope of stemming the violence."
It's something Queensland police officer turned Bond University academic Terry Goldsworthy does not entirely agree with.
"Lockouts have been proven to be effective in conjunction with reduced trading hours, I think the real question here is, 'do we need to be drinking until 5am?" he said.
Dr Goldsworthy said a combined approach to the problem was required, not one or the other.
"Newcastle and other jurisdictions clearly show that approach has a substantial effect on the reduction of violent crime and you don't necessarily place it elsewhere as the liquor industry argues," he said.
"But also, people are far less likely to act in an anti-social manner when there are plenty of police there.
"You do need to weigh up the costs of policing and incarceration with the long terms costs of violent crime, like long term care and medical costs."
God and religion are not dead just yet...
Enthusiasm for silencing religious voices and getting the faithful to keep their beliefs to themselves can blind us to the important connections between religion -- particularly, but not only, Christianity -- and the institutions of liberty and prosperity we have come to cherish in Australia.
God is changing, or at least the involvement with God of western liberal societies is changing. In parts of Europe and in countries like Australia the 'secularisation thesis' holds that religion is gradually being displaced altogether from society. God is on the way out, it says.
Certainly this process of displacement is being accompanied by what appears to be the outright decay of familiar forms of religion. But while traditional religions are losing ground in the west, other religions, such as Islam, are putting new pressures on governments and societies.
No wonder God is seen variously as too timid, too militant, or completely redundant. And no wonder it has never been more important to understand more clearly the contribution religion has made to modern liberal society.
Sovereignty of the individual, for example, owes much to Christianity with its egalitarian moral insight about individual liberty. The emergence of the free individual brought with it a new social and economic status, and the capacity to give informed consent at the ballot box or in a contract.
There is much to criticize in today's materialistic culture, but the individual's freedom to participate in the market has helped to transform communities from widespread poverty to remarkable levels of prosperity. Individual economic agency has been a powerful engine for growth.
You don't have to be religious yourself to recognise that our liberal, democratic way of life has deep roots in religious principles and values. But failure to recognise the important relationship between religion and liberty is likely to lead to a broader indifference to liberty in general.
Of course, none of this is to assert that religion will never wither and disappear from view and practice. But predictions of its demise have so far been off the mark. "Religion and spirituality in Australia [are] about hope," says sociologist Gary Bouma.
Such hope, and the generation of that hope through actions, beliefs and practices, is critical for maintaining the freedom, resilience and vitality of a liberal society whose freedoms we can so easily take for granted.