Monday, July 31, 2017

Bill Shorten promises $17.2 billion tax crackdown on trusts

This attack on trusts takes no account of alternative tax avoidance measures. Say I own a business and have a non-working wife.  I simply give my wife a 25% share in the business.  So the profits are legally and properly shared in that ratio too.  So I have a smaller tax base and she pays little or no tax.  Voila! More money for the family and less to the tax man.  "Tax the rich" attempts always runs up against avoidance strategies.  And let us not mention the "black" economy. I might mention that I have a family trust but don't use it for tax avoidance so would not be hit by the new measures. Trusts have many uses

Bill Shorten will slam the door shut on tax loopholes that let high income earners legally use trusts to slash their tax bills, in a move designed to raise $17.2 billion over 10 years.

The new tax policy, foreshadowed by Fairfax Media a week ago, is the second-largest revenue raising measure announced by the federal opposition, after its ambitious plan to curb capital gains and negative gearing tax breaks, designed to raise $37 billion over 10 years.

Mr Shorten will tell Labor's NSW conference on Sunday that, if he wins the next election, he will introduce an across-the-board minimum 30 per cent tax rate on discretionary trust distributions to people over the age of 18.

The policy, Labor argues, will only affect 2 per cent of taxpayers and is a fairness measure that puts middle-income earners on level pegging with Australia's most wealthy.

The bold plan to change the rules for discretionary trusts – put in the too-hard basket by previous governments – will be framed as a tough but necessary decision to tackle Australia's ballooning debt, which is on track to pass half a trillion dollars under the Coalition government.

Discretionary trusts allow high-income earners to distribute money to family members on lower incomes and tax rates – for example, to adult children at university – and, by so doing, reducing their own tax liability.

This sort of income splitting is legal but, Mr Shorten will argue, it is effectively a subsidy for wealthy Australians paid for by middle-income earners and is unfair as ordinary PAYG workers cannot split their income in the same way.

Mr Shorten will say that, over four years, the changes will raise $4.1 billion in revenue for the Commonwealth and that, with Australia's AAA rating under threat, "we don't have the luxury of leaving everything in the too-hard basket".

"We need to make the tough decisions to build a fairer tax system, a stronger budget, a stronger nation. This must include cracking down on artificial income splitting to avoid tax.

"A healthcare worker at the Nepean Hospital can't go down to payroll and request that they split her income to reduce her tax. A hospitality worker in Blacktown doesn't get to give herself a tax cut by moving some money into her partner's account.

"I don't begrudge anyone the money they've made. But our system should not be subsidising those who are already wealthy, and our budget cannot afford to."

Labor says non-discretionary trusts such as special disability trusts, deceased estates and fixed trusts will not be touched and – in a move that will shut down a key line of attack from the Turnbull government – it will also not apply to farming or charitable trusts.

Similarly, Labor will attempt to firewall itself from criticism by arguing the policy change follows a change made by John Howard, when he was Treasurer in the early 1980s, that saw income distribution to minors taxed at the top marginal tax rate.

Australian Taxation Office figures from 2014-15 showed there were 823,448 trusts in Australia with assets of $3.1 trillion and revenue of $349.2 billion and that about 78 per cent, or 642,416, of those trusts were discretionary trusts used by high-income earners to reduce their tax bill.

According to research from the progressive Australia Institute think tank, the use of discretionary trusts may be costing the Commonwealth as much as $3.5 billion a year in revenue. University of NSW tax professor Dale Bocabella has estimated the figure at about $2 billion a year.

Labor's estimated revenue numbers, from the independent Parliamentary Budget Office, are well below these figures.

The Turnbull government is likely to attack the plan as another example of class warfare from the Labor leader that does nothing to grow the economic pie but, rather, relies on the politics of envy and serves only as a redistributive measure.

Taken together, these promises are a gamble by Mr Shorten but, also, demonstrate his determination not to repeat the mistake of Tony Abbott's "small target" strategy ahead of the 2013 election.


Bill Shorten vows to hold vote on republic during first term of a Labor government

The last referendum returned a big vote in favour of the monarchy so this should be a loser for Shorten

Opposition Leader Bill Shorten will promise to give Australians a vote on whether to become a republic during the first term of a future Labor government.

The promise, to be made in a landmark speech to the Australian Republican Movement on Saturday, will dramatically reignite debate about whether Australia should have its own head of state.

In a move that will energise republicans and give supporters of an Australian head of state a clear choice between Labor and the Turnbull government ahead of the next election, Mr Shorten will pledge to hold a simple "Yes" or "No" vote.

The question would be: "Do you support an Australian republic with an Australian head of state?"

The promise means a first vote on the issue would be held sometime between 2019 and 2022, to be followed by a second vote after that would settle on the tricky topic of the best model.

Prime Minister Malcolm Turnbull has said the republic debate should not be considered until after the Queen dies. But Mr Shorten will argue the debate does not require Australia to "wait for a change of monarch, we don't need to tip-toe around our future".

"I'm confident Queen Elizabeth would farewell us with the same affection and good grace she has shown every time a Commonwealth nation has made the decision to cut its ties with the monarchy. We can vote for a republic and still respect Queen Elizabeth," he will say.

Mr Shorten has previously said he would like to see an Australian head of state by 2025.

Mr Shorten believes Australia can retain its sporting and cultural links to the Commonwealth even if it voted to leave it.

"We can vote for a republic and recognise that Will and Kate have two seriously cute kids. We can vote for a republic and still binge watch The Crown on Netflix. And we can vote for a republic without derailing the business of government, or the priorities of this nation," he will say.

"I know an Australian republic isn't front-of-mind for everyone, but I don't buy the argument that we can't have this debate until every other problem in the nation has been's no good hoping for a popular groundswell – we must set a direction and bring people with us, and we have to do it early."


Residents fight to stop NBN and Telstra from axing 'state of the art' HFC network

For the residents of one of Sydney's tallest buildings, the arrival of the national broadband network has spelt the end of fast and affordable high-speed internet.

But last year, NBN ordered Telstra to scrap the HFC system and move customers onto its fibre-to-the-building (FTTB) technology, which it had installed using the building's 20-year-old copper phone lines.

One angry resident is well-known property developer Rick Graf. He is refusing to switch, aghast at the poor experiences of his neighbours.

"With the HFC backbone, I'm getting 120Mbps internet – over Wi-Fi," he said. "A neighbour of mine has switched to NBN and on a high-paying plan, and he can't get more than 50Mbps."

A quarter of Elan's 276 households are estimated to be using the HFC internet service.

Late last year, Telstra began telling Elan residents, via information sessions and letters, to move to the NBN and experience "fast downloads, better productivity, a brighter future", before it turned off the HFC system in February 2018.

NBN has the legal power to compel telcos such as Telstra to decommission their HFC and ADSL networks in return for compensation.

Mr Graf said NBN had effectively "downgraded" the building's infrastructure by choosing to connect the fibres to old copper lines instead of the HFC backbone.

"I'm not moving. Once we hear back from NBN about their reasons, we'll be taking this to the Ombudsman," said Mr Graf.

"It's counter-intuitive for NBN to downgrade the technology and give everyone half the speed."

The Elan building has become another flashpoint in the ongoing blame game between NBN and telcos over the escalating complaints about and general dissatisfaction with the $49 billion project.

NBN Co chief executive Bill Morrow last week sought to downplay growing complaints by admitting to a 15 per cent dissatisfaction rate among customers connecting to the NBN. This could add up to more than 2 million users.

Mr Morrow said complaints from that cohort were becoming more audible now that the network was being made available to about 100,000 new premises every week.

An NBN spokesman said FTTB was the "best fit" and the "easier" option from an engineering point of view.

He said FTTB was capable of delivering speeds of 100Mbps, but retailers had to buy sufficient capacity or bandwidth.

He claimed retailers, including Telstra, were automatically placing customers on 12Mbps or 25Mbps plans unless they specifically asked for faster speeds, causing speed and congestion problems.

A Telstra spokesperson said customers shouldn't see much of a difference if they remained on the same speed tier.

"We actively monitor and manage our capacity on the NBN network to ensure we have the right level of bandwidth to support customer speeds," she said.

"Speeds on the NBN vary due to quite a large number of factors ... some are managed by retailers, others are designed and controlled by NBN."

Another resident, electrical engineer John Flanagan, who is refusing to switch, said his neighbour's internet connection had dropped from 110 to 30Mbps.

He is paying $29 per month for 25GB of data, which is a relatively small amount, delivered at an enviable 100Mbps.

Based on flyers left in his mailbox, he would have to pay iiNet or TPG $100 per month to remain in the same speed tier. IPrimus' best offer was unlimited data at 25Mbps for $80 a month.

"It's ridiculous," said Mr Flanagan. "I'm not going to pay more for an inferior service."

He said NBN should use the HFC cables to provide internet services or upgrade the cables.

This is because elsewhere in Australia, NBN is upgrading HFC technology to "DOCSIS 3.1", which can deliver lightning download speeds of 1Gbps.

"NBN says that HFC is the way of the future, so why can't they upgrade our existing system so that we can get speeds of 1GB [1000Mbps] and 100Mbps upload speeds and beyond?" he asked.

Residents who have tried to switch back to the HFC network have been blocked by Telstra.

Emeritus Professor Rod Tucker, an electronic engineering expert at University of Melbourne, suggested NBN could take a more flexible stance and allow Elan to keep the HFC network. "This is an isolated case and it is not going to cause NBN any significant financial disadvantage," he said.

"If NBN can provide a high-quality service on their network, they might be able, over time, to attract some of the residents using HFC onto the NBN."

He said under Labor's NBN plan, any shortfall in the bandwidth provided to customers would be the retailer's fault, and the tensions now emerging could have been avoided. "The best possible outcome for the residents of this complex would be to upgrade their network to DOCSIS 3.1, and retain it for access to the NBN," he said.

NBN spokesperson Tony Brown said the logistics around new connections were more complicated than they used to be, when there was a good chance that a single company – Telstra – owned the relationship with the customer from the retail face to the copper and exchanges underlying it.

"Now you've got NBN Co, then 43 retail service providers buying directly from the NBN, and another 141 sub-resellers buying capacity from Optus or wherever it might be, so it's not as simple as it used to be," Mr Brown said.

Resident Pam Cassidy's plan is to "jump up and down" until NBN changes its decision. One afternoon, she popped into her neighbour's flat to compare internet speeds. Her neighbour's NBN-delivered internet was "extremely slow".

"Call me old-fashioned but if you've got a service that's good, why change it?" she asked.  "Why change it to something that is not good?"


NSW ALP set to back Palestine despite 'furious' lobbying by Israeli government

The Left love Muslims because they both hate the rest of us

Labor leader Bill Shorten will be under increasing pressure to recognise Palestine after the party's NSW conference appears set to make an "historic" push to do so, despite some MPs complaining about "extraordinary interventions" and lobbying against the motion by the Israeli government.

On Friday afternoon shortly before NSW Labor Right figures met to negotiate on the wording of a proposal that would "urge" a future federal Labor government to recognise a Palestinian state, state MPs who were delegates at this weekend's NSW party conference received an email.

"Time and again throughout its history Israel has extended a hand of peace only to have it rejected by the Palestinians," the three-page document from the Public Affairs Section of the Israeli Embassy labelled as a fact sheet and obtained by Fairfax Media, reads. "The international community must speak up against the culture of oppression, genocidal rhetoric, terror and incitement that is prevalent among the Palestinians."

Former Premier Bob Carr told Fairfax Media there had been a "furious" lobbying campaign against the motion, which will "urge" a future federal Labor government to recognise Palestine and be voted on by 800 party conference delegates on Sunday.

"How did they know which MPs were delegates [only up to one-third of caucus go to conference]?" one NSW MP told Fairfax Media on condition of anonymity, saying the list was not publicly available.

An email and phone call to the Israeli Embassy in Canberra was not returned.

Former foreign minister Bob Carr said: "It's an honour to be asked by the party to move an historic motion that supports recognition of Palestine and to do so in the face of a furious lobbying campaign."

The final motion, unlike that originally presented to conference, includes an affirmation of a two-state solution and supports Israel's right to exist "within secure and recognised borders" something pro-Israel Labor MPs said was a significant addition to the party's original approach and a significant watering down of a provocative motion.

Some MPs in the right dismissed the addition as mere boilerplate but another observer said the phrase "within secure and recognised borders" could prove highly significant.

Pro-Palestinian NSW MPs claim they were subject to other lobbying last week from official and back channels, such as suggestions of alternative motions including that Australia only acknowledge Palestine when that country's institutions improve.

Mr Carr caused a fissure in the Gillard government by advocating abstaining on a motion before the UN on upgrading Palestine's official observer status, when the then-PM advocated voting against the proposal.

Mr Carr later wrote in his memoirs that the former prime minister was overly influenced by the Israel lobby and constituents in Melbourne.

Backers say the motion is an historic break for Labor, whose support for Israel dates back to its the 1940s and backing from party legend and former UN General Assembly President, Doc Evatt.

But that support, particularly in the NSW Right, has been weakening recently, particularly as the party relies more heavily on voters descended from middle-eastern countries in Sydney's west for its supporter base.

Earlier this month frontbencher Tanya Plibersek said foreign affairs was a matter for the party's national conference and would not be influenced by state branches.

But state conferences can influence policy debate significantly, party insiders say. Queensland Labor's conference this weekend also reportedly backed recognition.

At Labor's last national conference leader Bill Shorten's Victorian Right faction opposed any change to policy on Palestinian recognition.


Posted by John J. Ray (M.A.; Ph.D.).    For a daily critique of Leftist activities,  see DISSECTING LEFTISM.  To keep up with attacks on free speech see Tongue Tied. Also, don't forget your daily roundup  of pro-environment but anti-Greenie  news and commentary at GREENIE WATCH .  Email me  here

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