Millionaires, tax breaks for property investors in unions’ sights

3 months ago 17

Negative gearing would be restricted to a single property, millionaires and family trusts would pay at least 25 per cent of their income in tax, and building approvals would be accelerated on everything from housing to large energy projects, under a union proposal to improve living standards.

The Australian Council of Trade Unions today revealed its submission to the Albanese government’s three-day economic roundtable at which it will have two seats, outlining proposals that would raise up to $25 billion in revenue that could be pumped back into services such as the National Disability Insurance Scheme and healthcare.

ACTU secretary Sally McManus will outline a broad agenda of tax increases and regulation overhauls.

Just days after most of the business community rejected a proposal from the Productivity Commission to cut the company tax rate, while introducing a world-first cashflow tax, the ACTU has outlined an agenda unlikely to win corporate or government support.

But ACTU national secretary Sally McManus said the living standards of Australians, particularly younger generations priced out of an increasingly expensive housing market, had to be paramount in any discussion about productivity reform.

She said wages growth had not kept up with productivity levels over the past two decades, accusing businesses of grabbing disproportionate levels of the improvements in efficiency that boosted profit levels, but leaving little for workers.

“One of the reasons that productivity has slowed in Australia is that companies have directed profits into share buybacks, into dividends to shareholders and into bonuses,” she told this masthead.

“Working people are very careful about wanting to engage in a discussion about productivity, given what’s happened to them.”

Under the ACTU’s proposals, negative gearing and the 50 per cent capital gains tax concession would be restricted to a single home. Existing investors would be grandfathered from the changes for five years.

Their submission backs changes to superannuation performance tests so they can invest in the property sector, and recommends that planning rules be altered to accelerate the construction of new homes.

This week, figures from property analytics company Cotality showed median property values lifted another 0.6 per cent nationally, having increased every month since the Reserve Bank started cutting official interest rates in February.

The ACTU is proposing changes to negative gearing and capital gains tax that it believes would help younger Australians into the property market.

The median house value in Sydney has now surpassed $1.5 million, it is above $1 million in Brisbane, and Canberra is likely to reach that level in the coming months.

McManus said levelling the playing field between property investors and first-time buyers had to be on the government’s agenda, while the ACTU also backed reforms to regulations around planning and construction to get more properties built.

“This is the most important issue when it comes to addressing living standards, given what we have now is particularly unfair for younger generations,” she told this masthead.

“People need to be able to live near where they work.”

Figures released last month by the Australian Taxation Office revealed that 91 people in the 2022-23 financial year had income of more than $1 million but paid no tax.

The ACTU wants changes to the nation’s tax laws that would require people earning more than $1 million to face at least a 25 per cent tax impost.

While many financial trusts pay at least 25 per cent in tax, the union movement wants that set as a minimum level for all trusts.

The nation’s oil and gas companies would face a 25 per cent “energy levy” on exports of LNG, while a $20 million cap would be set for businesses that claim fuel tax credits.

In total, the ACTU’s proposals would raise about $25 billion in additional revenue. Treasurer Jim Chalmers has told organisations he wants ideas that are either budget-neutral or improve the budget bottom line.

McManus said apart from channelling that revenue into improved services, the union movement wanted improvements to regulations on the construction of major projects, particularly those instrumental to the net-zero transition. “We need to get yes or no on projects quicker,” she said.

McManus is one of two ACTU representatives to be part of the roundtable that will be held between August 19 and 21.

Tax and regulations are slated for discussion on the second and third days of the roundtable, which is due to be held in the federal Cabinet room.

Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter.