"Any profits made on Australia's equity ownership will be put into a sovereign wealth fund to reinvest and grow, not to be rorted by … future governments,"
Extraordinary legal action has been commenced to stop the publication of potentially damning findings of a corruption investigation which has ensnared former Victorian Premier Daniel Andrews.
The Herald Sun can reveal the findings from IBAC’s long awaited Operation Richmond, which were finally due to be published in coming weeks, have now been shelved because of the action.
The report probes the dealings between the Andrews government and the powerful United Firefighters Union and interviewed the former Premier as part of its investigation.
IBAC wrote to key witnesses this week to advise of the unprecedented legal bid to block the report being made public.
“We write to update you/your client that the publication of IBAC’s special report on Operation Richmond has been delayed due to court proceedings commenced against IBAC,” it said.
“We remain committed to the release of the special report, which is ready for publication, pending the resolution of this matter.”
IBAC commissioner Victoria Elliott said last month she planned to publish the findings from the watchdog’s long-awaited investigation before July 1.
It is understood the action has been filed in the Supreme Court. It is not clear by who, but the militant United Firefighters Union has previously taken the matter to the High Court.
Peter Marshall did not respond to requests for comment but is understood to have told people privately the UFU was not behind the case.
The pending release of the report is expected to deliver a devastating blow to Labor’s election hopes, and amplify concerns around corruption amid the ongoing Big Build scandal.
Operation Richmond has been one of the most secretive operations in the history of IBAC and has involved scores of witnesses being called before secret hearings.
The investigation is understood to have probed the United Firefighters Union’s role in the amalgamation of the Metropolitan Fire Brigade and Country Fire Authority into Fire Services Victoria.
It is understood it began after a complaint was lodged with IBAC alleging misconduct on the part of the government in its dealings with the union.
Conversations with members of the government, and its support for the ALP forms part of the intercepted material, are also understood to be key to the probe.
Senior government MPs including Daniel Andrews emerged as figures of interest during the investigation.
Publication of Operation Richmond’s final report has been delayed by years because of legal challenges going all the way top the High Court.
It's going to take a bit more than grave concerns at this point - Australia actually needs to grow backbone and start pushing back against its so-called allies.
The numbers are in, and experts say what happened on the weekend is only the beginning.
Sydney’s auction market has crashed to a six-year low as rising interest rates and sweeping tax changes in the federal budget turn would-be investors away from property.
Prices now falling, the “fear of missing out” had been replaced with a “fear of overpaying,” meaning buyers were “happy to be patient and seek out better deals”.
The volume of homes for sale in Sydney was also quite elevated, providing buyers with lots of choice and tilting the balance in their favour.
“Sydney is now a buyer’s market."
NSW Premier Chris Minns has thrown a bomb into the Albanese government’s post-budget sales pitch by calling for “urgent action” to reduce the tax burden on workers including the 47 per cent rate paid by those earning more than $190,000.
The rare intervention by the Labor Premier highlights the growing pressure Jim Chalmers faces over a budget that increases taxes by $80bn on investors while only returning part of the proceeds through a flat $5-a-week rebate for workers.
As former prime minister Paul Keating entered the debate with a strong defence of the Treasurer’s contentious changes to capital gains tax, some federal Labor MPs privately raised concerns over the budget sales pitch, with one labelling it a “shit show”.
In an extraordinary back-and-forth with Mr Minns, Dr Chalmers claimed he had already increased the threshold from $180,000 during Labor’s first term of government. This is despite the government breaking a 2022 election promise to retain Scott Morrison’s legislated stage three tax cuts to raise the top tax threshold to $200,000, lowering it to $190,000.
After Mr Minns said he was concerned those on the top marginal tax rate were working half the week for the government, Dr Chalmers suggested the NSW Premier did not understand the income tax system.
“That’s not how marginal tax rates work,” Dr Chalmers said, responding to Mr Minns. “This is a government which is cutting taxes for every Australian worker – 13.3 million Australian workers will get another tax cut from this government in the budget.”
The main concerns raised by Labor MPs were unveiling the CGT changes without special treatment for start-ups, an unconvincing pitch on why CGT reform was needed for asset classes outside of residential property, flat-footedness in responding to a grassroots campaign against the government from business founders and a reluctance to deliver more relief for workers under the package.
The government is expected to offer more income tax relief ahead of the next election by bolstering the $250-a-year working Australians tax offset, but this does not amount to reforming the income tax brackets.
While Dr Chalmers is claiming only one in 10 people under 35 has shares, recent polling for the Australian Securities & Investments Commission found that 18 per cent of 18 to 28-year-olds owned shares and 23 per cent owned crypto.
Mr Keating, the architect of the CGT in the 1980s, backed the government’s push to revert to a model closer to the one he implemented. He said implementing the CGT allowed the Hawke government to lower the then 60 per cent top marginal tax rate, while arguing wages continued to be taxed too high. He also rejected the need to provide exemptions for start-ups, as had been flagged by the government.
Mr Keating took aim at “wealthy people” arguing against the government’s change to revert to an inflation-indexation CGT model with a 30 per cent minimum rate, arguing that the Howard government’s 50 per cent discount caused house prices to increase from “nine times income to 16 times income over the 25 years”.
“And they want to split off start-up capital and shares as if the individuals commentating have not made a feast of it already,” Mr Keating said. “The simple fact is that income is taxed too heavily while capital is taxed too lightly. That is the fact of it and has been the fact of it. And that distortion has made housing unaffordable for a whole generation.”
Mr Minns said the Albanese government’s failure to act on bracket creep was undermining the pay rises the NSW government was funding for nurses, paramedics and teachers. “Whether it’s in this budget or it’s in the future, we do need to make sure that we’re doing everything we can to hand more money back to working Australians,” he said.
“The top marginal rate of 47 per cent … you’re working Monday, Tuesday, and half of Wednesday for yourself, and then (the rest of) Wednesday, Thursday, and Friday for the government.”
Mr Minns’ intervention follows revelations by The Australian that state governments could be in a fight with the commonwealth over stamp duty paid by trusts selling their assets as they restructure in the wake of Labor’s new tax changes.
With the Coalition vowing to index the income tax thresholds if it wins the next election, opposition Treasury spokesman Tim Wilson said people felt bracket creep “in their pocket” even if they didn’t know what the term meant.
“We will absolutely continue to sell this policy all the way through to the next election, because we see it as very important to also educate the public along the way of what the government is doing,” Mr Wilson said.
While a grassroots campaign against the CGT reforms has seen start-up founders claim Anthony Albanese is a 47 per cent owner in their companies, the Prime Minister said this was being pushed by “right-wing parties and their allies”. “We’re replacing the 50 per cent capital gains discount with a discount that’s based on inflation, but that’s only realised when a business is sold, when an asset is realised,” Mr Albanese told ABC radio Perth. “And most small businesses pay little or no capital gains tax when they sell. We’re making no changes – no changes – to the small business CGT capital gains tax exemptions which are currently available.”
Optimal Economics chief economist Stephen Walters said moving to indexation shouldn’t be seen as such a radical idea. “Of the 38 OECD countries 20 do automatic indexation of the tax thresholds so suggesting we do this is not radical,” he said.
Westpac chief economist Luci Ellis has proposed that instead of the polar choices of no indexation or indexation to inflation, a third option was automatic indexation at a fixed rate of 2.5 per cent – the midpoint of the RBA’s inflation target. “This design would … deliver the same amount of indexation over long periods as a CPI-indexed system,” Dr Ellis said. “The average tax take would still increase when inflation is high. The real value of the bracket thresholds would rise when inflation is below 2.5 per cent, reducing the average tax take.”
AMP chief economist Shane Oliver said indexing the tax thresholds was a “no-brainer”, also backing Dr Ellis’ model of limiting the yearly income threshold increase to 2.5 per cent.
“Not indexing them leaves people with tax hikes by stealth. It also puts more pressure, more transparency, on the government around its spending decisions,” Dr Oliver said.
Antipodean Macro economist Justin Fabo and Rich Insights Chris Richardson also backed indexing thresholds to 2.5 per cent a year, rather than the Coalition’s policy for the indexation to be as high as inflation.
Mr Fabo said lifting tax brackets by 2.5 per cent a year “assumes that the RBA does its job by hitting its target over the medium-term and that the inflation targeting framework persists”.
Mr Richardson said 2.5 per cent indexation would “ “help give us discipline”.
“Shortfalls in money collected from the failing parts of our tax system get made up over time by bracket creep – by higher taxes on workers. That means our existing bias against the young is on a ‘set and forget’ course to worsen over time,” Mr Richardson said.
Barrenjoey chief economist Jo Masters said indexation would need to be funded by a broader tax package, including raising the GST.
KPMG economist Brendan Rynne said moving to indexation was needed and would not be inflationary if the government did not spend so much.
The Albanese government initially intended to confine the capital gains tax changes to housing, but was advised by Treasury to broaden the increase to all asset classes, a move that has it locked in battle with the small business sector and investors.
As Prime Minister Anthony Albanese refused point-blank to consider any changes to the CGT policy other than the already-flagged carve-out for tech start-ups, sources confirmed the policy was broadened beyond housing less than a month before budget day.
Before the government accepted the Treasury advice, it was hinting heavily that the then-speculated CGT changes would apply only to residential housing. Dan Peled
As detailed this week in the Treasury advice released by the government, the department advised the Expenditure Review Committee that if a reduced CGT rate applied only to housing, investors could set up companies to circumvent the rules.
This was subsequently debunked by experts who said it would be too complicated for most, and the practice could be stopped by anti-avoidance tax rules. Broadening the application of the change also allows the government to raise more revenue.
The decision to abolish the 50 per cent CGT deduction for assets held for at least a year, replace it with the pre-1999 inflation indexation model, and apply it to all assets has muddied the government’s budget pitch about helping young people buy a home.
It has outraged the SME sector, which claims to be collateral damage from a budget that was supposed to be about housing, and has underwhelmed younger voters at whom it was aimed, especially those investing in shares, cryptocurrencies and ETFs as a way to try to build a house deposit.
Anthony Albanese pictured in this digitally altered meme faces a concerted social media campaign against his CGT changes. u/frankgreeff_ on Instagram
Before the government accepted the Treasury advice, it was hinting heavily that the then-speculated CGT changes would apply only to residential housing.
“The treasurer has made public statements, and I have as well, and I think the prime minister has, about examining the intergenerational issues affecting housing in Australia,” said Finance Minister Katy Gallagher in mid-February, as budget deliberations were in full swing.
“We’ve been clear on that. We are interested in a discussion on the intergenerational issues around housing.”
Amid growing calls for further carve-outs from the CGT change beyond just tech start-ups, Albanese remained adamant. “No,” he said when asked on Perth radio whether he was contemplating further change.
As reported by The Australian Financial Review, the government, with the support of the Greens, intends to rush the legislation for the CGT increase and negative gearing curbs through parliament before July 2, when it rises for the winter break.
This tight deadline leaves time for a cursory Senate inquiry at best, something that has angered the Coalition and the teals.
“Labor refused to take these policies to an election. They are now refusing to give time for scrutiny in the parliament and outside of the parliament,” said Opposition Leader Angus Taylor.
“They are frightened of small business people saying this is not good enough. They are frightened of Australians saying this is a government that simply doesn’t understand what it is doing. So they are going to try to rush it through.”
Independent Allegra Spender said there were genuine concerns with the application of the CGT changes.
“Rushing this through will only result in bad policy, unintended consequences and less likelihood the changes will last,” she said.
“The government can’t expect community support for tax changes that are sprung on them without proper engagement on concerns.”
In his official reply to the budget on Wednesday, shadow treasurer Tim Wilson launched a “Stand with Small” campaign, which, he said, would “back the self-starters of the nation and to get their input about how our economy needs to be restructured”.
Wilson pledged that a Coalition government would introduce a Small Business Act that would include a single national definition of what constitutes a small business and legal maximum payment terms to small businesses from government and big business. It would also include a right to be heard.
“Each new law should require a small business regulatory impact statement, and provide a pathway for feedback and where small businesses should also be heard – from the RBA, ASIC, the ATO and Fair Work,” Wilson said.
There will also be new and expanded minimum requirements for government procurement that must come from small business.
“We will replace Labor’s pessimism with Liberal optimism. A nation where the taxpayers are respected, hard work pays off, and Australians feel in control of their lives,” he said.