The recent Tax Forum in Canberra was a worthwhile exercise, despite some cynical coverage by sections of the media. Having been one of the 180 delegates invited to attend, I can say that — yes — some of the speeches were boring,and some people came along to push the barrow solely for the benefit of their particular narrow-interest groups — but — by and large, the debate concentrated on what was good for Australia, and a number of important matters were given a good airing.
No votes were taken, but Wayne Swan was there for the entire proceedings and participated fully in the discussions. He was strongly supported by Julia Gillard, who dropped by for several lengthy visits, as well as Bill Shorten, who was a regular participant. They were left in no doubt as to what the key issues were, and theyappeared to me to be ready to take action on many of them.
Let me comment on just three points that appeared to me to be crucial ones.
Firstly, there was strong support from both Left and Right for the abolition of negative gearing on property, and some advocacy for similar action on margin loans for share transactions. The general feeling was that both favoured a small section of the population while the majority have to bear the cost of their privilege.
Economists produced telling evidence that negative gearing has driven up property values to a point where they are beyond the financial capacity of first home buyers and pensioners seeking retirement homes. It wasalso pointed out that no other nation has the liberal tax benefits for negative gearing that Australia provides and,if we are allergic to leading the world on a carbon tax, we should have the same allergy about negative gearing.
Of course, its removal would have to be carriedout progressively, say overfive years, or there would be a major crash in property markets.
This possible slump would be offset to some extent by the second important issue that I want to raise, and this relates to the removal of Stamp Duties on everything.
When State Treasurers arrived at the Forum, they were given a tough time on this matter as they were obligated to remove Stamp Duties when they signed their Agreements with Peter Costello back at the time when the GST actually came into being — a deal that they have all ratted on, as they did with Payroll Tax.
The clear indication during the debate was that the States would do this only if Wayne Swan was willing to finance their loss of revenue, a thought that did not seem to please him. Nevertheless, the message was clear. The removal of Stamp Duty has to happen now.
Sadly, this debate showed clearly, yet again, that the States are total mendicants at the door of the Commonwealth, and emphasised the undeniable fact that they have passed their use-by date. They have to go.
The third issue of importance was superannuation — its complexity, its track record, its impact on the economy and its capacity to restrict the investment choices of individual taxpayers, etc. While Bill Shorten has done a good job of upgrading and simplifying the way in which Superannuation works in Australia, he has had to do this with one hand tied behind his back, because too many politicians have fiddled with the legislation down through the years.
A totally new system should be implemented. I advocated this in one of three speeches that I made at the Forum. My suggestion was that Bill Shorten be asked to prepare totally new superannuation legislation and regulations that would commence in 2015 for all new employees from that date onwards, and that no-one could sign-up to participate in the existing system, which would disappear when all current participants died. In the meantime, they would have the right to move over to the new model if they choose to do so.
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