Labor plans to strip more than $30 billion of negative gearing and capital gains tax concessions from investors — rich or otherwise — over a decade.
Labor plans to strip more than $30 billion of negative gearing and capital gains tax concessions from investors — rich or otherwise — over a decade.

How much money Aussies will lose under Shorten’s plan

EXCLUSIVE: Bill Shorten is preparing to rob those Labor considers rich but so far is giving almost nothing more to many of the poorest - and some of those in the middle.

Exclusive analysis of how Opposition and Government plans affect seven household types finds Mr Shorten would take thousands of dollars a year from self-funded retirees and higher single-income families while currently pledging less than $2 a week more than Scott Morrison to those on $25,000 a year, barely $1 a week extra to a $40,000 earner and nothing to those on the dole.

In so-called middle Australia, working couples on about $90,000 each would be no better off under Labor than the Liberal-led Coalition.

The analysis, by the Australian National University's Centre for Social Research and Methods (CSRM) for News Corp Australia, compares the cost of living impact in 2020 of competing policies for income tax, childcare and superannuation. It also factors in the Opposition's proposal to end cash refunds on franking credits, forecast to raise $56 billion over 10 years.

The analysis does not take in Labor's plan to strip more than $30 billion of negative gearing and capital gains tax concessions from investors - rich or otherwise - over a decade, or its $27 billion hit on family trusts. These could not be modelled.

CSRM principal research fellow Ben Phillips said to date neither side had offered anything "concrete" to people generally regarded as poor - the unemployed and those working part-time or casually.

"They are the groups who need the most relief," Associate Professor Phillips said.

"The major parties, at this point, haven't provided any real additional assistance for those groups."

But experts predict Labor will go there, tapping in to the $446 billion it intends to siphon between now and 2029 - the product of closing what its 'budget plan' describes as "loopholes for the top end of town".

 

Labor has signalled that its wealth redistribution agenda is far from finished.
Labor has signalled that its wealth redistribution agenda is far from finished.

 

"They are shifting the expenditure of Australian governments to be a much higher level," said PwC economics and policy partner Jeremy Thorpe. "Labor is looking to reset the role of government and I don't think people have really understood that.

"It is much more interventionist."

As an example, Mr Thorpe cited Mr Shorten's $10 billion promise to increase by 20 per cent the wages of all childcare workers.

Labor has signalled that its wealth redistribution agenda is far from finished.

It has foreshadowed raising Newstart and other welfare payments, because they are "too low". A commonly discussed increase is $75 a week, which Deloitte Access Economics costed at $3 billion annually.

In 2017, Mr Shorten said inequality was "on the march" and tackling it was Labor's "defining mission". He called it "the biggest threat to our health as an economy and our cohesion as a society".

A Labor campaign spokeswoman said "even the Reserve Bank Governor (Philip Lowe) agrees that inequality is on the march" due to the rise in asset prices, citing comments by the RBA boss also from 2017.

However, a February 2019 OECD research paper on Australia found that since 2008, "income inequality has been roughly constant".

Labor plans to strip more than $30 billion of negative gearing and capital gains tax concessions from investors — rich or otherwise — over a decade.
Labor plans to strip more than $30 billion of negative gearing and capital gains tax concessions from investors — rich or otherwise — over a decade.

When News Corp Australia questioned Labor about why it could only offer a worker on $40,000 about $1 a week more than the Coalition, the spokesman said it would also restore penalty rates that workers on lower incomes rely on to make ends meet and deliver on a pay rise for childcare workers.

"The Liberals on the other hand want to push ahead with a corporate tax cut and to give the highest income earners an $11,000 tax cut," Labor's spokesman said.

"Australia cannot afford another three years of a government that prioritises the top end of town over the vast bulk of workers on lower and middle incomes," the spokesman said.

A Coalition spokeswoman said that once its income tax plan was fully rolled out in 2024-25, everyone earning over $40,000 will be better off under a Liberal-National government.

Under Labor "a bricklayer in NSW would pay $613 more tax every year and a bus driver in Adelaide would pay $693 more tax every year," she said. "A public school classroom senior teacher in WA would pay $3955 more tax every year while a nurse manager in NSW would pay $11,740 more tax every year."

Shadow treasurer Chris Bowen has flagged tax cuts in 2020, without saying who will get what relief.  Picture: Kym Smith
Shadow treasurer Chris Bowen has flagged tax cuts in 2020, without saying who will get what relief. Picture: Kym Smith

The ANU research shows that next year, a dual-income couple each earning $80,000 with two kids in full-time childcare would be $5000 ahead under Labor.

But those earning $90,000 apiece are no better off, because the extra benefits under the ALP childcare plan stop when a household reaches $174,000. Labor's spokesman did not answer when asked whether the party was sending a message to people that they should not seek to earn more than that.

When it was put to the Coalition spokeswoman that parents bringing in a combined $160,000 were better off voting for the Opposition, she said: "Labor's done this before - they've promised the world but because they can't manage the economy, they can't deliver.

"Because Labor couldn't manage the economy, they couldn't afford their promises and, in 2011, Labor had to reduce their rebate cap from nearly $8000 to $7500, as well as pause indexation."

CSRM's calculations include the similar income tax relief both sides are offering from as soon as July, as well as Labor's reintroduction of the budget repair levy for those earning over $180,000 and the hit such workers would face through Mr Shorten's doubling of tax on their superannuation contributions.

The numbers also reflect the Opposition's more generous childcare scheme.

Not included is the impact of Labor's plan to double the rate of carbon emission cuts, which the Government has warned may increase wholesale electricity prices by nearly 60 per cent - a claim the Opposition says is false.

And they figures do not take in differences in tax plans after 2020. Labor intends to undo $285 billion of savings Scott Morrison has promised.

Shadow treasurer Chris Bowen has flagged tax cuts from 2023, without saying who will get what relief.



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