How does the Liberal Party rebuild? On Background
It's honestly difficult to remember a week where the political landscape has shifted as dramatically as it has this week. The Liberals, who lost their leader Peter Dutton - are facing what some are calling an existential crisis. So, what direction will it now go in?
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ABC News
34 minutes ago
- ABC News
Tech billionaires to reap the rewards of Trump's strongarm tax tactics
The world's richest are about to get a whole lot richer. Donald Trump has just engineered a spectacularly lucrative arrangement for his big technology backers, the "broligarchs" who backed his run to the White House. While most of the world has been focused on tariffs and the potential havoc they could wreak, it was another T word that dominated the American president's strategy to reward his biggest supporters. Tax. For close to 20 years, the Organisation of Economic Co-operation and Development has been diligently working on a plan to ensure multinational firms pay their fair share of tax in the countries in which they operate. A little over 18 months ago, they finally secured an agreement from members at a meeting in Singapore. The plan, endorsed by the Biden administration, was that all multinationals would pay a minimum of 15 per cent tax. It didn't seem too onerous an impost. Australia, a primary force in the movement for more than a decade, formally signed the proposal into legislation just before Christmas last year. That's now out the window. As part of an agreement reached on Friday our time, the US will junk its planned "retaliatory tax" on nations it deems unfriendly to American corporations. The quid pro quo? The G7 nations — and most other countries as a result — should tear up their plans to tax American multinationals. It went largely unnoticed during the presidential inauguration back in January. Within hours of his long and rambling speech, the new president signed an executive order announcing America's withdrawal from the OECD initiative to standardise global corporate tax rates and limit tax avoidance. The writing was on the wall. Suddenly, it all became clear at the extent of the power of the four figures — Elon Musk, Jeff Bezos, Mark Zuckerberg and Sundar Pichai — nestled up behind the new president at the podium seated in prime position in line with his new cabinet, and all looking as though they'd just eaten the canary. United by a common goal, enriching themselves, it was a statement about power, influence and American hegemony. Less than six months in and Donald Trump has delivered for them in spades. Multinational tax avoidance has always been a problem, particularly in resource rich countries like Australia. But in recent years, it has reached new heights as the big technology companies have turned it into an art form. The traditional standard bearer for tax avoidance Down Under was oil giant Chevron. Back in 2021, the oil giant paid $30 in tax. Yes, you read that correctly. $30. That was on revenue of $9.2 billion and, even then, it wasn't happy, arguing it shouldn't have to pay anything as it lost $1.8 billion that financial year. A subsequent clampdown by the Australian Tax Office saw it cough up a couple of billion in tax the next year. That followed years of legal action between the company and the ATO over its reluctance to pay tax which Chevron finally abandoned in 2018. Like many multinationals, Chevron shifted its profits offshore by borrowing money from a Chevron entity at punishing rates of interest, then claiming that as a tax deduction. The big tech companies employed a more sophisticated model. Aided by the fact that they manufactured different components in different countries, if they manufactured anything at all, and sold their wares across the globe, it was easy to justify operating out of low taxing destinations where profits could be shovelled. One way was to establish a marketing firm in a low taxing country, that charged related companies in other parts of the global network exorbitant fees. Or there was the preferred strategy of establishing a firm that owned the intellectual property in a tax haven, which then charged its cousins in high taxing countries exorbitant fees for using technology derived from the US parent. For years, the Australian arms of the big tech outfits generated massive revenue streams but made little profit here and, hence, paid hardly any tax. In many cases, most of the money was shunted off to Ireland. Amazon, for instance, in 2018 notched up sales here of more than $1 billion but paid just $20 million in tax. It since has begun paying substantially higher tax payments but continued to book huge amounts of Australian revenue through Singapore. If President Trump's executive order was manna from heaven for the broligarchs, this week's agreement for G7 nations to abandon the 15 per cent minimum tax has been a gift from God. Trump loves to insert the word "deal" into almost every sentence and on Friday his Treasury Secretary Scott Bessent was channelling his boss on Elon Musk's X. "President Trump paved the way for this historic achievement. On January 20, the President issued two Executive Orders instructing Treasury to defend US tax sovereignty, and as a result of President Trump's leadership we now have a great deal for the American people." How did Bessent manage to convince the G7 to abandon years of toil on a standardised global corporate tax rate? Some might call it negotiation. Others may see it as coercion. It involves America abandoning a little heard about clause in Trump's Big Beautiful Bill, the big spending, tax cutting bill that threatens to blow out America's budget deficit. Section 899 from that bill was penned as a new line of attack on what the president deems to be unfriendly nations. It deals with "retaliatory taxation". Companies and investors from "discriminatory foreign countries" buying or investing in the US could be slugged with escalating increases in US federal income tax and withholding tax. The tax penalty would rise by up to 5 per cent a year to a maximum of 20 percentage points above existing treaty rates. While that all sounds a little esoteric, it put Australian super funds and big corporations into a mild state of panic. Our super funds have roughly $400 billion invested in the US, most of it on Wall Street and much of it in America's big tech firms. The prospect of increased taxes would thwart those returns into the future and damage the retirement incomes for Australians. While it delivered a mighty big stick for Trump in any negotiations with Australia, it wasn't without dangers for him at home. US investment firms, already worried about the exodus of global capital from US markets, were becoming increasingly concerned that if the new tax was ever enacted, it could ultimately cause a run on US government bonds and cause a credit crisis. That crisis has been averted for now. But it has come at the expense of America's reputation and role as the moral standard-bearer in the global economy.
News.com.au
44 minutes ago
- News.com.au
‘Not the main problem': Unexpected response to the ‘Robin Hood of renters'
Few figures are more synonymous with Australia's ongoing housing crisis – or more polarising – than Jordan van der Lamb. A fierce critic of the real estate industry, the so-called 'Robin Hood of renters' and socialist politician has attracted a hundreds-of-thousands-strong audience across YouTube, Instagram and TikTok under the moniker PurplePingers. Unlike the heroic outlaw after whom he's been nicknamed, Mr van der Lamb does not advocate for anyone to steal from the rich. He does, however, encourage those in need of shelter to squat in their 'vacant' properties. He has created an entire database of such homes across the country. 'Are you sick of rich people hoarding empty houses during a housing crisis? Because I am. Here's what you can do about it,' he told his followers in a video this week, before taking them on a tour of a seemingly-abandoned property in Melbourne's Chadstone. 'Fun fact: squatting in Australia is not necessarily illegal – which is the best type of illegal. Especially if the front door doesn't actually lock. So yeah, here's a free house if you want it … Homes are for people to live in, not for rich people to make money off.' Mr van der Lamb's methods have, unsurprisingly, proven controversial – drawing sharp criticism from social media users and those in the real estate industry to Anthony Albanese. Yet his relentless coverage of the current state of our property market cannot be ignored. 'Australia is experiencing more than a housing crisis; we are in the grips of a housing disaster,' acting executive director of independent think tank Per Capita, Sarah McKenzie, told 'In 2024, demand for new dwellings outpaced supply by 68,000 compounding a severe supply shortfall that has been building for years. Severe rental stress is at a decade high, public housing waitlists are near breaking point, and homelessness services are overwhelmed.' 'They're not the main problem' 'In that context, it's no surprise that people are frustrated,' Ms McKenzie said. A Prosper Australia report released last July and frequently cited by Mr van den Lamb showed that Melbourne has close to 100,000 vacant homes – more than enough to, hypothetically, shelter the 30,000 Victorians experiencing homelessness (per the latest census). 'Jordan van der Lamb's tactics aren't the solution, but they're not the main problem either,' Ms McKenzie said. 'They reflect a growing anger at a housing system that leaves homes empty while people sleep on the streets. At CEH we don't endorse squatting or public shaming of property owners, but nor should the national debate be sidetracked by it.' Earlier this year, the consequences of Mr van den Lamb's activism were laid bare – and ignited the fury of the Prime Minister – when a Melbourne woman arrived at her vacant investment property to find security cameras installed, the locks changed, squatters inside and the home's address online. The woman, who inherited the home from her late father, also discovered that most of his possessions were missing. She went on to tell the ABC she did not believe it was a coincidence that the break-in happened after the address was shared on social media. Mr van den Lamb confirmed he had posted the home's address but noted it was unclear if the squatters had moved in prior to him doing so, telling The Project the home 'was empty for 17 years'. Though he felt 'very sorry that (her) belongings were taken … I also think about the fact that every four days a young person experiencing homelessness dies in this country, even though there are hundreds of thousands of homes available to them', Mr van den Lamb said. 'They might be good for clickbait, but they won't help' Like Ms McKenzie, Macquarie Law School Professor and Executive Member of Smart Green Cities, Cathy Sherry, said 'the younger generation has every right to be very angry about the mess that older Australians have created in our housing market'. 'It is the result of muddled thinking that has encouraged everyone to view residential property as an asset class to build wealth, as opposed to a basic human necessity,' Professor Sherry, a leading international expert in land law, told 'If that basic necessity is not met – or if people have to spend too much time and money securing it – they cannot contribute fully to society. That is harming us all.' Yet Mr van den Lamb's ideas are neither 'realistic or practical', she said. 'They might be good for clickbait, but they won't help young people,' Professor Sherry, a leading international expert in land law, said. 'The answer is not for people to squat, as that means they have none of the protections that apply to residential tenants. 'He runs the risk of encouraging people to do things that might make them civilly or even criminally liable.' Jacob Caine is the interim CEO of the peak professional association for the Victorian real estate industry, Real Estate Institute of Victoria (REIV). '(We) remain acutely aware of the significant impacts that the state's ongoing housing and rental market crisis is having on Victorians, and the urgent need to address it,' Mr Caine told 'But we strongly reject any attempts, including by Mr van den Lamb, to encourage squatting as a means of achieving this. This is a highly dangerous practice, that risks the safety of all involved. 'It is completely at odds with Victoria's high-functioning real estate sector and the fundamental rights of home ownership that have long been a hallmark of Australian society.' Mr van den Lamb's rhetoric 'also plays to a false and inflammatory narrative around all rental providers being rich', Mr Caine noted, 'a perception which ignores the fact that almost nine-in-ten rental providers are private investors, with the majority owning just one rental property'. 'We need to be a bit more grown up' The 'answer' is not in headline-grabbing antics, Prof Sherry argued, but in fixing the tax policies that have 'encouraged older people to buy residential property as an investment'. 'Just as we would not allow some people to stockpile food when other people are hungry, we should not allow some people to stockpile homes when other people are homeless or experiencing housing stress,' she said. Owners who don't intend to use the property themselves, renovate or sell it in the near future – and are instead 'land banking for an extended period or allowing their property to fall into serious disrepair … should be penalised by the tax system'. That Australia doesn't already do so, Prof Sherry said, is 'exceptionally dumb tax policy that is shooting the nation in the foot'. 'Tax policy is not as interesting as squatting, but if we want real solutions, we need to be a bit more grown up about the issue.' At the end of the day, 'governments, not individuals, are responsible for the state of housing in this country', Ms McKenzie said. 'We have a housing system that fails to deliver enough homes, especially for those on low incomes,' she said. Though the Federal Government's $43 billion Homes for Australia plan is a 'good start', structural factors like skilled worker shortages, low construction productivity, outdated planning rules and 'tax settings that make it easier to profit from housing than to build it' hold it back. 'Housing isn't just where we live – it's the foundation of health, safety, and opportunity,' Ms McKenzie said. 'We won't solve this crisis through distraction or division. We'll solve it by building more homes, and ensuring those homes are delivered at a price people can actually afford.'
West Australian
2 hours ago
- West Australian
Michelle Grattan: Bold reform a taxing journey
Next week will be the 40th anniversary of the Hawke government's tax summit. Dominated by then treasurer Paul Keating's unsuccessful bid to win support for a consumption tax, it was the public centrepiece of an extraordinary political and policy story. That story was about the possibilities for, but constraints on, bold reform; how a determined treasurer can muster a formidable department to push for change, and the way the ambitions of a minister can clash with the pragmatism of a prime minister. Ken Henry, later secretary of the treasury, was then part of what they dubbed the 'treasury tax reform bunker'. He kept a timesheet, averaging 100 hours work a week for a three-month period. Officials brought sleeping bags and their small children (Henry's were aged three and five) into the office. Before the summit, the government produced a comprehensive draft white paper. Keating battled to keep the conflicting interests 'in the cart' for his blueprint. But the four-day summit, attended by business, unions, premiers and community groups, was inevitably divided by stakeholders' self-interests. In particular, the unions couldn't wear Keating's consumption tax, and Bob Hawke kyboshed it unceremoniously. Keating, who had to settle for a more limited but still very significant set of reforms, was furious with Hawke, and it left a fracture in their relationship. Jim Chalmers was aged seven in 1985. But he's a student of Keating (he did his PhD on his prime ministership) and you can be sure he's boned up on what went right and wrong in that tax reform exercise. Now he is preparing for the Government's August 19-21 'roundtable' and his own bid at major tax reform. The roundtable, as first announced, focused on 'productivity', and that will be central. After all, a fit-for-purpose tax system is one key to improving productivity. The roundtable (for which invitations to business and the union movement are now going out, with more to follow) is nothing like on the scale, in size (the summit had about 160 attendees, the roundtable will have about 25) or preparation, of the elaborate 1985 conference. And crucially, while that summit was the culmination of a process, Chalmers is using the roundtable to kick off a process. Chalmers is lowering expectations in regard to specific outcomes on tax from the roundtable. While those might be obtainable on some productivity issues, on tax he is likely to look for broad support for a direction of reform. For instance, is there a general appetite for reshaping the tax system towards lower personal and company tax, offset by higher taxes on certain investments and savings? ` Most tax experts argue Australia's system is too skewed towards taxing income rather than spending. This leads to calls to increase or broaden the GST, financing cuts to personal income tax. Chalmers has been a long-term opponent of changing the GST, but he says he is not ruling the GST out for discussion at the roundtable. (That's a contrast to when prime minister Kevin Rudd, commissioning Henry to lead a major tax review, excluded the GST from its terms of reference.) Almost certainly, however, it would not be possible to get 'consensus' from business and unions for GST changes. Not least of the constraints is that compensating the losers in such a change is very expensive and there is not the money to do so these days. That immediately limits the extent of reform. Henry tells The Conversation's podcast that if he were designing a tax reform package 'I'd be looking at opportunities to broaden the GST and maybe to increase the rate as well'. But 'I do think it is possible to achieve major tax reform … without necessarily increasing the (GST) rate or extending the base'. Henry's (non-GST) wish list includes getting rid of the remaining State transaction taxes, such as stamp duty on property conveyancing. Notably, he argues for extracting more revenue from taxing natural resources and land, and also from taxing pollution from various sources. 'We're going to need to tax those things more heavily if we're going to relieve the tax burden on young workers through lower personal income tax and introducing tax indexation.' Henry is particularly focused on the unfair burden at present put on these younger taxpayers. He has come around to the idea of income tax indexation as one means of assisting them. A system more geared to younger workers raises immediate questions about the present generous treatment of superannuants. Chalmers is already caught in that hornets' nest with his proposed changes for those with balances more than $3 million. To what extent will the roundtable tax debate revive the issues of negative gearing and the capital gains tax discount? The Government hosed down before the election the prospect of any changes to negative gearing this term. Chalmers, however, had work done on this last term and he would likely favour reining it in. But would this be a bridge too far for the Prime Minister? Indeed, where will Anthony Albanese's limits be when it comes to reform? Would he only support changes that had strong consensus? And how far would he feel constrained in going beyond what he considers he has a mandate for? If Chalmers stays serious about the tax push, it is going to take many months of intense work. It can't be rushed, but nor can it be delayed. If it ran for much over a year it would likely find the Government's political capital had been eroded. The size of its capital store can appear deceptive because so much of it is thanks to Peter Dutton and Donald Trump. In 2022, the Liberals boycotted Labor's jobs and skills summit (although Nationals leader David Littleproud attended). This time, shadow treasurer Ted O'Brien has accepted Chalmers' invitation and will participate in the roundtable. It will be a tricky gig for O'Brien, new to this shadow portfolio. He has to avoid being too negative, but nor can he endorse things the Opposition might later reject. The Coalition will not have a tax policy against which to judge what's said. The occasion will be a chance for O'Brien to make contacts and get more insight into stakeholders' views on the key economic debates, much wider than just tax. Importantly, however, O'Brien will need to remember judgments will be being made about him by other participants in the room. Business in particular will be seeking to get a fix on whether Opposition Leader Sussan Ley's declarations about wanting to be constructive where possible are fair dinkum. Michelle Grattan is a professorial fellow at the University of Canberra.
