Latest news with #Eslake
Sky News AU
a day ago
- Business
- Sky News AU
'Un-Australian': Western Australia's $60 billion sweetheart GST deal safe under Coalition, despite massive budget blowout
The Coalition has confirmed it will not propose any changes to the controversial GST arrangement that disproportionately benefits Western Australia. It comes amid renewed calls from NSW, Queensland and Victoria to revisit the national carve up of GST revenue, which hands WA better services despite lower taxes. Shadow treasurer Ted O'Brien and shadow finance minister James Paterson told Sky News the Coalition's position would not change the existing arrangement. 'The Coalition will not be proposing changes to the current GST settings with respect to Western Australia,' the shadow economic team said. The statement reinforces the Coalition's acceptance of the 2018 GST deal, which guarantees WA at least 75 cents for every dollar of GST raised in the state. NSW, Victoria, and Queensland typically receive less than 75 cents per dollar of GST raised within their borders and do not have a guaranteed minimum. The arrangement also includes a 'no worse off' guarantee designed to protect other jurisdictions from losing funding, but critics say it has come at a heavy cost. Independent economist Saul Eslake was scathing in his response to the Coalition's decision, telling Sky News it shows they were 'not serious about returning the budget to balance'. Mr Eslake has previously described the WA GST deal as the 'worst public policy decision of the 21st Century', citing two key reasons. Firstly, he argues the deal fundamentally undermines the purpose of the GST system, which is meant to ensure states and territories have the capacity to provide similar public services while imposing comparable tax burdens. Instead, the deal allows WA, Australia's richest state, to enjoy better public services while paying lower state taxes. 'The 'WA GST deal' which Albanese champions means that residents of Australia's richest state, WA, will get better public services whilst paying lower state taxes than other Australians,' he said. 'It is giving WA $7 billion in 2025-26, and at least $8 billion per annum in 2026-27 through 2029-30. 'More than WA needs in order to be able to provide the same standard of services whilst levying the same burden of taxes as the average of all states and territories. Which I think is 'un-Australian'.' Secondly, Mr Eslake said the massive cost blowout of the deal, which has surged from $9 billion over eight years to nearly $60 billion over eleven years, marks it as one of the most expensive policy failures. 'That's the biggest blow-out in the cost of any single policy decision, ever, with the possible exception of the NDIS, which was at least for a noble purpose," he said. Calls to revisit the GST carve-up have intensified from the eastern states which argue the current system is unfairly weighted in WA's favour. NSW Treasurer Daniel Mookhey and Queensland Treasurer David Janetzki have both urged the federal government to reconsider the arrangement and pursue a model based more on population. WA Transport Minister Rita Saffioti accused eastern commentators of being 'obsessed with wanting to tear WA down' on Tuesday. 'If you're a true economic commentator, you would realise that WA is driving the national economic agenda,' she said. Prime Minister Anthony Albanese has likewise stood firm on the deal, saying he supports the position on WA GST given he did not propose changes in the election campaign. 'We support the position on WA that I took to the election, that I took the 2022 election, and that were enshrined at the National Cabinet,' Mr Albanese said on Tuesday. 'Importantly, as well, part of that is that no state's been worse off (under) that guarantee—and that guarantee is in place.' The deal was originally set to expire in 2026-27 but has been extended until 2029-30 as part of a broader agreement with states on the National Disability Insurance Scheme. Mr Eslake has urged bipartisan cooperation to end the costly arrangement, proposing the Productivity Commission be tasked with designing a simpler, more transparent system for distributing GST revenue. 'If the Coalition were to offer the government bipartisan support for reversing the 2018 changes… then the government would have absolutely no valid reason not to accept that," he said.
Sydney Morning Herald
2 days ago
- Business
- Sydney Morning Herald
‘How do they sleep at night?' Allan and Minns governments, experts demand Albanese fix GST
The Minns Labor government and its treasurer, Daniel Mookhey, have been pushing for an overhauled distribution model that would give states GST corresponding to their population. 'NSW will continue to argue for a fairer carve up of GST on a per capita basis,' a government spokeswoman told this masthead. 'That would include support for the smaller jurisdictions as required. This would help eliminate the wild fluctuations which hinder states from being able to properly budget for future GST contributions.' Queensland's Coalition Treasurer David Janetzki warned Labor against 'locking in a Western Australia sweetheart deal for political reasons' and SA Labor Treasurer Stephen Mulligan argued the GST model gave WA 'an unfair financial advantage'. Albanese and his ministers will spend two days in Perth this week and hold a cabinet meeting in a state that has received lots of attention from this government. Labor last week approved an extension of the North-West Shelf gas project off the state's coast, watered down a petroleum rent tax last term, and backed off on legislating a new environment protection agency last year, partly due to concerns from the mining state. Loading Independent economists Saul Eslake and Chris Richardson want Labor to seize the moment to scrap the WA deal. The cost blowout is the largest in the federal budget and only comparable with the NDIS, according to Eslake, who has been a frequent critic of the WA arrangement. Eslake said Albanese's big win meant he did not require a group of seats in any one state to remain in power. 'This government didn't introduce the worst public policy decision of the 21st century. But they extended it, and they defended it. And if they are serious, then they have a chance to end it,' Eslake said. 'Given that Anthony Albanese and Jim Chalmers profess to believe in equality and in sound financial management, how can they sleep at night knowing they are giving the richest state in the country $8 billion more than it needs while simultaneously saying they can't afford to increase the JobSeeker allowance?' In 2016, under pressure from the politically influential WA government, Morrison came up with a plan under which no state's GST share could fall below 75 cents for every dollar of the tax raised within its jurisdiction. This was designed to offset WA's frustration that it had fallen to a much lower share than 75 per cent because the GST formula punished WA for its ability to raise billions in mining royalties. The top-up was initially forecast to cost $2.3 billion over four years, but, combined with another policy to make sure no other states were worse off, the total package of changes combined to push the expected cost of Morrison's original plans to $60 billion by the end of the decade. WA's GST share was expected to lift due to a forecast fall in iron ore prices and royalties, but that did not occur, baking in the costs to taxpayers across Australia. Unlike other states struggling to manage budgets, WA is projected to bank cumulative surpluses worth about $20 billion over the eight years to 2026-27. Richardson said the only way the WA deal would end was if the Coalition agreed not to turn the issue into a political issue to gain votes in the state. He said Chalmers must give the Productivity Commission an appropriately expansive terms of reference for its review of the GST next year, which he said would inevitably find that the WA deal was the equivalent of the country 'smoking 100 notes'.
West Australian
29-05-2025
- Business
- West Australian
‘Stop giving concessions': Major warning on first-home handouts
Potential first-home buyers are falling further behind due to the very schemes designed to get them into a home. Independent economist Saul Eslake said the best thing the government could do to help first-home buyers would be to remove concessions that allow them to buy a home. 'The question isn't what they should be doing, it's what they should not be doing,' he told NewsWire. 'What they have to stop doing is things that needlessly inflate demand for housing. 'Stop giving out what I call second-home vendor grants as I call them because that is where the money ends up.' 'Stop giving stamp duty concessions, all they do is allow people to pay the vendor what they would have paid to the state government and back away from the mortgage deposit guarantee schemes and shared equity schemes,' he said. Mr Eslake said these policies, which are designed to help first-home buyers, simply end up inflating house prices. 'While a shared equity scheme sounds like a good idea, in practice, if you're willing to buy a $400,000 house and the government says 'hey, we will give you 20 per cent', then buyers say 'oh good, I can now afford a $500,000 house'. 'So a $400,000 house becomes a $500,000 house, so it's more a matter of just stop needlessly inflating demand.' One of the key election policies the Albanese government ran on was its expansion of the First Home Guarantee scheme, which is sometimes called the 5 per cent deposit scheme. This program allows first-home buyers to purchase property with a deposit as little as 5 per cent, with the government effectively guaranteeing the other 15 per cent, allowing first-home buyers to avoid paying lenders' mortgage insurance. But in an updated version of the scheme to come into effect at the start of 2026, caps of $125,000 for singles and $200,000 for couples will be removed. The PropTrack April Home Price Index showed national house prices hit a new record high over the month of April, increasing by 0.2 per cent monthly or 3.7 per cent compared with the same time last year. Australia's Cash Rate 2022 Helia chief executive and managing director Pauline Blight-Johnston said the main risk to the latest policy was the removal of the income caps to get government help. 'Our belief is that we will achieve the most as an economy if the government help is directed towards those that need it the most, and those that are able to help themselves through private enterprise do so without the taxpayers' dollar,' she told NewsWire. 'At the end of the day, our view is that taxpayers' dollars should go to those that really need the help to get into the market, such as essential workers or others that are really struggling.' Ms Blight-Johnston said expanding the HGS didn't address the fundamental underlying issue for those struggling to buy their first home – a shortage of affordable supply. She fears that the government's housing schemes just worsen housing affordability by fuelling demand and driving up prices. Instead, she pointed to first-home buyers using lenders' mortgage insurance as a 'really powerful tool' that is often misunderstood. 'People think of it as a fee …. But if you think of it differently as a wealth creation tool and it allows you to get into a home earlier, on average people that use LMI get in around nine years earlier and around $100,000 better off after five years because they got into the market earlier,' she said. Ms Blight Johnston said mortgage holders would typically pay 1 to 2 per cent as a premium above their usual repayments if they took on LMI. 'If you think property goes up on average 4 or maybe 5 per cent a year, if it is going to take you more than six months to save the deposit, the extra 15 per cent — as LMI takes the deposit down from 20 to 5 per cent – you're going to be ahead by getting into the market earlier and paying the premium.' Mr Eslake said LMI could increase demand for property if it acted like a reduction in interest rates. 'We know whenever interest rates go down, people borrow more and pay more for the house they buy which results in higher prices,' he said.
The Advertiser
25-05-2025
- Business
- The Advertiser
Fears super tax rise for rich will whack housing market
A bid to increase taxes on wealthy Australians' superannuation has been paved with good intentions, but there are warnings it may create unfair outcomes. The federal government is hoping to pass a bill to impose a 15 per cent tax on super balances higher than $3 million, which would affect about one in every 200 savers, according to the Australia Institute. Some have complained it would force Australians to move their assets, such as small businesses and farms, out of their super. Independent economist Saul Eslake does not have much sympathy for them. "That's not what bloody super is for," Mr Eslake told AAP. "Super has become a vehicle for rich people to avoid tax and it's become a subsidy for bequests, not retirement income. "I support the government's objective ... however, I think the government is going about it the wrong way." The bill would tax unrealised gains, which is the growth in the value of an investment before it is sold. Mr Eslake branded it "unfair", as it means people would be taxed even if they had not earned income. Treasurer Jim Chalmers insists calculating unrealised gains is not unique and says no one has proposed a better way of making this calculation after almost three years of consultation. Some have called the proposal a tax on wealth. Mr Eslake is not opposed to this, but questions why it is being imposed on superannuation and not on housing. "This will encourage people - particularly rich people - to put more money into owner-occupied housing, which is completely exempt from tax," he said. "It's enough of a tax shelter as it is." The government's decision not to index the $3 million threshold has also been a sore spot for critics. While the proposal may only affect 0.5 per cent of Australian savers, the lack of indexation means many more could be taxed in the coming years. Dr Chalmers anticipates the government could raise the threshold in the future. The superannuation tax was first proposed in 2023 and could be one of Labor's first bills to pass after its landslide election win. "Just because they've got a mandate, doesn't mean it's right," Mr Eslake said. The economist has suggested that anyone with more than a certain amount - say $3 million - in their super should not get any concessions on future contributions and would have to pay the marginal tax rate on contributions and income generated. Alternatively, super contributions and earnings could be taxed at a person's marginal rate minus 15 percentage points rather than a flat 15 per cent, meaning those in the top tax rate would pay 30 per cent, Mr Eslake proposed. Liberal senator Andrew Bragg acknowledged steps to improve the tax system were worth consideration, but warned Labor's bill would "destroy superannuation as the preferred savings vehicle in Australia, particularly for millennials and Gen Zs". A bid to increase taxes on wealthy Australians' superannuation has been paved with good intentions, but there are warnings it may create unfair outcomes. The federal government is hoping to pass a bill to impose a 15 per cent tax on super balances higher than $3 million, which would affect about one in every 200 savers, according to the Australia Institute. Some have complained it would force Australians to move their assets, such as small businesses and farms, out of their super. Independent economist Saul Eslake does not have much sympathy for them. "That's not what bloody super is for," Mr Eslake told AAP. "Super has become a vehicle for rich people to avoid tax and it's become a subsidy for bequests, not retirement income. "I support the government's objective ... however, I think the government is going about it the wrong way." The bill would tax unrealised gains, which is the growth in the value of an investment before it is sold. Mr Eslake branded it "unfair", as it means people would be taxed even if they had not earned income. Treasurer Jim Chalmers insists calculating unrealised gains is not unique and says no one has proposed a better way of making this calculation after almost three years of consultation. Some have called the proposal a tax on wealth. Mr Eslake is not opposed to this, but questions why it is being imposed on superannuation and not on housing. "This will encourage people - particularly rich people - to put more money into owner-occupied housing, which is completely exempt from tax," he said. "It's enough of a tax shelter as it is." The government's decision not to index the $3 million threshold has also been a sore spot for critics. While the proposal may only affect 0.5 per cent of Australian savers, the lack of indexation means many more could be taxed in the coming years. Dr Chalmers anticipates the government could raise the threshold in the future. The superannuation tax was first proposed in 2023 and could be one of Labor's first bills to pass after its landslide election win. "Just because they've got a mandate, doesn't mean it's right," Mr Eslake said. The economist has suggested that anyone with more than a certain amount - say $3 million - in their super should not get any concessions on future contributions and would have to pay the marginal tax rate on contributions and income generated. Alternatively, super contributions and earnings could be taxed at a person's marginal rate minus 15 percentage points rather than a flat 15 per cent, meaning those in the top tax rate would pay 30 per cent, Mr Eslake proposed. Liberal senator Andrew Bragg acknowledged steps to improve the tax system were worth consideration, but warned Labor's bill would "destroy superannuation as the preferred savings vehicle in Australia, particularly for millennials and Gen Zs". A bid to increase taxes on wealthy Australians' superannuation has been paved with good intentions, but there are warnings it may create unfair outcomes. The federal government is hoping to pass a bill to impose a 15 per cent tax on super balances higher than $3 million, which would affect about one in every 200 savers, according to the Australia Institute. Some have complained it would force Australians to move their assets, such as small businesses and farms, out of their super. Independent economist Saul Eslake does not have much sympathy for them. "That's not what bloody super is for," Mr Eslake told AAP. "Super has become a vehicle for rich people to avoid tax and it's become a subsidy for bequests, not retirement income. "I support the government's objective ... however, I think the government is going about it the wrong way." The bill would tax unrealised gains, which is the growth in the value of an investment before it is sold. Mr Eslake branded it "unfair", as it means people would be taxed even if they had not earned income. Treasurer Jim Chalmers insists calculating unrealised gains is not unique and says no one has proposed a better way of making this calculation after almost three years of consultation. Some have called the proposal a tax on wealth. Mr Eslake is not opposed to this, but questions why it is being imposed on superannuation and not on housing. "This will encourage people - particularly rich people - to put more money into owner-occupied housing, which is completely exempt from tax," he said. "It's enough of a tax shelter as it is." The government's decision not to index the $3 million threshold has also been a sore spot for critics. While the proposal may only affect 0.5 per cent of Australian savers, the lack of indexation means many more could be taxed in the coming years. Dr Chalmers anticipates the government could raise the threshold in the future. The superannuation tax was first proposed in 2023 and could be one of Labor's first bills to pass after its landslide election win. "Just because they've got a mandate, doesn't mean it's right," Mr Eslake said. The economist has suggested that anyone with more than a certain amount - say $3 million - in their super should not get any concessions on future contributions and would have to pay the marginal tax rate on contributions and income generated. Alternatively, super contributions and earnings could be taxed at a person's marginal rate minus 15 percentage points rather than a flat 15 per cent, meaning those in the top tax rate would pay 30 per cent, Mr Eslake proposed. Liberal senator Andrew Bragg acknowledged steps to improve the tax system were worth consideration, but warned Labor's bill would "destroy superannuation as the preferred savings vehicle in Australia, particularly for millennials and Gen Zs". A bid to increase taxes on wealthy Australians' superannuation has been paved with good intentions, but there are warnings it may create unfair outcomes. The federal government is hoping to pass a bill to impose a 15 per cent tax on super balances higher than $3 million, which would affect about one in every 200 savers, according to the Australia Institute. Some have complained it would force Australians to move their assets, such as small businesses and farms, out of their super. Independent economist Saul Eslake does not have much sympathy for them. "That's not what bloody super is for," Mr Eslake told AAP. "Super has become a vehicle for rich people to avoid tax and it's become a subsidy for bequests, not retirement income. "I support the government's objective ... however, I think the government is going about it the wrong way." The bill would tax unrealised gains, which is the growth in the value of an investment before it is sold. Mr Eslake branded it "unfair", as it means people would be taxed even if they had not earned income. Treasurer Jim Chalmers insists calculating unrealised gains is not unique and says no one has proposed a better way of making this calculation after almost three years of consultation. Some have called the proposal a tax on wealth. Mr Eslake is not opposed to this, but questions why it is being imposed on superannuation and not on housing. "This will encourage people - particularly rich people - to put more money into owner-occupied housing, which is completely exempt from tax," he said. "It's enough of a tax shelter as it is." The government's decision not to index the $3 million threshold has also been a sore spot for critics. While the proposal may only affect 0.5 per cent of Australian savers, the lack of indexation means many more could be taxed in the coming years. Dr Chalmers anticipates the government could raise the threshold in the future. The superannuation tax was first proposed in 2023 and could be one of Labor's first bills to pass after its landslide election win. "Just because they've got a mandate, doesn't mean it's right," Mr Eslake said. The economist has suggested that anyone with more than a certain amount - say $3 million - in their super should not get any concessions on future contributions and would have to pay the marginal tax rate on contributions and income generated. Alternatively, super contributions and earnings could be taxed at a person's marginal rate minus 15 percentage points rather than a flat 15 per cent, meaning those in the top tax rate would pay 30 per cent, Mr Eslake proposed. Liberal senator Andrew Bragg acknowledged steps to improve the tax system were worth consideration, but warned Labor's bill would "destroy superannuation as the preferred savings vehicle in Australia, particularly for millennials and Gen Zs".
Perth Now
25-05-2025
- Business
- Perth Now
Fears super tax rise for rich will whack housing market
A bid to increase taxes on wealthy Australians' superannuation has been paved with good intentions, but there are warnings it may create unfair outcomes. The federal government is hoping to pass a bill to impose a 15 per cent tax on super balances higher than $3 million, which would affect about one in every 200 savers, according to the Australia Institute. Some have complained it would force Australians to move their assets, such as small businesses and farms, out of their super. Independent economist Saul Eslake does not have much sympathy for them. "That's not what bloody super is for," Mr Eslake told AAP. "Super has become a vehicle for rich people to avoid tax and it's become a subsidy for bequests, not retirement income. "I support the government's objective ... however, I think the government is going about it the wrong way." The bill would tax unrealised gains, which is the growth in the value of an investment before it is sold. Mr Eslake branded it "unfair", as it means people would be taxed even if they had not earned income. Treasurer Jim Chalmers insists calculating unrealised gains is not unique and says no one has proposed a better way of making this calculation after almost three years of consultation. Some have called the proposal a tax on wealth. Mr Eslake is not opposed to this, but questions why it is being imposed on superannuation and not on housing. "This will encourage people - particularly rich people - to put more money into owner-occupied housing, which is completely exempt from tax," he said. "It's enough of a tax shelter as it is." The government's decision not to index the $3 million threshold has also been a sore spot for critics. While the proposal may only affect 0.5 per cent of Australian savers, the lack of indexation means many more could be taxed in the coming years. Dr Chalmers anticipates the government could raise the threshold in the future. The superannuation tax was first proposed in 2023 and could be one of Labor's first bills to pass after its landslide election win. "Just because they've got a mandate, doesn't mean it's right," Mr Eslake said. The economist has suggested that anyone with more than a certain amount - say $3 million - in their super should not get any concessions on future contributions and would have to pay the marginal tax rate on contributions and income generated. Alternatively, super contributions and earnings could be taxed at a person's marginal rate minus 15 percentage points rather than a flat 15 per cent, meaning those in the top tax rate would pay 30 per cent, Mr Eslake proposed. Liberal senator Andrew Bragg acknowledged steps to improve the tax system were worth consideration, but warned Labor's bill would "destroy superannuation as the preferred savings vehicle in Australia, particularly for millennials and Gen Zs".
