The 2019 Federal Election is only a few days away… But how can you maximise your vote to shift the tax system away from unproductive rent seeking? Which parties have the best policies to deter land speculation, and reduce wealth inequality from inflated land prices?
Prosper has produced a brief policy scorecard for parties with relevant policies to help provide a basic overview.
Policy platforms compared
Here’s what notable minor parties are taking to this election:
Sustainable Australia would like to immediately cut immigration to Australia. For this reason, they are sometimes accused of xenophobia by progressives who haven’t read the fine print. This is unfortunate because Sustainable Australia has a very impressive platform that aligns with Prosper’s policy and vision. This is no doubt due to the contribution of many Prosper supporters, including Dr Cameron Murray (#1 Senate candidate in QLD).
Its revenue policy covers key policies areas such as Capital Gains Tax, Negative Gearing, Land Tax, Resource Rent Taxes, as well as higher taxes and restrictions on foreign ownership of land and natural resources. These reforms are coupled with reductions in company tax for local manufacturing, higher income tax free threshold and broader GST. Sustainable Australia also promotes the ACT’s 75% developer betterment tax on the total land value gain.
Sustainable Australia wants to axe demand side measures that inflate land prices e.g. SMSF borrowing, bank lending, First Home Buyer Grants. The platform also includes strong positions on returning natural monopolies and essential utilities to public ownership, promoting public transport over toll roads, establishing a Federal ICAC, and reviewing/renegotiating trade agreements to remove investor-state dispute settlement clauses.
Pirate Party Australia
The Pirates were born out of resistance to corporate monopoly over intellectual property, control over the internet and creative content, and restoration of the digital commons. Subsequently, the Pirate platform covers policies a number of areas related to economic rents. It features Land Value Tax as the single tax at State Government level. At federal level it seeks to abolish negative gearing, tax inflation adjusted capital gains as normal income, and reform income tax into a flat rate structure with a Basic Income (negative income tax). It’s patent and copyright policies are also noteworthy. The Pirates also oppose the “toll booth economy” and private ownership over natural monopolies. Resource Rent Taxes have been discussed favourably internally, but no policy has been created and formally put to the membership yet.
These include replacing state level payroll tax, stamp duties and council rates with a broad based land tax. It also wants to remove the Capital Gains Tax discount and tax inflation adjusted capital gains as regular income, including for owner-occupier housing. It also intends to tax bank interest on savings accounts after accounting for inflation. Finally, income tax brackets would be simplified and the tax free threshold raised.
In housing policy supply side and regulatory measures are not coupled with a betterment tax (like in the ACT) and will likely increase windfall gains for landowners. The Science Party is heavily based in NSW.
The Greens have the most policies that collect economic rent for the public and tackle the issue of monopoly.
The Greens seek to abolish Negative Gearing and grandfather it only for investors with one property. They will also phase out the capital gains tax discount. The Greens want to provide Federal financial support for states to transition from Stamp Duty to a Broad Based Land Tax.
They also support Resource Rent Taxes (“super profit taxes”), eliminating fossil fuel tax concessions, redirecting private health insurance rebates into the public health system, and carbon taxes to reduce emissions.
Additionally, the Greens seek to reverse privatisation of key natural monopolies, introduce public competitors into banking and energy retail, and revert to relying on stable, cost effective public servants over exorbitant consultants.
The major parties:
The Australian Labor Party
The ALP will grandfather negative gearing for existing properties and quarantine it to new properties, and halve the Capital Gains Tax discount. They have promised to crack down on trusts and axe franking credit refunds to improve the fairness of the tax system. This is followed up by a plan to cut income taxes using “Tax Offsets.” This plan directly reduces the amount of tax people pay (as opposed to their taxable income), but increases the complexity of the income tax system. The main beneficiaries being low to middle income taxpayers. Labor also seek to curtail SMSF borrowing for property.
The ALP also have some less desirable components of their housing affordability platform. They intend to build 250,000 new affordable rental homes (over 10 years); although if it follows the model of the National Rental Affordability Scheme it will be a big waste of money. The money would be much more effectively used in establishing LRS and CLTs. Additionally, Labor will provide tax breaks Build-to-Rent providers, both private and community sector developers – a potentially to benefit industry super funds?
The ALP has also agree to match the Coalition’s flawed home-buyer lending scheme.
The Liberal/National Coalition
The Coalition intends to also push for income tax cuts, with those tax cuts favouring higher income people in coming years.
Coalition housing policy focuses on helping people save home deposits, allowing them to tap into superannuation, and finance assistance through their home-buyer lending scheme. Both measures are fatally flawed as they stimulate demand and drive up prices.
Other measures of note include an affordable housing provider bond aggregator to reduce financing costs for affordable housing. This could be useful. The Coalition want more Commonwealth land to be released (read: privatised) as well as subsidise retirees to downsize – this policy was roundly critiqued by the Grattan Institute in their housing affordability paper.