This week at RFS, we were fully expecting a Labor party led by Bill Shorten to be heading to the lodge and their agenda to start being factored into our strategies.
The concern was always that the ALP had already flagged a mini budget in September, which would have meant at least another four months of uncertainty and then looking at the impacts of the changes they were going to introduce.
Ignoring personalities and rhetoric, the Labor economic policies were all about a big increase in taxes that they would then be redistributing to government services and welfare.
What we don’t have to do this week!
- We don’t have to discuss what the Labor policies might be in September;
- We don’t have to look at the impact on property prices from the removal of negative gearing;
- We don’t need to look at the impact of a minimum tax of 30% on trusts and how that would affect small businesses;
- We don’t need to look at the impact of a 50% increase in capital gains tax on all asset prices;
- We don’t have to look at major structural changes to Self-Managed Super Funds to offset the loss of franking credits for retirees; and
- We don’t need to be concerned about the impact of the franking credit removal on the value of Australian shares.
What we do need to think about…
How will the coalition’s policies impact:
- The economy;
- Wages growth and unemployment;
- The building industry;
- Business investment; and
- The Australian Share Market.
The LNP policies are really based on the April budget and some sweeteners on the campaign trail.
LNP on Taxes:
- Businesses (with turnover of less than $50 mil) can write off tax assets of up to $30k to July 2020;
- Those with incomes of $48k – $90k will get a tax offset (The Low and Middle Income Tax Offset (LMITO) Understanding LMITO) this year 18_19 Financial Year( FY) and the next three financial years thereafter;
- In the 22_23 FY, the Low Income Tax bracket (19 cent) will lift from $38k to $45K. The 32.5 cent tax bracket will lift from $90k to $120k; and
- In the 2024_25 FY we would see the 32.5 cent tax bracket drop to 30 cents.
The LNP on Health:
- More medicines on the Pharmaceutical Benefits Scheme (PBS);
- MRI scan covered by Medicare; and
- Increased funding ($170 mil to $1.45 bil) on Mental Health.
The LNP on Climate Change:
- Emissions to be cut by 26-28 per cent of our 2005 emissions levels as per the Paris Accord;
- $2 billion for a Climate Solutions Fund which pays farmers, small business and indigenous groups to plant trees and other direct counter measures;
- Snowy Hydro 2.0 for clean energy;
- A second interconnector between Tasmania and the mainland to increase renewable energy into the mainland; and
- A national electric vehicle strategy.
- The First Home Loan Deposit Scheme. This means the Government will guarantee loans for potential first home owners on incomes up to $125k with only a 5% deposit. Normally you would need a 20% deposit or you have to pay loan insurance which can be very expensive.
The dust will settle and we will have a new opposition leader, but the really good thing, from a planning point of view, is the removal of uncertainty – at least in Australia.