ACTU sets tax, housing reform agenda for Economic Reform Roundtable

Sally McManus on Insiders

ACTU Secretary Sally McManus says reforms to housing policy and taxation are essential to creating a fairer and more productive Australia.

Speaking on ABC’s Insiders, McManus outlined the union movement’s priorities for the Economic Reform Roundtable (ERF), to be held from 19 to 21 August.

Among the ACTU’s proposals is a cap on tax concessions for property investors. Negative gearing and the capital gains tax discount would be limited to one investment property, with existing arrangements to be grandfathered for five years to give investors time to adjust.

McManus said housing affordability was the “number one issue”, especially for younger Australians.

“Working people can no longer afford to live near where they work, and young people have been locked out of the housing market and locked into high rents. It's just not right, and it has to change,” she said.

“Young people should have the same aspirations as the generations before them. And at the moment they don’t. It’s been wiped out by the fact that housing prices have gone up twice the rate of wages over the past 25 years.”

Taxation reform

While she acknowledged that supply is part of the problem, McManus said current tax settings had fuelled soaring prices and must be reformed.

“The issue isn’t ordinary Australians that are trying to get ahead and have an investment property. The issue is that a small number of investors – we’re talking about 1% of owners – own 25% of the investment properties and that has been driving the housing prices.”

“We’ve got to bite the bullet, otherwise we’re saying ‘too bad, young people, you’re not going to be able to ever own a home. Forget about even thinking about it.’”

The ACTU also wants more affordable housing built to reduce rental pressure and restore fairness. It supports a larger modular housing industry to create cheaper housing faster and is calling for superannuation rules to be changed so funds can invest more in housing projects.

Union housing affordability proposals
• Limit negative gearing and the capital gains tax discount to one investment property, with existing arrangements grandfathered for five years
• Support modular housing construction through new factories to boost supply more quickly
• Reform rules to allow superannuation funds to invest in building new housing.

Union taxation reform proposals
The ACTU is calling for the Federal Government to:
• Introduce a 25% minimum tax for individuals earning more than $1 million per year
• Apply a 25% minimum tax on disbursements from family trusts and increase trust transparency
• Impose a 25% tax on all export revenue from liquefied natural gas, replacing the failed Petroleum Resource Rent Tax
• Cap the fuel tax rebate at $20 million per year per corporate group.

Union taxation principles
• Everyone should pay their fair share of tax
• Working people already do, so big business and the wealthy must too
• Wealthier Australians are better able to exploit legal loopholes
• Many large companies report record profits but pay no corporate tax
• Tax avoidance by big business and the wealthy robs the country of revenue for Medicare, education, health and infrastructure

The Economic Reform Roundtable will bring together “leaders from business, unions, civil society, government and other experts” to “build consensus on ways to improve productivity, enhance economic resilience and strengthen budget sustainability”.

McManus said the roundtable represents a critical opportunity: “A fairer tax system will strengthen our economy, support essential services, and secure a better future for the next generation.”