Corridors of Power – 21 July 2015

Corridors of Power – 21 July 2015Treasurer Joe Hockey says everything is on the table in the lead-up to today’s meeting in Sydney at the PM and Premiers special retreat. But an unlikely alliance has emerged beyond political lines between the Premiers of NSW and SA. Today the special COAG retreat kicks off in Sydney between the Prime Minister and state and territory leaders on the long-term reform of the Federation and tax system. Finally we will have the leaders showing their cards after weeks of policy debate, ongoing advocacy and much speculation. Last week in a major speech Treasurer Joe Hockey made it clear that everything is on the table and that proper debate was needed on state taxes and state governments’ over-reliance on their inefficient taxes. The Property Council welcomes this and has released more research this week on three tax reform proposals. All three modelled the impact of abolishing stamp duty and the option to increase or broaden GST. This comes on the back of our published survey in which close to half of all Australians favoured abolishing stamp duty in exchange for keeping GST exemptions. On Monday NSW Premier Mike Baird announced his strong support for increasing the GST to 15 per cent with no broadening of the GST base. This was backed up immediately by South Australian Premier Jay Weatherill who supported the discussion. Prime Minister Tony Abbott thanked both leaders for being “prepared to talk about the things that really matter”. When we see the cards on the table today, hopefully there will be a few aces.In other news, the proposed legislation and new FIRB application fees are due to come into effect on 1 December, 2015. The Property Council is pressing government to free up investment and make FIRB rule enforcement easier. This should include carving out non-national interest commercial transactions that pose no policy threat, and removing proposed thresholds that will trigger corporate penalties if foreign shareholdings in domestic companies inadvertently exceed 40 per cent. The Australian economy is heavily reliant on patient, long-term capital from global investors for property projects and infrastructure that domestic investors cannot fund. The Property Council’s recommendations would ensure this capital could continue to invest in a transparent and attractive Australian property market.