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Action on wage theft welcome, but fix for unpaid super still MIA

THE Federal Opposition’s plan to help victims of wage theft recoup entitlements is a welcome development, but stops short of necessary reforms to ensure super is paid to workers’ accounts at the same time as wages, Industry Super Australia said.

Industry Super Australia chief executive Bernie Dean said the only way to stop the millions of Australians being robbed of their super entitlements every year is for the major parties to commit to changing the law and requiring all employers to pay super at the same time as salary.

“Anything less is a band-aid solution that won’t fix the problem and will see millions of Australians end up worse off at retirement,” Mr Dean said.

New polling conducted by UMR has revealed that Australians overwhelmingly want the major parties to take action on unpaid super at this election, with 89 percent of people polled supporting a law that would require employers to pay super at the same time as salary.

Of those polled, more than half said the issue would influence how they vote at this election. Mr Dean said people’s outrage on unpaid super was justified.

“Super is meant to be guaranteed for everyone, but we’re seeing that it’s not guaranteed at all for about a third of eligible workers,” he said.

“Hardworking Australians rightly expect that the super they are legally entitled to is paid into their account. Instead, rogue employers are ripping of these workers, and because the penalties are lax and enforcement is weak, they are getting away with daylight robbery.”

Mr Dean said the establishment of a new claims jurisdiction to help workers recoup lost entitlements was welcome, but didn’t fix the cause of the problem.

“If the law was changed we wouldn’t need to help workers’ get their super back because employers wouldn’t have been able to steal it in the first place,” he said.

“It’s disappointing the major parties are turning a blind eye to the fact that nearly three million Australians are having close to $6 billion in super entitlements stolen from them every year.

“Politicians are looked after – they have their own special law that guarantees they get paid super at the same time as they get paid their wage. But what about the rest of Australians? It’s a double standard to have one rule for politicians and another for average Australians.”

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Researchers welcome Labor’s wage theft crackdown

THE AUTHORS of a ground breaking study on wage theft have welcomed the Federal Opposition’s policy announcement to give underpaid workers an ‘efficient and effective avenue to reclaim unpaid wages’.

The Labor Party announced today that it would create a new small claims jurisdiction with funding for legal assistance for workers to file wage claims.

Senior law lecturer at the University of NSW (UNSW) Law department, Bassina Farbenblum, and senior law lecturer at University of Technology Sydney (UTS) Law, Laurie Berg, released the Wage Theft in Silence report late last year.

Dr Laurie Berg said their research found that more than half of temporary migrants surveyed were underpaid, but only a small minority were able to reclaim the wages owed to them.

“Our study on wage theft among almost 4,500 temporary migrant workers showed that underpaid migrant workers don’t get their money back and the system is broken,” Dr Berg said.

Ms Farbenblum said there was an entrenched cycle of impunity for wage theft.

“There’s no way to break this cycle unless workers have a quick, cheap and accessible avenue to reclaim the wages they are owed, and can hold employers to account,” she said.

The researchers have encouraged all sides of politics to propose similar measures to the Labor announcement, to assist underpaid workers.

www.uts.edu.au

www.unsw.edu.au

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Coalition plan for first home buyers a much-needed boost to the market

THE Prime Minister’s plan to help first-home buyers purchase with only a 5 percent deposit could have a major impact on the broader economy, according to RiskWise Property Research.

RiskWise Property Research CEO Doron Peleg said the Coalition’s First Home Loan Deposit Scheme, particularly in the current market and with the increased likelihood of interest rate cuts by the RBA, was by far more effective than Labor’s proposed taxation changes and would support the market instead of further weakening it.

He said, based on previous outcomes when the first-home buyers’ grant was implemented by the Labor Government in 2008, there would be a positive flow-on affect to the broader market.

“When the grant was introduced it saw an increase in demand from first-home buyers for established affordable properties and this resulted in a larger number of sellers of those properties, who in turn became upgraders and therefore significantly increased the demand for more expensive properties," Mr Peleg said.

“This then had a further upward impact on the demand across the entire market.

“And this will help boost GDP growth, through an increase in household consumption, as well as have a positive impact on jobs and property-related costs.”

The Coalition government has announced it will underwrite home loan deposits for first-home buyers who cannot achieve the 20 percent that most banks require.

“Although the number of loans is expected to amount to around 10,000, when you take this amount and add in the saving of the LMI, potential interest rate cuts and the flow-on effect on upgraders, this could support particularly affordable markets that are more appealing to first home buyers,” Mr Peleg said.

“Also, the Prime Minister has said he would like to run the scheme through second tier lenders and this will further improve the position of non-bank lenders in the market.”

The First Home Loan Deposit Scheme, adopted from New Zealand’s Welcome Home Loan program and announced by the Prime Minister Scott Morrison at the Liberals’ formal campaign launch in Melbourne last week, will mean first-home buyers, who have been able to save a deposit of at least 5 percent, will be able to access a government guarantee for the remainder of up to 20 percent of a property’s value. It will also remove the costs of paying lenders’ mortgage insurance.

The scheme will offer up to $500 million in equity through the National Housing Finance and Investment Corporation, would start on January 1, 2020, and be capped for individuals earning $125,000 and couples earning $200,000.

The value of homes that can be purchased under the schemed would be determined on a regional basis. Labor has said it will match the Coalition plan, stating it could afford to do so as it was “closing loopholes” for the wealthy.

Mr Peleg said Labor’s proposed taxation changes, to limit negative gearing to new homes only and cut capital gains tax from 50 to 25 per cent, would have “unintended consequences” and further impact an already weak housing market.

“The property market has been experiencing ongoing weakness,” he said.

“Tighter lending standards, the findings of the Banking Royal Commission, political uncertainty, fears of the potential changes to negative gearing and capital gains tax, restrictions on foreign investors, unit oversupply and large falls in dwelling commencements have all had a material impact.

“The Coalition’s plan brings a number of potential benefits with a positive flow-on effect on the housing market and the broader economy. At this point of time when the market needs strong measures to support demand, the Coalition’s scheme, alongside potentially two interest rate cuts, will deliver good benefits across the board.

“First, the number of qualified buyers will increase. Many first home buyers who currently don’t have sufficient deposits will be able to significantly decrease the amount of time it takes to purchase a property, even for 90 percent LVR.

“Secondly, they will be able to save the costs associated with loan mortgage insurance which amounts to thousands of dollars and could be well into the five figures.”

In New Zealand, the Welcome Home Loan scheme, launched in 2003, means first-home buyers only need a 10 percent deposit as opposed to a 20 percent one normally required by most lenders.

www.riskwiseproperty.com.au

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Resoruces industry needs to get better at telling its story: QRC research, survey

QUEENSLAND'S resource sector companies are focused on building stronger bonds and delivering even more returns to local communities and all Queenslanders. 

The Queensland Resources Council’s (QRC) Chief Executive Ian Macfarlane said the latest research conducted by an independent research agency has reinforced the need for the sector to better explain its everyday importance, relevance and world class environmental standards to all Queenslanders. 

He said it was clear the industry, and the hundreds of thousands of Queenslanders working in it, must strengthen the understanding of all Queenslanders of the benefits from industry for all Queenslanders, particularly those who live in the South East corner of the State, now and into the future.

“This latest research backs our own State of the Sector report released in March which surveyed resource chiefs about the wider view across other industries to increase community appreciation,” Mr Macfarlane said.

“To highlight this point, 67 percent of Queenslanders surveyed as part of this independent research were either uninformed or had a balanced view on the resources sector. The research found that 20 percent could be described as pro-mining and 13 percent responded as anti-mining. 

“The opportunity is to listen to our community and tell our story to Queenslanders particularly how relevant resources are to them and of the benefits they each get from a strong and vibrant resources industry in Queensland.  Our sector is part of every Queenslander’s life, whether it’s the silver in their smartphones, the copper in their solar panels or the steel in their car. 

“Queensland’s resource sector contributes more than 80 percent to the State’s exports, supports more than 315,000 full-time jobs and is on track to pay more than $5.3 billion in royalty taxes to build schools, hospitals and roads. But we need to keep telling our story," Mr Macfarlane said.

“The quarterly State of the Sector survey found in the next 12 months an overwhelming majority of resource companies plan to invest more on working with local communities, with 68 percent of companies surveyed committed to increasing or significantly increasing community and social capability.

"As an industry, we need to be strengthening our linkage with our communities and local stakeholders. Mining offers so much locally – yet we are not doing a great job in reinforcing these links."

www.qrc.org.au


State of the Sector report is at https://www.qrc.org.au/wp-content/uploads/2019/03/State-of-the-Sector_Dec18_FINAL_compressed.pdf

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Builders back home deposit scheme

MASTER Builders Australia has backed the First Home Loan Deposit Scheme announced by Prime Minister Scott Morrison. 

Denita Wawn, CEO of Master Builders Australia said, “The scheme will be a boost for both First Home Buyers and residential builders who are worried about the declining housing market.

“For many aspiring First Home Buyers it is the deposit gap rather than the size of mortgage payments that is the real barrier to home ownership and we think the First Home Deposit Scheme will help them overcome it," she said.  

“We have been calling for measures such as this scheme because this kind of targeted and practical approach will do more to assist First Home Buyers than doubling capital gains tax and restricting negative gearing.  

“The measure will be welcomed by home builders and tradies who are facing a softening housing conditions which are down by as much as 30 percent in some markets.

"A stronger building industry means a strong economy and this measure will provide some stimulus for the housing market at just the right time,” Ms Wawn said. 

www.masterbuilders.com.au

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More than $1.8b at risk from negative gearing changes - Master Builders

MORE THAN $1.8 billion per year in repair and maintenance work on negatively geared homes will be under threat from Labor’s policy to impose restrictions on negative gearing, according to Master Builders Australia.

Denita Wawn, CEO of Master Builders Australia said, “Thousands of small mum and dad building businesses and tradies in every city, town and region around Australia would feel the impact of Labor’s policy progressively if it is rolled out.

“This work is the bread and butter of so many builders and tradies and Labor’s policy will hurt the viability of their business and will put their livelihoods at risk.

“Repairs and maintenance and maintenance work is a lifeline for many home builders when times are tough as they have been in markets such as Perth and Adelaide for the past few years and we can expect the same in Sydney and Melbourne as those markets continue to fall,” Ms Wawn said. 

“This work is not about renovations or capital improvements, it’s not about adding swimming pools or pergolas, this is the day to day running repairs that keep a home up to standard for residents and renters. 

“Labor’s promise to restrict negative gearing will make investing in these essential repairs significantly less attractive as it is implemented,” Ms Wawn said. 

“The next Federal Government needs to back the thousands of small building businesses who repair and maintain negatively geared investment properties, especially as the housing market softens, not bring in policies that will put their businesses at risk,” Ms Wawn said. 

State/Territory Breakdown 

State/Territory

Total Value of Repairs/Maintenance on
Negatively Geared Properties ($m)

NSW

$515.9

VIC

$402.0

QLD

$509.4

SA

$115.4

WA

$234.5

TAS

$31.6

NT

$26.3

ACT

$26.2

AUSTRALIA

$1.861

 Source: recently released ATO figures for year 2016/2017

Public 'hoodwinked' on franking credits policy say retirees group

THE AUSTRALIAN public is being 'hoodwinked' by the Labor claims on the franking credits refunds, according to the Association of Independent Retirees.

“For a year, the Labor Party has continually tried to hoodwink the general public on Franking Credits refunds,” acting president of the Association of Independent Retirees Wayne Strandquist said.

“The Labor Party has taken advantage of the complexity of the tax system and a lack of understanding about franking credits by using over-simplified and emotive terms that do not properly explain the situation,” he said.

“A tax refund occurs when there has been an overpayment of tax and statements like ‘you get a tax refund when you haven’t paid income tax, the tax refund is a gift from the government, it’s a tax loophole, it benefits the top end of town and no other country does this’ do not clarify the policy,” Mr Strandquist said.

“No one criticises workers when they receive a refund when too much tax has been deducted from their income," Mr Strandquist said.

The average self-funded retirees with incomes of between $30,000 and $50,000 will get a significant cut of $5,000 to $10,000 in income under the Labor Franking Credit policy, according to Mr Strandquist.

The association said Labor Party statements on franking credits were open to challenge as follows:

"Firstly, cash refunds are received by low-income earners (including retirees) who do not pay income tax because they own part of a company that has already paid the tax at 30 percent. If a shareholder’s tax rate is less than 30 percent they receive a refund of tax already paid and this is not a gift.
 
"Secondly, it has been argued that the refund of franking credits is rorting a tax loophole. It is not a tax loophole but has been a legitimate part of the Commonwealth tax law since 2000.
 
"Thirdly, it is claimed that franking credit refunds go to the wealthy and benefit only the top end of town. This is not the case for the vast number of self-funded retirees who have incomes below $37,000 a year. Furthermore, the majority of retirees in Self Managed Super Funds are also not wealthy.
 
"Fourthly, there are many OECD countries that have some form of tax imputation scheme.
 
"Finally, retirees can’t retrospectively change their retirement income strategies, so they are soft targets by Labor to raise funds for all sorts of purposes."
 
"The Labor franking credit policy is based on flawed assumptions, is unfair and discriminates against self-funded retirees of modest means,” Mr Strandquist said, “when at the very least the policy should be grandfathered."

www.independentretirees.com.au

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Crystal ball predictions may not lead to promised savings say accountants

THERE HAS BEEN significant misinformation when it comes to accountants’ fees for providing tax advice, according to the Institute of Public Accountants (IPA).

“The figures used are based on a very small sample.  These in themselves do not justify a policy of capping deductions for tax advice,” IPA chief executive officer, Andrew Conway said.

“In addition, if the numbers being bandied around are using aggregated data, they will result in grossly overstated averages for adviser fees for this sample size.

“The ATO data that has been used related to the 2016-17 financial year.  The label in the income tax return that makes up these figures includes adviser fees, ATO interest charges and litigation costs.

“If aggregated figures are being used, then this is misleading the public," Mr Conway said. 

“Importantly, if aggregated figures are being used, the predicted savings will not be realised. You can polish the crystal ball as much as you like, it doesn’t mean you will see future savings.

“With the release of costings by Labor, we would like to know the facts behind the figures.

“It is also misinformation to say that only the rich can access tax deductions; these are accessible by all Australians.

“It is highly inappropriate to have a universal cap for all taxpayers as circumstances differ; a one-size-fits-all is inequitable.

“Our tax system is complex.  Denying deductibility for seeking advice from a trusted adviser is inappropriate,” Mr Conway said.

www.publicaccountants.org.au

 

About the Institute of Public Accountants

The IPA, formed in 1923, is one of Australia’s three legally recognised professional accounting bodies.  In late 2014, the IPA acquired the Institute of Financial Accountants in the UK and formed the IPA Group, with more than 36,000 members and students in over 80 countries.  The IPA Group is the largest SME focused accountancy organisation in the world. The IPA is a member of the International Federation of Accountants, the Accounting Professional and Ethical Standards Board and the Confederation of Asian and Pacific Accountants. 

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First home buyers continue to drive Australia's housing market

THE IMPORTANCE of the First Home Buyer (FHB) segment of the market has grown again, with newly released figures for March showing that their share of the market is at its largest in nearly seven years,” Chief Economist Shane Garrett said. 

During March 2019, First Home Buyer loans accounted for 27.6 percent of owner occupier housing loans, higher than at any time since September 2012. 

“First Home Buyers are becoming an increasingly vital driver of activity in our housing market, especially with investor activity so quiet,” Mr Garrett said. 

“Looking ahead, there is much potential for FHBs to support new home building activity in the years ahead. Our economy has generated over 600,000 new full-time jobs over the past three years – many of whom will want to buy their first home in the near future.

“In this respect, yesterday’s commitment by the Coalition that was matched by Labor to facilitate the low deposit loans for First Home Buyers is most welcome. This brings home ownership a giant step closer and spares young homebuyers from being forced to waste money on expensive Lenders’ Mortgage Insurance (LMI) premiums,” Mr Garrett said. 

“The housing market is reversing rapidly. It is vital that we receive support from all sources in order to get activity back on track and ensure that we build the 200,000 new homes needed each year to satisfy long term requirements,” Mr Garrett said. 

During March 2019, First Home Buyers enjoyed the largest share in the Northern Territory, with 42.9 percent of owner occupier housing loans. This was followed by Western Australia (36.9%), Victoria (30.0%) and Queensland (27.0%). 

FHB participation was lowest in Tasmania (20.7%), followed by South Australia (21.7%), the ACT (22.0%) and New South Wales (24.8%).

Comparison of small business policies released by COSBOA

TODAY the Council of Small Business Organisations Australia (COSBOA), has released comparison findings on the policies proposed by the Coalition and the Australian Labor Party (ALP), affecting small businesses.

The policies were assessed based on areas considered to be of high importance to the small business community.

As part of the findings, COSBOA have graded policies of critical importance; three areas are considered highly critical for the future of the sector.

On the ‘Important Policy Areas’ for small business, the Coalition trails in one category (Climate and Energy), while the ALP trails in seven, with a further two areas having no policy coverage (Export Market Facilitations and Mental Health policies for small business owners) by the ALP.

Of the three areas deemed to be ‘highly critical’ (Wage Policy, Access to Finance and VET), the parties were deemed to be similar in two areas (Access to Finance and VET) however in the area of ‘Wage Policy’ the ALP policy was ranked as a ‘fail’.

A summary of the results have been laid out in the below table, however, a comprehensive document is available via the below link.

SUMMARY – Comparison of small business policies between the major parties

COSBOA policy area

COSBOA “Importance Weighting” (1 to 3)
with 1 being “highly critical

Policy Scores

Coalition Score

ALP score

  1. Taxation policy and processes

3

69%

69%

  1. Red Tape

2

60%

40%

  1. Late payment

2

75%

40%

  1. Competition, Contracts and Justice

2

65%

41%

  1. Wage policy

1

65%

32%

  1. Energy (and Climate) policy

2

40%

50%

  1. NBN and infrastructure policy

2

65%

45%

  1. Digitisation and cyber security

2

70%

45%

  1. Access to finance

1

75%

65%

  1. Industry specific policies

3

70%

40%

  1. Vocational Education and training

1

75%

70%

  1. Export market facilitation

3

60%

0%

  1. Mental health policy

2

70%

0%

Peter Strong, CEO of COSBOA, said, “Perhaps there is no surprise that the Coalition has scored well, and COSBOA members express deep concern about the wages policy proposed by Labor. VET and energy continue to rate highly as key areas of concern.”

To see the full report, visit: https://www.cosboa.org.au/policy-comparison
 

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Hiding behind the numbers on accountants - ALP should come clean says IPA

THERE HAS been significant misinformation when it comes to accountants’ fees for providing tax advice, according to the Institute of Public Accountants (IPA).

“The figures used are based on a very small sample.  These in themselves do not justify a policy of capping deductions for tax advice,” IPA chief executive officer, Andrew Conway said.

“In addition, if the numbers being bandied around are using aggregated data, they will result in grossly overstated averages for adviser fees for this sample size.

“The ATO data that has been used related to the 2016-17 financial year. The label in the income tax return that makes up these figures includes adviser fees, ATO interest charges and litigation costs," Mr Conway said.

“From 2018 onwards, we will have a proper breakup of the three components. If aggregated figures are being used, then this is misleading the public.

“It is also misinformation to say that only the rich can access tax deductions; these are accessible by all Australians. There are already substantial penalties for advisers doing the wrong thing," he said.

“It is highly inappropriate to have a universal cap for all taxpayers as circumstances differ; a one-size-fits-all is inequitable.

“Our tax system is complex.  Denying deductibility for seeking advice from a trusted adviser is inappropriate,” Mr Conway said.

 

About the Institute of Public Accountants

The IPA, formed in 1923, is one of Australia’s three legally recognised professional accounting bodies.  In late 2014, the IPA acquired the Institute of Financial Accountants in the UK and formed the IPA Group, with more than 36,000 members and students in over 80 countries.  The IPA Group is the largest SME focused accountancy organisation in the world. The IPA is a member of the International Federation of Accountants, the Accounting Professional and Ethical Standards Board and the Confederation of Asian and Pacific Accountants. 

www.publicaccountants.org.au

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