Aussies in for tax cuts, Google for walloping, as Shorten concedes
Labor leader Bill Shorten has officially conceded, pushing Australia's endless election one step closer to a conclusion.
The latest results have the Malcolm Turnbull-led Liberal-National Coalition within striking distance of the 76 seats needed for an absolute majority in the 150-seat House of Representatives.
Ironically, Mr Shorten's leadership seems safe. He is regarded as having done a solid job chipping away at the Coalition's pre-election total of 90. Mr Turnbull, by contrast, now faces rumours of a spill.
The Australian Electoral Commission and media pundits have finally fallen into line their projections. The official AEC tally:
- Coalition: 76 (including 2 still in doubt)
- Labor: 69 (including 3 still in doubt)
- Minor parties/independents: 5 (right leaning: 3, left-leaning: 2)
The Coalition is now certain to finish with the most seats and form a government, be it minority-led or across the 76-line.
The situation in the 76-seat Senate – which can amend or veto legislation – is less clear.
The Coalition, with a projected 28 seats, will both fall well short of the 39 needed for a majority (it went into the election with 33).
On the flip side, Labour (up to 26 seats) and the Greens (up to 3) will fall short of the 38 votes required to block legislation (the complicated rules of a double dissolution election, as was called by Mr Turnbull, meant it was easier for minor parties and independents to gain seats; they needed to meet a minimum threshold of 7.69% of the vote at state level compared with the usual 14.28%).
Mr Turnbull's administration will end up in the same situation as it was before the election: reliant on horse-trading with minor parties and independents on a bill-by-bill basis to get legislation through. Only now the new Senate will be a more volatile mix, with One Nation's Pauline Hanson making her return to Canberra, and talkback host Derryn Hinch joining the ranks for his Justice Party.
Excruciatingly, the final senate result is not expected until August.
Tax cuts on way
Now that it has clung to power, if only by its fingernails, the Coalition should be able to implement its Budget 2016 (passed in May, just before the campaign kicked off).
A ‘Google tax’ provision (including a 40% tax penalty) will close tax loopholes for profit-shifting multinational companies, raising $A3.9 billion to fund broader corporate tax cuts. These include lowering company taxes over 10 years from 30% to 25% and an immediate one-percentage point cut to 27.5% for small businesses.
Middle-income earners will pay less tax as the income threshold is raised from $A80,000 to $A87,000 for the highest tax rate (32.5%).
This will be funded by a $A1.6 million cap on tax-free retirement savings that is expected to raise $A2.9 billion from the wealthy. The "concessional cap" – the tax-free limit for compulsory retirement savings – will be reduced from $A30,000 a year to $A25,000.
On the spending side, the government has committed to a $A50 billion spending package on infrastructure and an even bigger one of $A90 billion on defence.
On this side of the Tasman, Finance Minister Bill English has ruled out possible tax cuts until at least 2017, preferring a Cullen-esque focus on debt reduction. Our government has also ruled out unilateral action on multinational profit-shifting, preferring to wait for coordinated OECD action.
Read Lance Wiggs' analysis of NZ vs Australian tax rates here.