Federal Budget will be a "throw of the dice attempt": Bowen
Shadow Treasurer Chris Bowen said the Federal Budget will only be a “throw of the dice attempt” aimed at survival rather than a sustainable future and warned that the housing sector was on its way to becoming a "heavy detractor".
Bowen spoke at the Financial Services Council BT Political Series media address on Friday in Sydney about the upcoming Budget, being announced on Tuesday.
“Unfortunately, after six years of Liberal Government the budget to be handed down next week is going to be a rather desperate throw of the dice attempt to change the political conversation, as opposed to a blueprint for reform, fiscal repair or growth.
“A document focused on the Government’s immediate political survival that disregards fiscal discipline and fails to put in place a plan for the future.”
Bowen spoke of the former Australia housing boom stating it’s on its way to being “a heavy detractor.”
He highlighted that National Australia Bank forecasts predict dwelling investments could potentially fall by 18 per cent over the next two years creating a need for a strong housing sector.
“These falls come off record high levels, but we need to ensure we have confident and vibrant housing construction sector because we need to keep building to ensure our future growing population is affordably housed.” Bowen said.
To this, Bowen announced that an incoming Labor Government will reform the tax treatment for “Build to Rent” to ensure it’s a viable part of the housing market in Australia, just as it is in other comparable countries.
“We will do this by ensuring Build to Rent housing can be included within a Managed Investment Trust when they meet requirements that are currently in place for commercial property assets, basically where they are a passive investment held primarily for the purpose of deriving rent.
“This means that eligible Build to Rent investments will pay a 15 per cent tax rate, not the 30 per cent rate proposed by Prime Minister Scott Morrison, which would be double the rate for investments in shopping centres and office buildings.”
Turning to superannuation, Bowen believes the current $2.7 trillion pool of superannuation assets could have been better managed under a Labor Government.
According to Bowen, under the Howard Government and the Abbott-Turnbull-Morrison Government there has been a cancellation of scheduled legislated superannuation increases, meaning Australia is stuck at 9.5 per cent rate many years later.
“As a result, the average person retiring today has $100,000 less in their superannuation balance than if the original Keating [former Prime Minister and arguably the architect of Australia's compulsory super system] timetable had been kept to.” Bowen said.
Bowen continued to say $3 billion each year is lost from superannuation accounts from employers who decide “the law doesn’t apply to them.”
“This is nothing short of theft…. This is why Labor will change the law to include a right to superannuation within the National Employment Standards, which will give all employees the power to pursue their unpaid superannuation through the Fair Work Commission or Federal Court” Bowen said.
Bowen said both the Productivity Commission report along with the Royal Commission both identified problems with frequently underperforming funds.
“Millions of Australians are being ripped off by underperforming accounts and we want to force these funds to report on their performance and lift their game.” Bowen said.
To end this, Bowen said a bill currently in the Parliament will require super funds to report on their performance compared to similar products if passed.
Labor amended this bill in the Senate to make the outcomes test tougher, make director penalties higher and make APRA’s powers stronger, according to Bowen.
“I want to make it clear: consistently underperforming funds, regardless of whether they are industry funds or retail funds will have no sympathy from a Shorten Labor Government.”
On Sunday, Bowen told the ABC's Insiders program that if Labor were to take power in May, it would deliver a mini-budget in September to "reset the economic settings'.