21 May 2024
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Treasurer Chalmers tax concessions to beat the ghost of Paul Keating

Peter Switzer
15 April 2024

At a time when the Albanese Government is facing criticism about its ‘Future Made in Australia’ policy and Treasurer Jim Chalmers is being called a poor man’s Paul Keating,

Labor has come up with a surprise by offering tax concessions for investors who put their money into targeted industries where we need growth.

The Budget will outline the industries that will be assisted but they’re bound to be linked to clean energy and strategic manufacturing that needs to happen here.

Recently, Dr Chalmers tried to throw off the comparisons he faces with Labor legend Paul Keating,

In the SMH, Peter Hartcher suggested if Paul Keating was Placido Domingo, then Dr Jim is Michael Bublé! And while the latter sings nicely, he doesn’t have the gravitas of the former.

The Treasurer has returned fire by arguing: “I’m not trying to own the past; I want us to own the future”.

So, how does he plan to do that? This is what the SMH’s David Crowe tells us:

  1. Tax concessions for special growth industries.
  2. Related job opportunities.
  3. “Rigorous and robust tests” to prevent money being wasted.
  4. No change to the company tax.
  5. Changes to foreign investment laws to encourage overseas money into these growth industries
  6. A smaller budget surplus as a consequence of these concessions, but the Treasurer insists a surplus will result.

The recent fall in the price of iron ore could hit the budget’s bottom line by $9 billion but the last budget figuring was based on an iron ore price of US$60 a tonne and it’s still US$90.

The Opposition argues this could be inflationary and instead would prefer the Government opted for affordable reliable energy, quick approvals for projects/investments and a competitive industrial relations system.

Undoubtedly, all these are ideal for business, but a Labor Government has realistic and political barriers to achieving them to the satisfaction of the Coalition and business.

This is how the Treasurer sees the future under his proposed changes: “It will be broad; it will be comprehensive. The tax system may play a part, public investment will play a part, but overwhelmingly what we’re trying to do here is incentivise private investment, not replace it.”

There will be a lot of debate about encouragements to business with the Productivity Commission chief Danielle Wood concerned we could be in a “subsidies forever” trap. But others from the Commission see what’s happening overseas and there’s a lot of government assistance to industries with potential and related to alternative energy.

David Crowe gave an example of how the Government has already got involved in assisting business growth. “In one example of industry support, the government has pledged $840 million in recent weeks to Arafura Rare Earths to develop a lithium mine and refinery in the Northern Territory,” he revealed. “The federal support came after years of Chinese interest in Arafura, although the Chinese investors have sold down their stake and the government last year blocked a Chinese investment in another rare earth company, Northern Minerals.”

What’s my view? Targeted assistance makes sense but as the Treasurer promised, there has to be rigorous and robust tests to prevent money being wasted. If Dr Jim can pull this off, he might get out of the shadow of his hero Paul Keating!

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