Accounting industry ‘already subsidised’: Labor defends childcare proposals
Opposition Leader Bill Shorten has defended Labor’s plans to lift the wages of childcare workers through government subsidies, stating that Australia already offers subsidies to a range of other industries including property, mining and professional tax services offered by accountants.
Speaking at a press conference in Nowra, Opposition Leader Bill Shorten discussed Labor’s plans to fund pay increases of 20 per cent to early-childhood educators over eight years.
Mr Shorten said the changes would mean that childcare workers would be paid $11,000 more over the next eight years and would help retain workers in the childcare industry.
Responding to a question about whether subsidising childcare worker wages would force the government to also look at funding wages for other lower income industries such as aged care, Mr Shorten stated that many industries in Australia already receive subsidies.
“Let’s talk about subsidising industries. Did you know that we subsidise the property industry with negative gearing subsidies? That’s billions of dollars. Did you know with the diesel fuel rebate we subsidise the mining industry and we’re keeping that before anyone says anything, but it is a subsidy. Did you know that we subsidise private health insurance, north of $6 billion a year,” Mr Shorten stated.
“If you look around Australia, a lot of industries get subsidies. What we’ve chosen to do is subsidise the workforce as opposed to the top end. Did you know we subsidise the accounting industry in Australia, when they provide professional services doing your tax, you get a tax deduction, that is a subsidy for that industry. We don’t provide other professional services that.”
While Mr Shorten agreed that the wages of aged care workers were also low, he said he wanted to see what the outcome of the royal commission into aged care would be.
Mr Shorten’s comments follow fresh figures released by Labor for its proposal to restrict the tax deductions available for managing tax affairs to $3,000.
Ahead of final policy costings by the end of the week, Labor has revealed that its plan to limit the deductibility of the cost of managing tax affairs to $3,000 will raise $375 million over the forward estimates and $1.6 billion over 10 years, down from its initial $1.8 billion projection.
The new policy costings rely on Tax Office data from the 2016–17 financial year, showing that 69 people earned more than $1 million but paid no tax, with 27 claiming an average $607,000 for the cost of managing tax affairs, which was provided to SMSF Adviser’s sister title, Accountants Daily.
Shadow treasurer Chris Bowen said the new figures justified Labor’s proposal.
“This data reiterates that it’s the top end of town who benefits most from the tax deductibility of managing your tax affairs,” Mr Bowen said.
“This reflects the two-class system we currently have in Australia and the Liberals endorse: First class, where the wealthy can afford lawyers and accountants to use tax deductions to reduce their taxable income right down, and then there’s economy class for PAYG earners who can’t access these deductions.
“This often comes as a double whammy for low and middle-income earners, because it’s those claiming the bigger tax accountant costs who are accessing tax loopholes that cost the taxpayers billions of dollars in revenue.”
Labor’s $3,000 cap for managing tax affairs has been a controversial measure within the SMSF and accounting industries, with associations such as the Tax Institute fearing that it could impact migrants and individuals planning to start a business who require more complex tax advice.
It is expected that the cap will also apply to specialist tax advice received by SMSF members.