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.
Just call it something else. It’s not tax advice. It’s holistic business advice, bookkeeping review services, financial reports preparation services. All nothing to do with tax. The tax return/advice is only a small proportion of the services provided by an accountant.
People will simply TELL their accountants not to be as thorough and “keep costs down” leading to non compliance IMHO. B…S… Bill is the biggest threat facing this country in the forseeable future.
As a small employer I have nearly had a gut full…From July 1, the Single Touch Payroll reporting starts. I pay my 1 staff member each week by automatic Bank EFT and I will have to now report to the ATO weekly. What do I do if I go away for 3 weeks ( not often I must admit ) I am technically non compliant,. It is all getting too hard.
Petrol is tax deductible if you use it in your business, so are tyres, mechanics, training services, solicitors fees, painters, advertising. The people paying over $3,000 for accounting fees are highly likely to be in business. How is everything that is tax deductible not being subsidised by the government?
Not the smartest comment.
SUBSIDY: a sum of money granted by the state or a public body to help an industry or business keep the price of a commodity or service low.
There are two limbs: fees are too expensive, so the government has to help out and
ALL items appearing as a tax deduction in anyone’s tax returns are therefore subsidies based on the comments.
The government does NOT pay for tax agent services. But they do intend to fund child care workers. I have no problem that these people are underpaid. However, wouldn’t you think that their UNION should be stronger and lobby to get the hourly pay rates increased?
The subsidy is already coming from the government to help reduce costs to families by a rebate system. Clearly this is not working, because the organisations are not passing anything back to staff.
It is a bit the same with low wage growth across the board. The government reduced company tax rates “assuming” that employers would pass this onto their staff or employ more. Neither has happened to any significant degree.
This is clearly the WRONG approach. Mandate an hourly rate increase. Fees will increase and the amount of subsidy provided will also have to increase. But at least this way the workers will get a well deserved payrise!
If the ALP get into office and try to move forward with this proposal maybe we should do what the unions would do – go on strike and stifle tax collection. That might wake up Treasury and a few politicians.
This man is dangerous – people need to know that he is full of it and a wrecking ball to the economy. No subsidies required in child care people will be staying home without a job.
Tax deductions are not subsidies. Tax deductions are aimed at stopping unfair double taxation. Similar to why franking credits were made available by both Liberal and Labour (Keating) Governments – to stop unfair double taxation. This is a good thing.
On the other hand – subsidies are a tool used by Governments to help them get elected. They are inherently unfair and usually do not achieve their stated aim. This is a bad thing. A waste of the nations wealth. Government subsidies are just lazy politicking and they are dangerous.
My memory is that when the child care rebate came in it seemed as though the cost of childcare went up by about the same as the rebate – no increased wages for the workers and no savings for working families there – but a big boost for the child care capitalists. Rebates are mostly counter productive – because they result in increased revenue to businesses – not reduced cost and increased work-force participation as was intended. Look at Childcare, Health Care, Aged Care, NDIS (read the papers today about NDIS fraud), – the list goes on.
Now Billy boy wants to stick his piggy nose into the trough of hard working productive Australian families – by stealthily bringing back double taxation. This tax policy will cripple the country.
This attitude – of draining the blood of producers to feed the bellies of the non-productive – is why after every term of a Labour Government since 1901 the Federal Government Debt as a percentage of GDP has been higher than when the Labour term started. (This is my opinion of the information provided at https://cuffelinks.com.au/federal-government-debt-much-little/federal-govt-deficits-and-debt-since-federation-ao/)
It will be no different this time – Labour has promised big expenditure and is now working out how to pay for it – by extracting more money from super (where tax has already been paid), by increasing the tax take from hard working Australian families and reducing Government services for people in need. This is the total opposite of their slogans. It is unfair.
This is Billy boy showing off just how ignorant, woolly-headed, and dangerous he is.
“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.”
My breath is taken away – I can’t even….. Billy boy is just a woolly-headed wombat.
In his statement he says the tax deduction goes to the taxpayer – not the accountant. Sure, it usually reduces the net cost of the accountants services – but it is a long bow to draw.
Yes, the taxpayer gets a tax reduction, but the accountant pays tax (income and GST), so no tax is lost or gained. This is not a gift from the Governmment like a subsidy is – it is instead a fair and reasonable way of ensuring that the same money is not taxed twice or more.
OK Billy boy – if we follow your line of thinking – maybe we should rename tax as – subsidies!
OH, but we can’t because that means the Government would be receiving subsidies.
Really – just be honest – if you need more money to fund your promises – just increase the tax rates – but please don’t meddle and complicate any more what is for the most part a fair and reasonable tax system.
Union fees are a tax deduction, so should the subsidy be removed from them as well? Don’t see any mention of total union fees paid in a financial year…..
Great comment – Absolutely spot on. And why would anyone pay $607,000 in accounting fees to save $450,000 in tax !!
What other industries are people forced to rush out every quarter or annually to buy your product. The Accounting industry is the only industry where this occurs.
Perhaps it’s fair these taxpayer subsidies end. If it’s made almost compulsory to buy some sort of service or product (a tax return) then surely that industry should not be subsidized and or pay some mining tax levy or similar for the benefit of getting that Government dictated client base/ income stream. May be far better to increase the tax that accounting firms pay for this privileged income stream.
Miranda
No one is forced to use the services of and accountant or tax agent. The choice is yours.
Further the industry plays a vital role in the taxation system to reduce the extent of non compliance. I would suggest the industry in fact delivers substantial benefit aiding the community to pay the correct amount of taxation whilst aiding to minimize the govt. compliance expenditure that would be necessary if the industry was not there.
The costs of the examples of inequity put fwd by labor, whilst ridiculous in their tiny relevance to the overall community and industry, would pale into insignificance compared to the costs of not having a functioning taxation industry in place.
Even if this was a subsidy, which it of course is not, it would be in the country’s best interest to ensure the accounting industry is functioning.
Labor appear to be simply taking cheap shots attempting to appear like Robin Hood to attract votes. In a number of these taxation policy statements they are either deceitful or fools.
I doubt whether the $600,000+ accounting fee made those individuals non taxable. Therefore, even if they make the fee non deductible, those individuals are highly likely to be below the taxable minimum, and the proposed cap will not affect them. So those who suffer will primarily be small businesses who are forced to engage our services to navigate thy myriad of complex compliance requirements established by past Governments. The lack of logic is astounding. Why don’t the accounting bodies drive a truck through this idiotic attack on the profession and our clients.
Daryn’s words pretty much sum up my own thoughts.
Alarm bells should be ringing loudly in the wider community, not just the accounting profession or the people who engage them. The whole country should be concerned with this proposal that threatens to overturn one of the basic principles that underpin the income tax system. Policy proposals affecting franking credits, negative gearing, capital gains tax have all been announced before the election and demonstrate a very poor understanding of their likely outcome on the economy and the welfare of the population.
What will he do once he is in office?
How does Mr B*** S*** intend to run the country if he can’t understand the tax system (or deliberately seeks to undermine it)?
I agree with the comments but also say what is going to be done in response???
CA, CPA, IPA, SPAA etc need to band together and have a joint press conference with mainstream media how disgusted they are by this attack on the profession which I believe is the most trusted in the country supported by surveys on the topic.
An advertising campaign much like the Combined Industry Forum and MFAA ran for the broking industry to call this BS out.
Such statements leads one to conclude Labor are either:
– totally ignorant of the taxation framework and principles and hence incompetent, or
– are intentionally deceitful
I’m not sure which one I should be more concerned with. Regardless having a govt with either trait is a concerning prospect.
Is anybody at Accountants Daily or SMSF advisor brave enough to put this into the public domain and not just send it around the industry?
This is the gift that keeps giving. The problem is that most Australians don’t realise it. I wonder if Shorten was born this way or he had to work at it because the level of ignorance is monumental. What next? A subsidy for charities because donations are tax deductible? Can you imagine the carnage in that industry if people stopped making donations and the government had to pick up the difference? And what about panel beaters fixing company owned cars? Work related flights? The list goes on. I have a headache thinking about it.
If anything, the Australian government has actively been working in opposition to the tax advisory industry and by offering free tax preparation services via the MyTax app, have actively driven down the market price for tax agent services, thus driven down the wages of Accountants by their illegal predatory market behavior.
ok where do I start:
child care industry is already subsidised by government through fee reductions
politicians are subsidised by tax payers paying their wage
doctors, nurses, police, fireman are all subsidised by government
union workers subsidise unions, not the other way around
so if you want to play that game Bill….
This is starting to get very alarming and scary as to where the country is going to end up. Very socialist attitude.
a good way to lose the unlosable election…..
At least Mr Shorten is improving his comedy routine!
Here’s a thought. How about simplifying the tax system so people don’t need to pay somebody who’s had a personality bypass to complete a statutory form.
Speachless
It doesn’t explain why they would limit the deduction to $3k….that is very arbitrary if it is designed to cut down on the 27 taxpayers claiming a huge deduction! If the Government, whoever is in power, would stop continually changing the legislation, especially surrounding SMSF’s, the tax administration costs would not be so high and we would not have to pass this cost on to the clients…..
Well, bugger me – the accounting industry gets a government subsidy, then? Please tell me how I can get it, because I’ll be blowed if I can find it.
$607k for tax advice .. i am doing the wrong work
And of course he punishes those women who want to raise their own kids at hone. Some choices he likes to subsidize but he wants to punish those who raise their own kids and save for retirement. Blessed are the bludgers.
How about unions – they are TAX EXEMPT!!! Are they not subsidised?
This bloke is a complete moron. And a danger to the community.
I wonder why mainstream media do not report this. Maybe they just don’t understand.
Based on Shorten’s stupidity, it means that if a business employ a staff, the business is being subsidised because the business gets a tax deduction. I think he is trying to say that if any person get a tax deduction, it is a subsidy. We are no longer working on the concept of taxing net income/taxable income according to Bill Shorten. Maybe cost of goods sold is also a subsidy? This is a whole new world of taxation; may as well through out the Act. Maybe Bill Shorten should tell Australia that Labor wants to repeal section 8-1 of the ITAA1997.
Like what Michael Croker said, Labor have hit new highs at the bottom of the political barrel. Tax administration in Australia will fall apart without accountants and tax specialists; these are the people who have dedicated years to develop their acquired knowledge. I am appalled by recent Shorten and Bowen commentary, I cannot even look at them. Australia will be in serious strife if this their take on tax policy.
This is sheer madness, he cant be serious
Do people realise when a Union member pays Union memberships they get a tax deduction. That is also a form of a subsidy.
The Labor Party have no idea. Their tax proposals are just Rubbish
697k equates to $3k!
Mr Shorten you are unbelievable! If you are saying accountants are subsidised because taxpayers can claim a tax deduction for accounting services then what is your view on people who spend money on work related tax deductions. Are those industries subsidised as well?
How about your Union mates who pay no income tax on membership fees or any other revenue – are they subsidised? Perhaps you should look at taxing them as well.
I’m truly lost for words …. a subsidy is now anything you get a deduction for ….. seriously ??
Crikey, that is a big stretch…. like saying all Australians get a subsidy if they get a little bit of their tax back. A very misleading and manipulative statement