Interview with Peter Stefanovic on Sky News First Edition

‍Subjects: Labor's tax on unrealised capital gains

E&OE………

Peter Stefanovic

Liberal MP Tim Wilson pend his criticism of the reform in today's Financial Review. This is part of it. He says the failure to campaign against unrealised capital gains was not the greatest failure of the Coalition's last election campaign. It was the greatest failure of their last three years. Adding the tax is a slippery slope. Once the administration of this tax is set up, it'll be ported to other assets and structures from property, businesses, and trusts, as I spoke to Evan about. It will have negative impacts. That's part of it from Tim Wilson. Well, joining us live for more now is the Liberal Senator Andrew Bragg. Good to see you, Andrew. So is Tim right? Was this a Coalition failure not to oppose this more strongly during the campaign?

Senator Bragg

Good morning, Pete. The nation's finances are very sick, and this best shows the disaster of Labor's economic mismanagement that you would tax money and profits that are illusory or not real. And so we've never had a tax in Australian history on money that isn't actually in existence. So many of these profits will be just paper profits that could be there one year and just disappear the next. It is a very unfair concept.

Peter Stefanovic

It is an absurd proposition when you think about it and is under the category of classic socialism here. But why wasn't it argued more strongly during the campaign by the Coalition?

Senator Bragg

I think it is true that there was more we could have done to unpack the risk of this being expanded. Now, this is already in the Budget, billions of dollars booked in the Budget, but it hasn't passed Parliament. So the government will have to do a dirty deal with the Greens to get this tax through, and in the process, they could well expand it to other assets or lower the threshold, for example, because the government doesn't have the numbers in the Senate. So there's a huge risk of being expanded to other assets and vehicles.

Peter Stefanovic

So are you hamstrung now? Because as you say, all they need are the Greens in the Senate - this goes through, it becomes law.

Senator Bragg

Well, if it becomes law, you'll have a crazy tax on the books. It will damage investment, particularly around nimble, disruptive investment, the sort of investment that we need in an economy which is really in danger, I think, of heading backwards over the next 10 years. I mean, the Budget's already buggered. Frankly, the rest of the economy, I think, is in huge danger. So damaging investment into disruptive ideas, I think, is going to be on the books. And so this will be a terrible day if it does pass the Parliament with the Greens support. But I'm sure that the threshold will change or the assets that are covered will be expanded.

Peter Stefanovic

Won't smart people with smart accountants just move their money around as we're seeing reports in the AFR today is already happening? Won't people just move their money around before you hit that threshold, therefore creating problems somewhere else?

Senator Bragg

Well, of course, because the Budget already contains this tax revenue. It's already in the Budget, even though it hasn't passed Parliament. So, if people move things around, the tax revenue collected from this measure will be lower, and therefore the government will have to come and collect money elsewhere, which is why I say unrealised gains might start with superannuation at a certain level, but it will hit other assets. It could hit the family home. It is a crazy idea. Once it's on the books as a tax precedent, look out because it could hit anything else in the economy.

Peter Stefanovic

I think that's true. So I mean, when Jim Chalmers says it's just a sliver of people who will be affected here, because it's also true that not many people have over $3 million in super, that might be short term. But what about long term? Because more people are earning more now from a younger age. Therefore, it will affect more people 10, 20, 30 years down the track.

Senator Bragg

I think Jim Chalmers sounds very arrogant when he talks about this particular measure. I'm not sure he even has read the legislation. The legislation actually doesn't exempt the Prime Minister. The legislation doesn't exempt any Cabinet Minister. There is no certainty that any of the Government's Ministers that could be subject to this tax will be excised. And there's no confidence that if there are losses made, that they will be offset. So I don't think Mr Chalmers actually understands how this tax works, which is very scary.

Peter Stefanovic

That's an interesting point, because Jim Chalmers did say yesterday that politicians won't be exempt, but doesn't the Tax Office Code, it's Division 296, mean individuals with defined benefit interests can be excluded?

Senator Bragg

But there is no provision in the bill to exempt the Prime Minister. So as it stands - sorry I should say, there is no provision that would allow the Prime Minister to be hit with his tax. So we would expect that as it stands, that the Prime Minister has actually found a way to exempt himself and any other senior Ministers. So I don't know how the Treasurer proposes to apply this tax to the Prime Minister and other senior Ministers. We don't have that legislation. We don't have that detail.

Peter Stefanovic

Okay, just a final point here, because as Evan Lucas said to us in the program earlier, he doesn't think this is a great idea, like you, many others as well. But they do agree that there is somewhere in super that the government could move on to raise money. So if this isn't it, what do you think is a better target?

Senator Bragg

Well, the nation's finances are in a terrible position. We're looking at 10 years of deficits. The government is having to raise all these crazy taxes, and that is going to damage investment and damage the economy. So the idea that you have to raise new taxes to help the economy is absolutely insane. And that is not the approach that Australians...

Peter Stefanovic

So there's not another part of super that the government could move on, that Jim Chalmers could move on that would be better, even indexing it.

Senator Bragg

We're already a heavily taxed country. People are hit very hard. Companies are hit very hard. There's not much reward for aspirational hard work or enterprise. And so the solution is not in raising new taxes.

Peter Stefanovic

Okay, we're out of time, but Andrew good to have you with us as always. We'll chat again soon.

[Ends]

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