GOVERNMENT TO BRING FORWARD SMALL BUSINESS TAX CUTS

Prime Minister Scott Morrison and Treasurer Josh Frydenberg have announced a plan to accelerate the Government’s tax cuts for businesses earning up to A$50 million five years earlier than planned. In 2016 the Government introduced the Ten Year Enterprise Tax Plan to gradually reduce the small business tax rate to 25 per cent by 2026-27. The Government now plans to fully implement the proposal by 2021-22, at a cost of A$3.2 billion over four years. Mr Frydenberg said the legislation will be introduced in the sitting period (w/c 15 October), and indicated his party’s intention to place pressure on the Opposition, which has chosen to support this measure. The Government’s ability to fund this policy is partially due to its decision to abandon tax cuts for companies earning over A$50 million, which it failed to pass through the Senate (see Weekly Report 24 August).

LABOR RELEASES ACTION PLAN

Leader of the Opposition Bill Shorten presented his party’s policy agenda at a speech in western Sydney on Sunday, unveiling what he called a “fair go action plan”. The five-point plan includes proposals for more equitable funding for schools and hospitals, changes to workers’ bargaining rights and restrictions on workforce casualisation, as well as measures targeting clean energy and cost of living. This comes as the Australian Council of Trade Unions (ACTU) prepares to launch a campaign to alter the workplace bargaining system. The Government responded to the manifesto, with Prime Minister Scott Morrison arguing the plan would amount to higher taxes and curb economic growth, while Treasurer Josh Frydenberg accused Mr Shorten of engaging in class warfare. This was the second of five policy speeches Mr Shorten plans to make this year, preceded by his pre-school funding announcement last week (see Weekly Report of 5 October) and followed by a public school funding speech on Wednesday.

OTHER POLITICAL NEWS

Prime Minister responds to IPCC global warming report
Prime Minister Scott Morrison has acknowledged the findings of the recent Intergovernmental Panel on Climate Change’s (IPCC) Special Report, but asserted the Government will not alter its approach to energy policy. The report stated human caused carbon emissions must reach net zero by 2050 to prevent global temperatures rising by more than 1.5 degrees Celsius, meaning coal power would need to be effectively eliminated. The report also outlined consequences of global warming which could directly affect Australia, including coral reef depletion and intensified drought. Mr Morrison reasserted his belief that Australia would reach its Paris Agreement targets, and stated the Government would focus on lowering energy prices, while Deputy Prime Minister Michael McCormack gave explicit support to continued use of coal. The Opposition has criticised the Government’s approach and demanded an increase in renewable energy production, but has not called for coal power to be phased out.

Government launches inquiry into mental health
The Government has tasked the Productivity Commission with investigating the economic impact of mental health and the efficacy of current public spending. The inquiry will develop a means of measuring government funding against productivity, labour force participation and economic growth. The Commission will deliver its report with recommendations to improve outcomes within 18 months.

Police investigate leak from Department of Home Affairs

The Australian Federal Police (AFP) has raided the Department of Home Affairs as part of their investigation of email leaks involving Minister for Home Affairs Peter Dutton. The leaked documents revealed numerous interventions by Mr Dutton into visa cases for au pairs (see Weekly Report of 7 September). When the email correspondence became public, Mr Dutton requested an AFP investigation into the matter. The Opposition is now seeking to apply privilege to the documents, which would remove them from the investigation.

GLOBAL MARKET DECLINE AFFECTS AUSTRALIA

The Australian Stock Exchange (ASX) fell by 2.7 per cent on Thursday as US and Asian stock markets reacted to the increase of US interest rates. Australian stock values fell across numerous sectors, including mining, oil and banking. This is the largest decrease since February 2018, the last time the US Federal Reserve raised interest rates, suggesting a similar recovery is likely. While this event will not affect the Government’s approach to fiscal policy, its economic plan relies on a strong global economy, so a prolonged fall in global growth would be a serious challenge to its message.