GRACosway Weekly Policy Wrap Up

26 February 2016

The Government’s tax woes continued this week, as the latest Newspoll revealed the Government and Labor are level on 50-50 in two-party preferred terms. The poll comes as the Coalition struggles to articulate a tax reform agenda, with reports Prime Minister Malcolm Turnbull faces a revolt from a number of his backbenchers on proposed changes to negative gearing. The Prime Minister is leaving negative gearing on the table as Cabinet resolved to make tax reform a key feature of the May Budget. Deputy Prime Minister Barnaby Joyce called for unity on Friday, warning government members that continued public dissent would see them land on the opposition benches following the election.

The Prime Minister and Minister for Defence Marise Payne released the long-awaited Defence White Paper on Thursday, which outlines a $195 billion investment in new military hardware over the next decade. The White Paper announces a further $30 billion in new expenditure to lift Defence spending to 2 per cent of GDP by 2020-21, and includes a commitment to acquire 12 new submarines at a said cost of $50 million. The Paper also has an unprecedented focus on cyber and high-tech intelligence and space-based hardware to bring Australia’s defence capabilities into the 21st century. See the Prime Minister’s media release here and the Defence White Paper here.

Federal Treasurer Scott Morrison – who flew to China on Friday – has approved the sale of Australia’s largest dairy, Van Diemen’s Land Company (VDL), to Chinese-owned Moon Lake Investments, following recommendation from the Foreign Investment Review Board. The approval is the first to be subject to the new Australian tax law conditions announced by the Treasurer last week, which requires foreign investors to provide information on investments, including if they enter into transactions with non-residents to which transfer pricing arrangements and anti-avoidance measures may apply. The decision has prompted an angry backlash from some sectors of the community over fears about the level of Chinese investment in Australian agricultural assets. See the Treasurer’s media release here and his op-ed in Friday’s AFR here (subscription service).

Media ownership reforms gained Cabinet approval on Tuesday and will now be considered by the Coalition’s Communications Backbench Committee before being put to the joint party room in the coming weeks. The reforms will see the removal of the two-out-of-three rule, which prevents a single entity owning more than two forms of traditional media in the same market, and the 75 per cent reach rule, which prohibits a network broadcasting to more than 75 per cent of the population.

The Government introduced senate voting reforms into the House of Representatives this week, having reached agreement with Independent Senator Nick Xenophon and the Greens to pass the legislation ahead of the next election. The measures will introduce optional preferential voting from one to six above the line, abolish party lists and increase the number of allowable mistakes for voting below the line. Angered by the announcement, crossbench senators are threatening to ‘go on strike’ by delaying key government Bills, including the reintroduction of the Australian Building and Construction Commission and media reforms. Concerns the Senate could become unworkable for the Government prompted Leader of the House Christopher Pyne to renew speculation of a possible early double dissolution election, stating that July was ‘as good a time as any’ to go to the polls.

Two more members of the Government have indicated their intention to leave Parliament, with NSW Senator Bill Heffernan announcing he will not seek preselection for another term, and Queensland Liberal Member for Fisher Mal Brough saying he will not contest the next election. Senator Heffernan’s term in the Senate concludes on 30 June 2017.

The Victorian Parliament is reportedly nearing agreement on the sale of the Port of Melbourne after the Andrews Government agreed to Opposition demands that any owner’s compensation be limited to 15 years from the time of sale. The Government had originally proposed a compensation provision that would have seen the Port’s owners paid compensation until at least 2046 in the event of construction of another port. Treasurer Tim Pallas issued a statement late Thursday in which he said the last point of contention between the Government and Opposition had now been resolved. See the Treasure’s statement here.

In NSW, Chris Stone has been appointed the new State Director of the Liberal Party, replacing Tony Nutt who took up the role of Federal Director late last year. Mr Stone has previously worked for John Howard and was campaign manager for the NSW Liberal Party’s 2011 election victory. The State Government also faces the daunting prospect of replacing three chiefs of staff after Larry McGrath announced he will be leaving Treasurer Gladys Berejiklian’s office – this follows the departure of Tony Chappel from Minister for Planning Rob Stokes’ office last week, and Kath McFarlane from Minister for Family, Community Services and Social Housing Brad Hazzard’s office, who has gone to Charles Sturt University law faculty.

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