The devastating impact ALP policies will have on employment, productivity and prosperity

You can now listen to The Australian's articles. Give us your feedback.

You can now listen to The Australian's articles.

The big election win by the Albanese government heralds revolutionary changes to business and savings that will reconstruct the nation of Australia. The Coalition did not highlight this unprecedented set of business and savings blows so they fully deserved their ravaging in the polls. Here are just some of the blows coming down the ALP pipeline.

The proposed unrealised gains tax changes the superannuation movement for ever. And it substantially reduces the attraction of franked dividend investments to significant parts of the savings community.

Accordingly, this will reduce the value of shares in banks and other stocks linked to franked dividends. As more Australians have superannuation balances of more than $3m, over time it will reduce the value of the Australian share market.

And because the ASX is dominated by smaller companies, it will make capital raising difficult for half the listed stocks as well as decimating start-up venture capital in Australia. New start-ups must go to the US if the legislation is passed by the Senate.

The unrealised gains tax has been carefully designed by Treasury so it can be extended to all investment assets and maybe one day the family home.

That’s just the start of the fundamental blows the government has in its armoury.

There is to be no change in bracket creep taxation, so Australians will continue to pay more and more income in tax.

Given the magnitude of the ALP win, the ACTU’s demand that long service entitlements be paid in cash will most likely be legislated. Picture: Izhar Khan/Getty Images

Hiring skilled people with salaries less than $175,000 could destroy a family enterprise if the government proceeds with its plan to hit medium-sized businesses by giving employees paid less than $175,000 the right to poach customers and staff. They are also looking to raise the $175,000 limit.

The ACTU’s proposed $1.8bn long service leave fund will mean super long service leave entitlements will need to be paid in cash as they are accrued. This means vast numbers of businesses will be starved of cash. Given the size of the majority, the government will almost certainly back ACTU policy.

Empowered by the election, union representatives in family businesses will move to share control with families. The rights of employees explode.

Large enterprises have departments to handle these situations, but for a family business it is just another burden for hard-pressed owners.

Unless people and enterprises are heavily subsidised, power costs will continue to rise. Offshore wind projects involve horrific costs, which make those states that contract them destined to be high cost power areas for decades.

The tax on unrealised gains is the ALP’s signature business/investment policy and it is incorporated in the forward estimates even though it is possible it could be still blocked in the Senate.

All Australians need to understand how it works.

Superannuation tax changes

The actual tax on your superannuation fund does not change. It’s based on a 15 per cent tax, but there are concessions for capital gains and, of course, franking credits.

The unrealised gains tax is totally separate and is levied on individuals not the funds. The new tax is imposed first by calculating the total market value of a person’s investment in superannuation as at July 1 this year, then comparing that market value with total investment value at June 30, 2026. The value of a person’s investments in superannuation at June 30 this year is the “cost”.

The actual purchase price may be higher or lower.

The 15 per cent tax is then levied on the difference between the two balances, with adjustments for an individual’s contributions or withdrawals. The market value of non-listed assets will ultimately be determined by the Australian Taxation Office. Farmers and family businesses with business freeholds will be devastated if the ATO decides their value has increased. Once superannuation fund investments create a liability for an individual, that individual can withdraw money from the superannuation fund to pay the liability. They can also pay it from their own assets.

The tax is only applied to those assets in superannuation above $3m, but the Greens want that trigger point reduced to $2m. The $3m trigger is not indexed, so the number of people impacted gradually rises and it is estimated 2.7 million Australians will be impacted in their working lives.

Every Australian with superannuation approaching $3m will now consider shifting their assets out of superannuation into other vehicles, such as trusts or personal ownership by spouses and children. A new industry will develop to assist this process.

When banks and other higher-yielding stocks with big franking credits are held in superannuation funds that are over the trigger point, then if, say, CBA shares rise 10 per cent over the year, there is a 15 per cent tax on the rise (unless offset by losses elsewhere) paid by the individual not the fund. The tax wipes out the benefit of the franking credit in the superannuation fund.

Bonds become more attractive to those seeking income, and corporations will need to think about issuing bonds rather than shares. Gearing of Australian corporations will rise.

Given Australia is likely to lose its AAA rating, there is little doubt the Treasury is planning to extend this tax to extend all assets.

Hiring skilled people with salaries less than $175,000

The key to the value of a large number of family and listed businesses in Australia is their customers and staff. In the lead-up to the election campaign, the ALP told these business owners that, if returned to government, the ALP’s proposed legislation states, if enterprises hire staff with salaries of less than $175,000, those staff are free to leave the business and poach their former employer’s staff and customers. Renegade employees can either start their own business or join a rival.

Those enterprises that have grown usually thrived because they created team-based productivity. That changes, particularly if the limit is raised.

Given the magnitude of the ALP win, the ACTU’s demand that long service entitlements be paid in cash to an ACTU fund will drain corporate cash and particularly family businesses cash.

Put this together and it is an unprecedented attack on business and investment.

One would have thought had the Coalition taken even a slight interest in the business and savings communities would have vigorously pointed out the devastating impact the combination of ALP policies would have on employment, productivity and prosperity. But they didn’t, and while it’s easy to blame Peter Dutton, the leaders of the party turned their back on business and savers so must take their full share of the blame.