If an Australian election was held today, the opinion polls say the most likely outcome would be a joint ALP/Greens government. The Greens have policies outside the environment which will transform business in Australia and almost certainly cause a big fall in the sharemarket.
For example, one of their policies involves extending an ALP signature policy, taxing unrealised capital gains, deeper into superannuation — and beyond the superannuation arena — which is exactly what Treasury wants.
The Greens in recent times have moved from their traditional environmental platform into the Middle East/terror issues, which have cost them support.
But, they also have domestic social policies, including: free medical and dental services; lower mortgage interest rates; abolition of fees on state schools; a cap of 50c on public transport rides; abolition of student debt, and many others.
These policies will have great appeal to the 30 to 40 per cent of the population currently under economic stress. Unlike most other populist movements, the Greens set out how they will raise the money to pay for these community benefits.
In broad terms, the money comes from business and savers, and embracing even one or two major planks of the Greens’ platform will transform the Australian business environment and the level of its sharemarket.
Of course, we do not know how much of the Greens’ platform would be embraced by an ALP government supported by the Greens, but I have selected five tax policies which will be high on the Greens’ demand list:
• The Greens will require big banks to offer all residential home borrowers a “homekeeper” loan facility which carries an interest rate of 1 per cent above the Reserve Bank’s cash rate. Investment and holiday home borrowers will not be entitled to the homekeeper facility.
The average home loan interest margin is in the vicinity of 2 per cent, so it would be halved. I will leave others to calculate a likely fall in the share price of the Commonwealth Bank plus the other big banks in the event of such a policy being embraced. The Greens propose smaller banks which do not have sufficient profits will be helped.
• A 40 per cent “excessive profits tax” which would apply to all companies with more than $100m in turnover, such as the supermarkets and the big banks.
• Higher taxes on fossil fuel companies, including toughening the Petroleum Resource Rent tax. New coal and gas projects would be stopped.
• The Greens want to lower the superannuation threshold for extra taxes from $3m to $2m. This would dramatically extend the scope of the ALP’s signature unrealised gains tax policy, which is incorporated in the calculation of superannuation income for those with more than $3m in superannuation balances. The legislation has not passed the Parliament.
If the unrealised gains tax is imposed on balances above $2m, given it is not indexed, it will soon be a regular part of Australian superannuation taxation.
• The Greens want to extend unrealised gains taxing outside superannuation by applying the tax method to billionaires. The Greens have unveiled a detailed proposal to implement a 10 per cent annual tax on the net wealth of the nation’s approximately 150 billionaires.
The plan includes a limit on moving capital worth more than 10 per cent of a person’s wealth out of the country. It would come into force from July 1.
The Australian Taxation Office would be required to maintain a national wealth register and would have 450 new full-time staff to complete audits.
Marketing the above measures has fallen to Greens Treasury spokesman Nick McKim, and he is skilled at the task. Here are some of his quotes which I have brought together:
“The party’s economic policy priorities, in the balance of power, would be making big companies pay their fair share of tax and stopping corporate price gouging, with higher revenues funnelled into initiatives such as free dental care and wiping student debt.
“Gina Rinehart should not have $40.6bn while people in this country are sleeping in tents and cars. That’s the economic system that Labor and the Liberals are defending.
“The Coalition and Labor are facilitating an obscene accumulation of wealth in Australia. The cost-of-living crisis is a political choice.
“The Greens’ plan will force billionaires to start giving back.
“The major parties will not take on the billionaires or big corporations while they’re on the payroll.”
Quite obviously, I could set out how the above policies could adversely impact employment and wellbeing in the nation. But, it is always dangerous when a society allows an important part of its population to be the punching bag to reduce inflation.
History has countless examples where that segment of the population has fought back. We should not underestimate the potential power of Greens policies on voting patterns if they reversed their Middle Eastern policies.
The business and saving communities need to understand the non-Middle Eastern or environmental proposals the Greens are putting to the nation will have a lot of popular appeal.
All political leaders say they won’t enter into coalitions with groups like the Greens on the left or hard-right people on the Coalition side.
But, when it comes to the choice of having power or not having power, politicians normally choose power.
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