By Perry Williams, John Stensholt and Brad Thompson
Billionaire entrepreneur Shaun Bonett has criticised the Albanese government for its misguided budget tax policies and warned Australia could not tax or regulate its way to prosperity, as mining producers slammed Labor for failing to deliver a carve-out for the resources industry.
Jim Chalmers was forced to radically rework his budget tax reforms after backlash from a range of sectors, investors and Labor backbenchers, with a raft of concessions for small business, start-ups and testamentary trusts.
Mr Bonett, the owner of commercial property firm Precision Group and tech start-up Prezzee, said the changes were incorrect from the start.
“The backflip is sensible, but it should never have been necessary,” he told The Australian.
“Governments often underestimate how quickly uncertainty changes behaviour.
“Investors can tolerate paying tax, what they struggle to tolerate is not knowing what the rules will be tomorrow.
“The lesson here is that Australia cannot tax or regulate its way to prosperity.”
Mr Bonett had joined a growing backlash against the proposed tax changes, warning the measures risked driving founders offshore and making the country a less attractive place to build globally competitive companies.
The small business turnover threshold of $2m has been bumped up to $10m, broadening the pool of companies eligible for a concession and caving to the demands of small-business groups and industry bodies who claimed the changes disproportionately affected the sector.
Labor also pledged that early investors in innovative start-ups with a low or zero cost base would still receive a significant discount on a future capital gain in a potential fillip for the technology sector.
However, the nation’s powerful mining producers said the Treasurer had delivered a “kick in the guts” to the resources industry and its investors by ignoring calls for an exploration carve-out, despite the industry’s parallels with tech start-ups.
Association of Mining and Exploration Companies boss Warren Pearce said it was hard to understand why the government had looked after wealthy venture capitalists and angel investors in tech, but not mum and dad retail investors in mineral exploration.
“This is an own goal of epic proportions for the Australian government, given its ambitious critical minerals agenda,” he said.
“This will result in fewer discoveries, fewer mines, and will impact Australia’s critical minerals agenda, green energy transition and sovereign capability.”
Canberra ignored dire warnings from billionaire Gina Rinehart and Liontown Resources founder Tim Goyder, as well as other executives who led some of the biggest Australian mining success stories of recent decades.
Critical minerals has already fallen by more than 30 per cent over the past year at a time when the International Energy Agency estimates the world needs about 50 new lithium mines, 60 new nickel mines and 17 new cobalt mines to meet carbon emissions goals by 2030.
“Excluding an industry that finds the mines of the future from carve-outs will hurt future discoveries and reduce productivity for Australia’s most important economic driver,” Mr Pearce said.
Bill Beament, who grew Northern Star Resources from a penny-dreadful stock to the largest gold producer with a primary listing on the ASX, is among those who warned the tax changes would destroy the balance between risk and return for investors in exploration.
Mining entrepreneur Warwick Anderson shelved plans to list his junior exploration company, Gold Mines Australia, on the ASX pending clarity on whether the sector would receive a carve-out.
Outspoken budget critic Geoff Wilson said the Anthony Albanese and Dr Chalmers are “twiddling away while Rome is burning”, calling the CGT concessions a “micro-step”.
Mr Wilson said the expansion of CGT concessions to small businesses with a turnover of $10m will have “minimal impact”.
“The Treasurer and the Prime Minister are tone deaf,” Mr Wilson told The Australian.
“The tax on Australian businesses is going to destroy Australian businesses. Increasing the threshold on a company you own for 15 years to $10m will have a minimal impact on the billions and billions of dollars of costs this will add.”
Dr Chalmers also announced a backflip on discretionary testamentary trusts used to manage wealth inherited after death, saying it would exempt income distributed in trusts, which would have been subject to a 30 per cent minimum tax rate.
Winemakers had labelled the trusts and capital gains tax hikes as “soul destroying”, a “disaster” and a “slap in the face after years of sweat and toil” that would also threaten succession planning for many of the nation’s family owned wineries.
De Bortoli Wines boss Darren De Bortoli said common sense had prevailed.
“It was going to be a problem, but we were waiting to see the detail and it wasn’t going to be very helpful and the last thing we needed in the wine industry given the current state of the industry,” he said.
“And it sounds like common sense to alter it, and everything needs to be about common sense these days. These family trusts are not about minimising tax but are all about the kids, the next generation, keeping the assets within the family.”
Betashares CEO Alex Vynokur said the budget amendments showed the government had heard the concerns raised by small businesses and start-ups but warned the proposed CGT reforms would punish Australians trying to build a better future for themselves.
“At the same time, it demonstrates there is still more work to be done on the proposed changes to CGT,” he said.
“The new CGT regime has some serious second-order impacts to the way most Australians invest, which the government has so far failed to fully grasp.”
Jim’s Group founder and chief executive Jim Penman said he was pleased the government had made some concessions to tax changes outlined in the budget, but warned Labor would continue to look for receipts to cover profligate spending.
“I’m glad they’ve got the sense to listen,” he told The Australian.
“It was insane, (but) this is a government spending out of control and lacking self discipline and they’re straggling around to find some way to fund their expenses.
“So they thought let’s cripple the most productive force in our economy. Doesn’t make sense.”
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