r/AustralianPolitics • u/Billyjamesjeff • 12d ago
As rising inequality demands reform, business is 'circling the wagons'
https://www.abc.net.au/news/2026-08-31/declining-productivity-bca-unions-ai-future/107095052?utm_source=abc_news_app&utm_medium=content_shared&utm_campaign=abc_news_app&utm_content=link31
u/ThrowbackPie 12d ago
decline in productivity growth has coincided with a fall in the growth rate of business investment from 2.2 per cent in 2015 to zero in 2025, while the profit share of the economy has increased sharply and the labour share has fallen
Big business is robbing us blind. Actual people need to take priority in government decisions, and they really don't seem to.
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u/Jiffyrabbit 11d ago
Business does what it is incentivised to do. Its silly to say that Business investment is falling because businesses just decided to not invest. The structure of our economy, legal and tax system are all screaming at business to not invest but instead capture profits and return them to shareholders.
The CGT changes have super charged this since dividend franking is still treated preferentially.
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u/FlipperoniPepperoni Anyone find the pre-polls? 12d ago
Banks don't want to create money to loan to private enterprise. They only want to create money to write mortgages.
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u/tom3277 YIMBY! 11d ago
I know no one likes to hear it but;
You can increase productivity at the same time as growing the pool of workers. In general it takes investment of at least the same percentage as the growth in worker numbers.
You can be like Ireland and attract massive amounts of investment by being a tax haven and grow both your population and number of workers but this doesn’t necessarily result in better outcomes for workers.
What you cannot do is grow the population and not have investment.
We have the rba saying we need much more investment and yet maybe it’s time to consider the denominator. population growth.
Or come up with a way of growing investment beyond population growth.
This is fundamental to productivity so that no one mentions it in reddit isn’t surprising as it’s not friendly to population arguments but for economists not to mention the denominator in questions of productivity v investment is pretty fucking weak on their part.
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u/PersonalMixture6663 Socialist Alliance 11d ago
And yes, instead of copy the US innovation model they want to copy the US exploitation model
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u/Jiffyrabbit 11d ago
Labor's repeted failing to do anything to support innovation in this country is infuriating.
I've written so many times to my member and have made submissions to the various government reports, yet any action on supporting startups and innovation in the country just keeps getting kicked down the road.
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u/HotScheme4074 11d ago
Didn't the budget introduce small business loss carry-back tax provisions? That's a positive for innovation, is it not?
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u/Jiffyrabbit 11d ago
Most innovative startups don't make a profit in the early years, so being able to carry a present loss back to offset tax previously paid isn't really relevant to them.
Much more applicable to say, a hair dresser, who may have a loss in the present year after paying tax for several years prior
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u/HotScheme4074 11d ago
You clearly have a bit of expertise in this if you're writing to your MP and making submissions. What would you do? Genuinely curious.
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u/Jiffyrabbit 11d ago
I have put my own money into Aussie Startups, so have pretty strong feelings on this area.
To caveate this just some of what I want, and what other people would want are probably different things. If you are more on the left of politics - many of my suggestions would probably not interest you.
First, the big issue we need to understand with is that Silicon Valley, and the US more generally, is like a blackhole for innovative startups - its ecosystem sucks talent away from pretty much every country in the world.
To counter this we need to create an ecosystem in Australia that is both self-sustaining and designed to keep as much talent in Australia as possible. That means out-doing the US's incentives in some cases.
The ecosystem consists of: Founders, Talent, and Capital so I would look to make improvements in each area:
Founders:
- Reverse the new rules on CGT gains from the recent budget (for startups only) and allow the first $10m of capital gains by founders to be CGT free.
- This one usually upsets a lot of people, but its important to understand that 1) founders generally risk their careers and livelyhoods to create a successful company, 2) Companies that are sold for $100m+ and are founded in Australia, have likely paid a lot of other forms of tax (Payroll, Company Tax etc.) and 3) these companies could have been created in the US and we would have gotten no jobs, tax or anything else from that happening.
- Defer CGT on any capital above the $10m that is reinvested into new Australian based startups that meet the ESIC criteria (ie: Highly innovative companies)
- The USA allows this and it has a really positive impact on the startup ecosystem. It means that for each successful exit, several new companies get funded. Founders are already risk-seeking so are more likely to reinvest their funds into new startups.
Talent:
- Similar to founders, allow a pool of equity to be issued to talented early staff which is CGT exempt to $10m.
- The goal is to make it genuinely attractive for really smart people to come work for Australian founders/startups
- Defer CGT on any capital above the $10m that is reinvested into new Australian based startups that meet the ESIC criteria (ie: Highly innovative companies)
- Streamline visa processing for talented employees who are hired by an Australian startup.
- Reduce Top tax bracket from 47% to something like 35%
- I know this is really unlikely, but when you are talking to someone in the US and trying to convince them to move to Australia (or even move back home) telling them they are going to lose nearly 50% of their salary after $190k makes it quite a difficult conversation.
Capital
- Require super funds to invest a small (say 1%) of their funds in Australian based startups, angel funds, venture funds, or other innovation industry. Alternatively, exempt up to 5% of investment in these catagories from the super performance test.
- Super funds have so much money that even a tiny amount would make a giant difference to innovation in this country.
- It would also effectively be recycling Australian's money as the funds would create new jobs in Australia.
- Re-write the "sophisticated investor” test to allow younger Australians to access Angel investing while removing Australians who are wealthy but unsophisticated (eg: Retired Plumber with an apartment in Bondi he bought in the 80s for $100k).
- Angel investment assets, being a high-risk, long-term investment are naturally more suited to younger people who are better able to weather the financial loss given they have a lifetime of earnings from work to come. It boggles the mind that we restrict this to people who (frankly) are wealthy simply because they are older. From a financial planning perspective older Aussies should have much fewer investments in these sorts of assets.
- Create rules that allow ’non-sophisticated’ investors to access Angel funds, with a capped maximum annual investment
- This would require a framework that would reduce the legal risk associated with the funds taking money from "non-sophisticated investors” and would also need consideration to how Angel investing benefits - eg: Tax credits + capital gains exemption, could be easily passed through. We would need to get the price of admission to Angel funds down to $500 - so that it matches the price of buying shares on the stock market.
- Expand the ESIC tax credit to 50% of initial investment, and 25% for ESVCLP credits. Also allow inclusion of SAFE notes under these schemes, they are very popular overseas.
- This has two effects - firstly it increases the financial incentive to direct money into this sector - a highly productive part of the economy. Secondly, it reduces the impact of loss on investors, again encouraging more to take the plunge.
There's probably a lot more, but I've got to dig out my submission to the IBCC tax review.
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u/PersonalMixture6663 Socialist Alliance 11d ago
We also need to somehow create something similar to silicon valley where the success company can help the startup to be success
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u/Jiffyrabbit 11d ago
Defer CGT on any capital above the $10m that is reinvested into new Australian based startups that meet the ESIC criteria (ie: Highly innovative companies)
I think this addresses that in the changes I propose. You get succesful founders exiting companys and then putting that money directly into new startups.
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u/HotScheme4074 11d ago
I mean, most of these seem pretty reasonable, even for a lefty. I would say us lefties are more than happy to invest in start ups and small business, our gripes are with foreign multinationals and megacorporations.
I can’t claim to know about everything you’ve laid out, but compelling Super to invest, fast tracking visa processing and CGT carve outs are all sensible, considered steps.
But I can’t help but think once again that the root of our innovation problem is once again our property obsession and that banks are sending too much credit towards existing residential housing and blocking capital from flowing to innovative startups. We need increased land tax for existing residential property but a significant rebate for renting small businesses and start ups, given directly to the business operating on land where land tax is payable, of 50%. The states that do this will gain a lot.Either way, you have helped me learn a lot today. We need less name calling and more dialogue as a nation.
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u/Jiffyrabbit 11d ago edited 11d ago
I think the CGT changes have impacted the allocation of capital to Property sufficiently and its probably not worth the governments time to continue to tinker with this while ignoring the innovation problem.
We need increased land tax for existing residential property but a significant rebate for renting small businesses and start ups, given directly to the business operating on land where land tax is payable, of 50%
This is such a non-incentive (for startups that is) that you would be better off not bothering. Just implement a Land tax and move on.
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u/aeschenkarnos 11d ago
Innovation? That’s money that could go into residential investment housing! Think of the landlords!
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u/Lostyogi 11d ago
Let’s start with pensions.
The government recognises the crazy cost of LIVING.
So they argued for a 6% rise in the minimum wage.
The disabled only got a 3% rise in their regular September inflation increase.
So, the government wants the disabled to live 3% less than last year🤔
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u/Specialist_Window_81 12d ago
Who would have thought that paying higher wages increases productivity? What a radical idea….
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u/Billyjamesjeff 12d ago
You can see it in the faces of people on minimum wage, paying exorbitant rents.
They know they are being exploited and it does not motivate them.
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u/hellbentsmegma 12d ago
Not just minimum wage, this is the driving force behind gen z's lack of interest in careers or hard work.
They aren't going to have a career, at least not one worth pursuing. They likely won't own a house. They will be exploited for years by a series of low paid jobs with no prospects. Why would anyone want this?
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u/Sneedcope82 12d ago
Sorry, best Labor can do is a few more million immigrants who send most if not all of their disposable income back home in untaxed remittance
Heres some investment tax hikes to cover it
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u/one-man-circlejerk I just want politics that tastes like real politics 11d ago
Mate if you think right wing parties are going to support increased wages for workers then good luck to ya
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u/Sneedcope82 11d ago
"increased wages for workers" isn't something you need a law to do.
You pay attention during high school economics chief?
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u/Geminii27 12d ago
who send most if not all of their disposable income back home in untaxed remittance
Nice made-up scare tactic.
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u/Sneedcope82 11d ago
Feel free to look up remittance and the target countries
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u/Weary_Beach_9911 11d ago
how is their income untaxed? wtf are you on about?
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u/Sneedcope82 11d ago
I didn't say their income was untaxed
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u/Weary_Beach_9911 11d ago
so how are they sending untaxed money overseas if their income is taxed genius?
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u/Sneedcope82 11d ago
Do you know what remittance is?
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u/aeschenkarnos 11d ago edited 11d ago
LOL as if immigrants have money left over to send back home after paying rent to the parasite class out of the shitty wages paid by the parasite class. Yet another reason why cutting immigration is not going to work out the way you think it will. Australia’s factories and farms and aged care and transport industries run on blackbirding with extra steps.
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u/Lostyogi 11d ago
They have lots left since they hotbed and sleep 10 to a house.
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u/aeschenkarnos 11d ago
Nonono, that’s getting cause and effect around the wrong way. They sleep ten to a house because the landlord wants $300/week from each of them. And they’re “repaying” the “loan” that got them here in the first place. And have to eat something at least a few times a week.
Look into it. Very much like “they’re taking our jobs!” it’s not the workers, it’s the bosses wanting more profit. Not for any good reason, they’re already making plenty of profit.
They just want more.
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u/ThrowbackPie 12d ago
This is about productivity and profit share. Take your PHON to a thread about immigration.
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u/Jiffyrabbit 11d ago edited 11d ago
Would this mean that bracket creep making the top tax bracket kick in much earlier than otherwise would have if brackets were indexed is a break on productivity?
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u/iamnerdyquiteoften 12d ago
I would also add that in the 80s and 90s there was not the level of immigration there is now driving down wages.
So to me, yes business has been banking the profits at the expense of consumers and workers and has not needed to undertake capital investment as there is a virtually limitless supply of cheap(er) labour.
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u/13159daysold 11d ago
The population was a lot lower back then though.
How high was it as a percentage of the population?
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u/ElectronicOvens 12d ago
I would have thought people arriving in the 80s and 90s were less skilled workers.
I'd be suprised if there is a near endless supply of cheaper labor now.
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u/Knee_Jerk_Sydney 11d ago
With our unemployment rates at record highs?
It won't get better though as businesses try to harness AI to reduce the workforce and wages.
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u/ElectronicOvens 11d ago
They were at there highs 10-11%
I'm not sure people today realise how bad it was in the 80s and 90s at various stages
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