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GRACosway Weekly 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.

The Tax and Superannuation Laws Amendment (Measures No. 6) Bill 2015 passed Parliament this week, which makes two amendments to the operation of Australia’s capital gains tax (CGT) regime. The amendment alters the CGT treatment of earn-outs on assets and establishes a withholding obligation to improve compliance by 10 per cent of the purchase price on assets bought from foreign residents. The laws will apply from 1 July 2016, and are estimated to raise $330 million over the forward estimates. See media release: Key tax changes to improve the system
Prime Minister Malcolm Turnbull and Treasurer Scott Morrison announced the formation of the FinTech Advisory Group to help establish Australia as the leading market for financial technology (fintech) in the Asia Pacific region. The group will be chaired by Craig Dunn, Chairman of fintech hub Stone and Chalk and Director of Westpac Bank, and builds on the Government’s $1.1 billion National Innovation and Science Agenda. See media release: Turnbull Government backing FinTech
The Competition and Consumer Amendment (Payment Surcharges) Bill 2015 passed the Senate this week, which will regulate ‘excessive’ credit card surcharges and allow the Australian Competition and Consumer Commission (ACCC) to issue penalty notices of up to $108,000 per contravention to listed corporations. See media release: Turnbull Government’s laws to end excessive card surcharging pass Parliament


Federal Developments
Minister for Industry, Innovation and Science Christopher Pyne and Minister for Resources, Energy and Northern Australia Josh Frydenberg have launched the National Energy Resources Australia (NERA) growth centre. Chaired by oil and gas industry executive Ken Fitzpatrick, NERA will receive $15.4 million over four years to help drive innovation, competiveness and productivity across the oil, gas, coal and uranium sectors. See media release:  Energy Resources Growth Centre launched.
Minister for the Environment Greg Hunt has announced round five of the Green Army Program will open applications in March for large scale multi-project proposals that will use numerous Green Army teams to achieve outcomes over a two to three year period. See media release:  Expanded Green Army round for long term results and Australian Green Army for further information.
State Developments
The Tasmanian Government has approved the temporary installation of diesel generators across several locations to secure the State’s energy needs during ongoing repairs to the Basslink cable. See media release Energy Security Plan Implementation Update.


Federal Developments
Minister for Infrastructure and Transport Darren Chester turned the first sod on the $1.162 billion Gateway Upgrade North in Brisbane, which will widen the 11.3 kilometre road between Nudgee and Bracken Ridge from four to six lanes. The Federal Government has committed $929.6 million to the project in partnership with the Queensland Government, who are contributing $232.4 million to the build. See media release: Work starts on $1.162 billion Gateway Motorway upgrade
State Developments
Transport for NSW (TfNSW) announced 420 additional timetabled bus services for Sydney’s Hills District and an additional 348 weekly for the Seven Hills District, which will commence on 27 February. Minister for Transport Andrew Constance said the services are a crucial interim measure to cope with increased demand while the Government completes the construction of the North West Metro. See media release: More than 345 extra weekly bus services for Seven Hills bus users and Sydney's booming North West to get hundreds of extra bus services
Victorian Premier Daniel Andrews released the updated business case for Melbourne Metro, and called on the Federal Government to match state funding of $4.5 billion. The business case argues the $10.9 billion project will generate $1.10 for every dollar invested. Federal Minister for Major Projects, Territories and Local Government Paul Fletcher confirmed the Government had submitted the proposal to Infrastructure Australia for assessment, as is required of all projects with a value greater than $100 million. See media release here: Time for Turnbull to Back Melbourne Metro
Also on Melbourne Metro, Victorian Treasurer Tim Pallas announced 44 organisations have formerly registered their interest to tender for the design and construction of the two nine kilometre rail tunnels and five underground stations, as well as financing, operation and maintenance of the infrastructure. See Treasurer’s media release: World Wants to Invest in Melbourne Metro


Federal Developments
The Federal Government’s medicinal cannabis legislation was passed by Parliament this week, giving patients access to medicinal cannabis for pain management and chronic conditions. The Therapeutic Goods Administration (TGA) is currently considering the down-scheduling of medicinal cannabis, with an interim decision due in March. Health Minister Sussan Ley announced an independent advisory committee will be established to oversee the rollout of the national medicinal cannabis regulator. See media release: Historic medicinal cannabis legislation passes Parliament  
State Developments
The Northern Territory Government has opened expressions of interest (EOI) for the redevelopment of Royal Darwin Hospital. The upgrade includes a new 24-bed cognitive care facility, a multi-storey carpark and residential accommodation for staff. Minister for Health John Elferink said the Government is also considering outsourcing ongoing service delivery as part of the process. See media release: Expressions of interest invited for the development at Royal Darwin Hospital
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