On Tuesday, Finance Minister Katy Gallagher assured that the changes remain Labor policy, but failed to confirm whether the bill would go to a vote in the final sitting week.
Gallagher did, however, concede that the bill faces opposition in the Senate, calling the upper house “an obstructionist chamber”.
“There’s a big cross bench with different views, we’ve got an opposition that doesn’t want to work with the government, that wants to stop progress, but we are going to be fighting right up to the end.”
Speaking to InvestorDaily’s sister brand SMSF Adviser on Tuesday, SMSF Association CEO, Peter Burgess, said the bill is unlikely to be put to Parliament this year, but could be tabled in its February sitting.
“The government has other priorities at the moment and has come to the realisation that it does not have the numbers in the Senate. We know based on our discussions with the crossbench that there have been no discussions on the bill and no attempt to make any deals,” Burgess said.
In the likelihood that the government opts for an early election, the CEO said the bill could become an election issue.
“Given all the criticism this proposal has attracted, you would think it would be foolish for the government to go to the election with this tax in its current form or even try and reintroduce it after the election in its current form,” he said.
“If the polls are right, we are headed for a minority government, which means the Teals will probably have more influence and power, and we know the Teals do not support this tax in its current form.”
Burgess also highlighted the budgetary impact of the bill being dropped, explaining that the government has already forecast revenue off the back of the Division 296 tax.
Economy already in trouble
Earlier this week, in its latest Budget Monitor, Deloitte Access Economics sounded the alarm on Australia’s fiscal health, warning that the reliance on unexpected revenue windfalls has reached its limits.
Ahead of the government’s 2024–25 Mid-Year Economic and Fiscal Outlook (MYEFO), Deloitte predicted a significant worsening of the underlying cash deficit, forecasting a $33.5 billion shortfall, up from the official estimate of $28.3 billion.
“If realised, that would represent a deterioration in the budget bottom line of more than $49.3 billion following the $15.8 billion surplus inked in 2023–24,” Deloitte Access Economics partner Stephen Smith said.
“That stunning turnaround in Australia’s fiscal fortunes would be the largest nominal contraction in the underlying cash balance on record, excluding the pandemic-hit budget of 2019–20,” he noted.
“Worryingly, there is little to suggest that the situation will right itself in the years to come.”
Deloitte Access Economics forecasts a cumulative $26.9 billion deterioration in the underlying cash balance over the four years to 2027–28 compared to projections in the 2024–25 budget. This is expected to drive net debt higher than previously forecast to 23.2 per cent of gross domestic product (GDP), up from the 21.9 per cent predicted in the 2024–25 budget.
