Backbone forces Backdown

By John Ogilvie

Last night, Warren Mundine spoke to myself and a group of other people about his upbringing and journey through business and politics. At the end I had an opportunity to ask him a question, and considering his background in business, I was curious to get his insights into the backlash from entrepreneurs to Chalmers’ budget. To be more specific, I want to understand why Australian entrepreneurs have suddenly decided to become far more outspoken on political issues compared to the past.

Warren’s reply was insightful. He said that forty years ago, businesses were content to just learn the rules and carry on. The problem, he says, is that now the regulatory environment has become so hostile that entrepreneurs and small business owners feel that they have no choice but to speak up.

It seems that the change in approach has been effective.

After a visceral reaction from business owners and the general public, the Albanese government has been forced to make several changes to its proposed tax reforms . The turnover threshold for accessing the 50% CGT concession on active asset sales has been raised from $2 million to $10 million, extending relief to nearly three million existing small businesses. Additional measures include a new tax concession framework for innovative start-ups. Also, testamentary trusts established for genuine succession purposes are now exempt from the proposed new taxes, explicitly to avoid creating a de facto death tax on family assets.

Albanese and Chalmers have tried to frame this backflip as the Government having taken on board constructive criticism, but it’s clear to just about everybody that this about-face is due to a large segment of the community seeing through what was an obvious tax grab and making their voices heard.

This doesn’t mean that the issue has gone away, there are still lots of problems with the proposed tax reforms. However, there’s an important lesson to take away here. When enough pressure is applied from everyday people, governments can be compelled to withdraw a policy proposal.

The scale of modern government often feels overwhelming, and many people can feel powerless as a result. This outcome should serve as an encouraging reminder that we all have power to bring about change.