Treasurer gets the message: tax cap all con, no pro
Representatives from more than 30 organisations that are part of the 75-member Scrap the Cap Alliance have met with officials from Treasurer Chris Bowen’s office to underline the depth of opposition to the $2000 cap on tax deductions for work-related self-education expenses across a broad swathe of the community.
The meeting, held at the AMA’s national headquarters in Canberra, brought together representatives from the medical professions, engineers, accountants, small business, the tertiary education sector and the hospitality industry, who provided detailed accounts of how the cap would hurt their members, undermine the quality of vital services and damage the economy.
Destructive and far-reaching effects
AMA President Dr Steve Hambleton told the Treasurer’s advisers that the Government was yet to grasp the enormous follow-on effects the tax change would inflict on the country, and which were the focus of enormous anger among doctors.
He warned that doctors spent, on average, more than $12,000 a year on self-education, meeting mandatory continuous professional development requirements, acquiring new skills and learning of new treatments.
Dr Hambleton said the $2000 cap was a huge disincentive for doctors and other health professionals to undertake such activities, which underpinned the quality of the health system.
He told the Treasurer’s representatives that no other issue in the history of the AMA had drawn such a response from members – including the medical indemnity crisis early last decade.
“This is the issue with the single greatest impact on members that the AMA has ever had experience of,” Dr Hambleton told the meeting. “We have had more contacts [from members] over this issue than even the indemnity crisis.”
He said there had been more than 50,000 views on the website related to the tax cap, and more than 10,000 members had taken part in AMA polls and surveys.
Economic modelling prepared by Universities Australia suggests the cap will have a devastating effect on post-graduate education, with a third of students indicating that they would be forced to ditch further learning in the face of an effective increase of between 30 and 54 per cent in the cost of post-graduate study.
The peak university body predicted this would cost the economy $2.8 billion a year in reduced skills and productivity.
Rural communities to be hit hardest
Groups including the Country Women’s Association have joined the Scrap the Cap campaign amid warnings the measure could be particularly damaging for rural communities.
Doctors, dentists, nurses, engineers, veterinarians and accountants working in rural and remote areas face among the highest self-education costs because of their need to travel to receive necessary training, and groups warned of the danger that the cap would make it harder to attract and retain professionals providing vital services, and undermine the scope of services they would be able to provide.
Australian College of Rural and Remote Medicine President Professor Richard Murray said the tax cap “cuts right across” policies and programs intended to support and boost the rural health workforce, and warned rural communities would pay for the measure with their health.
“A lack of skills in rural communities kills,” Professor Murray said.
Cap hurts not just professions
The tax change is also expected to undermine the nation’s ability to bid for and host major international conventions, conferences and other events.
Association of Australian Convention Bureaux Chief Executive Officer Robyn Hendry told the meeting that Australia’s position as one of the top 20 destinations in the world for conventions and conferences would be put in jeopardy by the cap because it would make it very hard to guarantee the strong domestic attendances vital to getting the organisers of international events to choose Australia.
Ms Hendry said it also threatened to rob many towns of the economic boost they got from hosting conferences and conventions.
Threat to productivity, prosperity
Dr Hambleton said the Government’s own Asian Century White Paper highlighted the importance of education and training to future national prosperity.
In Chapter 5.2, the White Paper said “education and training are crucial to Australia’s future productivity. The greater the skill level of each worker, the higher the potential productivity of the workforce – a highly educated and skilled workforce supports innovation, the spread of technological advances and the accumulation of physical capital”.
Engineers Australia Director of Policy Brent Jackson said the tax cap undermined the stated policy goal of making Australia a high-skilled, high wage economy.
Mr Jackson said the tax change would discourage people from becoming or remaining engineers, increasing the nation’s already heavy reliance on engineers from overseas to fill gaps in the workforce.
Representatives from the Australian Chamber of Commerce and Industry, the Tax Institute and the Institute of Chartered Accountants pointed out that the policy discriminated against professional education, leaving claims for work-related expenses like tools untouched.
The groups said there was already ample provision in existing tax laws for measures to crack down on extravagant expenses claims, and condemned the cap as a very blunt instrument.
Dr Hambleton said the Government needed to re-think its policy.
“The Government must heed its own messages about the importance of education and training and dump this policy before the election – or pay the political consequences,” Dr Hambleton said. “There are votes to be won and lost on this issue.”