May 19, 2020

$6bn of construction contracts signed for Melbourne Metro Tunnel Project

Australian construction industry
Cross Yarra Partnership
Melbourne Metro Project
Addie Thomes
2 min
$6bn of construction contracts signed for Melbourne Metro Tunnel Project

Melbourne’s highly-anticipated $11bn metro infrastructure project has reached a major milestone after $6bn of tunnelling and station building contracts were awarded to a consortium of companies.

The Cross Yarra Partnership, consisting of Leandlease, John Holland, Capella Capital and Bouygues, will deliver the largest chunk of the work on what is the city’s most significant transport project of all time.

Craig Laslett, Lendlease CEO Engineering and Services, said: “A world-class project of this scale will create unprecedented opportunities for local employment and procurement, and we look forward to working with government, project stakeholders and the community to bring this project to life.”

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The consortium will deliver twin 9km tunnels and five new underground stations at North Melbourne (Arden), Parkville, State Library, Town Hall and Anzac. Lendlease also has rights to deliver the over-site development at Town Hall Station.

Maintenance is also included in the deal, which is set to last for around 25 years. Early works on the project have already begun, with the new system set to open in 2026.

Up to six tunnel boring machines (TBMs) are set to be used during construction, each up to 100m long and weighing more than 1,000 tonnes.

In preparation for this significant work, three shafts will be excavated in the CBD – at Franklin Street and A'Beckett Street near Melbourne Central station, and at City Square near Flinders Street Station.

The shafts will be up to 11 storeys deep and will enable the roadheaders to be lowered into the ground to begin excavating around 2mn cubic metres of soil and rock – enough to fill 800 Olympic-sized swimming pools.

The final contract has also been signed with CPB Contractors and Bombardier Transportation to start work on the roll-out of high-capacity signalling on the Metro Tunnel. The $1.1bn Rail Systems Alliance will allow trains to safely run closer together, meaning they can run more often – creating a turn-up-and-go train network for Melbourne.

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May 14, 2021

Opinion: Are you ready for a wealth tax?

taxes
wealthtax
finance
singapore
Eryk Lee, CEO, AAM Advisory in...
5 min
With wealth taxes back on the cards worldwide, Eryk Lee, CEO of AAM Advisory in Singapore outlines what a Singapore wealth tax could look like

Wealth taxes – a levy charged on the total value of someone’s wealth – have fallen out of favour over the last 20 years with only three OECD countries choosing to levy a recurring tax on wealth, down from 12 in 1990. Almost overnight, however, wealth taxes are back on the cards worldwide, as governments grapple with rebalancing the books post-pandemic.

As the world turns its attention to paying for the pandemic, there has been a steady chorus of calls – most notably in the US and the UK, and recently from the International Monetary Fund – to introduce a new tax on the value of someone’s wealth. Singapore is not immune, and it is likely we will see a review of Singapore’s wealth taxes in the future.

After Coronavirus, anything and everything must be on the table and up for consideration by the government to fill the fiscal hole left by the pandemic. We have never experienced a crisis quite like this, and the government must quite rightfully have a serious conversation about what needs to be done next to help balance the books post-pandemic.

The truth is that Singapore, like most of the world, has an ageing population that will require more and more tax revenue to pay for an ever-increasing cost of care. It sounds logical for a wealth tax to fill that revenue requirement, but there is one big issue with such a tax: it is complicated, very complicated.

The government would have to track down and accurately value all kinds of assets considered to be ‘wealth’, from fine art to Ferraris and everything in between. And for this they will need a vast, and expensive, administrative army.

What happens to people with considerable illiquid assets but few liquid assets to settle the bill? How do you value an insurance or pension policy, which may pay a sizeable amount but isn’t sat as a capital sum in someone’s account? How do you value someone’s wealth tied up in their business?

Then there’s a question of implementation. Do you go for a one-off tax or an ongoing tax? Do you focus the tax on the mass affluent or just the ultra-high net worth? What assets are you going to include as wealth? What rate will you set the tax at? Will there be any exemptions?

Then there is the most important question of all: how do you avoid killing the goose that lays the golden egg by spurring people to up sticks and leave to avoid paying the levy? This is a particularly acute problem for Singapore given our competitive advantage largely rests on an attractive low tax regime.

While the jury is still out on whether Singapore will go down the route of introducing a new wealth tax, the government may be tempted to instead tweak existing taxes, or introduce new, less controversial, taxes on wealth. A case study in this is the UK, whose government categorically rejected proposals by a wealth tax commission to introduce a one-off wealth tax, but that didn’t stop them tweaking pre-existing taxes on wealth, including capital gains tax and inheritance tax at the Budget in March.  

If the UK is anything to go by, we could see all the talk of a new wealth tax in Singapore translate into changes to pre-existing taxes, or the introduction of new, but less severe taxes on wealth including estate duty and capital gains taxes.  

As there are clearly more questions than answers at this stage, it would be wise to get your ducks in order and consider how your wealth is structured so that when the time comes for any future tax tweaks, you are prepared and can ensure maximum efficiency.

If implemented, a wealth tax can come in many different forms, which clearly means that any wealth structuring will depend on the actual rules on implementation. But as an example, if a wealth tax comes in the form of capital gains tax upon the sale of an investment, it may be worth considering holding your investments in a tax efficient vehicle such as a Private Placement Life Insurance (PPLI), whereby the liability to tax can be deferred into the future.

Within this vehicle, investments can grow virtually tax-free, until a chargeable event such as death, maturity, early encashment or surrender occurs. As little to no tax is being charged, there will be more investment returns to compound over time. Using a tax-efficient structure and the power of compounding are two of the most important tools in the accumulation and preservation of wealth.

If Singapore goes down the route of estate duties or inheritance tax, we can take guidance from other jurisdictions. For instance, a properly structured Trust or Private Placement Life Insurance can minimise estate taxes, but for certain assets there may be a ‘look through’ so such structures may not be appropriate. In such instances, an insurance policy can provide liquidity to help the beneficiaries pay the tax bill.

It is important to note that the effectiveness of various structures will depend entirely on the tax rules being implemented in Singapore. The key is to have an open mind as there are many possibilities on structuring your wealth to achieve tax efficiencies and efficient succession planning. A financial adviser experienced in such structures can provide this support and can position your finances so that you are prepared for whatever is thrown at you post-pandemic, a wealth tax or otherwise. But speak to different professionals as well, as there is no one solution that works for all, it really depends on your scenario and what you want to achieve.

Eryk Lee is chief executive of AAM Advisory, part of Quilter plc

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