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When lower taxes and wages don’t work, there’s always defence

When Tony Abbott launched his election campaign in 2013, he promised that “the motor industry will be saved from Mr Rudd’s $1.8 billion tax on company cars.”

His decision to not close a tax loophole that saw people being over-compensated for inflated business usage claims did nothing to save the car industry.

He also promised that repealing the carbon tax would “boost Australia’s economic growth, increase jobs and enhance Australia’s international competitiveness.”

In fact, all it did was increase our emissions for the first time in a decade and kill off investment in the renewable energy industry.

Tony also promised to “abolish the mining tax so investment and employment will go up.”

The exact opposite has happened with investment and employment in mining plummeting, and all workers worse off due to the abandonment of the scheduled increases to the Superannuation Guarantee.  Families were also hit with the removal of the School Kids Bonus.

Then there was the promise that removing tariffs under free trade agreements would create jobs and growth through increased exports, particularly in agriculture.

However the Australian Farm Institute: Review of Agriculture Trade Performance 2016 found that the growth of Australia’s exports to every global region except Oceania and North Asia was slower than the equivalent global growth figure.  Alarmingly, the report also finds that in addition to the volume of exports fall, so too has the value.

“The results highlight the need for Australian agricultural producers and exporters to dispel any complacency that might be held about the ability of Australian agriculture to automatically benefit from the growth in global demand for agricultural product as world populations increase and diets change.” — Australian Farm Institute: Review of Agriculture Trade Performance 2016.

These decisions have cost Australia tens of billions in revenue.

We have more people under/unemployed than ever.  Wages are stagnant despite Abbott’s claim that he wanted “our workers to be the best paid in the world.”

Investment has dried up and we are facing the real possibility of a recession.

MYEFO saw a tax revenue write-down of $30.7 billion over the next four years.

Morrison claims the cumulative deficit will only blow out by $10.4 billion due to his “savings” which, in the main ($12.2 billion), are made up of lower than expected expenditure on childcare benefits, pension payments, and carers programs.

When claiming to have abolished “red tape worth $1 billion per year”, Abbott said the “the businesses of Australia should be competing, innovating, marketing, investing and employing, rather than simply lobbying government for more favourable rules or the best possible handout.”

But that is exactly what businesses are doing.

Having got rid of the FBT changes, the carbon tax, the mining tax, tariffs, red tape, and increases to the superannuation guarantee, the business groups in Australia are insisting that they want further tax cuts of 5% regardless of the fact that a great many of them pay less than 5% already, and they are insisting that penalty rates be abolished.

Never mind Scott.  When that doesn’t work you can always spend a few billion more on defence.

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26 comments

  1. John Brame

    Ring of steel, pathetic… we need a ring of tungsten carbide.

  2. Ella

    Kaye Lee, as always a very informative piece….look forward to reading many more in the New Year.
    A so called intelligent person usually stops doing what has been proven not to work.
    How long before our so called intelligent leaders accept that trickle down economics is dead and should be buried with 2016,
    a year I wish I could forget.

  3. Miriam English

    Ella, I don’t think they can stop. It is a religious point of faith for them. Like other religious beliefs, they don’t want or need facts. When trickle-down fails to work, their usual response is that it just hasn’t been pushed strongly enough yet to make it work. Like simple-minded children, if that round peg won’t go in that square hole, they’ll really hammer it rather than look for a different-shaped peg.

    Thanks for the overview, Kaye. Keep ’em coming. I always get a lot out of your articles.

  4. Kaye Lee

    To save money, they are cracking down on “welfare fraud” and job assistance programs….

    “The government used the budget update to announce a welfare payment fraud crackdown, which it expected to save $2.1 billion over the next four financial years.

    It will also increase the cost of Commonwealth fines from $180 to $210 per penalty unit, which is expected to raise $90 million by 2019/20.

    MYEFO also confirmed the government will scrap the Green Army, a program introduced by former prime minister Tony Abbott. This should save $9.3 million this financial year, and $224.7 million over four years.

    It will also stop family tax benefit part A end-of-year supplement for families earning more than $80,000 ($644 million over four years).

    And it will cap funding for the Jobactive program for those over 25 ($329 million over four years).”

    But they have found some money to spend….

    “The government also used MYEFO to announce it will spend an extra $813 million over four years on 75 infrastructure projects, as well as $541 million over four years on community infrastructure projects.

    It will restoring funding for the Australian Renewable Energy Agency ($800 million over five years).

    And it will delay changes to bulk-billing incentive payments for pathology and diagnostic imaging ($200 million over four years)”

    That infrastructure spend sounds like a few football fields in marginal seats will get an upgrade just before the next election. It’s not enough to even cover Barnaby’s porkbarrelling let alone actually build anything. Maybe a few more CCTV cameras?

    And yet another partial refunding of cuts made by Abbott who took $1.3 billion from ARENA and a backdown on an unpopular poorly thought out attack on Medicare.

  5. Rossleigh

    It’s interesting that after three full years of the adults governing us there is still so much “welfare fraud” and “dole bludging” going on. You’d have thought that they’d have fixed most if it by now. So unless the extent of it is being grossly exaggerated, then one must conclude they’ve been sitting on their hands.

  6. Terry2

    John Alexander, the Liberal member for Bennelong has again pointed to Negative Gearing as being against the public interest, a policy that is being irrationally supported by the coalition merely to snub the more sensible Labor alternative.

    He says of the distortions to the Australian housing market created by negative gearing and the associated CGT concessions : “Too often we see the young couple getting beaten out at the auction, and then renting out the very place that they were trying to buy,”

    It feeds into the narrative that Kaye has pointed to of a conservative ideology that says ‘we know best and even if we are wrong, we will lie to support our world view’.

    The home ownership and housing affordability inquiry had a long and tortured history. It was commissioned by Joe Hockey in April 2015 under former chairman John Alexander, but stalled until the July election this year. Treasurer Scott Morrison later directed it to complete its report under a new chairman, Mr David Coleman who was prepared to follow the coalition policy to the letter and he duly slipped in a report late last week that actually made no recommendations neither could it find any problem in housing affordability in Australia.

    So, if you set up an enquiry on something like housing affordability and your hand selected Chairman forms an opinion based on empirical evidence but contrary to government policy, what to do : change the Chairman of course.

    Alice had the same problem as I do when trying to understand the machinations of this government :

    But I don’t want to go among mad people,” Alice remarked.
    “Oh, you can’t help that,” said the Cat: “we’re all mad here. I’m mad. You’re mad.”
    “How do you know I’m mad?” said Alice.
    “You must be,” said the Cat, “or you wouldn’t have come here.”

    (Alice’s Adventures in Wonderland, Chapter 6)

  7. Ricardo29

    There is this constant obsession with welfare cheating and, like you Rossleigh, i wonder how they can keep finding new examples to prosecute or persecute, at the same time their unwillingness to tackle corporate and wealthy tax avoidance and welfare (CGT/Neg Gearing) becomes more glaringly obvious by the day. Pensioners are already revolting but we need a wider revolution. Hopefully the Senate will see some justice though since both Labor and Greens apparently supported the pension changes not a lot of hope there.

  8. kerri

    It always amazes me that Morrison compares the budget to a household budget?
    So when things go bad in the Morrison household they stop going to the doctor and pull the kids out of school?

  9. Jack Straw

    Fundamentalism is a form of madness. Yes they are all mad.Imagine actually sitting down to have dinner with some these conservatives.Say Erica Abeetz ,Tony Abbott, Bernardie, George Christianson and George Brandis.I think I’d prefer waterboarding.

  10. Kaye Lee

    Even if we ignore that we are a sovereign currency issuing nation, businesses borrow when interest rates are low to invest in things that will make money down the track.

    BHP has NEVER been debt free. Gina Rinehart doesn’t pay for her new mines – she borrows.

    These guys really don’t have a clue. That’s what happens when you have Direct Instruction from your parents on political matters. They are unable to think beyond the age old ideology because they never questioned it in the first place – lowering costs for businesses is all they exist for – which would be all very well if businesses and rich people behaved ethically. But no….for the Kate Carnell’s of this world, business is all that matters, and the more you can screw out of the people the better.

  11. Andreas Bimba

    I suspect that even when more than half the sheep that vote for the Coalition lose their jobs they will still remain loyal to the Coalition as Rupert and his friends that run the Ministry of Truth will blame the unemployed, the unions, Labor and the Greens for blocking worthy Conservative policies and for wrecking the economy.

    On second thoughts the sheep will probably then vote for the hard right of the Coalition and One Nation as Rupert will take the opportunity to accelerate Australia’s turn to the right. Just think of all the new jobs that will arise from establishing dozens of new mega coal mines, restarting cheap coal fired power stations and all the fraudulent public private partnership investments in new roads, dams in the northern rivers and new mining infrastructure. Sounds like the rise of Trump?

  12. Roscoe

    Mal and ScoMo have a plan!!! they will cut the tax rates for big business so that they will start paying tax to get the reduction. bound to work

  13. Kaye Lee

    Commodity forecasts issued 13/12/2016

    …..2016-17 export forecast – falls in beef and veal (down 17 per cent), live feeder/slaughter cattle (17 per cent) and mutton (12 per cent). Export earnings for dairy products are expected to remain largely unchanged.

    Good job on those FTAs Robb. I do hope your new positions are working out very well for you and that screwing your country was worth it.

  14. Alison White

    They have found a couple of new ways to decrease welfare. A) clawing back monies from up to six years ago by cross referencing ATO data and by averaging income earned over the WHOLE year for people who may have received benefits for only PART of the year it creates a debt!!! It’s wrong but most people will pay it regardless because it’s almost impossible to disprove if you haven’t kept every payslip.

    B) They have also seemingly changed the eligibility for mobility allowance for disabled pensioners- they now have to be in work or training. Attending a day centre does not appear to qualify anymore. We now have to cover all of her significant transport expenses ourselves. No more buses within the disability sector due to cut backs.

  15. townsvilleblog

    Ella, The L&NP know that trickle down economics don’t work, they are deliberately following this course of action for the people that they represent, the 1% of the global population who own all the foreign multinational multibillion dollar corporations who make billions out of Australia, yet pay no tax to the country, gees, even the PM is a taxation avoid-er, what could you expect from a government of this type of person? The Australian “people” run a distant second place behind shoveling Australian dollars into these corporations i.e. a billion Australian taxpayers dollars to build Adani a railway like, Adani will then continue to rape and pillage our land, and pay no tax to the Australian Treasury, what a scam!

  16. Roswell

    They just don’t get it. Give a poor man $5 and he’ll spend it. Give a rich man $5 and he’ll put it in his pocket.

    We need to have a lot of people in this country spending more money. More money going into the economy would create more jobs but people don’t have the money to spend.

    That’s about the extent of my economic knowledge. It seems fairly basis.

  17. Jexpat

    Roswell:

    What’s most impressive is that many small business people don’t get it, even though it’s so obviously and directly in their interests.

    In most instances, wealthy individuals will only purchase a capped number of their goods or services (following the basic principle of declining marginal utility). Once this is tapped out, the only way to grow a business is by adding more customers who have the disposable income to direct their way. Conversely, as inequality increases and disposable incomes decline- so does the business’ revenue.

  18. Ill fares the land

    One harsh, if not horrific, reality that confronts the employment market is that the relative power between capital and labour has shifted overwhelmingly in favour of capital. In many ways, this is a scenario from which there is no going back, because now that capital is in control and is blindly and selfishly devoted to increasing profits at ANY cost, it is invariably labour that “transfers” wealth to the capitalists. This occurs in a number of ways – tax benefits and concessions that are claimed by the already well-off, wealthy and big business; the transfer of jobs from Australia to other countries; the increasing automation of every possible thing imaginable – from serving petrol to self-serve at the supermarket. Add in the concerted and frenzied attack by conservatives on unions and the power of labour in the economy is being driven down…. and down. The proof of this is that the labour component in our GDP peaked a long time ago and is now being driven inexorably downwards – and this equates to a transfer of wealth from labour to capital. Anecdotally, the huge rise in part-time jobs across many sectors is further evidence that it is the owners of capital who dictate what happens in the economy.

    The relative power of capital is so great that it now holds politics (and therefore policy makers) to ransom. As is to be expected, our present Conservative government is merely a tool of the owners of capital. But Labor and the Greens are too weak and incompetent to really hold out – the present political narrative has, in my estimation, moved decisively to the right. In part this is because absolute clowns like Hanson and Bernardi are able to twist the narrative to point the finger of blame at migrants, the poor, the unemployed, those on disability pensions – all bludgers, apparently. Behind them is a massive army of think tanks and lobbyists, mostly funded by business and the wealthy, who can direct the public narrative to suit themselves (BTW – a question out of left filed – how does an idiot like Georgina Downer [a lackey of the right-wing think tank the IPA] manage to get so much media attention when she really has nothing overly intelligent to say?).

    In reference to the car industry, one clear example of how those well off take advantage of tax concessions is the now ubiquitous novated lease. It is interesting that the biggest selling vehicular configuration in Australia at the moment is the dual cab ute. Now, putting aside that these vehicles are in part just “toys for boofheads” (who all too often drive them aggressively while they are acting out their “tough guy fantasies), most dual cabs are actually exempt from fringe benefits tax (this is not limited to those tradesmen who need a commercial style vehicle. Now, boys in suits pay $50,000 plus for a dual-cab ute and in effect, the costs of buying and operating that vehicle are “tax deductible”. That is not actually what happens, but in tax terms, the FBT exemption is the equivalent of a 100% deduction for the costs of operating a car driven to and from work (a deduction that most people can’t claim). This is costing the taxpayer many, many millions and the costs to everybody else are growing. Should this concession, and others like it – be removed? Of course it should. Will it? No – because it is an example of how those already well-off believe they are entitled to benefits and the salary packaging industry is now powerful enough to make sure that no government ever dares to take any action. Capital trumps labour – and common sense and the “greater good” are just air brushed out of existence

  19. Roswell

    Jexpat, you and I need to go into business together. We could show them all how it’s done.

  20. Max Gross

    The LNP: a mob of poltroons with paper bags over their heads, running round with baseball bats, bashing anything within reach without the slightest qualm for the damage being done

  21. totaram

    Max Gross: Sorry to let you know, you are completely wrong. They know what they are doing and they are doing it knowingly and with forethought. Just look up the IPA’s website for their “plan for Australia”:

    http://ipa.org.au/publications/2080/be-like-gough-75-radical-ideas-to-transform-australia

    Until you have read and worked through these (in your head) there is no point commenting on what they are doing.

  22. Kaye Lee

    totaram,

    I wonder about that – reason being I think they are incapable of critical analysis. They are fed a mantra from birth which they never question. It makes them ripe for manipulation. These are installed puppets, uncritical mouthpieces, dolls with strings in their backs who can only repeat the set phrases that they have been programmed with. The IPA is full of very inadequate aging Young Liberals – they too repeat the lines they are fed by their donors, parents, and private schools.

    Kate Carnell isn’t clever – she has been bred to believe that cutting costs for business is the only reason to exist. Ask for reasons or proof of it being the best thing for society – she has none. It’s just “accepted” that the creeds they have heard from birth should be followed. No doubt there are smart manipulators pulling the strings but none of them are in parliament and none of them head industry lobby groups.

  23. Jean Taylor

    One more thing out of the blue.
    Any one on the ActNow program which is a support program for patients prescribed Actonel.Osteo Rhumatoid Arthritus etc.Will no longer
    receive eVouchers from the Government.
    No free supplements will be provided after 31st Jan 2017 just received letter today.
    As a 74year old Pensioner it is disgusting how this LNP treat the public,so long as they have their faces in the trough they do not give a shit.
    Julia please come back we need you more than ever.

  24. Matters Not

    Some interesting ‘quotes’:

    know what they are doing … incapable of critical analysis … just “accepted” …

    I agree. But that shouldn’t be interpreted as people operating with mala fides . That it’s just a ‘plot’ and all that. Indeed, there’s a mountain of evidence that they act with honesty, sincerity and good intention. As judged, of course, from their own ‘world view’. The ‘problem’ is that it’s very difficult to see the world from a different point of view. Importantly, most people don’t even try. There’s no ‘natural’ imperative to do anything other than to operate from one’s existing ‘common sense’. Indeed, most people don’t even consider (or realise) that they are immersed in a cultural soup through which they ‘construct reality’.

    It’s why lots of people travel – to see the world from different perspectives – to try to escape the limitations of their own cultural fog and seek deeper understandings of the human condition. (Not to suggest that all travellers are so inclined.)

    Yes people know ‘what they are doing’ because they want a better society. That the concept of a ‘better society’ is contestable is just nonsense – from their viewpoint. It’s just ‘common sense’ – from their ‘world view’. That they can ‘critically analyse’ is also a ‘given’ – again from their viewpoint. They ‘know’ what ‘critical analysis’ will deliver. Their ‘common sense’ If you only have an intellectual hammer, you will only ever see nails – and all that.

    In contrast, (my view) the ‘good society’ is not something to be discovered – in the heavens or elsewhere. Neither is it a ‘given’, nor a constant. Rather it’s something to be constructed, day by day, argument by argument, and the better world won’t come by dismissing the others’ ‘common sense’. Attractive as it might be.

    We need to be above all that. We need to understand what they are on about. And why.

  25. LOVO

    Jean, “Julia please come back we need you more tha ever”……every now and then, throughout history, the ‘people’ get an champion. A personage that rises like cream from from the crop….a once in an lifetime. .individual, not perfect, to be sure…but a true champion of the people ..for the people…a talker that could walk and chew gum at the same time…is it any wonder, Jean, why they ‘double downed’ on her….they could not compete, as evidenced by Abbott and Turnbull’s tilt’s at the windmill, as it were.

    Jean, keep telling your story, is my advice to you. Keep advocating for a ‘fair go’…because ‘word of mouth’ advertising can be a powerful ‘thing’….fight Jean!!
    I, like you, like history will, remember with affection, Julia…one of our best PM’s…and I like you say “Julia please come back we need you more than ever” 😢

  26. iggy648

    kerri, Scott will be telling his grandchildren ” Yes, I used to own a house that I could have left to you, but I had a mortgage, which is a debt. We have to get rid of debt, because debt is bad. So I sold the house, and paid off the mortgage. The good news is that you, my lovely grandchildren, have not been left with any debt! The bad news is…”

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