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Shooting yourself in the foot

By their own admission, Coalition politicians don’t bother reading reports to inform their opinion before they shoot their mouths off – Abbott with the BHP Olympic Dam report, Pyne with the original Gonski report, MacDonald with the Forgotten Children report, Kelly with the Finkel report – they have their ingrained ideological views that will not be swayed by expert analysis of the facts.

It seems they also don’t pay attention to the conclusions in their own budget statements.

The 2014-15 budget reported that investment by non‑resources businesses remained subdued despite low interest rates and high business confidence.

“This is consistent with reports from Treasury’s business liaison which suggests firms are reluctant to invest until they have a clearer sense that demand is improving.”

Moving on to the 2017-18 budget, the problem remains the same.

“the subdued recovery in non-mining business investment in Australia remains something of a puzzle, as supportive conditions have been in place for some time. Business borrowing costs are near record lows, business confidence is solid and capacity utilisation in the non-mining sector is above its long-run average.”

Even though there has been stronger growth in dwelling investment, it “is more than offset by softer than expected household consumption.”

Very slow wage growth is mentioned several times as being a drag on the economy.

Aggregate wages growth remains low by historical standards — a phenomenon present in many advanced economies — and is anticipated to be lower in each year from 2016-17 to 2019-20 than expected at the 2016-17 MYEFO.  The slowdown in wage growth has been widespread across industries and States. Wages growth is expected to improve as domestic demand strengthens but the outlook for wage growth remains subdued in the near term.”

Company profits, however, are on the rise.

Corporate profitability is expected to improve, lifting expected receipts from company tax from 2017-18. However, aggregate wages growth is expected to be weaker, resulting in downward revisions to receipts from personal income tax.”

GST receipts have been revised down due to “lower nominal consumption” and superannuation fund tax has also been revised down “reflecting weaker aggregate wages and weaker-than-expected collections.”

The amount of tax collected each year depends on both the size and composition of national income. Most income is ultimately earned either as wages or business profits.  The greater the share of income that comes from company profits compared to wages, the lower the tax revenue because wage earners generally pay a higher rate than companies.  Higher wage income also results in higher consumption and superannuation contributions, which are also subject to taxation.

Overall, forecast total tax receipts have been revised up in the five months between last year’s MYEFO and this year’s budget, but only because the government who never raises taxes (if you ignore the GST which was a great big new tax which added 10% to the price of everything) is “increasing the Medicare levy by half a percentage point from 1 July 2019, introducing a major bank levy, improving the integrity of GST on property transactions and introducing a Skilling Australians Fund levy.”

It is screamingly obvious that investment is driven by demand and that consumption is driven by wages but don’t expect this government to act on that.  They will continue to attack unions, attack penalty rates, push for more flexible employment (read erosion of workplace benefits and job security), freeze superannuation guarantee increases, reduce welfare payments, and do everything in their power to increase profits for business at the expense of the worker and tax revenue for the country.

Talk about shooting yourself in the foot.


15 comments

  1. Roswell

    Another neatly packaged article, Kaye.

  2. @RosemaryJ36

    Links to two other recent posts are not working.

  3. diannaart

    It is screamingly obvious that investment is driven by demand and that consumption is driven by wages but don’t expect this government to act on that.

    “Think of how stupid the average person is, and realize half of them are stupider than that.”
    ― George Carlin

  4. Andreas Wagner

    Sally McManus into Parliament!

  5. Freethinker

    Thank you Kaye for the article.
    What depress me is that this government was reelected and some times make me wonder if people are happy with the situation described in the article..
    I cannot see any strong union members activity to reverse it, on the contrary union membership is low and days lost by union protests are minimum.
    We cannot keep blaming the media or the government when people are well aware of the financial pain that they are going trough.
    Perhaps the electorate still thinking that there is no use to vote for another party “because they are all the same” and the Greens together with the other lefties will ruin the economy?

  6. stephengb2014

    I think that the fact that this government was re-elected is a testimony to how those people actually feel and believe.

    In other words they are are Right wing, and that all of what Abbott did was wanted, by at least enough of the population to see the LNP re-elected.

    So all of the disgusting and obhorant things that the LNP keep trying to do is supported by the majority of the population.

    What does that day about those Australians- I know what it says, and I am horrified,.

    If it wasn’t for the fact that I have invested 37 years of my life to Australia and the fact that my family is here and i am 70 years old, I would leave, not that going back to UK would be any better.

    Where is our own Jeremy Corbyn and Bernie Sanders.

  7. jamesss

    We seem to be experiencing our belated GFC chaos compliments of the LNP.

  8. Bronte ALLAN

    Well said, as usual Kaye! Sadly, our lying, inept, obscenely over-paid, so-called liberal mob have NO regard, or feelings etc for ALL Australian workers & those on Welfare! They are ONLY concerned (as usual!) with ensuring ALL their wealthy Industrialist mates, property owners, pastoralists, miners etc are “taken care of” with tax cuts & “allowances” for their tax business. The sooner we vote this mob out the better! And, as for the so-called “financial crisis” the Labor lot was (supposed to have) left for the Liberals, why is this debt now almost double what Labor had? So much for “good & proper” (??) financial management!

  9. Brendan

    Slightly off-topic: the results of the quiz at the end of this article, “Which profession deserves the most contempt?” truly make me sad:

    Politician 52
    Banker 9
    Lawyer 1
    Economist 3
    Mainstream journalist 20
    Corporate executive 15
    (the numbers are percentages of the total votes, which now stand at 253 as I write)

    To me, Politicians and Journalists should receive the least contempt, and the fact that they receive the most is a sad reflection of our society. Maybe I’m too idealistic, but I took the question as “which profession should deserve the most contempt”. Politicians should be respected as paragons of the community, selflessly giving their lives to serve others. The fact that our political system attracts the kind of self-serving people that it does, and then moves their behaviour to a focus on retaining power at all cost, well, that’s the system that needs changing. The lone politicians these days who manage to resist those lures of selfishness deserve even more respect, and certainly not contempt.

    Same goes for the number two spot, journalists. They’re the fourth estate; they are an integral part of a functioning democracy! Just because a journalist works for a newspaper that’s been bought out by Murdoch et al, doesn’t mean they aren’t doing their best within a crap system.

    Now a banker, sitting on 9% of the vote? Bankers only make money off of money. They’re making profit off the toils of others, and subsequently I think they should be #1 for contempt. I can’t wait for blockchain tech to make banks obsolete.

    The remaining 3 positions I don’t think deserve contempt in any way. Lawyers, Economists and Executives? They’re all roles required for our economy & society to function. There are certainly shitty people in all of those roles, just as there are good people, but then those individual people deserve contempt, not the position.

    How did you guys vote?

  10. Michael Taylor

    Brendan, I can’t remember how I voted on that. It was a hard one.

    Unless a particular poll is embedded into an article you will see a different poll each time you refresh the page.

    That particular poll was submitted by one of our readers after we asked for ideas. We’re happy for the ideas to keep coming, btw. ?

  11. Kaye Lee

    I don’t have contempt for the profession of politician, just for the majority of people who currently fill the job. And whilst there is the odd decent article in a Murdoch newspaper, they are very few and far between and you first have to get through a despicable headline on the front page and then drivel from the likes of Miranda Devine. My husband tells me the sports coverage is good. If corporate executives weren’t taking home truly obscene wages and bonuses as they lay people off and avoid paying tax, maybe they wouldn’t attract such scorn. The law has become less about justice and more about who can outlast who in paying their legal team. And most economists just get it way wrong too often to feel much respect. As for the banks, you can actually make a profit from them if you use them to your advantage. I wouldn’t get my financial advice or insurance from them though.

    Contempt is probably not the word I would use. Disappointment perhaps?

  12. townsvilleblog

    Sally McManus is the best thing to happen to the union movement in a long time, a lady who is passionate about the ‘working poor’ and who wants to improve their lives. This is precisely the type of person needed in the federal parliament, preferably in the House of Representatives so she could become Prime Minister to lead the Labor Party back to the path it originally took of trying to improve the lives of labour families in Australia. Perhaps she could lead the Greens in the Senate in order to achieve the same aim.

    I am pleased that The Greens decided ‘not’ to give the Turnbull tories another ‘win’ before the long winter break.

  13. townsvilleblog

    Kaye, we don’t have much money but what money we do have is not with a major bank, it is with a credit union, I refuse to support any business who I am aware of that ripps it’s workers off, I don’t like the yanks so I refuse to buy their takeaway food, or the pizza company who under pays their workers. If more people followed my tactics our businesses would be a lot more honest.

  14. Ill fares the land

    I agree with you “dianaart”. However, what makes the world an even more dangerous place is what I call the rise of the “intelligent idiot”.

    There are and always have been people who are stupid and just don’t know it – as Akhenaton said around the 14th century – “True wisdom is less presuming than folly. The wise man doubteth often, and changeth his mind; the fool is obstinate, and doubteth not; he knoweth all things but his own ignorance”. I am sure that Shakespeare and then George Bernard Shaw both said something along the same lines. An idiot will always be utterly unmovable on their views.

    But there are more and more people who are not intellectually stupid, but are behaviourally stupid – take Hanson (not super bright, but not a fool); Malcolm Roberts (intelligent but a moron over the climate change evidence – he sees only what he wants to see and everything else is the work of conspirators in his absurd parallel universe); O’Dwyer (who held a senior role in banking prior to politics, but she is a dolt of the first order). These are among the many at the vanguard of this growing and increasingly powerful movement. They have infiltrated every walk of life, including politics where they now dominate, in my view,
    and we see and hear them every day. Wisdom now has no currency.

  15. diannaart

    Ill fares the land

    Quite the conundrum; intelligence.

    I would and do call Donald Trump many things, but “stupid” is not one.

    One thing these ‘functioning idiots’ share is a deliberate closure to change, particularly in their thinking. They have found the way that suits them, it works for them so they do not see any reason to challenge what is at the foundation of their personalities, lest their edifice crumble. Scary stuff.

    Wish they’d just keep it all to themselves. It is the harm such people do when they reach positions of power – reaching heights where they can influence the world around them, such heights requires yet more striving to maintain their lives of lies, more closure to reflection.

    In the tale of the “King’s New Clothes” – I suggest the ending was a little different – the small boy who saw the awful truth was swiftly and ruthlessly silenced.

    How to deal with these people? Work around the bastards as much as is possible – I doubt they will ever reach an epiphany of truth. I imagine the White House is working overtime just trying to function while appeasing the POTUS.

    …and these people have managed to fool roughly half the population – nothing new, same as it ever was. The difference is just a tiny percentage of people, just a few more to nudge the 50% into a possible 55%, enough for change to occur – that’s all it takes.

    We don’t have to convince the Malcolm Roberts – waste of precious time, we just get on with research, invention, innovation, collaboration – plenty more will follow when this work results in a better return for the $. The tricky part is getting this done before climate change speeds exponentially and irrevocably.

    Interesting times.

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