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“As surely as night follows day” doesn’t equate to evidence

The government has offered no evidence whatsoever that their proposed company tax cut will lead to more investment, more jobs and higher wages other than the assurance that it will happen “as surely as night follows day”.

In fact, actual evidence, as opposed to textbook theory and ideology, tells an entirely different story.

For example, in the last year, employment increased by about 400,000 and non-mining investment grew by 10% – the best result in four years and double the 30-year average annual growth of 5%.

Company profits have surged, reaching an all-time high in the first quarter of 2017.

But this doesn’t automatically equate to more employment as exemplified by the National Australia Bank who, when announcing a profit of $6.6 billion, also announced they would be cutting 6,000 jobs.

Ten industry leaders sent a letter to the crossbenchers pleading for them to approve the tax cuts and ‘promising’ that they would invest more in Australia if they did. The combined salaries of those ten CEOs were in the order of $65 million and five of the companies represented paid no tax last year.

When asked for a guarantee about wage rises, Jennifer Westacott very quickly backpedalled saying they couldn’t do that because the benefits would not flow through for about a decade.

Pro-tax cut lobbyists point to Trump’s tax cuts in the US where unemployment is low, Walmart has increased its minimum wage to a princely $11 per hour, and some companies have given out a one-off bonus to their employees.

The IMF acknowledges that the recent US tax cuts will have a positive impact on economic growth in 2018-19. However, this is conditional on the US government not cutting expenditure, is likely to be short-lived, and will come at the cost of increased government deficits.

And there’s the rub.

These tax cuts will be paid for either by workers paying higher income taxes through bracket creep (and Australian shareholders paying more to make up for the reduced dividend imputation) or by the government reducing expenditure, a move that Australia’s most prominent welfare groups say would be unconscionable when millions are living in poverty.

In a letter to the Senate crossbenchers signed by groups including Anglicare, Oxfam Australia, the Salvation Army and the Australian Council of Social Service (ACOSS), they expressed concern that “already disadvantaged Australians may pay more for health, education and community services.”

“We believe that a company tax cut is a mistake while almost three million people live in poverty. It is unconscionable to pursue company tax cuts while refusing to raise the rate of Newstart and other allowances.”

The head of the Reserve Bank, Phillip Lowe, doesn’t see increasing investment and company profits as a pressing issue. Instead, he says stagnant wage growth is the real crisis facing this country and that workers ought to realise the relatively low unemployment rate meant they could, and should, start asking for a larger share of the nation’s economic pie.

Rather than us giving a handout to foreign shareholders and waiting a decade to see if anything good comes of it, we should approach this from the other direction.

The economy would be far better served by increasing the tax free threshold, increasing Newstart and other welfare payments, and increasing wages. This would help lift people out of poverty and increase demand which would flow through to more jobs.

Try this line out, boys.

If people have more disposable income, increasing demand will lead to more jobs, more investment and increased company profits “as surely as night follows day.”


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  1. David Bruce

    The tax cuts will encourage businesses to invest in Algorithms, Automation and Robots. The finance and banking sectors will be the first to shed jobs as smart AI algorithms take over more jobs in the workflow. The ADOBE report “From autonomous vehicles to drones, machine-learning digital assistants and voice-controlled everything, up to 40% of today’s jobs are about to change significantly… or be eliminated outright.” ( ). Perhaps the LNP are setting Labour up with a poisoned chalice for when they win the next election?

  2. Keith

    When listening to the radio earlier; Turnbull made disparaging comments about the cricket team cheating.
    Prior to making such statements he needs to clean up the LNP; politicians generally are at a low ebb in relation to trust worthiness.
    Where big money is involved in Sport or Politics some very ordinary decision making happens. The LNP gains huge donations from the mining lobby. It is very naive to believe that the mining lobby is just being generous.

    The LNP have a product obtained from the Koch Bros that mines information off social media to use to target voters.
    Who ever gave them permission to do so; David Tyler, has an excellent article currently on AIMN. It’s like Big Brother is watching us.

  3. Kaye Lee

    I wonder what the reaction would be from big business if they were offered a tax cut to 25% but they have to give up some/all of the dodgy deductions like lending themselves money at exorbitant interest rates, instant asset write-offs and accelerated depreciation, exploration, research and development, diesel fuel rebates, carrying-over losses etc

    What’s the bet they would opt to stick with the current system.

  4. etnorb

    Great article, as usual Kaye! the trouble with this inept bunch of right wing flat earthers is that they truly believe that tax cuts to big business etc will ALWAYS “trickle down” to the very poorly paid workers. We all know what a load of garbage this is! One of the sad things about all these obscenely wealthy Industrialists, mining barons, Pastoralists, Property developers etc is that they all “got there” as a result of the toil of their lowly paid workers & yet now they want even more. We can only hope & pray that all the Liberal mob get booted out at the next Federal election, so that the Labor Party can try to gain back the Welfare, Health & Education benefits (amongst lots of others) for ALL working class & Welfare dependent Australians.

  5. guest

    As long as we have the Coalition in power we are assured that night will follow day – the darkness of ignorance and sleight of hand.

    Critics of the “trickle down economics” are criticised vigorously, yet the Coalition offers no proof of its success. When we are told the positive effects of “trickle down” will take a decade to show, we realise what a “trickle” it is. It is a vain promise.

    Just look at all the ways a company can cook the books to their advantage. And so many companies sucking out the money are not Australian.

    Yet the PAYE worker is squeezed more and more, treated as “leaners”.

    A heap of companies are laughing about the tax they will pay: 25% of nothing!

  6. Bert

    Kaye a good read and some worthwhile thinking points but I do have a problem with this paragraph,

    “These tax cuts will be paid for either by workers paying higher income taxes through bracket creep (and Australian shareholders paying more to make up for the reduced dividend imputation) or by the government reducing expenditure, a move that Australia’s most prominent welfare groups say would be unconscionable when millions are living in poverty.” especially about the dividend imputation line.
    Dividend imputation is not being reduced or even removed but the loop hole where people that pay NO tax, yes NO TAX get a refund from the tax office of tax paid on dividends is being closed. This is not a refund as refund infers that something has been paid in the first place where as in this case it is a gift from government straight out of revenue. My rant done. Keep up the good work Kaye. You often write very thought provoking article so well done you.

  7. Kaye Lee


    Two different issues regarding dividend imputation…..

    If company taxes are cut from 30% to 25% then franking credits will be likewise cut. For those who actually pay tax, they will have to make up the shortfall with increased income tax.

    What you say about the refund of excess franking credits is true. In a sense it is a refund in that companies pay tax which, in this case, is refunded to non-tax paying shareholders resulting in, far from double taxation as some suggest, the government receiving no tax from the company ie the company tax is going to the shareholders instead of the government.

  8. Bert

    See your point Kaye. My solution to dividend imputation would be unpopular. No unfranked dividends paid to the shareholder and if you receive income from shares you pay the tax. Now if that was implemented imagine the screams from people that receive hundreds of thousands from shares. For the people that only have a few thousand in shares and are on a pension it shouldn’t be any big deal, they’d still end up with the same in their pockets anyway. Another rort that needs investigating is the issue of a tax free pension from super but I’ll leave that to far wiser people than me to try and tackle.

  9. diannaart

    Kaye Lee March 26, 2018 at 10:38 am

    I wonder what the reaction would be from big business if they were offered a tax cut to 25% but they have to give up some/all of the dodgy deductions like lending themselves money at exorbitant interest rates, instant asset write-offs and accelerated depreciation, exploration, research and development, diesel fuel rebates, carrying-over losses etc

    What’s the bet they would opt to stick with the current system.

    Yeah, but BB know they can achieve subsidies, not paying even less tax, bring in AI’s and reduce number of employees – that’s called ‘business savvy’.

  10. RatMatrix

    Two undeniable markers that trickle-down is just the rich pi$$ing on the poor.

    The divide between the haves and have nots is increasing.

    “As you can see in the following chart, households headed by 65-74-year-olds were on average A$480,000 wealthier in 2015-16 than households in the same age group 12 years ago. And that’s after taking inflation into account and despite the damage caused by the global financial crisis. Households headed by 45-54-year-olds are A$400,000 richer.

    In contrast, households headed by 35-44-year-olds are on average only A$120,000 wealthier – and for 25-34-year-olds the figure is just A$40,000”

    When big corporates cut jobs, their share prices rise.

    “”Markets will receive a positive signal when they consider that the firm is in good financial health and that the announcement is part of a wider reorganization program. The layoffs plan will then probably be interpreted as the proof that the firm is trying hard to become more efficient. This is referred to as the pure efficiency hypothesis (Lin and Rozeff, 1993).”

  11. Paul

    As sure as night follows day those miscreants on the Senate crossbench will roll over like tickled puppies and the LNP will get their way.
    Foreign investment $$ will not flood in, it will be busines as usual with shareholders and corporate executives rejoicing over increased dividends, salary hikes and bonuses, corporations will continue with efficiency downsizing, none of the non tax paying companies will develop a conscience, there will no evidence in the next few years of trickle down benefits.
    Turnbull and his front bench will spout the same infantile nonsense of projected jobs and growth, lie about employment and deficits and they still get the 40% moron vote next election.

    Meanwhile in the real world our climate problems will intensify with storms, floods, heatwaves, droughts, bushfires in Australia while war, famine, pestilence, genocide, food shortages and misery ravage unabated elsewhere.

    Happy days? Yeah Nah.

  12. Glenn Barry

    Perniciously pilloried by a plethora of pretentious, pointless platitudes puked up by pious, peerless perjurers, the peoples patience pales perilously which pestilently poisons public opinion, preceding a plummeting popularity that perverts all pleasantry potentially provoking a putsch.

    Yes I am a fan of V for Vendetta 😀

  13. totaram

    etnorb: “.. the trouble with this inept bunch of right wing flat earthers is that they truly believe that tax cuts to big business etc will ALWAYS “trickle down” to the very poorly paid workers.”

    They don’t believe it unless they are incredibly dumb. They just think there are enough people in voterland who can be convinced to believe it. Big difference.

  14. paul walter

    Quite so. Do folk remember Kath Day- Night from “Kath and Kim” ?

  15. diannaart

    Paul March 26, 2018 at 4:16 pm

    Turnbull and his front bench will spout the same infantile nonsense of projected jobs and growth, lie about employment and deficits and they still get the 40% moron vote next election.

    But Labor will, conveniently, win the election and the LNP, true to form, will then blame Labor for the jobs ‘n growth that will not occur.

    @ Glenn Barry

    Have not watched V for Vendetta in years, maybe time to brush the dust off the DVD.

  16. Florence nee Fedup

    There is plenty of scope for Labor to claw back much if company taxes are cut to 25% without repealing anything. What has PM got left if it is passed. Labor can ensure they pay the full 25%, not the 12 -17 -20 % they now pay. That would make us equal with USA. Would be a good result from where I sit.

  17. Miriam English

    Night will follow day… in the same way that a dark age will follow the good times?

    Glenn Barry, the movie or the original graphic novel? (Graphic novel is a posh way of saying comicbook. That comicbook was written by Alan Moore, one of the most brilliant writers of this age. About time for me to re-read it.)

  18. Glenn Barry

    Dianaart, wonderful movie – astonishingly contemporary
    Miriam English, I have not had the pleasure to read the graphic novel – your reference prompted me to research it and I discovered Alan Moore also wrote Watchmen – another graphic novel I’ve not had the pleasure of reading, but which has an excellent movie also

  19. Miriam English

    Both movies were very good. It’s been ages since I saw “V for Vendetta”, so can’t really comment on it (I should watch it again), but “Watchmen”, the movie, left out almost half of the graphic novel and altered some of the story near the end. All the way through the book there was a parallel story of a man who survives a disaster at sea. It offered strange insights into the main story. He writes his super heroes as messed up as ordinary people and they make most things worse instead of better. His mind works in strange ways, and he casts a different light on things we take for granted. A number of his stories have been turned into movies… with good reason. A few others are “From Hell” starring Johnny Depp, Heather Graham and Ian Holm, “The League of Extraordinary Gentlemen” which has little similarity to the original story apart from the basic theme, and “Swamp Thing” which capitalised on action and missed all the philosophy in the book.

    His most recent work (that I’ve seen) is “Lost Girls” with his wife, artist Melinda Gebbie. It’s about three women who meet at a holiday resort. They are Alice from “Alice in Wonderland”, Dorothy from “The Wizard of Oz”, and Wendy from “Peter Pan” now all adults. The story is intentionally sexually explicit soft porn. I think he intended it as a bit of a joke to puncture the pretentiousness of the publishing industry. There would be some fun making that into a movie. 😀

  20. diannaart

    Enjoying the chat, Miriam & Glenn

    Have not heard of the “Watchmen” (maybe) sometimes I find when I check out a book or movie I am already acquainted. Anyway, Watchmen sounds worth checking out the graphic novel rather than the movie, prefer more than just a linear story.

    Not that movies can’t do justice – I would suggest that shorter stories (something graphic novels should lend themselves to) unless a director is prepared to break up narrative into several movies…

    Can’t believe I am drawing a complete blank right now, well I can, it is called ME brain-fog.


  21. Kyran

    In addition to the Business Council of Australia lobbying the cross benchers with the tried and true argument of ‘Yeah, Nah, But, Just Cause, O’right?’, there was the wonderful image of Allan Joyce engaged in lobbying on behalf of Qantas. When he did it last year as a personal crusade for equality, the government said ‘business should not get involved in politics’. It’s ok now though. Joyce earns over $20mill personally, yet has been at war with the employees for years over their pay and conditions.

    “Qantas CEO Alan Joyce, one of the most prominent supporters of the Turnbull Government’s proposed big business tax cut, presides over a company that hasn’t paid corporate tax for close to 10 years.
    The period roughly coincides with Mr Joyce’s tenure at the helm of Australia’s flag carrier.”

    “Despite selling billions of dollars worth of tickets in Australia, historical losses and the entirely legitimate use of Australia’s tax laws allow them to offset those losses against future profits indefinitely.
    Both Qantas and Virgin companies emphasised to the ABC that, notwithstanding their zero corporate tax liabilities, they had continued to collect and pay departure taxes, fuel and alcohol excises, payroll tax, GST and FBT.”

    I’m not much good with share prices and dividends and franking, but it looks like Qantas don’t really pay dividends or enjoy the franking credits, but they do buy back shares.

    Can’t wait to see what they do when they get their tax cut. Oh, wait a minute……

    None of which is evidence of anything. It is just reciting the facts of modern and very recent history. Apparently Labor has some evidence, but not enough to get in the way of a good story.

    Just when you are ready to give up altogether on the need for evidence, the LNP think tank, the bastions of market freedoms, the purveyors of excrement and fertiliser, come to the rescue. From yesterday’s Guardian;

    “The Institute of Public Affairs has sent a parliamentary research brief to MPs today, which it says shows “five reasons Labor’s superannuation changes would damage Australia”.
    Those who receive a tax refund are doing so because they have paid tax which is in excess of their legal liability. This is no different to those millions of Australian who receive a tax refund on the income tax they have paid – they have been taxed in excess of their legal obligation and, rightly, receive a compensatory refund,” IPA research fellow Daniel Wild said in his statement.
    The explicit objective of the superannuation system is to encourage people to save for their own retirement, Labor’s changes could force even more Australians on to the pension.
    Reducing the refundability of dividend payments will reduce the expected return of investing in Australian firms. This will increase the cost of capital in Australia as investors will demand higher returns to compensate for the loss of investment income, and hence the volume of investment will decrease.”

    There you go. All the evidence you need, according to the LNP and their media cheer squad. It’s a ‘tax refund’? A refund is what you get back when you pay something. A ‘gift’ is what you get when you have paid nothing. Yet everyone keeps saying refund. Go figure!
    Ah well. The IPA said so.
    The only evidence that seems to work in modern Aus.
    Thank you Ms Lee and commenters. Take care.

  22. diannaart

    Always a good move for the LNP to whistle up the “horrors” of Labor, thus avoiding scrutiny on welfare for the wealthy.

    Anglicare has done a bit of digging:

    Using Treasury data, as well as various ABS figures and the University of Melbourne’s HILDA survey, Per Capita calculated that major tax concessions totalling $135 billion per year were costing the budget more than the four main welfare payments – the aged pension, family assistance payments, disability benefits and Newstart – combined….

    … The research finds more than half of the benefit from tax concessions is going to the wealthiest fifth of households.
    Anglicare’s executive director Kasy Chambers said the report was intended to highlight the largely “invisible” contribution of tax breaks to Australia’s budget deficit.

    “The cost to Australian taxpayers of the richest 20 per cent of Australians is actually a staggering $68 billion per annum,” she said.

    Put another way, $37 from every Australian worker a week to keep on keeping Australia’s richest 20 per cent rich.”

  23. Glenn Barry

    Dianaart, I’ll try to be persuasive rather than insistent, I have a friend who was deflated when I said I’ve got the Watchmen movie, because there are two versions – one animated, the other human actors. He was originally a real fan of the animated version and somewhat aversive to being disappointed by the movie.

    Safe to say he was really pleasantly surprised. I am yet to either encounter the animated version or the graphic novel, however the movie stands tall and the runtime is appropriately long – I’ve just checked and there are three versions 162 min | 186 min (Director’s Cut) | 215 min (Ultimate Cut)

    I’ll have to verify which version I have.

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