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Hasn’t Malcolm done well for himself – he should know what’s best

The Coalition seems firmly convinced that lowering taxes for businesses will create jobs and attract investment.

But we have been down this path before.

Before the last election, the Coalition told us that the carbon and mining taxes were job-destroying wrecking balls and that removing them would take a handbrake off the economy.

According to the ABS, in July 2013, a year after the introduction of these taxes, there were 191,090 people employed in mining. In July 2015, after repealing the taxes, this had fallen to 173,388 with many more job losses since then.

Operating profit before tax fell from over $82 billion in 2011-12 to $17 billion in 2014-15.

Lower taxes don’t help a company that is making a loss any more than higher taxes can make a profitable venture unprofitable.

It is also not taxes that affect business decisions on where to invest.

In a study jointly carried out by KPMG and Sydney University, Chinese companies were interviewed as to their reasons for investing in Australia. The key reasons given were:

  • long term stable economic returns

  • low sovereign risks

  • a stable policy environment

  • mature financial market

  • transparent legal system

The government points to its free trade agreements as providing “19,000 specific opportunities” whatever that means.

But the Chinese companies who have invested in Australia believe ChAFTA will benefit them by providing “easier entry for managerial and technical staff and labour import from China.”

A new subclass of 457 visa negotiated in parallel with the China-Australia free trade agreement allows “Chinese owned companies registered in Australia” to import skills for their projects – as long as they commit to capital expenditure of at least $150 million.

According to an analysis by University of Adelaide Senior Lecturer in Law, Joanna Howe, “There is no requirement to prove that there is a skill shortage or that the project company has had recruitment difficulties in enticing Australian workers. It allows Chinese companies registered in Australia to import Chinese workers for the duration of projects, so long as the capital expenditure exceeds $150 million.”

These decisions by this government have led, and will lead, to an enormous loss of revenue. Combining the amount that would have been raised by the carbon and mining taxes along with the taxpayer money being handed out for Direct Action and the foregone tariff revenue from the FTAs and we are already in the tens of billions even before considering a company tax cut costing another $50 billion.

David Richardson, senior research fellow at The Australia Institute, analysed data from Australia and OECD countries and found that:

  • There is no correlation between corporate tax rates and economic growth in OECD countries;
  • Countries with lower company tax rates have lower standards of living, measured as purchasing power of GDP per capita;
  • Wages and mixed income has declined as a share of GDP as corporate taxes have been lowered;
  • Average unemployment rates have risen as company tax rates have lowered; and
  • Growth in foreign investment as a share of GDP was strongest when Australia’s company taxes were highest.

“Claims are often made that uncompetitive rates of corporate and individual income tax are a recipe for lower economic growth and lower incomes, but these claims rely on assertions, rather than data and analysis,” Ben Oquist, Executive Director of The Australia Institute, said.

“The economic case for company tax cuts is weak, and furthermore, it is obvious that many companies are involved in widespread tax avoidance and the federal budget has a revenue problem. It is simply not the time for tax cuts.”

The government also claims credit for creating “300,000 jobs last year.”

Aside from this not even keeping up with population growth, the government has sacked tens of thousands of public servants, done nothing to stop the demise of the car industry and with it, a potential 200,000 jobs, destroyed investment in renewable energy and thousands of jobs with it, and overseen a significant shift towards part-time employment.

The government’s economic plan has completely ignored the two greatest economic challenges facing the nation and the world – climate change and inequality.

Even if the very modest gains they foresee arising from a company tax cut ever eventuated, and there is little supporting evidence, they would be far outweighed by the benefits of providing a well-educated, healthy, skilled workforce, the infrastructure required to be more productive, and the research and development to move us towards the future.

The government says that lower taxes are “in their DNA”. The problem with having a mantra is that it blocks out other input.

Then again, any evidence that is contrary to the “plan” is no doubt a political stitch-up concocted by Gillian Triggs and the climate scientists.

And hasn’t Malcolm done well for himself. He should know what’s best.

Groan.

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39 comments

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  1. townsvilleblog

    http://www.theguardian.com/news/datablog/ng-interactive/2015/dec/18/do-you-pay-more-tax-than-australias-biggest-companies not giving these corporations a tax cut would make sense, and so would making them pay a fair share of tax in the first place. Working people pay each and every week/fortnight to our country and out of the taxes we pay the LNP are going to give these corporations a tax cut, why aren’t more Australians as mad as hell and we won’t take any more punishment from this extreme right wing government. Goodness me the $50 bn could go into something more job creating than to land in a yank investors pocket, it could help Medicare or education, they (lnp) really are anti-people aren’t they.

  2. Carol Taylor

    I cannot but help notice the irony of it all, that ever since the Libs got into power it’s been slash and burn for jobs, so much so that government instrumentalities, Centrelink and Customs as example have expressed much dismay at their inability to function at other than a basic level. Turnbull then enters the election loudly and frequently proclaiming Jobs and Growth.

  3. Kaye Lee

    Carol, there are so many cuts that people don’t hear about.

    “Budget papers showed the National Library would be the worst hit, losing the funding equivalent of 28 full-time positions.

    The National Gallery will lose the equivalent of 20 jobs, while the National Film and Sound Archive will lose 12 positions.”

    “Department of Human Services officials have confirmed that 918 workers will be shed in 2016-17”

  4. z

    they are saying one thing does another, take jobs & growth as a slogan and excuse. that not only reflected on 10 years plan to cut corporate tax but also on housing affordability, on medicare and education, especially on public spending sector, the DNA was not for lower tax but for widen the gap of inequity

  5. Matters Not

    France provides a good example of what to do about multinationals and tax evasion.

    France will ‘go all the way’ to ensure that multinationals operating on its soil pay their taxes and more cases could follow after Google and McDonald’s were targeted by tax raids, Finance Minister Michel Sapin said.

    Sapin, speaking in an interview with Reuters and three European newspapers, ruled out negotiating any deal with Google on back taxes, as Britain did in January.

    Note that we tend to follow the British example and reach a ‘deal’ re multinationals and their tax assessment. (Often under pressure from Treasury who seem incapable of thinking long-term when it comes to revenue; more concerned with the coming 12 months). While this Budget allocates extra monies to increase the numbers in the tax office, this is only part of what’s needed. The multinationals are quick to point out they are working within the law. And they are. And they are doing the best they can for their shareholders. Their legal duty. What’s got to happen are significant changes to the legal framework.

    That’s where Shorten, Drefus, Bowen, Burke and Leigh should focus. Tell us how they will change the law(s) to stop these rorts. Get a plan.

    http://www.reuters.com/article/us-google-france-idUSKCN0YK03O

  6. Athena

    I think it’s a case of let’s repeat the lie often enough and people will believe it. Last night on Q & A, a business owner pointed out that giving him a tax cut will provide him with an extra $8 per week, nowhere near enough to create any more jobs. But if the government leaves Medicare alone and people are not forced to make the proposed co-payment, more customers will be able to afford to buy a coffee in his cafe, which will be of far more benefit to him than the $8 per week tax cut. Despite the exposure of a very obvious LNP lie, Steve Ciobo still waffled on about the “proven” benefits of tax cuts to businesses!

  7. Carol Taylor

    Kaye Lee, it seems odd that the many and various government cuts/job losses receive so little media attention yet a dozen jobs lost from a manufacturer receives front page headlines. Perhaps when people see Federal jobs lost they still think it in terms of ‘it’s only Canberra/ACT/Queanbeyan.

    One current theme being run by the Liberals is that Malcolm is ‘good’ at the economy because he’s successful ie. RICH, while failing to note methods eg inheritance/tax avoidance Turnbull used. If Turnbull is so good at things pertaining to the economy how is it then that he could in all conscience stuff up the NBN? Power = No. 1 for Turnbull with Australia as the ‘also ran’. Is that how he intends to run the economy? Power and wealth to those who have the greed/connections, ruthlessness and too bad for the rest. It would seem so.

  8. Kronomex

    “…that the carbon and mining taxes were job-destroying wrecking balls and that removing them would take a handbrake off the economy.” It certainly did take the handbrake off, just not for the little person. It’s been a boom time for the rich and the Big End of Town and Malcolm wants to make sure that they can grab the rest of the remaining money. Just wait until they announce, after the election of course, the continuing privatisation of government services which will “benefit” ordinary Australians from all the savings they will create.

  9. Carol Taylor

    On Shorten and stategies/policies. If I was an advisor I would recommend that Shorten and Labor keep their policies until the tail end of this extensive election campaign. We have already noted that Turnbull has a habit of 1. copying good ideas and claiming them as the Libs’ own ‘innovation’ or 2. throwing their considerable resources into a major media fear campaign. I would therefore be saving the best until last and limit time available for Turnbull to launch a counter.

  10. Matters Not

    Carol, the ‘time’ people vote has changed considerably. Now approximately 40% will have cast their ballots before July 2. Some will have voted weeks in advance. Accordingly, I expect the scare campaign to begin sooner rather than later.

    There’s an increase in the number of ways to vote early.

    When can I apply for a postal vote?

    You should lodge your application for a postal vote with the AEC as soon as possible.

    The AEC must receive your postal vote application by close of business on Wednesday 29 June 2016.

    This is to ensure that there is enough time for you to receive your ballot papers, complete them and return them to the AEC.

    Other ways you can vote

    If you can’t get to a polling place on election day, you can vote in person at an early voting centre or any AEC divisional office during business hours in the weeks leading up to the election . . If your are enrolled to vote and are overseas, you can vote in person at an overseas voting centre.

    As I say people can vote weeks in advance.

    http://www.aec.gov.au/election/pva/

  11. Matters Not

    As for Turnbull doing well, I think there’s still mileage in again reminding voters of his Cayman Island connections. There’s no doubt the island’s zero tax arrangements provide a powerful incentive for his investment presence.

    In the US, it’s been a practice for presidential candidates to make their tax arrangements known for all to see. Trump criticised Mitt Romney when he wavered and now Romney is returning the favour. Trump is of course coming up with a variety of excuses, including ‘Audits’ underway and the like. But it’s not washing.

    Because we seem to be going down the US track re health and the like, then perhaps we could ask for tax disclosure here in Australia as well. Seems fair. Afterall we demand their ‘interest’ disclosure, why not tax disclosure also?

  12. Rossleigh

    The idea that Malcolm is a good person to run Australia’s economy because he’s rich makes about as much sense as arguing that Uncle Fred would be a good person to decide the week’s menu because he’s obese!

  13. metadatalata

    Prior to the LNP coming to power, they already had plans in the pipeline to hand Australia’s Automotive industry to China and Korea. The FTA’s would not be signed until the local industry was on a firm path to dismantling. So it was a priority once Abbott got in to immediately pull subsidies on the industry to facilitate this outcome. Sure, there are some nice cushy payouts awaiting LNP members when they are done destroying the rest of the economy and environment. They certainly won’t be short of Asian-built vehicles to own for the rest of their lives either.
    I don’t have anything against the Asian automotive industry, I just wish that the LNP hadn’t sold out the Australian indsutry for no good reason than their own selfish interests.

  14. Peter F

    As for company tax cuts bringing new investment- as far as American companies are concerned, I believe that they Have to pay TO THE AMERICAN GOVERNMENT , any difference between overseas rates and the American system. Put simply, if we reduce our tax rates (already below the US rate) by 5%, that 5% savings has to be paid to the US government. Great tactic there.

  15. King1394

    Doing well in business is not a great recommendation at all. The Liberals at various times were also keen on Alan Bond and John Elliott as potential Prime Ministers.

  16. cornlegend

    Fizza seems to be holding his own at the moment
    Last two days of polling has seen the ALP drop 2% .
    In Western Sydney where I spent some time, Turnbull is holding on, seem as “better economic managers’ and “stopping the boats”
    The west is awash with Daily Telegraphs and with the Sydney shock jocks back onside with Turnbull and Rupert yet to launch a full on campaign, or the inevitable “terrorist threat” certain to appear soon it seems the battle will get more intense
    The areas Shorten is holding his own on is Medicare, NBN and Gonski

  17. Kaye Lee

    cornie, don’t forget climate change. That is big for a lot of us.

  18. Matters Not

    Last two days of polling has seen the ALP drop 2%

    Well that’s Essentials numbers (well within the MOE), but are you suggesting that you have access to internal polling figures over and above published polling?

    Given that as a strategy, the real figures will be a ‘secret’ so that the troops will stay on task. Not that there’s anything new (or wrong) about that.

  19. cornlegend

    I agree, but over the last 8 days 11 of us have spoke to thousands on trains ferries buses and at pubs and clubs and very few raised climate as an issue.That mentioned in my previous comment were what people in the West saw as positives and negatives for Turnbull and Shorten
    In 2014 my wife and I spent over 5 months in Greenland Canada and Alaska, in particular with indigenous people They accept climate change and are trying to adapt their lives around the effects already impacting them.I personally hold no doubts
    It hit home to me initially at the Exit Glacier where there are 5 or 6 points marking each years loss.
    I was just reading a report from Exit Glacier
    “On the icefield, measurements taken this fall at four of the six monitoring sites showed a net loss of mass, with all of the past winter’s snowfall melted out by the end of September. The biggest melt was at a site 1,745 feet up the icefield, the lowest-elevation of the six sites monitored by the Park Service, where nearly 28 vertical feet of ice was lost, according to measurements.”
    The disasters in Alaska from early ice melts ,and the disaster these early ice melts cause to towns, where the overflow ice just bulldozes and crushes towns, villages traditional hunting and trapping areas etc is mind blowing.Throw in some of the largest bushfires ever in the last couple of years and you understand why the good folk talk of climate change as fact and impacting them . They live it,Maybe we lose the Gold Coast and a few low lying areas to rising sea levels to see action
    Maybe we will have to get people to rise up on the issue with a Government that takes a Leadership and educational role.

  20. cornlegend

    Matters Not

    Morgan and Essential.
    Some internal is showing worse in critical seats but much better in safer seats, sort reverse to what I would like to see

  21. Matters Not

    Yep, getting a swing in safe seats is a complete waste in the whole scheme of things as far as the HoR is concerned but for the Senate it’s always encouraging.

    Then again, I am always suspicious of ‘leaked’ internal polling. (Been there, done that.)

  22. Carol Taylor

    I would have to be suspicious of the timing of certain polls. With Malcolm heading southward, amazingly up pops a poll to support “the fact” that he isn’t doing nearly as badly as supposed..thereby reinstating a ‘win’ mentality in followers and swinging voters. Note how support for Shorten took off when it appeared that he might not just make a better than expected showing but might actually have a chance of winning. A poll to reinstate the momentum for Turnbull’s followers? Perhaps..

  23. Matters Not

    Carol Taylor, generally speaking, I think that the ‘major’ polling companies have too much to lose (in a reputational sense and therefore the risk of economic damage) if they start ‘fiddling the figures’. Granted they can be criticised (and condemned) when they change the questions (and there’s some evidence of that) but overall they have to be ‘reliable’ while always remembering the ‘margin of error’ variable.

    While I entertain the ‘conspiracy’ notion in so many walks of life, that does not extend to ‘poll fiddling’, at least from the ‘majors’.

    Too much to lose. Just imagine a ‘leak’ from a disgruntled employee with ‘technological’ proof. Too risky.

  24. Möbius Ecko

    Matters Not there are ways of influencing a poll without fiddling the figures. For instance only landline polling or broadly choosing areas known to favour a party. The latter would be easy to ascertain if certain polling entities released the breakdown of the areas they polled, but they don’t.

  25. Kaye Lee

    Living in a marginal seat, I get polled a lot – I was rung twice yesterday. They manipulate the sample group by their initial questions eg wanting a certain age bracket or gender, wanting a swinging voter etc. The questions change every time so comparing results is questionable. They also ring at bad times like when you are in the middle of cooking dinner when it is hard to think sensibly and prioritise. They ask questions like who do you think is likely to have lower taxes. My answer was the Liberals but I also said I don’t want lower taxes. They ask what issue is most important to you. I said climate change because unless we do something urgently about that the rest of it won’t matter but that didn’t allow me to stress the importance of health, education, affordable housing, child care, aged care etc. When I said I thought inequality was a problem they asked what I meant by that – ummmmm how long have you got? They also do silly things like reading a list of names to which you have to answer about your impression of them – unfavourable, neutral, favourable or don’t know them. Policies are more important to me than personality.

    Seems to me that the Libs are in trouble on the Central Coast as they should be – we got stuck with the doo wop girls, head nodding eye candy who seem to swan around having their photo taken but achieving little else. Lucy Wicks blocked me from her facebook page very early on and has never responded to correspondence I have sent her in my capacity as a local small business owner. She was an Abbott captain’s pick parachuted into the area. Let’s hope she drifts on out again. As for Karen McNamara, her explanations to ICAC showed she either lied about her fundraising to preselectors or she lied to ICAC, neither of which is acceptable.

  26. Athena

    “Maybe we lose the Gold Coast and a few low lying areas to rising sea levels to see action”

    Maybe we lose low lying areas like Bangladesh to rising sea levels and the world has an even greater refugee problem than it has now. Where are the ALP and Liberals going to imprison and torture them then with their current gulags under water?

    Anyone who isn’t taking climate change very seriously is a damned fool.

  27. TechinBris

    Kaye, I ceased returning to the Central Coast a number of years ago, after an extremely upsetting family visit down there.
    I am of a historically known ‘older’ family for that region and avoid all contact now and haven’t heard anything on what has been happening.
    But you have just mentioned a number of names that have just made my blood chill! OMG!
    I’m so sorry!
    Please do take care.

  28. Kaye Lee

    TechinBris,

    Where I live is one of the most beautiful places in the world but I also have two children in their early twenties both of whom are currently studying at university. Their chances of finding a job locally are slim. They both have growing HECS debts. At the moment they both live at home – they certainly couldn’t afford to rent anywhere and the prospect of buying a home is an unattainable dream. I still have a mortgage myself so I can’t do as Malcolm suggested and “help” them any more than I am at the moment.

    When I was their age I was inundated with job offers – I had choices of part time and holiday jobs while I was studying and, not only was my degree free, I had a scholarship and the certainty of an appointment when I completed my degree.

    It is so much harder for my kids than it was for me. That is not the way it should be.

  29. Matters Not

    manipulate the sample group by their initial questions eg wanting a certain age bracket or gender, wanting a swinging voter etc.

    Sure do, but it can be no other way. The polling companies want a broad ‘representative’ sample based on socio-economic criteria. Otherwise the poll would be invalid.

    The people who actually ask the questions aren’t the people who write the questions. Answers in these quantitative polls are recorded by ‘ticking a box’ by a person who has no particular skills in the area. Responses that don’t fit any of the categories are discarded. It can be no other way, given the design. Attempting to have a discussion in these types of quantitative polls is not productive.

    ME, companies don’t release their ‘detail’ because it goes to the heart of their methodology.

  30. Kaye Lee

    One thing that perturbs me, I always ask who commissioned the poll and usually they say “I don’t have that information”. I think I am entitled to know. I do understand them wanting a cross section of respondents which is why I am often a 33 year old swinging voter 😉

  31. Matters Not

    If you press the point re who commissioned the poll, you usually get an answer but who actually wants the information is often far removed. For example, Company A commissions Company B who then commissions Company C to actually run the survey/poll. You can easily get the name of Company C by asking but that tells you very little. Much more difficult to trace the info you actually want via the phone.

    By the way saying you are a 33 year old swinging voter might explain the frequency of calls. ? ?

  32. Kaye Lee

    How could that be as they don’t record your personal information….supposedly. I thought these calls were supposed to be random? if they are choosing who to call then that blows out any claim to being representative.

  33. Matters Not

    Random they may be, but with the technology now available I would not be surprised that records are kept in some form or other. There is always the temptation to choose from a ‘particular’ (SES known) random set of numbers that will more rapidly legitimate the ‘representative’ sample.

    Alan Jones, for example, knows who is on the line waiting to be ‘aired’ because his staff can recognise the caller’s phone number. By having a queue of callers (with their ideological bias well known), Jones can control the direction of any debate.

    Nevertheless I am well aware that the major polling companies treasure their reputations. Most of their money comes from sources away from politics and they cannot afford to be compromised.

    But then again my days of commissioning polls are well past. I am sure that great changes have been made over the years.

  34. Kaye Lee

    The Australian Taxation Office revealed that, courtesy of deductions, deferred losses, minimisation and evasion, public companies in Australia pay an average of 24% on their taxable income, while private companies pay an average of just 19%.

  35. TechinBris

    No Kaye, it is not how it should be. That is why all that is happening to us all shows the lie that has been perpetrated and once again being sold to our gullible public.
    But like a junkie is too substance abuse, so are our Governments offering to us, that, which will in the end hurt us, in much the same way as was done to Greece and likely to the same outcomes. We don’t want that.
    I wish we had an answer for what has been done, but we must do something different to what we have been doing, for doing the same thing, expecting a different result, is going to show us to be vulnerably stupid.
    Pain is assured, but unless we fix this, it will be a worse home for our children to have. No matter how beautiful it is, it will be less than what we had, which shows we could have done our choices better. We can make better choices, if we are brave enough.
    Our dreams are what gives us hope, so we need to dream up a way to change what is happening.
    Better late than never.
    Never give up. 🙂
    We can.

  36. corvus boreus

    ‘Yes Minister’ on the subject and object of opinion polling;

  37. jimhaz

    [The government’s economic plan has completely ignored the two greatest economic challenges facing the nation and the world – climate change and inequality]

    Both of these are mere facets of future population growth. If we were more rational, a party named something like the Sustainable Population Party would get more votes than the Greens.

    [And hasn’t Malcolm done well for himself. He should know what’s best]

    It would be interested to see in 5 or so years just how much extra he does gain long term from his vested interest tax cuts and by getting the heads up on which new ventures might be worthy investing in.

    All around the world PM’s Presidents etc are becoming rich through becoming leader and thieving from taxpayers, or by being rich in the first place and getting richer as a result of being in charge. It is no wonder the rich–poor divide is increasing. Nor any wonder Trump is a candidate for Pres. We wealthy countries are not far off the less educated thus justifably politically ignorant African and middle eastern countries when it comes to being fooled by propaganda. The peasants do need to revolt.

    https://www.thrillist.com/vice/20-richest-world-leaders-ranked-by-net-worth-and-wealth

  38. TechinBris

    They want to have revolting peasants jimhaz. Violence is what they know and understand.
    Give them what they don’t expect instead. You will know what to do when the time comes for you to do it.
    Cheers.

  39. Wayne Turner

    The Libs are just serial LIARS and they know it.It’s a shame,so many of the ignorant gullible masses fall for it.Of course aided by ALL of the Libs MSM.”Trickle Down Economics” does NOT work.

    It’s a shame we are a “mediaocracy” because the MSM don’t point it out,cause they yet again want these LYING LIBS back in.

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