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How are you going to pay for it?

The Coalition stakes a lot on the perception of them as better managers of the economy. In the past, they have relied on ‘debt and deficit disaster’ rhetoric with promises of surpluses. That’s out for the foreseeable future.

They are now spruiking a low unemployment rate without ever acknowledging the impact that no foreign workers may have had on that. Nor do they ever speak of the precarious nature of employment and stagnant wages. They speak proudly of growth in GDP, not admitting that government spending (read debt) is driving it, and glossing over the increasing cost of living that inflation brings.

Another tactic they persistently use to undermine Labor policies is asking how much they will cost and how are they going to pay for them.

At the last election, Labor had excellent policies for taxation reform that a misinformed electorate rejected. It was too much for people to comprehend and, as such, was easily weaponised with the old adage about Labor will tax you more even though what they were mainly doing was closing loopholes and distortions thrust on us by the profligate Howard government.

The Coalition were able to get away with asking how much action on climate change would cost while never answering how much inaction would cost.

Well this time around, Labor could have an easy answer to how they will pay for policies whilst reducing debt if they are brave enough to use it – delay/abandon the stage 3 tax cuts.

The cuts, set to come into effect in 2024, apply a standard 30 per cent income tax rate to those who earn between $45,000 and $200,000 a year.

The reason given for this is to reverse bracket creep – where a pay rise puts an individual’s income over the threshold for the next tax bracket. (It should be stressed that the higher rate only applies to the excess over that threshold, not your whole income.)

The only way to truly eliminate bracket creep is to make annual adjustments to the thresholds as explained by a very interesting paper from the Parliamentary Budget Office, Bracket creep and its fiscal impact, released in September last year.

“In the absence of the Stage 3 tax cuts, bracket creep over the next decade would be projected to reduce net debt in 2031‑32 by $276 billion.”

What the government is proposing is “projected to add around $197 billion to net debt in 2031‑32.”

That’s a $473 billion difference in net debt, and it doesn’t keep up with bracket creep anyway.

“The impact of the Stage 3 tax cuts will be more than offset by bracket creep by 2031-32. In that year, the tax cuts are estimated to cost just over $30 billion, while bracket creep is projected to have added $57 billion in additional revenue.”

Research by The Australia Institute shows the benefit from the cuts would predominantly go to high income earners.

“In 2024-25, when stage 3(a) first comes into effect, almost a third of the benefit goes to the top 10 per cent of taxpayers and the top 20 per cent will get more than half of the benefit. At the other end of the distribution the bottom 10 per cent gets none of the benefit while the bottom 20 per cent gets less than one per cent of the benefit.”

As most women are middle to low income earners, these cuts disproportionately favour men according to analysis prepared by the parliamentary budget office for the Greens.

“Men will receive about $2 for every $1 women receive between 2024 and 2031 under the tax plan, receiving a total of an extra $121.7bn compared with $62.4bn for women over the period.”

The wealthy have already been doing quite well out of the pandemic with property and share prices ballooning. Low interest rates and government stimulus have made an ideal environment for those able to take advantage.

Giving the rich more isn’t necessary to stimulate an economy with low unemployment and growth in the target range.

Lifting the tax-free threshold would have a far more beneficial flow-on effect giving assistance where it is most needed, knowing it will be spent, and saving more people from having to fill in a tax return for the ATO to process.

Governments face a trade-off between returning bracket creep and allowing bracket creep to reduce debt faster.

With December’s MYEFO projecting net debt will peak in 2025 at $915 billion, it would be fiscally responsible for Labor to say now is not the time for this tax cut, which would then put their second term budget in far better shape than the Coalition’s.

As the Coalition goes to an election promising to spend hundreds of billions on obsolete and inappropriate armaments and hundreds more on tax cuts for the wealthy, perhaps it’s time to ask them about everything else they promise…

How are you going to pay for it?


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  1. New England Cocky

    Well said KL. Putting the money into the top of the social pyramid only keeps it at the top. For the economy to work the government funding has to go into the bottom of the pyramid and be spent up to the top with each layer taking a share as normal business practice. This is what happened with the Rudd Henry model for protecting the Australian taxpayers from the 2008/2009 GFC ….. mush to the chagrin of foreign supporters of the COALition.

    The same with taxation ”reform”. The rich correctly should pay more a agriculture should really be more that rural socialism with a handout for every contingency. Successful businesses should pay a fair share of the profits to workers and government because they expect government to support them during difficult times like COVID.

  2. Marcus Champ


    Yes, the LNP are lying, raging-hypocrites BUT can we please dispense with the myth that taxes “pay” for anything, let alone that what is needed now is “fiscal responsibility” or that we should worry about “debt” in our own currency. Kaye, I know you still don’t accept much of MMT, but I also know you have accepted Government spending is unconstrained by revenue…which frankly should be obvious to anyone given our collective experience over the pandemic.

    I get the need to show the LNP and the corporate media have been lying through their teeth over the “how you going to pay for it” stupidity…but I fail to see how this helps, particularly given it should be obvious by now the LNP DO NOT CARE.

    Attack them on their failed policies, huge spending with nothing of substance to show for it, directing massive amounts of public wealth to their mates, corporations and the wealthy, plus the cruelty of the administration of their awful failed policies. But this, just doesn’t land, ultimately only hurts ALP, people and the economy if we ever start going down the austerity route, and like I said earlier, they just don’t care and neither does their propaganda arm in the form of corporate media.



  3. Kaye Lee

    Marcus, I am not advocating austerity. I am suggesting the neutralisation of a political attack that has been used to great effect by the Coalition. Even without embracing MMT and the realities of a fiat currency, it is not difficult to understand that debt invested wisely brings a greater return.

    MMTers tend to ignore the wealth transfer side of progressive taxation. Wealth concentration is a problem that is getting worse. The world’s ten richest men more than doubled their fortunes from $700 billion to $1.5 trillion during the first two years of the pandemic.

  4. Gus

    Howard and his Masonic/Zionist backers promoted this crap ‘better managers.’
    The truth lies in the fact that they could not run a profitable brothel in an isolated mens camp.
    Our debt is rising to unsustainable levels; Morrison does not know his arse from his mouth so will we get another promotion of little Johnny and his magic elixir sprouted by his virgin boys in shorts.

  5. GL


    Take your bullshit and go somewhere else.

  6. Marcus Champ

    A quick follow-up,

    For the record I do not know of one MMT’er who doesn’t want to tax Billionaires out of existence and is also very conscious about rampant inequality which is destroying the social fabric. The main reasons we talk about it however, is to break the extent they have bought the political system to shape the economy to benefit themselves, not because we need any of their money for anything. They are not that important.

    Secondly, as has been reported the ALP have already waved through the stage 3 tax cuts which is disappointing to say the least, not to mention mystifying. Just goes to show the extent Corporate media has completely poisoned any reasonably policy debate in Australia. Furthermore, invoking “fiscal responsibility” or “budget in better shape” is usually used by the ideological right as a euphemism for cutting spending and imposing Austerity…putting aside there is always money for tanks, submarines and tax cuts for the rich.

    We should be focused on identifying the resources and services the people and the economy need, directing Government spending appropriately to provide them, and building economic capacity to ensure future generations have what they need to prosper. Not to mention the multi-billions we will increasingly be paying to address the growing climate catastrophe…rather than fixating on Government “debt”, which does not exist in our own currency.

    Lastly, if you really want to simplify the tax system why not get rid of income tax altogether. It is highly inefficient, wasteful, and will never target the rich whose wealth is primarily held in assets not income. Additionally, as you rightly point out our current tax system largely falls on the poor and middle class, and disproportionately impacts women. It needs complete overhaul and deep reform.

    None of which will happen as long as we continue to reinforce the myth that we need taxes to get nice things, which I would argue is exactly by design.



  7. Kaye Lee


    I agree that wealth equates to an imbalance in power and influence. It also distorts society eg use of construction resources.

    Yes the ALP have agreed to the tax cuts which is why I am trying to suggest plausible reasons to change their mind before it happens in 2024. It’s more using the Coalition’s own arguments against them.

    When you convince the government that they don’t need revenue, we can have a discussion about how you would combat wealth concentration and how you would ensure that resources would be available for government projects.

  8. Michael Taylor

    ”How are you going to pay for it?”

    Rob the poor.

    But first they will convince the poor that it’s in their best interest.

    They have history.

  9. Kaye Lee

    Robodebt vs Jobkeeper for example

  10. wam

    I love your work, kaye,
    “How are you going to pay for it?” is undoubted a question asked of labor and in the rabbott’s time it was accompanied by the size of the debt and its close proximity to the debt limit.
    Can’t remember it being asked of the copperman in 2016 or of scummo in 2019 and all the years in between?

    Torpid tanya is close to making the media focus on scummo’s weakness, EGO, with words like “And the problem with Scott Morrison is he just wants state and territory governments to take responsibility for anything that’s a little bit difficult in this COVID crisis.”
    Unfortunately she uses the abc and that has ^@$^%! all effect.
    Albo was good at the press club and insiders oops abc.
    Nevertheless, scummo is happily pooping everywhere and it is being stepped on by more and more of the people below the median.
    Albo need a strategy to KISS this election and rub scummo’s nose in the dirt.
    The it is only a shock tactic from the bandit that will produce the 2nd miracle for scummo.

  11. wam

    the bandit’s moving Albo?????
    Adam Bandt
    That’s the plan! Thanks for getting the message out, Prue.
    Taxing the billionaires and big corporations will help us pay for the services that benefit all of us – not just the wealthy few.
    If you’re excited as Prue is about what the Greens can get done in the balance of power, then check out our election platform here:

  12. Terence Mills

    To quote from a Crikey article yesterday :

    Treasurer Josh Frydenberg and his Coalition predecessors have been telling Australian voters that the Coalition parties stand for lower taxes and that the tax take is always higher under Labor.

    This is not true. It has not been true since 1975.

    Taxation as a percentage of gross domestic product (GDP) has been higher under Coalition governments since the Fraser years. It reached an all-time high during John Howard’s tenure.

    Figures don’t lie: taxes are not lower under the Coalition

    But don’t turn to Newscorp for innovative ideas on taxation or objective analysis : they haven’t paid tax in Australia for years and they don’t intend to start dong so now that’s why they are barracking for the coalition !

  13. wam

    Wow more spending, kaye, a big splash from the poll driven bent ego.
    Now is the time for albo to ask the morning shows where the cash is coming from??
    (we know it is from christine’s folly)
    good one waltz albo might use the two tyne approach:
    taxes are not lower but debt is still higher??

  14. Phil Pryor

    The next budget seems destined to be the start of a nightmare, for a coalition approach from now on is to avoid falling on the farcical face and to cover up more stupidly for past error, largesse to donors, dullard dogma, while an ALP victory will see them with huge lead weights in commitments they inherit while nobbling their own policy preferences. Debt? Deficit? Tax? Rates? Policy? Money printing? Class division? Rampant unfairness? Let us start again, debating…

  15. Henry Rodrigues

    Where’s the money coming from ???????

    From the same place as Joshie got his trilliion dollar debt from. Ah but coalition debt is so good and dare Labor to do the same, Why the foocken skies will fall in, the sun will stop rising and hens will stop laying. So says that maggoty old crinkled American scroat who warns us of dire straits if Labor gets in, And the stupid braindead, brainwashed, brainless will follow his every word, right over the foocken cliff. After all what’s another trillion dollar in add to the one we’ve already racked up. The international financiers are so nice and understanding and patient, aren’t they.

  16. Brozza

    Perhaps Labor should be talking about our national debt ballooning and the causes, since the fall of our countries status as the worlds #1 economic managers.

  17. Mark Shields

    I do not give a flaming toss about our international Debt! Since when did Australian workers ever care about the IMF, or this country’s parity on the international finance market?

    Whilst it is pretty clear that indebted countries like Greece etc have a lot to pay the world for their unnatural debt, why is Australia unable to support these countries, whilst we live in debt to our own public citizens?

    It would seem that having a debt to a foreign country is considered normal but having a debt to your own citizens, just cannot be answered!

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