Much of what happens in, and to, our economy is beyond the control of our government.
Technology causes disruption in the labour market. Wars, be they armed conflict or tit-for-tat trade sanctions, affect the global economy. Natural disasters happen.
The government’s job is to recognise risk, do what they can to minimise it through future planning, and have the flexibility to react to current reality and unforeseen circumstances.
Josh Frydenberg is insisting that his tax cuts be passed in their entirety right now even though some parts will not come into effect for six years. He says this is a priority to stimulate the economy.
Tony Abbott said removing carbon pricing would stimulate the economy. He said removing the mining tax would lead to greater investment.
He was wrong.
Joe Hockey told us that “a rising tide would lift all boats”.
He was wrong.
Scott Morrison told us that increased company profits, tax cuts for small business, and low unemployment would lead to higher wages.
He was wrong.
Now Frydenberg is trying to tell us that locking in big tax cuts to the top wage earners will stimulate the economy.
He is also wrong.
When the Global Financial Crisis struck the rest of the world, Australia survived through the immediate implementation of a stimulus package designed to help those who needed it most.
In October 2008, the Labor government announced a $10.4 billion emergency spending plan that included
- $4.8b down payment to pensioners, payable in December.
- $3.9b in support payments for families.
- $1.5b for first home buyers.
- $187m to create new training positions
The pension aid assisted four million pensioners, carers, and seniors, with single pensioners receiving a lump sum payment of $1,400, while pensioner couples received $2,100. People receiving the carers’ allowance received $1,000 for each eligible person in their care.
The Government tripled to $21,000 the first-home buyers grant for people buying a newly constructed home. Those first-home buyers moving into existing properties received a doubling of the allowance to $14,000, limited to contracts entered into by June 30 the next year.
About 3.9 million Australian children also received a $1,000 one-off benefit, commencing in December, with families who received Family Tax Benefit (A), families with children who received the Youth Allowance, Abstudy or a benefit from the Veteran Children’s Education scheme all eligible.
A second economic stimulus package worth $42 billion was announced in February 2009. It consisted of an infrastructure program worth $26 billion, $2.7 billion in small business tax breaks, and $12.7 billion for cash bonuses, including $950 for every Australian taxpayer who earned less than $80,000 during the 2007-8 financial year.
This targeted response kept people in jobs and kept the economy growing during the worst financial crisis since the Great Depression.
When Julia Gillard introduced carbon pricing, it was accompanied by a compensation package.
The measures included increasing the tax-free threshold from $6,000 to $18,200, direct payments to low and middle-income households called the Clean Energy Advance, the Clean Energy Supplement which provided assistance to pensioners and income support recipients, Family Tax Benefit recipients, and Commonwealth Seniors Health Card holders, compensation for trade-exposed industries by way of free carbon tax credits, the Carbon Farming Initiative which allowed farmers to sell carbon credits earned by planting trees, and the Clean Technology Investment Program which supported investments by the manufacturing and food sectors in “energy-efficient capital equipment and low emission technologies, processes and products”.
In the two years that the carbon price operated, electricity demand in the NEM declined by 3.8 per cent, the emissions intensity of electricity supply by 4.6 per cent, and overall emissions by 8.2 per cent, compared to the two-year period before the carbon price. It also raised $15.4 billion in revenue to cover the compensation.
Since its repeal, the Coalition has spent billions on its Direct Action Plan and Emissions Reduction Fund, only to see emissions rise by 4.2 per cent from their low in 2013. Power prices have also skyrocketed during this time. Increasing gas exports have seen Australians paying higher prices for gas than countries to whom we sell. Uncertainty about policy has hindered investment in energy generation to help prepare us for the closure of old coal-fired power stations.
But Matt Canavan wants more coal-mining and new coal-fired power stations. He also wants banks to ignore the commercial unviability of these projects and for energy companies to stop talking about carbon-pricing and emissions reduction.
It was Labor that earned us a triple A credit rating and Labor who kept the country growing when all others failed. It was Labor that took effective world-leading action on the global challenge of emissions reduction.
Labor offered a bank guarantee to support the strength of our financial sector when the world was in turmoil. The Coalition want to offer profit guarantees to the dying coal industry and job promises in an increasingly automated industry.
The Coalition’s plan of maximising business profit, protecting unsustainable tax concessions and cutting taxes for the wealthy, cutting the public service and using compliant consultants instead, privatising assets and outsourcing services, and continuing the expensive and ineffective re-named Climate Solutions Fund, will not stimulate the economy or relieve the cost-of-living pressure for low income households. It will not secure our energy future. It will not provide job security. It will not address the lack of affordable housing or the millions living in poverty.
Scott, Josh, Angus, Matt, Peter – I’m afraid you’re not doing it for me.
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