Joe Hockey went into the 2013 election complaining about Australia’s level of debt.
The country isn’t short of excellent economists who have some practical ideas on how it could be managed but Joe Hockey isn’t listening. He wants to do things his way and as Kaye Lee in this guest post shows, it might be an idea to take note of what the experts have to say as they’ve found lots of easy money for him.
My mother always told me that criticism should be constructive and that “if you aren’t part of the solution you are part of the problem”. I know this government feels we have a debt and deficit crisis and a budget emergency so, in the interest of making some helpful suggestions, I decided to share with you some thoughts I have had.
If I was benevolent despot I would . . .
Leave the fixed price on carbon until 2015, as was originally suggested. After all, as Steven Koukoulas points out, carbon pricing has had almost no impact on the macro-economy and inflation remains very low. Add to that the fact that emissions are falling and renewable energy generation is growing.
According to PEFO (Pre-Election Economic and Fiscal Outlook), with a fixed carbon price of $24.20/t of CO2 emissions, projected revenue for 2013-14 is $6.475 billion. If we left the fixed pricing until 2015, as originally intended, we will receive revenue of approximately $13 billion dollars over those two years.
Joe Hockey could scrap the Direct Action Plan because it won’t work, and save $3.2 billion over the next 4 years plus have a far better chance of meeting our targets.
Keep the Clean Energy Finance Corporation as they are making a profit of up to $200 million a year and are financing clean energy initiatives which will assist us in meeting our Renewable Energy and Emission Reduction targets. They are reducing emissions whilst making us money.
After all, there is no guarantee that electricity prices will go down if we remove the carbon pricing.
Joe Hockey could keep the mining tax. PEFO estimated an income from the MRRT (Minerals Resource Rent Tax) of $5.95 billion over the next 4 years. It is impossible to accurately predict future revenue but, even if it is half what is projected, that is still three billion.
Keep the changes to the FBT (Fringe Benefits Tax) that require claimants to provide proof of their car business use by filling in a log book once every 5 years. This tax concession costs us $1.8 billion dollars and will not change entitlements, only the way they are calculated and claimed, so genuine business use will be unaffected.
Keep the means test on the Private Health Insurance Rebate as that will save us $2.4 billion over three years by removing the concession from those earning over $260,000 a year.
Keep the tax on annual superannuation payments of over $100,000 per year which will raise us a projected $313 million over 4 years. I know the super funds have suggested it would be hard to implement but I am sure a scheme could be worked out with the ATO (Australian Taxation Office) and the funds if they put their minds to it.
Keep the superannuation co-contribution to low income earners. The Productivity Commission has identified the old age pension as a future burden that is becoming unaffordable. As low income earners are the most likely recipients of the old age pension, it is worthwhile encouraging them to invest something towards their retirement.
Keep the current paid parental leave scheme. The Productivity Commission said that replacement wage PPL (Tony Abbott’s Paid Parental Leave scheme) “would have few incremental labour supply benefits” and was too costly.
That would save us $5.2 billion dollars a year, and the proposed increase in company tax can be either scrapped, or used in the childcare area which is much more important in improving productivity and addressing the needs of parents.
Keep the funding for the Alcohol and Other Drugs Council of Australia. Its $1.5 million annual funding seems a pittance to invest considering Aussie youth’s battle with booze and drugs, and that $32 billion a year of taxpayer dollars is spent dealing with alcohol, illicit and prescription drug abuse, and that alcohol related crime occupies 60 per cent of policing resources.
Keep the National Crime Prevention Fund which distributes money confiscated from the proceeds of crime to various charities, communities and local councils. Organisations like the PCYC (Police-Citizens Youth Club) and Father Chris Riley’s Youth Off the Streets do a great deal to help keep young people out of gaol and surely this funding is less than the direct and indirect costs of incarceration.
Keep experienced public servants rather than hiring consultants, implement the recommendations of the reviews that have already been carried out, and get advice from the departments we already have like Finance, Treasury, the PBO (Parliamentary Budget Office), the Productivity Commission and Infrastructure Australia. Reinstate the Climate Council and refund the CSIRO. Considering the 5 person panel for the Commission of Audit costs us $7500 a day for their wages alone, we should save a motza and be far more likely to get actual ‘independent’ advice.
Increase our humanitarian intake. Negotiate to set up refugee processing centres in Malaysia, Indonesia and Sri Lanka. Speed up processing, and fly successful applicants to Australia and assist them to become productive members of our society. Increase foreign aid and combat human rights abuses so less people need to flee their country. This has to be cheaper than using our Navy to patrol for fishing boats, detaining people indefinitely, and transporting people to offshore detention centres which cost a fortune to run.
Tighten up on Parliamentarians’ expense entitlements. According to the Department of Finance, taxpayers forked out approximately $54.5 million in parliamentary expenses from June to December last year. That suggests an annual cost of over $100 million a year for 234 MPs.
Oh and get back the $8.8 billion present we gave to the RBA (Reserve Bank of Australia), who weren’t expecting it and didn’t need it. Borrowing that money is costing us $300 million a year in interest. Gambling on exchange rates gaining you a profit in time for the next election may be OK if we had spare money, but we don’t, so let’s get our priorities right.
Of course, nearly all of these things could have been achieved by leaving Julia Gillard in charge, but we didn’t.
I have only spoken about the financial side of these decisions. I have left aside any discussion of responsibility, morality, priorities or equity. That would take me volumes. My main aim has been to try and help find some money.
Now may Joe Hockey, could we please have the full Gonski reforms and a proper NBN?