It is extraordinary how the mainstream media is protecting the Coalition government by not exposing the true state of the economy.
Right now, the government is between a rock and a hard place and has no idea which way to turn. The latest ABS figures for the Wage Price Index show a further deteriorating trend in the most important category of taxation revenue, wages growth.
The flat wages drift continues and growth is being driven by private sector credit.
In reality, wages growth is important in terms of tax revenue but irrelevant in terms of getting Australians back to work. But our Treasurer can’t see that. His answer for low wages growth is to give corporations a tax cut.
On the ABC’s 7.30 last night, Scott Morrison was asked how the low wages growth issue could be fixed. He replied by saying, “Australians need to earn more AND companies need to earn more.” He then went on to say that the government’s corporate tax plan was necessary to give companies more “headroom” to give their workers more hours.
What utter nonsense! By “headroom” I presume he meant more after-tax profit. But businesses must first make a profit before they pay any tax, so how would a lower tax rate help it earn more? It is a ridiculous suggestion, all the more vindicated when one compares how many of our major corporations pay no tax at all.
There were 1,011,100 workers underemployed in August 2016.
More jobs would create more hours as well as exponential revenue by helping drive greater demand. The depth of questions asked of our government ministers is pathetic.
If Morrison was a Labor treasurer, he would be vilified by both the Murdoch, and Fairfax media outlets and the ABC, mercilessly.
Morrison is not up to the job. He waffles on about corporate tax rates in the U.K. and Donald Trump’s plans to cut the US corporate tax rate to 15% believing this is what drives an economy. He needs to speak to business more forcefully.
Professor Bill Mitchell says, “The suppression of real wages growth has been a deliberate strategy of business firms, exploiting the entrenched unemployment and rising underemployment over the last two or three decades.”
That strategy continues today with the government trying to pass its anti-union legislation through the senate. Productivity growth used to be shared with the workforce, creating higher rates of spending which then created more jobs.
Today, the gap between productivity growth and wages growth is widening. Morrison could lower the corporate tax rate to zero and it won’t do anything for wages growth.
The workforce will not increase their spending on the credit card forever. And companies will not employ new labour if they cannot sell more of the goods and services they currently produce. It’s not rocket science.
Morrison doesn’t have a clue.
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