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Scomo’s con job

Last Thursday, Treasurer Scott Morrison gave an Address to the AFR Banking and Wealth Summit in which he spruiked his “national economic plan” as outlined in last year’s budget.

“In last year’s Budget I said we needed to focus on jobs and growth. This year’s budget will continue this unapologetic focus.”

Morrison goes on to say “Unless you are driving economic growth, you cannot secure the jobs, wages and services that Australians rely on.”

Considering we have had over 25 years of uninterrupted growth, it is obvious that growth alone does not automatically translate into better outcomes for all citizens.  Instead, this dream run has contributed to skyrocketing wealth for the very few while the vast majority are experiencing flat wage growth, high underemployment, unaffordable housing, a decline in services and rising inequality.

Scott said he “will ensure the Budget works to place downward pressure on the cost of living – especially on energy costs and housing” with absolutely no indication of how he might achieve this.  Perhaps all will be revealed in May though somehow I doubt it.  If he has a plan then why is it a secret?

Whilst mentioning Australia’s extremely high level of household debt ($2.1 trillion), Morrison said we should be comforted by the fact that the debt concentration is in higher income households.  Households in the top two income quintiles hold around 60 per cent of Australian household debt.  For some reason, I don’t find that at all comforting.  When highly-leveraged speculative investments go bad, it is rarely rich people who suffer.

And Scott is apparently taking on the banks – or so he says.

“We are also addressing the problems in our banking and financial system to ensure our banks and financial institutions are held to account, by ensuring customer disputes are heard and resolved, that we are maintaining competitive pressures in the system to ensure that customers get the best deal and that there are serious sanctions in place to deal with bad behaviour and malfeasance.”

Considering the many cases that have come to light about wrong-doing by the banks, and in the absence of any punitive action, it is hard to believe Morrison’s words.

Speaking of himself and Kellie O’Dwyer, Morrison said “Together we have acted on the ASIC capability review to increase the resources and powers of ASIC to deal with malfeasance in the banking and financial system.”

ASIC’s role includes market surveillance, corporate law breaches, consumer credit, insider trading, takeovers, small business and financial literacy.

Are we supposed to forget that Tony Abbott cut $120 million in funding from ASIC in 2014 which caused the chairman to warn that proactive surveillance would substantially reduce?

There was also the Turnbull government’s bizarre idea of selling off the national corporate registry.  The cost to ASIC of operating the register is somewhere less than $6 million a year.  However it charges businesses and the public around $720 million a year for using it – a return to government coffers of over 10,000 per cent.  The entire budget for ASIC’s operations in 2015 was $311m, less than half of that revenue from the register.

At least six bidders had shown interest in the ASIC registry privatisation before Matthias Cormann finally pulled the plug on the idea in December last year after intense opposition from Nick Xenophon, GetUp! and journalists.  For some unfathomable reason, Labor did not oppose the idea.

Morrison then moved on to tax.

“If we wish to continue to see our living standards rise — to create more jobs with higher wages — then we need to ensure our tax system encourages investment and enterprise.”

Despite everyone being in agreement that property tax concessions have skewed investment away from more productive enterprises, that is never part of Scott’s tax plan which seems to rest solely on tax cuts for businesses which “will allow small and medium sized businesses to invest more, employ extra staff and pay higher wages – putting more money in the pockets of hardworking Australians.”  This claim is not backed up by any modelling of course.

Morrison seemed unaware of the uncomfortable paradox with his segue into cracking down on multinational tax avoidance where he assured us that we now have “some of the toughest laws in the world…which are expected to raise almost $4 billion over the budget and forward estimates.”  The proposed tax cuts will give these tax avoiders a far greater windfall than any liability we may try to claw back.

Moving onto superannuation, Scott boasted of how “3.1 million Australians will benefit from the Low Income Superannuation Tax Offset.” Cool bananas, except they are just reintroducing a scheme that was axed in the 2014 budget.

On income tax, Morrison said “By pushing up the tax threshold on the middle tax bracket from $80,000 to $87,000 per year, we’ll keep average full-time wage earners on the lower rate for longer.”

Big deal.  What that means is that anyone who earns up to $80,000 gets no benefit while those who earn over $87,000 will save about $6 a week.

We were then regaled with the number of jobs that would be created in the defence industry.  For example, the over $3 billion we are spending on Offshore Patrol Vessels will create 400 jobs.  That’s $7.5 million per job to go to foreign contractors.  The F-35 Joint Strike Fighter program is supposed to create 2,600 extra defence industry jobs by 2023.  I’ll believe that when I see it.

Scott reannounced the government’s “record $50 billion investment in Australia’s land transport infrastructure” but it remains just words.

In January the AFR reported that delays and apparent reductions in the Coalition’s $50 billion spending plan are dragging on economic growth and contributing to an annual $18 billion of potential “missing investment”.

But it was when talking about repairing the budget that Morrison went into full obfuscation, or is that lying, mode.

“Since we were first elected in 2013 we have reduced the growth in expenditure from over 3.5 per cent to less than 2 per cent and reduced the growth in debt by around two thirds, which when Labor left office was growing at 34 per cent per annum.”

Government expenditure under Labor reduced from 24.9% of GDP in 2011-12 to 24% in 2012-13.  Since coming to office, the Coalition’s expenditure has been 25.6% in 2013-14, 25.5% in 2014-15, 25.6% in 2015-16 and in last year’s MYEFO, was projected to remain at 25.2% over the forward estimates.

As for the debt, the net debt of the General Government sector was $161,253 million at 31 August 2013.  As at 28 February 2017, net debt is $317,425 million.

Whilst saying, in one breath, that “Since last year’s Budget, almost $25 billion of budget repair measures have been successfully implemented and legislated,” Morrison insisted on blaming Labor saying that “The Budget will need to address Labor’s continued refusal to cooperate on repairing the budget.”

“We know Labor will continue to oppose us, especially when it comes to budget savings and implementing our enterprise tax plan. Not because they don’t think it’s right – but because they have chosen to play cheap politics with our economy.”

From the man who thinks welfare, education and health expenditure should be cut to fund tax cuts for the wealthy and to spend hundreds of billions on Tony’s jets and subs.

The con job continues.


26 comments

  1. Freethinker

    Kaye Lee please put a warning to not read Scomo’s statements during digestion of food.
    These “team” make me really sick specially when Scott is together with Mathias.

  2. pierre wilkinson

    Unbelievable ignorance matched equally with unspeakable arrogance are the sole attributes necessary for promotion in this government.
    The ability to lie shamefacedly without the remotest flinch as you repudiate a statement you made the previous day is not mandatory, as the compliant media will gladly oblige with a bit of editing.
    Thanks Kaye, love your work.

  3. babyjewels10

    Well done Kaye Lee. Whilst I nearly vomited reading it, I’ve shared it all over the place, because it needs to be read.

  4. Kaye Lee

    The headlines show the spin……

    Scott Morrison talks down any changes to the petroleum resource rent tax

    http://www.afr.com/news/politics/scott-morrison-talks-down-any-changes-to-the-petroleum-resource-rent-tax-20170407-gvg2kv#ixzz4djEuexdY

    Scott Morrison resisting pressure on CGT, negative gearing

    http://www.afr.com/news/politics/scott-morrison-resisting-pressure-on-cgt-negative-gearing-20170404-gvdulh#ixzz4djF4rzEr

    Scott Morrison says high house prices are ‘real’, not an investor bubble

    http://www.afr.com/news/politics/scott-morrison-says-high-house-prices-are-real-not-an-investor-bubble-20170313-guwurn#ixzz4djFG7P1c

    When Greg Medcraft was asked on Thursday whether there is enough competition in banking, he said “No – it is an oligopoly.”

    The ASIC chairman pointed to the banks’ similar timing for moving mortgage interest rate

    http://www.afr.com/business/banking-and-finance/financial-services/productivity-commission-to-probe-banking-competition-20170406-gvf81z#ixzz4djGJr8HZ

    In an exclusive interview with The Courier-Mail, Treasurer Scott Morrison said it was unfair to keep running up the welfare bill, and wanted Australians to know “Labor needs to be held to account”.

    “Eight out of 10 taxpayers go to work every day to fund the welfare bill,’’ Mr Morrison said.

    http://www.couriermail.com.au/business/economy/federal-budget-2017-welfare-accounts-for-86-per-cent-of-all-personal-income-tax/news-story/fe5c5e7e5139ad9368a83afdfc10b750

    How many days do we go to work to fund the $400 billion defence materiel budget?

  5. Kaye Lee

    Back in the day when some truth still lived….(March 2005)

    Malcolm Turnbull, the new Liberal MP for Wentworth worth an estimated $125 million, says the poor are paying too much tax while the rich can avoid it altogether. In his first substantial interview about policy since the federal election, Mr Turnbull has challenged his own government to think boldly and crack down on “the black art” of tax avoidance.

    Continuing a transformation from merchant banker to people’s representative, he told the Herald: “You hear some people wandering around saying you should have a tax cut at the top and fund it by cutting social welfare. This is a ridiculous sort of proposition.”

    “Just as there are excessively high marginal tax rates at the low end, so at the high end there are, in some cases, excessively low marginal tax rates.”

    Mr Turnbull echoed some of the Reserve Bank’s concerns that distortions in the tax system have encouraged over-investment in housing. He said the Coalition’s 1999 capital gains tax discounts had enabled the wealthy to shuffle money away from highly taxed income into low-taxed capital investments.

    http://www.smh.com.au/news/National/Tax-the-rich-and-give-to-the-poor–Turnbull-does-a-Robin-Hood/2005/03/13/1110649061544.html

  6. Jaquix

    Thanks Kaye for trawling through Morrisons many fulsome burblings in an attempt to find something of substance. I of course there is none, he just spins, spins, spins and does nothing. Freethinker, add Kelly O’Dyer to that horrible mix. In fact, linecthem all up. I can’t bear to listen to any of them any more. All TV programs are now recorded in our household so we can zap through Turnbull , Fellow Libs, Trump etc. Very pleasing to see delightfully high swings against the Libs in NSW 3 by-elections yesterday. 25% in one! I know there was a lot of anger about council amalgamations, but its still good to see great whacks taken off previously high margins.

  7. helvityni

    By the time I reached to use the communal Scomo/O’Dwyer vomit bucket it was full, thank the lord ,I have my very own, frequent emptying getting tedious…

    Is there light at the end of this very LONG dark tunnel…?

  8. Victoria

    Thanks Kaye, how does the LNP do it?
    Imagine if the average family ran their household like government?
    National debt, not sure which figure you are using but I found it to be north of $551B:
    http://www.australiandebtclock.com.au/

  9. Kaye Lee

    Victoria, the two best places to check federal government debt are the following:

    For budget deficit and net debt refer to the Department of Finance Monthly Accounts

    The underlying cash balance for the 2016-17 financial year to 28 February 2017 was a deficit of $36,642 million
    As at 28 February 2017 Net debt is $317,425 million

    The following links to latest and historical figures

    https://www.finance.gov.au/publications/commonwealth-monthly-financial-statements/

    For gross debt refer to the Australian Office of Financial Management.

    Australian Government Securities on Issue at 7 April 2017 $486,530m

    http://aofm.gov.au/

    Details of future CGS issues is here. There are plenty more coming up.

    On Monday, 10 April 2017 a tender for the issue of $400 million of the 4.50% 21 April 2033 bond line is planned to be held.

    On Tuesday, 11 April 2017 a tender for the issue of $150 million of the 3.00% 20 September 2025 bond line is planned to be held.

    On Wednesday, 12 April 2017 a tender for the issue of $800 million of the 1.75% 21 November 2020 bond line is planned to be held.

    http://aofm.gov.au/ags/tender-announcements/forthcoming-tenders/

  10. iggy648

    I have my own idiosyncratic method of determining how jobs and growth are going. Million hours worked by Australians in the month of August 2013 was 1650.0. Million hours worked in Februaly 2017 was 1661.9. So the Coalition’s term in office has resulted in an additional 11.9 million hours worked by Australians. In that period we have acquired about 1.5 million new Australians, so each has access to an additional 7.9 hours a month or about 2 hours per week. Over the same period (42 months) of Labor Government from February 2010 (1553.2 million) to August 2013, 96.8 million hours per month were added, or about 16 hours per week per person. I’m keen to follow the progress of monthly hours worked as the new tax breaks for business come into effect.

  11. Kaye Lee

    I agree iggy. Monthly hours worked are very informative. They clearly reflect the increase in underemployment.

  12. iggy648

    (BTW as a (very) rough guide, the number of hours worked per month per person for the whole population I estimated as 1662/24.6 (millions) or about 67 hours per month. So Labor’s contribution of 64.5 hours per month is about par, while the Coalition’s contribution of 7.9 hours per month represents a substantial negative growth in work for Australians.

  13. Kaye Lee

    LABOUR FORCE COMMENTARY FEBRUARY 2017

    Year on year trend employment increased by 100,800 persons (or 0.8 per cent), which is less than half of the average year-on-year growth over the past 20 years (1.8 per cent). Over the same 12 month period the trend employment to population ratio, which is a measure of how employed the population over 15 years is, decreased by 0.4 percentage points to 60.9 per cent.

    Over the past year, full-time employment decreased by 21,200, while part time employment increased by 122,000 persons.

    Over the past month, the number of unemployed persons increased by 5,200, and increased by 10,700 since February 2016.

    Over the past year, the labour force, which includes both employed and unemployed persons, increased by 111,500 persons (0.9 per cent). This was below the rate of increase in the total Civilian Population aged 15 years and over (302,800 persons, or 1.6 per cent), resulting in the participation rate decreasing 0.4 percentage points, down from 65.0 per cent.

    The trend participation rate for 15-24 year olds decreased over the year to February 2017 by 0.6 percentage points. The youth unemployment rate remained unchanged at 13.0 per cent.

    http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/6202.0Main%20Features2Feb%202017?opendocument&tabname=Summary&prodno=6202.0&issue=Feb%202017&num=&view=

  14. richard grant

    Kaye Lee: keep up the good work refreshing to read.

  15. John Lord

    Always is Richard.

  16. iggy648

    There should be such a stunning growth in total hours worked, that we won’t know which are due to business tax cuts and which are due to penalty rate cuts!

  17. Alan Baird

    The one constant background noise is the parade of right wing commentary on all media (especially the ABC) repeating the mantra that business tax cuts cause jobs and growth completely automatically and as certainly as night follows day. No details of the mechanism. I learnt my tables as a child more quickly than this with less repetition. I hope all Oz citizens retain their buyers’ remorse from swallowing all this guff. There have been 30 years of tax cuts favouring the wealthy over the rest and it’s worked very well, quite apart from the extra special tax advice they get because they can fund it. No matter how the wealthy and THEIR parliamentary representatives try to dress this situation up, the gap gets wider. This is then addressed by them with more words. Or should that be mere words? Now the ads start… repeating the myth.

  18. Terry2

    Morrison will tell us today that he wants to see more investor money going into new affordable housing to bolster the rental market stock AND he wants to tell us that negative gearing and capital gains tax concessions on existing housing stock is a good thing.

    Why would an investor go through all of the hassles of building new stock when they can get the same government tax concessions just by churning existing housing ?

  19. James Cook

    And the MSM will regurgitate Morrison’s spin without any real analysis. We’re stuffed!

  20. Kyran

    Scummo is on local radio at the moment (Melbourne) assuring us that black is white, the sun is green, it’s complicated but he knows the answers. My ears are bleeding.
    There is an interesting, if not horrifying, article by Verrender on the ABC.

    “Right now, our banks have more than $1.5 trillion in outstanding home loans on their books. More than one third of that total, $543 billion, has been lent to investors.”

    “A little over a decade ago, the organisation he now runs decided it was a good idea to allow the big four banks to decide for themselves exactly how much cash they should stash way as a buffer for a housing market downturn. All in the spirit of deregulation.

    It shouldn’t come as a surprise to learn that each of them decided housing, being such a reliable asset for which to lend, no longer needed all that cash sitting in reserve down in the vaults.

    They slashed what is known in the game as the “risk weighted asset ratio”; from 50 per cent in 2007 to just 16 per cent by 2014.”

    The article finishes with;

    “It will take enormous skill and a huge degree of luck for our regulators to reset the safety catch.”

    http://www.abc.net.au/news/2017-04-10/debt-distribution-poses-new-threat-to-housing-market/8429578

    And we are meant to trust Scummo? As he has demonstrated no skill, let alone understanding of the problems or their complexity, we will necessarily be reliant on more than a huge amount of luck. Thankfully, we were the lucky country.
    Thank you Ms Lee and commenters. Take care

  21. Terry2

    These comments from Malcolm Turnbull on penalty rate cuts :

    “Malcolm Turnbull has put the onus on the industrial umpire to come up with a way to wind back penalty rates without workers being worse off.

    The prime minister’s comment came as debate raged over how many people would be affected by the Fair Work Commission’s decision on penalty rate cuts for retail, hospitality and pharmacy workers.

    Mr Turnbull told parliament when modern awards came into effect in 2010 they were phased in over five years.

    The commission had suggested the penalty rate cuts could be phased in over two years.

    “They have set out a road map to ensure that workers are not worse off in terms of their pay packet,” Mr Turnbull told parliament on Thursday (2 March) having faced a barrage of questions from Labor.”

    None of these reasonable suggestions were contained in the Federal Governments submission to the FWC.

    I’ve mentioned this before and I apologize for repeating it but he has reversed his position, wants the penalty rate cuts as soon as possible with no compensation to those affected.

  22. Terry2

    Ray Hadley and his 2GB audience have dumped Scomo or was it the other way round ?

    “SCOTT Morrison’s four-year bromance with Sydney shock jock Ray Hadley has come to an awkward end after the Treasurer ditched him for another radio station.

    After being told the Treasurer was unavailable to appear today because he was travelling — only to hear him on Melbourne ABC radio host Jon Faine’s show during their regular spot — Hadley has declared them finished.

    The conservative talkback king banned Mr Morrison from his 2GB morning show after four years of regular Monday morning chats.

    “It’s probably in my best interest not to have him on here because all I get is abusive emails from people saying ‘Why is he coming on?” Hadley said.

    “They call him all sorts of things … He’ll no longer be on.”

  23. Steve M ( ausgronk)

    I started out working as an apprentice Carpenter & Joiner which I loved much to the surprise of my High School woodwork teacher as I never in 2 years with him finished one practical assignment. I finished my apprenticeship and worked for awhile as a tradesman and then realised that I could not see a future in my trade as the things that I was really good at and luckily loved to do was fine & precise work more in the joinery side of the trade but I could see that the craftsmanship was already being replaced my machine work over skilled trades and that I didn’t want to be doing this for a living for all my life as it does take a physical toll on your body no matter what. I decided to go back to uni and get a degree in business. I grew up in a household where my Dad owned his own engineering workshop that had been in the family since his Dad & Uncle had started in the early 1900’s on the north side of Sydney harbour before the bridge was even being considered to be built.I lived and saw the naked realities of being a small business owner in both the good times and the bad ones as well. Not once was the rate of tax ever a issue in Dad’s business as he would say you need to work at making money first of all and how much tax you pay only matters if you are still in business. My point is that over the past 40 years I have been a worker and been a manager and a business owner and no matter what is going on in the ” real ” world good or bad the only constant from larger business interests is paying to much tax,workers earn to much etc.etc
    But guess what? They are still in business they are still making good to obscene money and when they on occasion don’t get what they want they still stay here as opposed to packing up and leaving to somewhere else.
    The big end of town will never stop bleating for their own self interest ever. We the average citizens no matter our role in our economy but more importantly our society have very little hope of having our voices heard in any meaningful way as it stands atm !
    There is no balance in our access to our politicians or government but most importantly apart from being thrown out in an election they really are never truly held to account for their intended and blatant lies and until this changes we as a society will be the losers and be consistently feeling powerless and let down.
    If I was to tell as much bullshit as our pollies do in my place of employment or my business I would not last a month let alone a 3 year term.

  24. Kaye Lee

    SteveM,

    My father, a teacher for over 40 years, used to say he aspired to having a tax problem 🙂 I feel it necessary to add that my teacher parents (mum was one too) did not own any investment properties. They bought their first home with dad’s war service loan and, when he retired, took a lump sum superannuation payout to pay off the mortgage.

    As many have said before, you can’t make a profitable business unprofitable through taxation.

  25. Terry2

    Yesterday Morrison again repeated his mantra about mums & dads with taxable incomes below $80,000 being the majority users of Negative Gearing : note the use of the term ‘taxable income’. Last time he pushed out this boat, a fact-check clarified the waters that he was trying to muddy :

    FACT CHECK

    “Data provided by Mr Morrison’s office, based on Treasury calculations, showed 67 per cent of the people who use negative gearing have taxable incomes of $80,000 or less.

    This was backed up by Fact Check’s analysis of ATO statistics.

    However, as 82 per cent of all taxpayers have taxable incomes below $80,000, it is not surprising that most of the negative gearers fall into this category.

    As this category represents only 67 per cent of negative gearers, it is clear that these taxpayers use negative gearing proportionately less than taxpayers with higher income.

    Put another way, only 8 per cent of people with taxable incomes less than $80,000 use negative gearing, compared with more than double that proportion among people with taxable incomes above $80,000.

    Similarly, people with taxable incomes over $80,000 receive 42 per cent of the negative gearing benefit, but they only represent 33 per cent of all negative gearers.

    Finally, those with a total income (including negative gearing benefit) of $52,000 a year or less — an income more in line with the definition of modest as a “moderate” or median income — represent 59 per cent of all taxpayers, but only 40 per cent of negatively geared taxpayers.

    Only 4 per cent of these people use negative gearing.”

    John Clarke, you used to see through these people who played with our language and lied to us : you did this with cutting satire and ridicule. One wonders what you could have done with this – we will be all the poorer without your insight.

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