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.
