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Sorry, our first plan was wrong

Scott Morrison is trying to sell his 2016 budget as a “plan” for the future. It should be called the “Sorry, our first plan was wrong” budget.

It is full of measures undoing Hockey’s damage, and figures which show the government’s “plan” has not worked.

Whilst it is good to finally see some action on gently tightening superannuation concessions for the very wealthy, it should be remembered that Hockey, as one of his first announcements, removed Labor’s measure to tax annual superannuation income of over $100,000.

The media is praising the introduction of the Low Income Superannuation Tax Offset (LISTO) where people earning less than $37,000 can claim a tax offset capped at $500 for superannuation contributions.

This is just the renaming of Labor’s Low Income Superannuation Contribution that Hockey also disposed of in November 2013 because it was funded by the mining tax, and all things ‘mining tax’ had to go. Now we are in the position of restoring the concession without the benefit of the revenue that was funding it, and it has not increased from the original $500.

It should also be remembered that the Coalition froze the projected gradual increase in the Superannuation Guarantee from 9.5% to 12% negatively affecting the retirement savings of all employees.

When they removed the carbon tax, they lost the revenue, had to come up with billions more to fund Direct Action, but kept the spending that had been implemented as compensation for the carbon tax, like Labor’s increase in the tax free threshold.

Removing the carbon and mining taxes was supposed to declare we were “Open for business” and that investment would flow in creating “jobs and growth”.

However the budget’s economic outlook show that, in 2015‑16, mining investment is expected to “detract 1½ percentage points from growth.”

Total private investment will decline by -11 per cent in 2015-16 and a further -5 per cent in 2016-17. They are hoping it will be static in 2017-18.

Growth is well below trend “at 2½ per cent in both 2015‑16 and 2016‑17 before strengthening to 3 per cent growth in 2017‑18 as the detraction from falling mining investment eases.”

Job creation has not kept up with population growth and there has been a significant shift to part time work – aggregate monthly hours are not increasing despite more people being employed.

According to Bill Mitchell

“The total estimated labour wastage in Australia – taking into account unemployment, hidden unemployment and underemployment – is well over 15 per cent of the available labour force. For teenagers the equivalent figure is over 40.1 per cent.

If we define a reasonable full employment policy goal of 2 per cent unemployment, zero hidden unemployment and zero underemployment, then the Australian labour market needs to create a further 1,050 thousand jobs.”

Speaking of the RBA’s downgrading of growth forecasts and cutting of interest rates in his Real Solutions pamphlet in 2013, Tony Abbott said “Monetary policy is now being used to try and catch a falling economy.”

For the first time in 7 years we had deflation with the consumer price index (CPI) contracting 0.2 per cent in the three months to the end of March, taking the annual rate to a very low 1.3 per cent, causing the RBA to further drop interest rates to an all-time low of 1.75%.

We are also supposed to be pleased that Morrison is creating a special taskforce in the ATO to tackle corporate tax avoidance but that would require forgetting the current program of cuts, which will see 4700 ATO jobs shed by 2018.

ATO staff warned that tax cheats were the winners as people who were “able to sort through the web of complex structures that larger entities use to hide transactions and money” had left the organisation. “The loss of knowledge around company, industry, case product and tax law have been immense.”

To show that they don’t just crack down on union corruption, Morrison announced that he will make the banks pay to restore the $120 million, and presumably the over 200 jobs, that Hockey cut from ASIC – a cost they pinky promise not to pass on.

In another “we were wrong” announcement, the government will no longer proceed with plans to shut down the Office of the Australian Information Commissioner (OAIC), and have funded it for $37 million over the next four years to continue responsibility for Freedom of Information reviews.

They are also restoring a little bit of the funding they cut from education and hospitals.

And young unemployed will no longer have to starve for six months – they now have the opportunity to be paid $4 an hour for the privilege of being an “intern” for a few weeks, a system that reeks of exploitation – cheap labour with no workplace entitlements who come with a government subsidy.

Tony Abbott got rid of Labor’s crackdown on the fraudulent claiming of business usage of leased cars to “save the car manufacturing industry.”

That worked about as well as all his other ideas that reducing taxes would promote investment, jobs and growth.

Overall, Morrison’s ten year enterprise tax plan is expected to deliver a permanent increase of GDP of just over one per cent in the long term but Turnbull is refusing to say how much it will cost. The budget’s forward estimates show the policy to cut company tax will hit revenue by $5.3 billion over the next four years, but after that it is unclear. Deloitte Access Economics director Chris Richardson estimated the tax cut would hit revenue by $55 billion over the next 10 years.

Stagnant wage growth, high private debt, and rising inequality have all worked together to suppress demand and, until we get a Treasurer who realises that investment, growth and jobs are driven by demand rather than the tax regime, we will continue to go backwards.

If consumers don’t have money to spend, entrepreneurs will be unemployed dreamers.

 

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33 comments

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  1. Steve Laing - makeourvoiceheard.com

    Before extending the small business tax break and early write-down legislation, would it have been too much for journalists to ask what the effects of last years changes were on the economy? Of course not. That would mean having to deal with the pesky fact that they’ve clearly done nothing of any great value, which any real small business person would have been able to tell you.

    Clearly learning from history is a concept utterly beyond this band of fools.

  2. Pappinbarra Fox

    Australia is open for business. Said with a patronising swagger. Now how is that working out? My god the economic activity is contracting – all the indicators are negative, there is no growth (not that I am enamoured with growth per se) so why is this bunch of shonky snake oil salesmen and women not languishing at the bottom of the polls – don’t people take notice?

  3. Keitha Granville

    excellent, I have 2 more years where I will get the low income super boost – thanks. I have paid for my own all my working life, not earning enough most of the time to get anything from an employer. The booster from the previous govt was always a welcome addition to the miserly amount I have managed to accumulate.
    Do you think any of them – both sides – have the faintest notion what it might be like to face a future with NO superannuation ? There are many workers in the country who do NOT receive employer funds, and who cannot afford to put by for themselves out of meagre earnings from self-employment. As always these are the people who fall through all the safety nets that are supposed to protect them – and no-one cares.
    That’s without even starting on all those who are generationally unemployed – they have only a pension to look forward and everyone tells them, including govt, that the pension isn’t enough. What chance have many of us got .

  4. David

    Finance Minister Cormann, who yesterday in Senate QT, decided he was a far better act than Senator Cash and proceeded to lose his cool after intense budget questioning from Senator Wong, today at Senate Finance Estimates lost the Cash persona opting for repeating endlessly his instructions from Morrison to push the Budget 3 word slogan ‘jobs and growth’, Every response included it, over and over and over.
    He is the master of deceit and under the protection of Chair Bernardi, rambled off into the realms of obscurity but never missing the opportunity to insert that damn meaningless slogan.
    Even the usually outwardly mild mannered Senator Xenophon had enough and somewhat ice like finally responded…”don’t come at your Bjelke-Petersen tactics with me”

    Like his boss and the PM this phony Cormann, has no idea what he is talking about regarding many aspects of this budget. The old smoke and mirrors trick so often the fallback of these Tory Ministers is not working this time. Too many economists are seeing through it and saying so publicly..

  5. diannaart

    If consumers don’t have money to spend, entrepreneurs will be unemployed dreamers.

    One of my fave dreams ATM is to see Tony Windsor kick Barnaby Joyce’s arse out of the New England electorate.

    Another dream is to watch unemployed entrepreneurs (who receive far more kudos than, say, fire-fighters, nurses, teachers, ambos and people who clean toilets for a living) manage on Newstart while working for the $4 pittance as interns.

  6. Terry2

    The coalition’s plan is over a ten year period – that takes us out to 2026 which is potentially five election cycles.

    These guys probably won’t be in politics by 2026 and that’s why questions in the House today were flipped : there is no plan, it’s an aspiration nothing more.

    I think our credit rating is shot.

  7. Kaye Lee

    I cannot adequately express my loathing for our misnomered environment minister. To coincide with the budget, Hunt issued a press release saying “The Turnbull government is doing more than ever before to protect the Great Barrier Reef and the 2016 budget strengthens this commitment with a $171.0 million boost.”

    What the deceitful scumbag didn’t mention was that all the $171m in funding announced in the budget for the Great Barrier Reef has come from other environmental programs, which already had significant amounts directed at conserving the reef.

    It was also revealed that a large portion of the reallocated money will not be available for the reef until 2019, coinciding with when Unesco is scheduled to reconsider whether to categorise the reef as “in danger”.

    There is NO new money for the reef and Hunt is a dangerous LIAR.

    http://www.theguardian.com/australia-news/2016/may/05/no-new-money-for-great-barrier-reef-in-budget

  8. Stephen

    It’s difficult to decide if they all think the rest of us are so stupid or they are so clever that we won’t see the self serving lying misdirection.
    Sadly I think they may be right on the first assumption at least with enough people.
    The capacity for anything requiring longer term vision and understanding has been largely lost and replaced with whats’ in it for me now, and or it’s someone else who loses but I ‘ll be alright because I.m not them, until they themselves or a relative, friend, or someone they care about is affected then shock horror lamentations and bewailing how could this happen it’s meant to happen to others not me or mine who’s at fault for this not me.

  9. guest

    I have just received a handout of Liberal propaganda which claims the Member is proud of what Malcolm Turnbull’s team, the Government, “has achieved”.

    It lists these things with few general statements in each category: Defence, Innovation and Science, Cities, Small Business and Clean Energy.

    The first thing to say is that the things listed as achievements have in fact not yet been achieved: they are policies only.

    Secondly, it does not take too much thought to see that a truck could be driven through these policies, and with even a new Senate they could well be defeated.

    Now it is Labor’s task to take these policies apart – except of course the ones borrowed from Labor. Limited time to do that in the Parliament; Murdoch has already begun with cries of “envy” and “class war”; now is the time for the truth to be told.

    I remember the now soon to retire Member trying to criticise the Carbon Tax in Parliament by producing an electricity bill for a local hotel complaining about the increase in cost. Part of the bill was torn off to deny access to some information What was not told was the fact that the hotel had been substantially renovated with increases in size, lighting and refrigeration. Such are the tactics.

    This mob are relying too, too much on smoke and mirrors. Let’s hope they can be revealed in the next 2 months. I know the AIMN will be doing its part assiduously and accurately as usual .

  10. sandrasearle

    Thank heavens for a longer than normal lead up to the election because it gives us all the opportunity to keep making sure that the messages of this current mob of miscreants are totally exposed for what they are.
    Perhaps we need to counter ‘jobs and growth’ with ‘truths not lies’.
    Eight weeks should help ordinary busy people to absorb how they will be affected especially if those of us who follow great articles from those on TAIM and other sites keep on sharing the truths.

  11. deanyz1

    I agree with all of the above; it is a nonsensical rearrangement to stupify the voters into thinking they are doing a wonderful job and Labor is BAD. I call it “The Lemonade and Fairy Floss Budget’. Sweet to the richer, full of fizz and bubble (exciting times) and sweet and fuzzy – you don’t really know what it is all about. Morrison is hoping to get away with it, I doubt very much that he will.

  12. pierre wilkinson

    Thank you for continuing to present alternate viewpoints of the truth as espoused by the MSM, and for taking the fight to social media in a very intelligent manner.

  13. John Lord

    Kaye are you referring to pre or post “Good government starts today” So many plans not to mention blueprints.

  14. keerti

    Kietha Granvillein the light of trying to live on a pension, I’d say you probably have two choices 1)learn all you can about hydroponics or 2) go to live in Cambodia or Vietnam. Both countries are cheap to live in and live in well. They have plenty of other australians living there, and with a pension you can save money!

  15. gee

    so it seems the LNP are doing the whole privatisation trick… to the entire country.

    Run it down, make it cheap and nasty, then flog it off to a multinational

  16. you can't be serious

    Why don’t the average wage and salary earning Liberal voters (who are the majority of the LNP base) get it that the reduced revenue due to lower corporate taxes will either have to be made up from somewhere (ie from their taxes and bracket creep) to provide and maintain the services and essential infrastructure they expect or if not recouped, those services will have to be cut, new infrastructure won’t be built and existing infrastructure not properly maintained?
    There are no magic puddings.
    It is a Liberal Party and big business created myth that corporate tax cuts will result in higher wages and more jobs. Just another attempt to fool the gullible/rusted on/disengaged into voting against their own best interests.

  17. Max Gross

    I don’t know about you but I usually judge people not so much for what they say but what they do…

  18. jim

    This is the Libs election budget.

  19. paul walter

    This was the go-to column here for me on this event and everything Shorten mentioned in his budget reply speech was predicted..once again, good writing from Kaye Lee.

  20. Athena

    “Like his boss and the PM this phony Cormann, has no idea what he is talking about regarding many aspects of this budget. The old smoke and mirrors trick so often the fallback of these Tory Ministers is not working this time. Too many economists are seeing through it and saying so publicly..”

    Including Professor Bill Mitchell, David. 😉

  21. Alison White

    @ Dianart – people who clean toilets for a living get a little over $19 an hour. I know this because my partner, a former European technical operations manager for a well known mobile phone manufacturer is now doing that for a living. It took so long to get off his bridging visa that that became his only option. He only got that job through a friend. It’s fiendishly hard to get a job nowadays.

  22. diannaart

    @Alison

    Cleaners are not paid anywhere near enough.

  23. PC

    You are awesome Kaye Lee. I would vote for someone like you in a heart beat.

  24. Abbie Noiraude

    So cleaners get the same pay as the person in a pharmacy dispensing your medication!
    Someone who had to be working in a pharmacy who did a 6 month course and sat an exam so that they would have the responsibility to fill your prescription (checked off by a chemist) or hundreds of medications inserted into Webster packs for the Elderly..
    The Govt (btw) pays the Pharmacy around $10 per WP…so if a Dispensary technician can do 80 to 100 a week it is a nice little money earner on top of the medication profits!

    Wages are pretty stagnant whilst this lying LNP govt plays games with the citizenry of Australia in order to keep in good with their wealthy donors/big business supporters and heads for Gina’s Wish of paying $2 a day for wages.

    “Liveable wage”?
    Ha!
    This is where the other Parties could rub the noses of the arrogant LNP/IPA partnership into the Truth with the help of a Fed ICAC!

  25. David

    Somewhat off topic but sort of connected to the main post….if it was Question Time, the Speaker would rule its relevant and in order with the mention of lies

    Social media is quite lively today after the revelation Turnbull lied about his knowledge of the 10 billion dollars cost of the higher income tax cut and Peny Wongs questioning of the Dept of Treasury Head at Senate Estimates on Friday.
    Tony Burke has released a short vid of the lies and attempted coverup

    [video src="https://vid1131.photobucket.com/albums/m548/davidlen2/Tony%20Burke%20on%20Twitter%20Did%20he%20really%20think%20he%20would%20get%20away%20_zpsbpzceugm.mp4" /]

  26. diannaart

    @Abbie

    If no-one cleans toilets, our pharmacy assistants may well find themselves on stress leave from overwork from so many ill people. You know, everything is interconnected…

    Just because someone is a cleaner doesn’t mean they are not entitled to a liveable income – as a former uni student I did many jobs – briefly as a cleaner – I really was much better at sales than a cleaner, but the experience did give me a new respect for all the people who do the jobs some of us consider so menial.

    Not having a go at you – I am sure you are right to point out that a pharmacy assistant had to do some training… prefer to stay healthy and have clean toilets myself.

    😛

  27. Abbie Noiraude

    I wasn’t suggesting we don’t need cleaners! I have been a cleaner..cleaning other peoples homes, toilets, children, doing their ironing and scrubbing floors etc
    I was not implying anything but that under LNP I thought having an education and a qualification meant you were paid accordingly.
    My daughter trained as a dispensary technician and the chances if someone being given wrong meds and being poisoned or killed is pretty high if the qualifications aren’t required or respected. Just shocked when we found out the owners of the Chemist Shop are NOT Pharmacists themselves but Capitalist pigs who can pay as little as possible PLUS get workers to waiver their penalty rates PLUS make them ‘push sell’ to make the owners get more profit.
    I was not demeaning cleaners. I was exposing those who think paying unliveable wages are most likely to bite LNP and push wages down to $4 an hour.

  28. diannaart

    Abbie

    I apologise if I upset you – lately there is so much judgement and hate where ever I turn…

    Anyway, I think you meant ‘vote’ not ‘bite’ – letters ‘b’ and ‘v’ & ‘i’ and ‘o’ right next to each other.

    Hmmmm biting a neo-con – probably get gastro, have to go to pharmacy then home to disgusting toilet (post-gastro)..

    Everyone having dinner?

  29. Jennifer Meyer-Smith

    I noticed there was no mention of an increase in Newstart payments in either the Budget Speech, or the Budget Reply. Such an increase would be a great way to boost the economy because we all agree low and no income people are most likely to pump all their incomes into consumer activity which is great for business and the economy.

    I also noticed there was no mention of incentives to no and low income earners to seek government backed Micro Finance Grants or Micro Finance Loans for their entrepreneurial ideas and projects.

    I also noticed that there was no mention of incentives to employers, or people who would be self-employed, for Mature Age UNemployed workers of all denominations and skillsets to be meaningfully employed on reasonable remuneration.

    Just in case we didn’t know it already, Snotty Morrisscum was just reinforcing how much he loathes poor people because he thinks they don’t “work hard”.

    SO, now it is Bowen’s and Shorten’s jobs to prove to the wide spectrum of the community that it takes seriously all of my highlighted deficits in Morrisscum’s responsibilities as Treasurer (for the next last 5 minutes before his annihilation).

    I demand that Labor addresses these issues that would alleviate the economic insecurities and indignities of low and no income people, who want opportunities to engage their skills and ingenuities in meaningful work for the long term and on reasonable income.

  30. Terry2

    Hi David

    Actually, the corporate tax cuts, Treasury officials have revealed the Government’s plan to cut the company tax rate to 25 per cent will cost $48.2 billion over 10 years.

    The disturbing thing is that Turnbull denied that the numbers had been calculated and Morrison said some rubbish about not doing Shorten’s homework for him. Neither have come clean on where the cuts are going to be funded from so, as a policy it is no more than a thought bubble and they deserve to be roundly condemned for suggesting these cuts without modelling the impact on the budget.

    Important to remember that the opposition have no access to Treasury modelling until after the election has been announced and we move into caretaker mode. This also explains why the opposition are hamstrung when it comes to the actual modelling on the tobacco excise increase : the Parliamentary Budget Office did the modelling for Labor which is at odds with that done by Treasury for the coalition. Evidently the two bodies are using different assumptions but we won’t know that until Treasury release their numbers to labor.

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