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Tag Archives: Henry Tax Review

Talk about stubborn!

stubborn-e1406190207500 Yesterday I heard Joe Hockey interviewed. When asked about Tony’s pet Paid Parental Leave Scheme he had the unmitigated gall to say that Labor hates paid parental leave. Does he forget that it was Labor that brought in our first PPL on January 1 2011? Does he forget Abbott’s history on this issue?

In 2002, Tony Abbott’s hostility to paid parental leave reached a crescendo, when he declared to the press: “Compulsory paid maternity leave? Over this Government’s dead body, frankly.”

Writing for The Australian in October 2008, he claimed that paid parental leave – like abortion – was part of a “radical women’s agenda” championed by extreme feminists in the Labor movement. He spoke out about his opposition to the scheme based on the ways it reduced stay at home mothers to second class citizens, lambasting then Prime Minister Rudd’s commitment to women workers as an example of “Political Correctness”; extreme lip-service to the feminists in Labor ranks.

In 2009 a Productivity Commission Report stated :

“Payment at a flat rate would mean that the labour supply effects would be greatest for lower income, less skilled women — precisely those who are most responsive to wage subsidies and who are least likely to have privately negotiated paid parental leave. Full replacement wages for highly educated, well paid women would be very costly for taxpayers and, given their high level of attachment to the labour force and a high level of private provision of paid parental leave, would have few incremental labour supply benefits.”

Despite this advice, in 2010 “Mr Abbott first announced his paid parental leave after he emerged from a luncheon event on International Women’s Day. The scheme would pay new mothers their regular wage for six months, up to a maximum of $75,000, and is to be funded by a 1.5 per cent levy on more than 3000 big companies.”

On May 6 2013, Malcolm Turnbull refused to comment when asked if he thought there should be a review into the scheme.

“I’ve said again I am not going to comment on whether it should be reviewed or not. I don’t believe there is any need to review it. I think it has been very carefully costed by Joe Hockey and Andrew Robb so it is certainly in the policy budget envelope but any further deliberations on that or any other policy is obviously something we do in the four walls of shadow cabinet,” Mr Turnbull said.

“This is a key policy of Tony Abbott’s and it is something that we have as part of our policy and I don’t see any probability or likelihood that of that policy being shelved. Tony is very committed to it.”

The next day we hear a little more about Tony’s rationale of wanting women of calibre to breed.

TONY Abbott’s expensive paid parental leave scheme is “all about” encouraging women of “calibre” to have children, the Opposition Leader said today.

“We do not educate women to higher degree level to deny them a career,” he said.

“If we want women of that calibre to have families, and we should, well we have to give them a fair dinkum chance to do so. That is what this scheme of paid parental leave is all about.”

On that same day

Internal dissent about the policy went public this morning, with federal Liberal backbencher Alex Hawke calling it an “albatross” that must be “scrapped”.

Writing for the Institute of Public Affairs backbencher Alex Hawke blasted it as an “unjustifiable impost on business” and said the policy should be reviewed.

“An expansion of the PPL scheme is ill-suited to an economically Liberal agenda,” Mr Hawke wrote.

“Most importantly for Australians, the policy does not pass the fair-go test.”

“Now would be a very good time to revisit this policy with a view to scrapping it before the next election, so we can go to the election without this albatross around the neck of the party,” he said.

In June 2013, when asked to guarantee Tony Abbott’s “signature policy”, Mr Hockey responded: “You will see our initiative in that regard prior to the election…I’m not going to get into speculating about where we’re at.”

The following month, big business and the IPA added their criticism of the scheme.

LABOR is on its own believing a parental leave plan should be paid at “welfare” rates rather than a worker’s real wage, Opposition Leader Tony Abbott says.

But that’s not quite true. Big business joined critics of Mr Abbott’s signature paid parental leave scheme as Coalition MPs prepare to pressure their leader to modify it.

Mr Abbott’s predicament has been summed up by a shadow minister: “There’s only one vote for it in the party room.”

It is one of the most generous proposals in the world but the cost, the need for a tax increase, and the lack of consultation has turned some Liberal MPs against it.

Business is also fighting the plan with the head of the Australian Industry Group, Innes Willox Monday night saying: “There are no positives, no upsides in this policy that we can see for business.

“It’s inequitable,” Mr Innes told ABC TV.

“Only the top 3000 or so companies would be paying and they’d be subsidising for everyone else. That doesn’t make sense on that level.

‘”The current system is operating well. It has very broad business and community support. We don’t see any reason to change.”

John Roskam of the economically dry Institute for Public Affairs said “There’s widespread concern that the Coalition is supporting a tax increase. And at this time, the Coalition should be talking about cutting taxes and cutting spending, not increasing taxes.”

More recently we have had the commission of audit and the Productivity Commission (again) suggesting the money would be better spent on childcare.

May 1 2014

The commission (of audit) also wants Mr Abbott’s generous paid parental leave scheme wound back and the money directed into a streamlined childcare support mechanism. Paid parental leave wage replacement should be capped to average weekly earnings – $57,460 a year, much less than the current proposal of $100,000. The savings should be used to offset the cost of expanded childcare assistance.

July 22 2014

The Coalition has dismissed a Productivity Commission suggestion that funds be redirected away from Tony Abbott’s paid parental scheme and into childcare services, arguing that the two are “separate things”.

On a government website there is an article titled Comparing the Paid Parental Leave Schemes. It states

The designs of both the current and Coalition/Greens schemes contain elements that make them as much like an Australian Government welfare payment as they are workplace entitlements. For example, rather than being funded and run privately by employers or funded (as occurs in most OECD countries) through a social insurance scheme, they are:

•fully or substantially funded from taxation revenue and

•fully or substantially administered by the Department of Human Services.

Critics of both the Coalition and Greens schemes have tended to argue that PPL should better reflect the existing framework of Australia’s welfare payment system, based around targeting flat rates of payment at those most in need. As the Henry Tax Review noted, ‘the primary purpose of government assistance payments to individuals is to provide them with a minimum adequate standard of living’. A further value underlying the Australian system is that there should be incentives for private provision, with the benefit system seen more as a safety net.

The government argues that their scheme aims at gender equity and workforce participation. This is hard to sell when you look at the guys and doll that form their cabinet and the reports from the PC and commission of audit suggesting affordable, flexible, quality childcare is far more important.

Despite a so-called budget emergency and criticism from every direction, regardless of advice from every expert review, unheeding of internal dissent, Tony forges ahead with his “I like women and women like me” campaign. Does Tony really believe that he knows better than all experts on every matter? It’s all just a political game for him and he increasingly shows he has no idea how to prioritise.

Abbott’s signature policy may be something to aspire to in the future but he is signing the cheque with money slashed from those most in need. This mantra of “we took it to the election” won’t wash in light of all your other broken promises from your infamous “no cuts” speech. Give it up Tony!

Failed plans should not be interpreted as a failed vision. Visions don’t change, they are only refined. Plans rarely stay the same, and are scrapped or adjusted as needed. Be stubborn about the vision, but flexible with your plan.

-John C. Maxwell

 

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Rupert Murdoch, where’s the outrage?

You may recall that one of the fabricated fears planted in people’s’ minds before the last election was that a Labor Government would raise the GST. Those of us who remember the perceived threat may also remember the public outcry expressed by readers who left comments on popular sites like Rupert Murdoch’s news.com.

Someone, somewhere, dreamt up that Gillard would raise the GST, the papers ran with it, and public outrage followed. Now who would have raised such an idea? Given the negative aspects and the timing of the alleged threat I’m sure the Liberal camp might have had a small bit to play in it. I’m sure they might have been a little bit bemused that there were genuine calls to have it raised, with many of the callers being the end of town that party with the Liberals party.

The calls became more vociferous leading up to the Tax Summit.

But you may ask: “Why should we raise such a repressive tax?” Well, there were a number of reasons mooted at the time. Independent MP Tony Windsor started off with the most simplest of these.

Tony Windsor has suggested the GST should rise by 1 percentage point to allow 115 “inefficient” taxes to be eradicated.

Mr Windsor and fellow crossbencher Tony Crook . . . called for the GST to be examined . . . following Treasury warnings that the tax has become increasingly inefficient.

Mr Windsor’s suggestion was in the wake Treasury’s executive director of revenue Rob Heferen’s statement that the GST was costing more to collect than other taxes and was “less than robust” because of increased spending on tax-free items.

The OECD Centre for Tax Policy and Administration highlighted the “practical reality” of an increase, being that it was essential to achieve many of the reforms recommended by the government’s tax review (The Henry Review) of 2009.

“There would seem to be a fairly compelling logic to GST base broadening and a slightly higher rate (eg 12.5 per cent) as a means of rationalising the major state taxes and compensating low-income citizens who would otherwise be unfairly impacted by GST expansion,” said the centre’s senior adviser Richard Highfield.

Viewing the current tax system as unfair and inefficient, accounting bodies also put their weight behind the call. Among them, CPA Australia suggest that:

. . . increasing the GST to 15 or 20 per cent, accompanied by cuts to business and personal tax rates, would improve the economy and raise the standard of living. “Our research helps demystify concerns that an increase in GST would hurt Australians,” CPA Australia chief executive Alex Malley said.

But the sharpest call and strongest argument comes from the big end of town; the business groups with the Australian Industry Group leading the call.

The Australian Industry Group is urging an increase in the rate of the GST – or a broadening of its application to more goods and services – as a way to pay for the removal of inefficient state taxes.

The Ai Group – whose chief executive Heather Ridout was involved in the Henry tax review – says the states and territories have among the most inefficient and poorly designed of all Australia’s taxes.

Ideally, the group says, insurance taxes and conveyancing duties would be removed and payroll tax remodelled or removed. Land tax could be improved substantially.

Compliance costs could be reduced by harmonising remaining state taxes, and economies of scale exploited by using the Australian Taxation Office to collect state revenue.

A more broadly based or higher GST should finance the removal of as many existing state taxes as possible, it says.

I found it rather interesting, that during the scare campaign the Murdoch media, in particular, were wheeling out all sorts of experts calling for the increase. In the minds of the readers raising the GST would be a good thing and Labor would fall prey to this meme.

In numerous media releases leading up to the tax summit the Government clearly ruled out the increase, or that it will be tabled for discussion. To do so would have been political suicide. It may have also been seen as an easy solution to return to surplus, even though it clearly would not have been for that purpose. It was a mute point that the Government had been widely criticized for not heeding many of the recommendations of the Henry Review, namely from those critics who sit on the opposition benches.

I was opposed to the introduction of the GST and the manner in which the Howard Government hoisted it upon us, as many people were. But it is with us, and despite its obvious flaws it nonetheless could unwittingly be the vehicle that will be used to overhaul the inequalities of the current tax system. However, this was unlikely to happen because of the negativity around the GST during the last election campaign and the Government’s reluctance to pursue the matter, particularly as it is in the minds of the electorate that the Labor Government has been painted as the party most likely to raise the GST if it ever were to be raised.

Fast forward to 2013 and Tony Abbott’s budget reply speech and this widely unpublicised comment:

We will finish the job that the Henry review started and this government squibbed.

Now, didn’t the Henry Review recommend an increase in the GST? Rupert, your papers were in a frenzy the last time an increase was put in the public sphere and the outrage against the Gillard Government was carefully nurtured.

Where is the outrage now?

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