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Tag Archives: Taxation

Greed is the problem, not workers

Of course, The Australian republished Andy Kessler’s ridiculous Wall Street Journal column, “The decline of work in a spoiled society.” Those News Corp bedfellows continue to miss that they are at the core of the problem.

The pandemic drew back the curtain for the workers of the West, casting a glaring spotlight on the fact that they were cogs in a machine churning profit for the power brokers. Billionaires took off on joyrides to space, in rockets built of the workers’ stolen wages. Emergency workers received mere thanks for dying in excessive numbers to keep the upper echelons safely serviced in their beach home escapes. Nurses saw that their dedication had been exploited for unfair pay as their shifts ballooned. Teachers learnt they were actually childminders to allow capitalism untrammelled access to parent workers.

This edifying revelation only built on the growing crisis of 2008’s financial crash. Taxpayers’ money was demanded to refund the financial sector that had gambled away its wealth. In the US, 10 million Americans lost their homes, mostly left sitting empty. In the UK, bankers got their bonuses back as austerity policy savaged the lives and communities of the taxpayers who’d funded their bailouts.

Over the Cold War, a combination of factors kept the gap between rich and poor narrow. Partly the financial circumstances of the era; partly a society that required a large educated and healthy workforce to maintain mass-employing sectors. Partly, though, it was the bowel-clenching fear of the rich and powerful that their own masses could revolt to seize the means of production.

The resultant conditions meant that unionised workers could support their families with some spending money on the side. After capitalism’s collapse in the Great Depression and the nightmare of two World Wars, the bargain seemed worthy.

In the wake of the Cold War, neoliberal ideologues and extremists won the battle for understanding how the economy should operate. Milton Friedman’s diktat that the shareholder was the corporation’s only responsibility became the operating principle. Maggie Thatcher killed “society.” The workers were to be recognised as inanimate parts of the machine. The threat of starvation would keep them obediently clocking in, clocking out, clocking in.

Meanwhile, the Cold War reticence about ostentatiously displaying wealth with the prospect of revolution to chill the peacock urge, was replaced by reality TV where everyone could see just how stupid and venal the wealthy actually can be.

In America, the social contract is broken. The poorest workers slog between several jobs, often on poorly maintained public transport, without healthcare. Teachers drive Uber after hours to pay the rent. In the UK, private school alumni threw the country’s well-being off the Cliffs of Dover in pursuit of defunct imperial grandeur. Both countries’ discontent was channelled against people with a different skin colour, seeking safety. The “revolution” to date has taken the form of electing populist-nativist clowns who made all their problems worse.

Liz Truss was the final straw in this revelation of the cold calculations underlying neoliberalism. There would be unaffordable tax cuts for the rich and further austerity for the rest.

In Australia, the crisis of worker investment is different. Rising prices creating rising profits eat into the wages of those previously getting by. The Reserve Bank is driving up interest rates, again eating into survival funds, instead of begging profiteers to cap their greed. Policy promoting property as an investment rather than a necessity is robbing the next generation of the chance to join in that mode of securing their future. Landlords increase rent because that is “the market,” and renters become desperate.

Australia’s workers are, on the whole, better paid than our American parallels but the same pressures that the neoliberal ideologues have imposed on that nation are grinding away at the readiness of workers to give over most of their working hours to employers.

Signs of poverty are becoming more overt in Australia. The recent story about a mother wanting to keep a pot of yoghurt as a Christmas treat went viral, shocking to a complacent population.

Victorian Premier Dan Andrews has taken some steps in his election promises to address the implications of these factors. One that drew howls of outrage from the Murdoch Dog Line was the promise to make menstrual products available in places where people might not be able to afford them. To any person willing to take a moment, it is clear that being forced to choose between food and sanitary products is a crippling decision.

To the Murdoch commentators, Andrews’ decision was an outrage. Regular Murdoch columnist Gemma Tognini fulminated that the promise was, bizarrely, “sexist” as well as “shallow, populist, cosmetic and desperate.” Then again, she is the columnist that equated accepting Dan Andrews to Chamberlain “attempting to appease a monster.”

In the worldview of the News Corp columnist, and their ultra-free market ideology, anyone not working hard enough is choosing to be unable to afford menstrual products. Pandering to this laziness encourages the slacker life.

Andy Kessler argued that what workers get from the ever-more poisonous bargain is “human capital” which he decodes “as what workers learn on the job is theirs to keep.” But too many jobs now, like the grinding immiseration of Amazon warehouse workers, grant little in the way of skills or satisfaction.

He demanded the American government “please stop paying people not to work.” At a moment in employment history where too many people are working in jobs that barely pay survival salaries because human labour remains cheaper or more precise than automation, the only way to get people to work at all is to starve them thoroughly rather than slowly.

A better option might be to abandon ultra-free market ideology as the destroyer of systems it has proven to be. Clearly, workers need to be and feel valued to sign over their lives to the awful jobs we need done. America’s extremes illustrate the utter failure of their neoliberal religion.

Removing obscene profits for executives and shareholders as the driving force of corporations would be a start. A fairer division of the spoils is necessary to keep society functioning. This might need to be achieved by higher taxes on the top tier, since they don’t seem to understand the crisis their never-sated greed has created.

This was originally published at Pearls and Irritations as Greed and a spoiled society: workers are not the problem

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Can the Federal LNP deliver its Flatter Taxation Scales in a Slowing Economy?

By Denis Bright

Just four months out from the federal election, current indicators do suggest that the federal LNP is fumbling the future of the investment sector of the Australian economy to achieve its short-medium term budget projections and to appease the erratic policies of the Trump Administration.

The IMF data on economic growth trends in Australia confirms the state of flux relating to federal budget projections and delivery of planned tax cuts for higher income earners. These trends will not be unscrambled until the release of the Mid-Year Economic and Fiscal Outlook (MYEFO) by early December 2019.

Finance Minister Mathias Cormann is still optimistic about future delivery of a fiscal balance for 2019-2020 without depressing economic growth projections or causing unemployment levels to rise further.

A key variable in this balancing act is the strength of the public sector spending at both state and federal levels as well as positive trend-lines for commodity and service exports. This favourable mix is marred by data for private sector capital investment over the last two quarters. Release of the September Quarter data on 28 November 2019 will be eagerly awaited. A continuation of the negative trends will be bad news for budget strategies for 2020-21, rather than in the current financial year.

Australia Private Capital Expenditure

To meet its budget targets, the federal LNP is now reigning in the growth in public sector. Probono Australia has revealed the benefits of under-spending on National Disability Insurance (NDIS) to the federal LNP’s efforts to maintain current budget surplus projections for 2019-20 (Luke Michael, ‘NDIS underspend helps return budget to the brink of surplus’, 20 September 2019):

The federal government spent $4.6 billion less on the National Disability Insurance Scheme than expected because of delays getting people into the program, new budget figures reveal.

Treasurer Josh Frydenberg on Thursday announced the final budget outcome for 2018-19, showing a deficit of $690 million – $13.8 billion less than what the 2018 budget predicted.

This improved financial position ­– which leaves the budget on the brink of surplus for the first time since 2007-08 – was built on the back of underspending in areas including the NDIS.

The government says this underspend is a result of a slower than expected transition of people into the NDIS, but critics argue the money should be spent fixing various problems plaguing the scheme.

Frydenberg said the NDIS was a “demand driven system”, meaning that a slower uptake of the scheme resulted in less money being spent.

“This is in part because of the delays in some of the states coming on board, and also because it’s taken a bit more time for the service provider market to develop sufficiently to meet the available demand,” Frydenberg said.

 

Caution with the delivery of future Newstart increases and the delivery of NDIS will assist in the extension of taxation relief that is skewed to middle- and upper-income households as promised in the 2019-2020 federal budget.

Support for market-oriented strategies of the federal LNP came from the US Secretary of Commerce Wilbur Ross on his Australian visit with one important policy recommendation (The Australian, Geoff Chambers, ‘Tax cuts key to driving revival, says Wilbur Ross’, 10 October 2019):

US Secretary of Commerce Wilbur Ross has suggested Australia could increase its global competitiveness and attract direct foreign investment if it replicated Donald Trump’s corporate tax cuts.

Speaking to The Australian on Wednesday, Mr Ross — one of Mr Trump’s closest advisers — said the US company tax cuts combined with regulatory reform had worked “very, very well”.

Wilbur Ross should have added a note of caution to his Aussie Allies Down Under as shown by the latest data from his own Bureau of Economic Analysis (BEA) in his own US Department of Commerce as released on 24 July 2019:

Direct Investment by Country and Industry, 2018

The U.S. direct investment abroad position, or cumulative level of investment, decreased $62.3 billion to $5.95 trillion at the end of 2018 from $6.01 trillion at the end of 2017, according to statistics released by the Bureau of Economic Analysis (BEA). The decrease was due to the repatriation of accumulated prior earnings by U.S. multinationals from their foreign affiliates, largely in response to the 2017 Tax Cuts and Jobs Act. The decrease reflected a $75.8 billion decrease in the position in Latin America and Other Western Hemisphere locations, primarily in Bermuda. By industry, holding company affiliates owned by U.S. manufacturers accounted for most of the decrease.

The foreign direct investment in the United States position increased $319.1 billion to $4.34 trillion at the end of 2018 from $4.03 trillion at the end of 2017. The increase mainly reflected a $226.1 billion increase in the position from Europe, primarily the Netherlands and Ireland. By industry, affiliates in manufacturing, retail trade, and real estate accounted for the largest increases.

US Investment plays a relatively minor role in the Asia Pacific Region compared with commercial interactions with Britain and Europe as well as countries in the American Hemisphere from Canada to Central and South America:

Making America Great Strategies have resulted in a decline in US Capital Flows across the Asia Pacific Region between 2017 and 2018. Australia is an exception to the regional trends and provides the US with highly favourable surpluses for trade in commodities and services as well as capital flows.

Days after this visit to Australia by Wilbur Ross, President Trump announced new compromises in his trade and investment war with China that undercut our own export gains in the Asia Pacific Region in favour of new export incentives from the US farm lobby.

The honeymoon after the last election may still be in session. As the rhetorical euphoria continues, it is time for Aussies to do a fact check of our unfavourable commercial relations with the USA. The Trump Administration has left Australians high and dry in a slowing global economy as the Trade and Investment War is replaced by a new Lovefest with China to the cheers from the US farm and resource sector lobbies which are our real competitors on the world market.

It’s surely time for our federal LNP leaders to show a spark of independence in defending Australia’s commercial sovereignty within the Australia-US Free Trade Agreement as President Trump focuses on his re-election strategies for November 2020.

Denis Bright (pictured) is a member of the Media, Entertainment and Arts Alliance (MEAA). Denis is committed to citizens’ journalism from a critical, structuralist perspective. Comments from Insiders with a specialist knowledge of the topics covered are particularly welcome.

 

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Short Term Tony

“You can always amend a big plan, but you can never expand a little one. I don’t believe in little plans. I believe in plans big enough to meet a situation which we can’t possibly foresee now.” (Harry S. Truman).

Whilst there has been much speculation about whether our Prime Minister will become One-Term Tony, another title is already definite. Tony Abbott will most certainly be remembered as Short-Term Tony.

The short-sightedness of the Coalition is seen in their approach to pretty much all of their decisions. Immediate political expediency outweighs the greater good. Priorities have been shifted from safety for our most vulnerable to increased wealth for our richest. Planning beyond the next election is basically non-existent.

Action on climate change is one glaring example of this. As the rest of the world gears up for the inevitable move from fossil fuels, we repeal carbon pricing, approve huge new coal mines, get rid of the profitable Clean Energy Finance Corporation, renege on our Emission Reduction and Renewable Energy targets, and sign Free Trade agreements that will allow foreign corporations to sue us for laws which may affect their profitability. We remove the right of challenge to environmental approvals, and abandon development of renewable energy industries.

As the rest of the world recognises the need for fast, reliable broadband speeds, we are spending billions on a national broadband network that will only deliver those speeds to a very small percentage of the population. This will limit the benefit of the system and have flow on effects in housing and rental prices. We are building infrastructure that barely copes with today’s needs let alone the explosion of future applications this technology will undoubtedly unleash.

To date, Australia has avoided the high unemployment levels seen in other countries, but there are warning signs that it is on the increase. Slashing public service jobs and assistance to manufacturing industries is only serving to exacerbate the problem. Rescinding the instant asset write-off for small business removes one small avenue of assistance for the largest employer in Australia. Scrapping trade training centres will add to the skills shortages that will see more foreigners on 457 visas occupying jobs that our children and unemployed should be training to fill.

Refusal to guarantee funding reform in the education sector beyond four years indicates that the notion of needs-based funding will be scrapped as soon as they feel they can get away with it. The states who signed up late to the deal have already been released from their obligation to co-contribute and to have their funding dependent on assessed progress. Rewriting a curriculum that has just been developed after extensive consultation seems an unnecessary waste of time and money.

Much has been made of Tony’s desire to be the ‘infrastructure Prime Minister building the roads of the 21st century’. Once again, this appears a very short term goal when we should be concentrating on urban and high speed rail as alternatives to road transport. Cars contribute to pollution and congestion in our cities where parking has become a luxury, and the rising price of petrol is an increasing burden on our cost of living. Facilitating more people working from home or using public transport should be a priority.

We have been told that our welfare system is in danger of becoming unsustainable, sparking an overdue review. With our aging population, the old age pension will become an increasing burden but, rather than encouraging low income earners to contribute towards their retirement through superannuation, Tony Abbott canned the co-contribution and the rise in the superannuation guarantee, thus reducing the capacity of the very people who would qualify for the pension to save towards their own retirement. At the same time, he has allowed very wealthy people to use superannuation as a legal way to avoid paying taxation.

Instead of increasing taxation and closing loopholes, Tony announces an amnesty for rich tax cheats so anything they got away with over 4 years ago will be forgiven. The timing of this is baffling as the information and agreements necessary to prosecute these people have just been made available. Since this information-sharing has begun, the Australian Taxation Office has collected $1.7 billion, recouping half-a-billion dollars via these international exchanges just in 2012-13 alone.

Right at the time when mining companies are moving from investment to production phase, when we might see some return on the billions of dollars profit that these companies and individuals make developing resources owned by us, we rescind the mining tax. Contrary to what they would have us believe, mining is a very small employer in the Australian labour market, and the vast majority of their profits go off-shore thus being lost to our economy.

We are being asked to embrace a paid parental leave scheme that is not means tested and will cost billions each year, with women who earn anything over $150,000 a year eligible to receive $75,000 to stay at home with their baby for 6 months. At the same time we see wage rises to childcare and aged care workers rescinded and, in perhaps the cruellest move yet, the government wants the most vulnerable workers in the Australian economy – intellectually disabled employees in managed workshops – to waive their legal rights to a wage claim in return for a one-off payment of backpay. These workers, who are pressured to sign away their legal rights, are currently paid around $1.77 an hour.

By hiding the boats and infringing on Indonesia’s sovereignty, we are being asked to believe that we are successfully addressing the asylum seeker problem. By illegally incarcerating innocent people in dreadful conditions in off-shore detention camps, we are being told we are fulfilling our obligations to the Refugee Convention. By cutting foreign aid and ignoring human rights abuses, we are contributing to the reasons people flee thus adding to the huge numbers of refugees worldwide.

The promise of a surplus has receded to the unforeseeable future amidst cries of Labor mismanagement and crippling debt, though it is hard to take these cries seriously when one of Mr Hockey’s first actions was to give the Reserve Bank $8.8 billion they had not asked for nor expected. We shall see if the rumours of a short term gamble on the exchange rate are true if Mr Hockey attempts to withdraw dividends just prior to the next election.

We have seen the disbanding of advisory groups on climate change, preventative health, positive aging, and crime prevention. Instead we are paying polluters, charging for doctors, cutting aged care wages and superannuation, and locking up people who have committed no crime.

Rather than being a visionary government, we have been saddled with a myopic group whose overriding goal is re-election on the back of big business and billionaires, paid for by our poorest and most vulnerable. Tony’s short-term decision-making is, I fear, going to have very real long-term consequences, and none of them are good.

We told you things would be bad

I can’t disagree with this comment on The AIMN from Geoff of Epping:

The Coalition voters around Australia, are, mostly sane, hard working people who through no fault of their own have been cruelly duped by Abbott’s softly softly campaign, and will, in a very short time realise that they are not uppermost in Abbott’s mind. They were a means to an end, they have served their purpose.

But I might add that we told you so. We told you things would be bad.

We learn today that the government is coming under fire over its decision to scrap super payments for low-paid workers. Here’s the gist of it:

The Government is continuing to come under fire for its decision to scrap a superannuation payment for low-paid workers, after announcing yesterday it would also abolish a proposed tax on super earnings for the better-off.

The Coalition also wants to scrap the low-income super contribution, also introduced by the previous Labor government as part of its mining-tax package.

It gives up to $500 a year to help those earning $37,000 or less save for their retirement.

More than 500,000 sales assistants, checkout operators and food and hospitality workers will pay more tax under the Abbott Government’s plan to scrap the Low Income Superannuation Contribution which will mean 3.6 million low paid workers will lose a yearly tax refund of up to $500.

We told you this was going to happen in our post “Your vote might just be worth something after all”, where we wrote that:

If you’re a low income earner…

The Coalition would abolish the low income super contribution, which pays people who earn $37,000 or less per year up to $500 each financial year to help save for their retirement.

But to those Coalition voters around Australia, who are, mostly sane, hard working people who through no fault of their own have been cruelly duped by Abbott’s softly softly campaign, all I can say is . . .

… You voted for it.

We tried to tell you things would be bad.

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