“I tell you what, if you go down the pub and you talk to small business people, they’re not talking about econometric models,” said our Treasurer Scott Morrison when asked about modelling to justify his legislated and proposed tax cuts.
He may well be right, but, personally, I would prefer our economic policy to be informed by evidence and evaluated by experts rather than the guys in the public bar.
The Coalition is going out all guns blazing this year to spruik their economic credentials and to push for further tax cuts but there are some things the guys in the pub should be made aware of.
Since the Coalition won government in September 2013, there are 8,600 more people unemployed and those that are employed are working, on average, 1.34 hours less a month.
Whilst tax cuts for small businesses may have been politically more palatable than for the top end of town, there is absolutely no evidence that it will deliver any benefit for the $24 billion loss in revenue.
Small businesses, those with fewer than 20 employees, account for about 45 per cent of the private sector workforce but generated just 5.2 per cent of the increase in job growth in the five years to June 2015, according to Australian Bureau of Statistics data.
By comparison, large businesses —those with 200 or more employees — account for 32 per cent of the private sector workforce but generated 66 per cent of the increase in job growth for the same period.
Whilst that may sound like an argument to cut taxes for large corporations, the reality indicates otherwise.
The 2017 financial year saw a 21% increase in corporate profits, reaching an all-time high of 82147 AUD Million in the first quarter of 2017, whilst wage growth declined to record lows.
Scott Morrison, the man who doesn’t like modelling, also seems adverse to looking beyond headline figures. He tells us that our corporate tax rate of 30% makes us uncompetitive, completely ignoring the franking credits that shareholders receive and the generous deductions that our system allows for things like accelerated depreciation and cross-financing which actually reduced our average corporate tax rate in 2012 to 17% and, more importantly, an effective tax rate of 10.4%.
This ignoring of the facts to promote political goals does not auger well for the new but very secret TPP11.
Steve Ciobo told Radio National the deal would increase access to Japan for Australian beef producers. I thought that’s what we just did when we signed the free-trade agreement with them a couple of years ago.
Presumably, it also increases access to Japan for Canadian beef producers.
In April 2017, Farm Weekly reported that, despite having signed a free trade agreement with Korea in December 2014, volumes of Australian beef exports to Korea “reduced significantly with the US competition an increasing challenge.”
Most concerningly, the High Commission for Canada in Australia says on their website that “Australia’s overly cautionary-cum-protectionist quarantine measures can effectively limit agricultural imports.”
I sincerely hope Barnaby hasn’t insisted that we relax biosecurity though, with his cavalier attitude to climate change, water security and animal welfare, I wouldn’t put it past him.
Labor has called for independent appraisal of the proposed TPP before we formally agree but the government is refusing.
Someone who can truly assess the effect on local industry and jobs, not just talk to one or two niche exporters and industry lobbyists, needs to look at the wider consequences before we sign on the dotted line.
When your Treasurer ignores factual analysis, doesn’t believe in econometric modelling, and wants to keep deals a secret, that is a real worry.