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Turnbull needs to be less taxing

Wednesday 21 February 2018

“The ABC Removed A Story Criticising Government Policy After The PM Wrote A Cranky Letter,” said the headline on

Since writing her views on the subject Emma Alberici has been, in my view, unduly criticised. Her work though has been backed by Peter Martin, John Menadue and Greg Jericho which gives it suitable credence.

Her argument is being put forward by many independent economists and columnists who take an opposing view to the government.

But the PM wasn’t happy at all and acting like a petty dictator made the ABC delete it. It’s an argument that I have said on many occasions is going to be an incredibly hard one to win.The public are well aware that one in five companies pay no tax at all. They are also well aware of the many tax saving loopholes open to the rich and privileged.

Throwing their support behind Alberici, The Monthly reports that:

“Alberici’s right. Her analysis simply confirms what we already knew. A December dump by the ATO showed that 732 companies paid no tax in 2015–16. Stalwart investigative reporter Michael West has published a stinging series of articles naming and shaming tax avoiders, including this piece that names News Australia Holdings, Goldman Sachs, two Glencore companies and others, and says that around third of the biggest companies in Australia pay no tax.”

Greg Jericho at The Guardian wrote that:

Appearing before the House economics Committee the Governor of The Reserve Bank, Philip Lowe, said that the benefit of the tax cuts very much depended on how they were funded. He described the Trump cuts as “very problematic” because they were unfunded and would increase the size of the deficit. Lowe suggested that “if we were to go down the direction of having lower corporate tax rates, I think it would be a big mistake to do that on the back of higher budget deficits.”

“He said that if the company tax cuts were funded based on bigger deficits, “animal spirits could turn the wrong way”, especially if at some point the economy did slow down and stimulus was required. He also noted that the choice was essentially one of a cut in tax or government services. Tax cuts don’t pay for themselves – even Scott Morrison concedes the government will get back, through increased economic activity, only 37 cents in every dollar lost from the cut in company tax rates.”So either something else needs to be taxed more or government spending needs to be cut”

I would have thought this was rather obvious. There is nothing controversial about it at all. It has been reported that because it was Ms Alberici’s first piece in her new roll as chief economics correspondent up to eight editorial executives and lawyers went over her article.

Quentin Dempster on John Menadue’s Pearls and Irritations concurs, and:

“Obviously concerned that she had been thrown under a bus by her ABC superiors she pointed out via Twitter: “In 2001 I was a @Walkleys finalist for a story on tax minimisation”. She has made no further public comment as her work is being reviewed by the ABC’s internal complaints handling adjudicators. Her authority and reputation as the ABC’s chief economics correspondent is now at stake.”

Judith Sloan and The Australian newspaper (paywall) tasting blood, have together with gossip columnist Joe Aston from the AFR, made repeated personal attacks criticising Alberici’s piece since.

Twitter was busy.

John Quiggin tweeted:

No obvious factual problems, and Judith Sloan’s critique in the Oz doesn’t point to any. It’s opinionated, but then, as I understand it, it’s an opinion piece.

Craig Emmerson tweeted:

What is incorrect in the @albericie report? I’ve read it & there are no factual errors. It does contain opinion, but dozens of ABC journalists express opinions daily. Pulling down the story & still having it under review sure looks like censorship

Saul Eastlake tweeted:

“I didn’t detect any factual errors and the quotes she attributed to me were accurate and in context.”

The problem as I see it is that Turnbull, Morrison and others have invested a lot of economic credibility into their proposed tax cuts and they need to win the philosophical argument. At present they are losing it.

Hence they will attack anyone who disagrees with them, including the ABC. However, it does look a little unseemly for a Prime Minister to be using his perceived power to stare down the ABC. Equally, it is unseemly for the ABC to be seen to be kow towing to a government drunk with power.

The simple fact is that the economy has been chugging along very nicely on government (borrowed) spending. If that is to continue, they cannot also borrow for the tax cuts. Either something else needs to be taxed more or government spending needs to be cut. Which is it, and how is it to be done?

My thought for the day

“Less informed voters unfortunately outnumber the more politically aware. Therefore, conservatives feed them all the bullshit they need. And the menu generally contains a fair portion of untruths.”

 258 total views,  2 views today


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  1. Don A Kelly

    The basic Income – Expenditure model in macroeconomics can be viewed in two ways, sources of spending and uses of income produced.
    (Govt.Spending – Taxes) + (Private Investment – Private Savings) + (Exports – Imports) = ZERO.
    All these relationships hold as a matter of accounting and not as a matter of opinion.
    If the Private Domestic Sector spends less that it earns (tend to save) and the nation runs a small external deficit, ie. Imports are greater than Exports, then the Government Fiscal position will always be in DEFICIT.
    If the nation is running a Current Account deficit, ie. Imports are greater than Exports, which is accompanied by a Govt. Sector SURPLUS of equal size, then the Private Domestic Sector will always be spending more than it earns, (borrowing or credit card spending).

  2. helvityni

    Not so long ago it was Yassmin Abdul -Magied’s turn, now it’s Emma Alberici’s…what going on there on their ABC…?

  3. Don A Kelly

    Appearing before the House economics Committee the Governor of The Reserve Bank, Philip Lowe, said that the benefit of the tax cuts very much depended on how they were funded. He described the Trump cuts as “very problematic” because they were unfunded and would increase the size of the deficit.

    Compare the above to what Alan Greenspan (former President of the Central Reserve Bank) said when he was called as an expert witness at a Senate Enquiry into Social Services sustainability. Under oath, Greenspan said, “It doesn’t matter whether the question is about Social Services, it could be about Defence Spending, it could be about Infrastructure Spending, it could be about Student Debt, it could be about anything. The fact is the Federal Government can always fund its spending. The Federal Government has no financial constraints.”

  4. Bert

    More tax cuts for the big end of town means more kicks in the guts for those at the bottom. I.E pensioners, unemployed etc. etc

  5. Wam

    The conservative feed the bullshit and the workers have no rejoinders QED. He rabbott fed the bullshit and gillard, with one marvellous exception, took it on the chin leaving the workers to unravel the rabbott’s debt threats on their own. As lord john suggests, the less informed voters (once termed those too ‘politically dumb’) grow on believable lies.
    Up to you billy go for it or retire injured.

  6. Graham

    Losing control of the narrative feels like the death of self-importance to those with a big head.
    Emma’s article exposing the ‘trickle down’ theory as rubbish is not new. However, it seems to have hit a raw nerve at the right time, effectively nuking any attempt by the LNP to sell $50B in tax breaks for their sponsors/corporate grifters in the lead-up to the next election. Thanks Emma. Such reaction to a factual article shows the LNP as authoritarian and without interest in the wider community good.

    LNP, Federal and State, are fails. As an example of local incompetence (WA) LNP, when last in power, awarded a $4.8B contract to Serco for management of a hospital, all without preparing a business case. We need an ICAC now:

  7. jagman48

    She will leave the ABC over this.

  8. Ricardo29

    The Mudrake rags continue to drag out and showcase economic dinosaurs l8ke Sloan, but I hope the widening debate about Alberici’s article, the bullying response from Turnbull, Morrison and Fifield and the craven response from the ABC will filter out to the proles, sufficient that they see the LNP government for the bunch of shysters they are. Put the LNP last.

  9. Ian Hughes

    This critique, by Prof Bill Mitchell, is the most in-depth I have read on this subject. It’s lengthy but well worth reading. “Censorship, the central bank independence ruse and Groupthink”.

  10. Glenn Barry

    jagman48, I sincerely hope she doesn’t leave the ABC, I still miss lateline and will continue to do so.

    I am loathe to witness more infiltration of former murdoch minions

  11. Glenn Barry

    correction that should be infiltration by

  12. Egalitarian

    I almost wept for Jennifer Westacott of Business council of australia speaking on RN Breakfast this morning. The terrible names people are calling Multinational Companies and Big Business. She is demanding the Tax cuts for Companies.She portrayed BB as really hard done by group.Comon now everybody sing “Tax Cuts now”.For Big Business.They almost need a Union for protection.It’s just awful what people are saying about them.

  13. Glenn Barry

    OH le petite pauvre Jennifer Westacott at ses amies les societes grandes.

    One the rare occasions that I have seen her speak, she does her job just fine, in that she presents a completely one sided pro business case whilst keeping the tears at bay.

    Compare her with James Pearson who a business only fundamentalist zealot, she seems moderate, however she is still completely blinkered

  14. Ill fares the land

    Conservative governments, business interests, IPA hacks and various other right-wing luminaries have for decades mounted precisely that sort of attack on anyone who threatens their cosy little cliques and might curb their capacity to accumulate wealth. The reality is that our stupid and vapid politicians can research as well as I can – and they pay staff to do it for them and unfortunately for them, there is no compelling evidence that has been compiled anywhere that suggests tax cuts for corporates result in benefits flowing to workers and to the economy generally. So then, why do they peddle this tripe? Because there are benefits, but not for the majority, but business and their handmaidens in the Parliament don’t won’t that known, so they peddle the lie that it is goof for all. It is a common theme and a game played out on a regular basis by our political masters (I simply can’t use the word “leaders” because I think they are anything but).

    Moreover, for the last 50 years, or so, the anti-smoking proponents were attacked and their science alleged to be wrong, or doctored – of course they were right all along. The lady who started the movement against pesticides and DDT in particular was viciously and relentlessly attacked. The idea of installing seat belts and then airbags – well, you can imagine what big automotive thought of those little imposts. Climate change, acid rain, the ozone layer – the list of issues that has mobilized the standard attacks by the usual vested interests is very long and the methodology is the same every time. In fact, often, it is the same people being recruited (right wing mercenaries if you like) to help the captains of industry dupe the public and lobby governments. For anyone interested, I refer you to the book “Merchants of Doubt” by Oreskes and Conway. Likely not the only book written on this topic, but it opens eyes.

  15. Andreas Bimba

    All the greed obsessed corporate cowboys, their lobbyists, think tanks, compliant politicians, staffers, academics, journalists/propagandists and bureaucrats and hangers on, wouldn’t fill a minor stadium, yet we let them dictate the terms for our governments and economy. What democracy is it when both major party blocs in the main, implement their agenda and ignore the best interests and will of the electorate?

    I also agree with Don Kelly and Ian Hughes that even though Emma Alberici is right about the appalling levels of tax evasion by so many major corporations she is also a neoliberal for spreading the false belief that federal deficits are dangerous and represent debt that must at some point be repaid. This false belief locks in high levels of unemployment, underemployment, inadequate government services and stagnant living standards as well as an ability to face major challenges like global warming effectively enough. Bill Mitchell provides the best appraisal of her reports and treatment.

    Censorship, the central bank independence ruse and Groupthink

    The US government during the WW2 mobilisation ran one year deficits up to 28% of GDP (1942). They didn’t tax or borrow this money but the FED simply issued the additional money. Inflation only hit 12% and this rapidly subsided as material shortages were soon met by an expanding economy. The GDP of the US doubled over the mobilisation period. Australia issues government bonds that match dollar for dollar any deficits but these bonds do not fund the deficit, RBA issued money does and this money does not need to be repaid. The interest on bonds is met with more issued money. Bond issuance is a convention that can be halted at any time through the appropriate legislation. Canada does not issue government bonds to match their federal deficits.

    No mass media outlet tells the truth regarding national government fiscal policy. Fortunately the Modern Monetary Theory economists have produced a wealth of books, academic research and online material.

  16. jimhaz

    So we have Turnbull in the US with a mob of super fund investors supposedly ready and willing TO INVEST in US infrastructure. Money owned mainly by average people.

    At the same time we have a large corporate tax cut where the main STATED purpose is to ATTRACT INVESTMENT. Money owned mainly by wealthy people.

    So we go to invest ordinary peoples retirement funds in a decaying US with a 20 trillion dollar debt, so they can lose it (in recent times most of our overseas infrastructure investment has been an utter failure – Various Banks, Macquarie, Bunnings all have had big losses) and we lower our tax rate to enable non-Australian money to invest here, or buy up the farm so to speak.

    We have no hope.

  17. Kaye Lee

    Apparently Nationals MP Andrew Broad has publicly called for Barnaby to resign. He is about to give a presser shortly. Does this mark the beginning of Barnaby’s demise?

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