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What I’ve Learned From Listening To The Liberal Party!

“No country ever taxed its way to prosperity!”

“What about Norway?”

“They don’t count.”

“Why not?”

“Because I don’t know enough about them. And besides, they don’t fit my basic point and as any economist will tell you, if some piece of data doesn’t fit the theory you just call it an outlier and move on, and concentrate on the bits that prove you correct.”

Now it’s going to work like this.

I want all of you to send me $100. Ok, if you can’t afford $100, just make it whatever, but if I get $100 from everyone in Australia, then my plan to make Australia great again will be a lot easier to implement because I’ll be a billionaire and not just a millionaire.

When I’ve received the money, I’ll actually have enough to start doing things with it. But before I do that, I’ll have to lobby the government to make me tax except because, let’s face it, if I’m being charged tax there’s no incentive for me to do anything.

Once I have the right not to pay tax, it’ll save me the trouble of employing Malcolm Turnbull’s accountant so I too can work out ways to send my money on a holiday to the Cayman Islands and I can get started on my aim to boost the economy.

Of course, when starting up a business, it takes a while before it’s profitable, so while we’re waiting for that tax exemption to actually mean something, I’d like to offer you all the chance to work for me. Because I’m intending to employ people with limited experience, I’m not going to pay you anything, but I’m sure I can have a word to Scott and he can count it as part of a work-for-the-dole scheme.

While I realise that there won’t be enough people with actual skills ready to work for no money at all, I’ll be bringing in a thousand workers on 457 visas. Before you go off all half-cocked, remember that these people will stimulate the economy with their needs for things like food and shelter because I can only sleep about fifty percent of them at my place of business so I intend to put the other five hundred in a motel. And I have just the motel because it has twenty rooms, so they won’t be more than twenty five to a room.

Now we’ve reached the point where my business has to actually do something. Ok, this is a bit of a stumbling block because I realise that if it was manufacturing anything then I could do it more cheaply in China. But after careful thought, I’ve decided that I could run a consultancy business. When the Federal Government wants advice on something they could give me a call and for a reasonable fee, I’ll issue a report telling them that they can go ahead and do what they were planning because I’ve handed it over to my 457 workers and none of them could find any problems with the plan. Not even the ones who could speak English and actually read the proposal.

However, I realise that there’d be a limit to how many times the government would need advice from me, so within a year or so, I’d be bankrupt and I’d only be allowed to keep my new house anc car, and I’d be forced to live off my family’s savings which thanks to their income as directors of my company, would be enough to enable me to eat, even if it’s not at the absolute top restaurants and I have to remember not to order the Grange.

All right, I know it may not make Australia great. But at the end, my family will be quite well off and we won’t have to depend on welfare and be a burden, so isn’t that a good thing. And all it takes is a hundred dollars from everyone…

If you read yesterday’s Herald-Sun you would have learned two very interesting things: Scott Morrison thinks that it would be a good idea to raise the GST to 15% and apply it to everything, enabling tax cuts which would “grow the economy” (Page 12 small column) and Peter Costello is an idiot.

Now, I know that some of you are thinking. How does applying a “great big tax on everything” actually equate to a tax cut? Well, it’ll enable them to cut company tax to twenty two cents in the dollar and all those companies paying exorbitant taxes will suddenly have greater profits. But I’ll bet some of you are confused about how a cut to company tax will boost profits when so many of the companies are paying more in Liberal Party donations than they’re paying in tax. And I’ll bet all of you are confused that the so-called carbon tax was supposed to be a dampener on economic activity but adding five percent to everything will boost growth. Actually, not five percent on everything. When it comes to fresh food, health and education, it’ll be a fifteen percent increase. But the Financial Services Council gave Scott a report and there’s one thing you don’t question, it’s a report telling you what you want to do. (See there is a good business case for my proposal!)

As for Peter Costello being an idiot, I am overlooking the possibility that he could just be pretending. I mean, he used to do a lot of that when he was Treasurer. He used to pretend that all the good things that happened were a result of his work, whereas everything bad was because of Labor. Even when he sold gold for about $300 an ounce and its value skyrocketted over the next ten years, this may not have been because he was an idiot – he was probably just trying to fit in with the Liberal Party and show that he too could make mistakes. And surely when he suggested that he thought that John Howard would stand down, because that’s what he promised and surely you could trust a promise from John Howard, he was showing the sort of comic genius that made Barry Humphries a household name.

However, his article on how we were being forced to lose all our money because of the super guarantee made me suspect that maybe the man hasn’t been pretending all these years.

He starts off by telling us how much the stock market has gone down this year. Yep, it’s a lot: about eight percent. But anyone who invests in the stock market will know that it has fluctuations and if you try and judge performance over a two week period, it’s like deciding to become a professional gambler because you picked the winner in the Melbourne Cup. Costello then goes on to tell you that you’re being forced to put your money into the share market because of the super guarantee. This overlooks, of course, that most super funds give you options and you could opt to put your superannuation into fixed interest. However, as Costello points out in the article, interest rates are low and it’s hard to get a good return which is why superannuation funds go for shares, which are more volatile – or as Costello says, riskier. Of course, he doesn’t acknowledge that interest rates are low because inflation is low and that you are getting a return above inflation and that a three percent return on your money when inflation is two percent is actually better than a ten percent return when inflation is fifteen percent.

He concludes by telling us that the Australian Share Market is 30% lower than it was eight years ago, but doesn’t point out that it’s actually about twenty percent higher than it was ten years ago. Significantly, however, he doesn’t actually talk about super funds when making the point about the Australian Share Market, and given that most super funds are a mix of cash, overseas equities, as well as the Australian Share Market, I’d be very surprised if any of them have actually lost money over the past eight years. While I know that a lot of people received a sizeable downgrade in their wealth when the GFC hit, if you look at the performance of money in a superfund from 2003 to 2013, the average rate of return for the big funds was around 6% per annum, so even with the big losses during the 07/08 year, you still did ok over a ten year period.

Of course, careful analysis doesn’t suit the idea that somehow the government is robbing you by forcing you to put aside 9.5% of your income into funds which have lost billions in the past week. Never mind that the same Aussie share market may bounce back billions in the next few days and actually be worth much more than they were at the start of the previous year.

Nah, convince people that they don’t need super. And convince ’em that they don’t need the pension either. Convince ’em all that they just need to be independently wealthy.

Actually, don’t send me the $100. If we have the Liberals in charge much longer, you may need every cent.

 

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28 comments

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  1. Susan

    Great article thanks once again?

  2. Jaquix

    Beats me how on earth raising one tax, so you can lower another, is going to “grow the economy.” HOW ? Scott Morrison doesnt know what he is doing, they are just clutching at straws. Meanwhile all the BIG items like tax concessions to high income earners so they can move their money to their super accounts (the local equivalent of Cayman Islands?) . That is purely a SPENDING item, Mr Morrison, if you are giving it away, you are in fact “spending it”. There are plenty of other such opportunities, all of course being studiously ignored by the Liberals. That would fix an awful lot of things in one go, but then the Liberals would not be able to indulge in so much fiddling with the affairs of the lower orders, which is really their obsession.

  3. Wally

    Great article rossleigh.

    Definitely no shortage of material on offer in the MSM to prove the LNP are a bunch of idiots with no idea what they are doing.

  4. JohnB

    Costello is the Chair of the Board of Guardians of the ‘Future Fund’ – ~45% of those funds are invested in ‘equities’.
    Are not ‘equities’ effectively shares in major companies?

    What is his recommended plan to insulate the Future Fund from share market exposure?
    Does he know of another world in which to invest large amount of funds that are not exposed to global financial market gyrations?

  5. Roswell

    Rossleigh, you shouldn’t have been listening to them in the first place.

  6. lawrencewinder

    Great piece…. what a shambles this ruling rabble is making of the country!

  7. Max Gross (@Max_Gross)

    Great work! One of the best, astute and acute unpickings of the LIEbral “mind” that I have read in yonks. Thank you, Rossleigh!

  8. Bacchus

    Beats me how on earth raising one tax, so you can lower another, is going to “grow the economy.” HOW ?

    Easy Jaquix – it’s that special magic pudding called the “trickle-down”** effect => Scotty’s taking all that extra money from the plebs, who obviously don’t need it, and giving it to his mates in the larger businesses that fund his election campaigns because they are smarter than the plebs, so can obviously make better use of it 😉

    ** aka the super-rich peeing on the rest of us from a great height…

  9. Graeme Henchel

    The point of Costello’s idiotic essay in the Murdoch muckraker was not so much to denigrate super but to add support to the coalition’s goal of changing super laws so that so called “independent” board members must be appointed and that employees will have the “Choice” to go into underperforming high fee paying retail funds. This is just another attempt for the rapacious rent seekers of the Neo conservative right to get their filthy hands on workers savings. We all know what “independent” and “choice” mean in the double speak world of the coalition.

  10. Neil of Sydney

    Costello then goes on to tell you that you’re being forced to put your money into the share market because of the super guarantee. This overlooks, of course, that most super funds give you options and you could opt to put your superannuation into fixed interest.

    I think you might be missing the point. I think Costello is saying you are being forced to put some of your income into Super when you could be using it to pay off your home loan. Many conservatives think Superannuation is a mistake.

  11. Jaquix

    Bacchus – yours is the best desctiption Ive seen about trickle down…..

  12. diannaart

    Far-Right economic intelligence quotient – beautifully explained by Rossleigh, goes along with reducing penalty rates to enable employers to make squillions of $ that they’ll give all their workers a pay rise.

  13. win jeavons

    If this is trickle down, when the seniors’ supplement has just been savaged, then some one has a serious prostate problem.

  14. John Lord

    Increase the GST so that we all contribute to a lower tax rate for companies who don’t pay any. I confess I’m struggling.

  15. PJP

    I’m skeptical that super funds will be there when I retire and that funds are untouchable anyway so a rate of return beating the CPI by a couple of points to me is not so important. What is important though is the fact that some governments have already seen fit to raid the peoples’ retirement savings, even bank deposits, remember Cyprus? And I don’t mean to peddle doom porn but I can’t help thinking these are just signs of the things to come as the world economy is ‘dismantled’. The crooks in government here are just as capable especially if it’s deemed to be in the ‘national interest’ or for the ‘greater good’. Usually they like to steal our money through inflation (which just another form of taxation) but these days outright theft will do just as well thanks very much.

    http://news.goldseek.com/GoldForecaster/1330480800.php

  16. Rossleigh

    Didn’t Cyprus happen because a private bank went belly-up and the government had to bail it out? Rather than the government “stealing” the people’s money wasn’t it a case of them actually getting something rather than nothing?
    I’m not really up with Cyprus but that’s my recollection of it.
    As for your scepticism about super funds, I wonder where you think they’re going. And the funds are “untouchable” until you reach a “preservation” age. I’d be more concerned with the government tinkering with the preservation age than the super funds themselves being stolen by the government.

  17. Philip

    Yes. They’re a shambles. And the hypocrisy of wanting to increase the GST after having spent years telling us the carbon “tax” would be a wrecking ball through the economy is breathtaking.

  18. Adrianne Haddow

    PJP, on the matter of super ends being available when you retire. Not bloody likely.

    My super scheme has, at the direction of the best PM since Tony Abbott, partnered my super scheme with a venture capital firm.

    Not too happy or hopeful that the funds I need to see me through to death will be used in the ‘innovation’ policy this government claims will be the saviour of our economy.

    Hand outs to start up businesses should not come from the life time savings of ordinary people when the likes of Gina and Broadspectrum pay no tax.

  19. Neil of Sydney

    Beats me how on earth raising one tax, so you can lower another, is going to “grow the economy.” HOW

    I am not for a GST increase but i can answer that question. Apparently the GST is a very efficient tax to collect. Income tax requires a huge tax office to administer, collect and audit the tax plus huge numbers of tax advisors. GST does not need anywhere near that number of people to collect.

    An interesting thought is that we could raise the GST to 20% and get rid of income tax. Getting rid of income tax would result in a huge productivity increase.

  20. jimhaz

    I’ve always had a problem with compulsory super fund investments in the stock market. I’d allow a maximum of 15% on existing stocks.

    What it does is supply more money for the SAME profits. Increasing a stock’s price does not itself provide the company with any extra resource as a result (other than providing higher security for loans and enabling share issues for funds), so this means they will produce much the same regardless of the stock price. All this means is that the return on the investment decreases as it now takes more capital for the same profit return. Sure they can issue more shares and obtain funds for expansion thus achieve growth that way – but I reckon most of them just buy out competitors at inflated prices, thus there is no real growth.

    Far more of the super capital needs to actually be under GREATER risk, not lower risk as per Costello, because a far greater proportion should be applied to fund real growth (which yes would need to be highly regulated and controlled). That they are not allowed to take greater risk in real direct capital investment (not the high risk derivatives scams), might suggest Keating set up a rigged game – that it was set up to produce an wealth creating opportunity for the already wealthy – there being no chance of a 1930’s stock market crash. Allowing them greater freedom for say direct investment in housing would most likely have meant lower pricing now, and would have helped to ensure more regular low level recessions to clear out some of the fat cat leach deadwood in financial markets.

  21. Henry rodrigues

    What the Coalition practice is a kind of voodoo economics, Scott Morrison is just as economically illiterate as Hockey. Raising any tax is the equivalent to sucking money out of the economy, not something to do when facing a slowdown. And then to cut company tax rates is somehow going to increase jobs, at the same time as bringing in more third world workers at very low salaries ? Not recognizing and accepting that we have a revenue deficit and not a spending splurge is just a pig headed approach to a very volatile and potentially disastrous situation.

  22. Chum Bucket

    @ Roswell
    January 20, 2016 at 12:30 pm

    “Rossleigh, you shouldn’t have been listening to them in the first place.”

    You don’t listen, you don’t learn.

    But heck… You have a history of that.

  23. Wally

    Neil of Sydney

    “Apparently the GST is a very efficient tax to collect. Income tax requires a huge tax office to administer, collect and audit the tax plus huge numbers of tax advisors. GST does not need anywhere near that number of people to collect.”

    What a load of shit, you obviously have not operated a business to come out with such a naïve comment. Typically in small business the same staff manage GST and PAYE (income tax) reporting and payment, in fact both are reported on the same form (BAS statement).

    GST reporting is very time consuming, every business transaction has to be added to a ledger and the GST collected or paid recorded before totalling all of the information. GST reporting is beyond the capabilities of most sole traders and many small business operators so they engage accountants or bookkeepers to perform what is required to meet their GST obligations.

    The Liberal Party like GST over income tax because it reduces the total tax paid by wealthy people and increases the tax paid by low income earners. GST also bolsters business for accounting firms and it is very transparent making it difficult to cheat.

  24. totaram

    “GST also bolsters business for accounting firms and it is very transparent making it difficult to cheat.”
    1. You have not heard of the “cash” economy.But I agree all your other points are correct.

    2. The GST is a regressive tax as everyone knows.

    3. Neil of Sydney is well known for parotting LNP talking points without really understanding anything. He is totally incapable of explaining how the “carbon tax” was a “great big tax on everything that would put the economy into a python squeeze”, so removing that tax “freed up” the economy, while increasing the GST by 50% will actually grow the economy.

    4. His statement totally ignores the fact that the there are already people collecting Income Tax, Medicare Levy, etc. and dealing with superannuation taxation, so changes in these would not require many more people. Admittedly going after corporations who avoid tax by doing dodgy accounting may require more people, but this government just fired 100s of people from the ATO (guess why).

    5. These people like Joe Hockey and Scott Morison are stupid because they don’t understand macro economics, but they have very clever advisers (IPA, BCA, MCA etc.) who tell them what is required if they want to keep getting the donations they need. As long as the politicians follow the script and the talking points they will get their just reward when they leave politics – nice board positions can always be arranged.

    6. Peter Costello was so clever he organised his own board position by inventing the “future fund”, which supposedly invests for the future superannuations of public servants. While earning a fat salary for sitting on this board, he actually lectures poorer workers on why investing in super is a bad idea! You cannot make up the stuff these people indulge in, and the amazing thing is they get away with it! So is he stupid? No! He is a charlatan, plain and simple.

  25. Wally

    totaram

    “You have not heard of the “cash” economy”

    Without doubt there is a certain amount of cash in hand work but how much each business can do is limited. In the electrical industry labour and materials run at about 50/50 +-10%. How many cash jobs can be done while still claiming GST input credits on materials is limited and this is the transparency I refer to. If your input credits and GST receipts go out of balance from what is typical it is obvious.

    Tradies who do a lot of cash in hand generally pay cash for the materials and do not claim GST input credits so the government still collect GST on the materials. I had much more cash work pre GST than post GST but there were many changes to my business that could have contributed to that. I have also noticed that businesses who barter with each other include GST in the bartering so they still comply with the GST act even though the transactions never see the light of day.

  26. Mal Cayman

    I’m still waiting for the pay rise promised to me in lieu of the rise in the Superannuation Guarantee Contribution.

    You know: “the money’s better in workers’ pocket than going in to superannuation”

  27. Ken Wolff

    Your analysis didn’t go back quite far enough. I know, because I was following the share market for my own super, that the ASX index in 2000 had reached somewhere around 6400. That was during the ‘tech bubble’. I lost money in my super when the ‘tech bubble’ burst but what I find most interesting is that the ASX index has not been that high since. While I do not fully understand such things, that does suggest that the value of shares was highest back in 2000 and has come nowhere near that level since (even though some overseas countries have seen their stock indexes reach new records in that time).

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