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When the wealth of the few is more important than the well-being of the many

According to Scott Morrison, he is being “honest” with the Australian people when he warns that Labor will decimate the economy with $200 billion worth of higher taxes.

Let’s examine that in a bit more detail – not Scott’s strong suit.

At a business summit in Sydney, ProMo promised that he “will maintain the continuity of the policies that have been so successful in restoring the budget.”

Pardon?

The Coalition are about to hand down their sixth budget and they are yet to deliver a surplus.  There have been countless promises of one, but you don’t get to count a promise as a success until you deliver on it.

Despite “higher than expected revenue, lower expenses and lower net capital investments” than predicted in MYEFO, at the end of January, the underlying cash balance for the current financial year was a deficit of almost $22 billion and net debt was over $373 billion.  The net debt at the end of August 2013 was $161 billion.

No gold stars there.

So how about policies?

When Peter Costello introduced a 50% discount on capital gains tax back in 1999, he skewed both the housing market and the tax system heavily in favour of landlords over first home buyers.  Prior to that, negative gearing did not cost the budget anything because roughly equal numbers of people were making rental profits and losses balancing the tax situation out.

As Richard Denniss points out,

Since Costello introduced the capital gains tax discount, the “smart money” has bid up the price of houses beyond their capacity to ever generate a rental profit, in the hope that the low-tax capital gains made the whole venture eventually worthwhile. The annual cost of negative gearing has blown out from around zero to $1.6 billion. And the capital gains tax concessions on investment housing now cost a further $3.7 billion per year.

A policy that costs billions in lost revenue and makes housing unaffordable for those hoping to buy their first home is hardly something to be proud of.

Costello was also responsible for making superannuation income tax free and for allowing people to make a voluntary tax free contribution of $1 million in one year.  Tax concessions for superannuation now cost the budget more than $46 billion per year, and will soon cost more than the age pension.  Even the Coalition have recognised this is not sustainable.

Another of Costello’s concessions that the government is fiercely defending is the ridiculous situation where people can claim a refund on tax they haven’t paid through excess franking credits.  We are constantly told that the majority of people who would be affected by Labor’s policy to stop this are poor retirees.

The Grattan Institute points out the perfidy of this line.

Take the example of a self-funded retiree couple with a $3.2 million super balance, plus their own home, and $200,000 in Australian shares held outside super. Even drawing $130,000 a year in superannuation income, and $15,000 a year in dividend income, they would report a combined taxable income of just $15,000, and pay no income tax whatsoever.

With pensioners excluded, this policy change will only affect people who already have significant assets and/or income.

Another tax avoidance measure that Labor are targeting is family trusts where income is shared between family members thus lowering their individual tax obligation.  Normal PAYG employees are not able to do this.  The Coalition have been quieter on this measure because they know it has been abused and recognise it probably should stop.

So back to the $200 billion.

This is the extra revenue that the Coalition estimates that Labor will raise over the next ten years but the vast majority of it comes from not proceeding with the second and third stages of the government’s proposed income tax cuts for high income earners.  Judging the impact on the economy of stopping tax cuts that have not yet begun is highly theoretical and, as we know, the government tends to just make up numbers rather than doing any genuine modelling.

It also ignores Labor’s proposed income tax cuts which would see everyone who earns less than $125,000 a year – that is, most Australians – hundreds of dollars a year better off compared to what the Coalition is offering.

Coalition policies got the budget in trouble in the first place.  They facilitate tax avoidance by those who can most afford to contribute at the expense of government services and payments to those who can least afford to pay.

If you call that success, then you patently care more about the wealth of the few than the well-being of the many.

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26 comments

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  1. New England Cocky

    There is about $160 BILLION PER YEAR available to any government willing and brave enough to curb the tax benefits presently enjoyed by the undeserving wealthy and corporates. In 2014 these items were:

    THE $150 BILLION SUBSIDIES TO WEALTHY CITIZENS AND CORPORATIONS

    Joe Hockey has set the standard: “The age of entitlement is over and the age of personal responsibility has begun. … Everyone has to help do the heavy lifting here”.

    YET, NONE of these government handouts to the undeserving wealthy and corporates were touched!!!

    Excessive tax cuts to filthy richest $15.8 BILLION
    Fossil fuel subsidies $12 BILLION
    (24 times the car industry subsidy that
    returned 200,000 jobs and $30 BILLION)
    Superannuation tax concessions in FY15 $36 BILLION
    Negative Gearing $ 6.8 BILLION
    Capital Gains discount on home to FY18 $19 BILLION
    Capital Gains discount (CGT) $ 9.1 BILLION
    CGT discounts for persons & trusts in FY18 $28.3 BILLION
    Imputed Rent Exemptions $ 9.6 BILLION
    Mining Industry Subsidies $ 4.5 BILLION
    First Home Vendors Grants $ 1.0 BILLION
    Private School Subsidies per year 09-13 $ 9 BILLION
    Private Health Insurance Rebate per year $ 5 BILLION
    Overseas housing for boat refugees per year $ 4 BILLION

    Total government handouts $160 BILLION

    Thank you R Ambrose Raven for this compilation.
    The Conversation 030514

  2. Keitha Granville

    thanks Kaye

    Obviously the 40% odd who will still vote for them fall into that category. It is always interesting to hear that we can’t afford pension increases, we can’t afford welfare benefit increases, but we can afford masses of free stuff for people who already have more than they need so they can have a second or third car, another overseas holiday and several nights a week out to dinner.

    It has to be stopped. The excess has to be stopped.

    I would like to see Labor take a huge swipe at the over generous benefits lashed out to MPs as well, but they prob won’t as they enjoy a few of their own snouts in the trough.

  3. Kronomex

    “Joe Hockey has set the standard: “The age of entitlement is over and the age of personal responsibility has begun. … Everyone has to help do the heavy lifting here”.”

    “We 10% are responsible for grabbing more and more money for ourselves and you 90% are there to make sure that your cash keeps flowing into our pockets and offshore bank accounts and family trusts, etc. You do the heavy lifting, of pallets of cash, then we return the empty pallets.”

  4. Frank Smith

    The Howard/Costello years have a lot to answer for. In the midst of a windfall from the “mining boom” they threw money around like confetti – much of it landing in the pockets of their rich mates and multinational companies. Then after they were finally turfed out, up comes a Global Financial Crisis that demanded winding back the ludicrous tax concessions and give-aways Howard and Costello relied upon to keep them in Government for so long (along with persecuting refugees). But the Coalition then used any such winding back as a tool to wedge following Governments that might attempt to do so, even though the country has been unable to afford them for the past 12 years. So, the unaffordable concessions and handouts persist and the vast majority of our citizens suffer as a consequence. I applaud Labor for finally getting the policies in place that, belatedly, will undo some of the continuing damage done to our Nation by the Lying Rodent and his henchman Costello.

  5. Alcibiades

    A policy that costs billions in lost revenue and makes housing unaffordable for those hoping to buy their first home is hardly something to be proud of.

    It is, from their perspective, if the creators, enablers and defenders of the ‘policy’, as well as their patrons & political donors, and a priveledged/advantaged block of influential voters, financially benefit from it.

    The ones getting a go, for having the wealth &/or influence/mates, to have a go … is that not what Ssscott Morals-None drones on about ? sigh The endemic Game of ‘Mates’.

  6. Henry Rodrigues

    Good stuff, Kaye and New England Cocky. Nothing like presenting the unvarnished numbers to blow away the lies and obfuscation and deliberate guilding of the lily, by Scummo and his ‘treasurer’ and the rest of the innumerate financial geniuses of the coalition.
    Thanks and well done.

  7. pierre wilkinson

    How is it that the total incompetence of this misgovernment, especially the economic mess they are trying to create, are not brought to task by Labor?
    ProMoMorrison continues to berate Labor’s fiscal woes and sing COALition successes without relevance to facts or credibility but with seemingly no contradictory critique – apart from the AIM network.

  8. Kronomex

    Gee, I wonder which party this disaster can be squarely aimed at?

    https://www.smh.com.au/environment/sustainability/travesty-fourth-fish-kill-looms-as-study-finds-phantom-water-savings-20190305-p511xb.html

    Scummo has absolutlely no credibility with anything to me –

    https://www.smh.com.au/politics/federal/government-reveals-number-of-adverse-character-refugees-and-asylum-seekers-20190305-p51206.html

    “We demand you tell us so we can spear them from pillar to post…er, ignore that last bit.”

    “On Tuesday, Mr Morrison described the reopening of Christmas Island as “incredibly regrettable” and challenged Labor to confirm who its Minister for Home Affairs would be if it wins the May election.”

  9. Wayne Turner

    “Obviously the 40% odd who will still vote for them fall into that category.” – If ONLY that simple. Sadly there are plenty of ignorant morons that don’t fall into the catergory of welfare for the well off,but would vote for this mob against their own self interests ie: Too ignorant to know correctly what is their own self interest.

    This mob ONLY represent themselves,and their well off mates. Their well off mates that are a small number, from the businesses that bribe them,to the leaners that continue to benefit from hand outs for the well off – Alot less than 40%.

  10. Kaye Lee

    Latest GDP figures are out.

    Had it not been for population growth, Australia’s economy would have fallen into recession, in hypothetical terms, at least.

    With Australian population growth running around 0.4% per quarter, and real GDP growing by 0.2%, per capita GDP went backwards during the quarter, falling 0.2%.

    Combined with a 0.1% decline in the prior quarter, that means Australia has officially entered a per capita recession.

    That means that while the Australian economy has become larger as a whole, the share among individuals has actually become smaller.

    Government spending is propping up this result so if they aim for a surplus they could really send us into recession.

  11. helvityni

    Heading on ABC news: Australia just entered recession on a per capita basis…

    I wasn’t surprised by the news…

  12. Kaye Lee

    A minor concern…..

    As some would be aware, I have been waiting for the State of the Forests Report to come out. (It was released recently)

    As I was getting no joy from the relevant ministers, I started contacting Labor shadow ministers. And this is where it gets disappointing. First I contacted Mark Butler, Shadow Minister for Climate Change because my interest is in the emissions reductions claimed in the LULUCF sector. He didn’t bother replying to my email so I rang. His office suggested I contact Tony Burke, Shadow Minister for the Environment. He has just replied to my email that if I have any further queries in this area I should contact Labor’s Shadow Minister for Agriculture, Fisheries and Forestry, Joel Fitzgibbon.

    It seems to me that having three ministers (at least) covering similar territory is silly, particularly if they are going to pass the buck.

  13. New England Cocky

    Well Kaye Lee, is it any wonder that we can get no sense out of politicians about decentralising government jobs to regional urban centres so that residential real estate is affordable for families, local economic “booms” can occur simultaneously in several locations and wealth can be more equally distributed around the regions rather than concentrated in metropolitan cities.

  14. Andreas Bimba

    Another important, concise and balanced article Kaye, something like we should see on the ABC, but don’t.

    Although this impacts the well being of Australians directly rather than the government’s finances, another rort we can thank that little rodent John Howard and Australia’s worst ever Treasurer Peter Costello for is the massive fees our superannuation fund managers receive for doing bugger all. The fees are now about $32 billion per year yet nearly 100% of funds are not able to offer a growth rate for investors greater than the appreciation rate of the applicable investment class indices. In other words a blind broad spectrum fund with negligible management fees would do better. Note also most fund managers park their investors money in some other fund that is managed by another financial institution and are really just prospectus providers and data base managers. It also doesn’t make much difference to the operating costs of these fund managers how many zero’s are tacked onto the end of their total pool of funds to invest. The funds with the biggest fees and lowest historical returns are generally owned by the Big 4 banks – what a surprise. Was this on the agenda of the Banking Royal Commission?

    https://www.businessinsider.com.au/superannuation-super-fees-rise-32-billion-a-year-2018-10/amp

    On a similar level, who benefits most from the real estate bubble in our major cities? Property developers? Real estate agents? Property investors? Our state governments via stamp duties? Nope not them, again it’s the Big 4 banks. Given that all mortgage repayments made by owner occupiers and investors come to about $80 billion p.a., it is reasonable to assume that half of this arises just from the property bubble, probably it is much more but no one has done the maths as far as I can tell. An extra $40 billion of revenue is not a measure of profits but mortgages are definitely the main source of the Big 4 banks huge profits and the real estate bubble must have at least doubled that figure over what it would otherwise have been if real estate prices had grown much slower. I wonder who lobbied the little rodent and Australia’s worst ever Treasurer, and all subsequent governments, for the 50% CGT concession and its continuation and the continuation of the negative gearing concession as well as loose monitoring of foreign funds entering the Australian real estate market? Could it have been any of the lobbyists funded by the Big 4 banks or some of their financial arms or business associations? It simply must have been this way.

    We really do need more investigative journalists, whistle blower protection laws that work and an electorate concerned enough to listen.

  15. DrakeN

    Add to that, Andreas, the personal and domestic borrowings which are frequently made to make up for income shortfalls during periods of misfortune and/or unemployment.

    The “payday” lenders take full advantage of that, of course, but mainly after the banks have issued credit with little or no regard for the actual circumstances of the borrower who has then defaulted due to changes in circumstances.

    It appears to me that ultimately the credit issuing parasites will kill off their hosts

  16. Andreas Bimba

    DrakeN indeed. Someone should do the sums on credit card debt interest payments as well as the interest rates are exorbitant and many people that are struggling financially max out their cards just to pay essential bills and stay there for long periods in the hope of higher income later which may never happen.

  17. Dr Tristan Ewins

    Cutting tax concessions for the unambiguously rich and restructuring other taxes progressively makes sense and such be electorally viable if Labor could ‘cut through’ with the truth. Though arguably you can only go so far so fast hitting ‘the one per cent’. Expropriation sounds good ; but we know the ‘one per cent’ can resist as well. That’s not to say we shouldn’t try ; but for now change needs to be gradual. Tax should not be too ‘broad based’ (for reasons of equity) ; but nor can it be too narrow. Everyone needs to be contributing to the welfare state and social wage for the common good ; and to support the vulnerable. But over the medium term (say three terms) it makes sense to have the upper 20% pay their fair share. As progressive as is possible ; but also drawing on a broad-enough base to get things done. And on the principle that we should ALL stand in solidarity with one another and ‘do our bit’ in proportion to our capacity to do so.

  18. Matters Not

    Dr Tristan Ewins, really good points. Then again – perhaps we could start with those 700 (approximately) companies who pay no tax (or virtually) zero tax in Australia. Take the top three tax rorters as an illustrative example.

    Number one Is Glencore. With a turnover of $28 billion (over three years) their contribution is zero dollars.

    https://www.michaelwest.com.au/companies/tax-dodgers/glencore-investment-pty-limited/

    Number two is Exonmobile Australia with a turnover approaching $25 billion over three years and you guessed it – their contribution is also zero dollars.

    https://www.michaelwest.com.au/companies/tax-dodgers/exxonmobil-australia-pty-ltd/

    Number three is Energy Australia with a turnover approaching $24 billion over three years and needless to say it also paid zero dollars.

    https://www.michaelwest.com.au/companies/tax-dodgers/energyaustralia-holdings-limited/

    Yes Labor promises to do something about it, but their vision can only be described as limited – 3 or 4 billion over the medium term. (Now that’s a political backdoor (escape) of some significance.)

    Yes let’s worry about miniscule while the real rorters fly free. And the irony is, the citizens are so easily distracted. What with robo-debt and the like … Yep focus on the locals while the foreign companies have a field day.

  19. Alcibiades

    Matters Not

    Just Fossil Fuel companies alone, in 2015/2016 :

    , or

    pic.twitter.com/Qh4KfMva79

    Hm, that’s income of ~$75.877 Billion (AUD), yet No Tax Paid</>, whilst receiving how many Billions in direct & indirect commonwealth subsidies, hm ? How very odd.

    What parties sat on the front benches in HoR in 2014, 2015, 2016, 2017 and for the moment still do, as the supposed government, and did ‘nothing’, hm ?

    Don’t recall the opposition being in power over the last six years … are not the Lying Nasty Parties responsible, to be held to account, on their watch ? Yeah/Nah

  20. Matters Not

    Alcibiades. I am not in the business of barracking for Labor, The Greens or any other progressive organisation. While I am appalled when the LNP resort to accusations such as – Labor was worse – because it’s puerile, juvenile bullshit, I also hope that genuine supporters of progressive politics don’t follow suit. Surely we can do better than that.. Accordingly, I hold all progressive parties to account – and to a much higher standard that I apply to the conservative side of politics – because I don’t even waste time barking at the moon re their failings.

    I did note today that you also made the extraordinary claim (without a link):

    This is a man who did not donate ~$1.8M to his party, which he renamed & campaigned on as the Turnball Coalition Team, logos & all, to ensure His election, but instead ‘loaned’ it on financial terms.

    Are you aware that political parties and donors (above $13 000 + – it is indexed) are obliged to submit truthful returns to the Australian Electoral Commission and that the penalties re false submissions can be rather severe? (Just ask the NSW Liberal Party about failing to meet obligations.) Therefore, are you aware that you are claiming that both the Liberal Party and Malcolm Turnbull conspired to submit false returns? ‘Tis rather a serious accusation – is it not? If you are have any credible evidence, then I suggest you submit same to the AEC. You could be the whistleblower of the decade.

    Or is this latest claim to be regarded at the same level as Indue funnels donations to … (Here’s a clue – they don’t.)

    Take your time to respond.

  21. Alcibiades

    MN

    My, you are consistent. Merely provided some relevant figures in followup to your own good post and queried who should actually be held responsible/accountable for such a circumstance.

    Why the aggressive defensiveness, did one inadvertantly offend you in some way.

    Perhaps you are unaware ’tis considered rude to respond to a question with a question, let alone the rest ?

    Hm, re the The LNP Welfare Card: the true facts exposed. Corruption disguised as philanthropy, um, er, therefore are you to be taken as suggesting/accusing all relevant authors, studies, AIMN, ACOSS, even Hansard stenographers of being deluded/mistaken/conspirators/fabricators ? You have been repeatedly provided such material in response to your demands by commenters for years, to simply dismiss them out of hand. Remarkable, truly.

    Is it not also rather rude to misdirect and attempt to disrail by referring to separate comments.from other article threads, entirely out of context, and attribute & project your strawman words such as ‘conspiring’ ?

    Following in your footsteps, dear MN, prove it is not so ? Hm, off you go, with corroborated references, if you please.

    PS FYI, one is not now nor has ever been a member of, nor ‘barrack’ for any, party. Have you, are you, do you,perchance ?

    PPS A reminder. Not your Gopher.

  22. Lambert Simnel

    Much thanks to MN and Alcibiades. It can be said that Al’s thought processes have improved no end since that unfortunate incident with the Spartans.

  23. George Villiers.

    Let’s also thank Dr
    Ewins for his comments, Lambert.

    Frustration alone will not win the day or even do a lot to change things in a society where politics has become shopfront and flees from the scrouge of Murdoch tabloidism, fear and smear. Even the Greens now avoid challenging too directly rightist memes and a cursory glance at the letters to the editor columns in most mass circulation newspapers demonstrates just how deeply some quite extensive pockets of the population have become as consent manufacture becomes more sophisticated,.

  24. Alcibiades

    Lambert Simnel

    As you are quite probably aware, Alcibiades of antiquity, was old Socrates most prize student and favourite, with such personal gifts from the ‘Gods’ that could have served society for the ‘good’, who was bereft at what Al became.

    An amoral arch-opportunist, heretic, blasphemer, serial adulterer and traitor to anyone & any City or State he ever obtained the opportunity to betray or exploit for perceived personal gain or advancement.

    Who scorned redemption throughout his colourful life to his dying breath, mortally wounded, having taken an arrow in the back running along the beach, desperately fleeing from his righteous pursuers. Um, only just prior jumping out a beachside cottage window half-naked from his latest adulterous conquest.

    Sums up the core values of the Liberal & National parties to a tee, IMHO. Hence my ID is a mirrored tribute to them, one and all.

    Peace

  25. Alcibiades

    GV

    Thank you kindly. Did indeed, earlier.

    Such brazen arrogance to ignorantly dismissively attribute to the opposition, blah/blah/blah, then, instantly backtrack and earnestly support it, once advised Cormann had in fact made the statement. All on live TV.

    Craven.

    An ‘Honourable’ Minister of the Crown ? Bollocks ! My assistance dog barks ‘Woof!’ too (That’s a yes).

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