kevrenor
Well-Known Member
You can stick Tony's knighthood where the sun don't shine sonny! Up the Republic!
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"I for one welcome our insect overlords" - The Politics Thread
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You can stick Tony's knighthood where the sun don't shine sonny! Up the Republic!
BrisRecky
I'm an idiot savant without the pesky savant bit
I must admit to being more than slightly worried about Abbotts bee in his bonnett as relates to pensioners...quick story as relates to me....I broke my neck boogie boarding at Umina a few years ago and worked through it for a couple of years until a govt doctor wrote me off .....NOW.....I get the disabled pension and Deb gets the carers pension...which lasts us about 3 hrs every second friday...it barely covers expenses with virtually nil entertainment funds...I saw the PM, Treasurer and the minister for Social Services saying that there will be pension cuts and that quite frankly scares the shit out of me....me and Deb are barely getting by now.....we are truly worried...I have to wonder if their statement on the various news services caused any medical issues among the disabled community...I know I got a migraine over it....someone said to me about Abbott "maybe his trying to thin the herd"
Last edited:
dibo
Well-Known Member
The age pension is indexed to Male Average Weekly Ordinary Time Earnings (AWOTE).
The problems are that AWOTE have typically risen faster than inflation. Even if they don't, the Age Pension indexation is set so that it rises by the higher of the two numbers. Over time the real value of the pension (relative to CPI) has been increasing while other benefits have been static - hence recent discussion of whether the rate of indexation should change to CPI.
The cost is rising fast, but it's not rising as fast as the cost of superannuation tax concessions. If we did away with super concessions (which overwhelmingly go to high-income earners) we could afford to keep funding the pension, maybe even more generously than now.
There was an interesting article I read during the week that suggested that we could do away with the super tax concessions and instead fund a non-means-tested age pension. Do away with asset and income tests, and instead have a universal retirement benefit.
It's actually not dissimilar to the idea of having a negative income tax - each person with $0 income is entitled to a certain sum, that thereafter every dollar earnt is taxed at a given rate. When proposed by folks like Hayek it was proposed that it should replace the minimum wage and various social security programs.
I don't agree that you can do away with the minimum wage (people should have a guarantee of at least a minimum marginal rate of return for an hour of their labour) but it would certainly take pressure off the minimum wage and we could certainly do away with social security programs.
The added benefit is that if you set the tax and welfare systems on the same curve, you eliminate the issue of interaction between the two, where income tax and tapering welfare lead to EMTRs well over the top marginal rate.
The problems are that AWOTE have typically risen faster than inflation. Even if they don't, the Age Pension indexation is set so that it rises by the higher of the two numbers. Over time the real value of the pension (relative to CPI) has been increasing while other benefits have been static - hence recent discussion of whether the rate of indexation should change to CPI.
The cost is rising fast, but it's not rising as fast as the cost of superannuation tax concessions. If we did away with super concessions (which overwhelmingly go to high-income earners) we could afford to keep funding the pension, maybe even more generously than now.
There was an interesting article I read during the week that suggested that we could do away with the super tax concessions and instead fund a non-means-tested age pension. Do away with asset and income tests, and instead have a universal retirement benefit.
It's actually not dissimilar to the idea of having a negative income tax - each person with $0 income is entitled to a certain sum, that thereafter every dollar earnt is taxed at a given rate. When proposed by folks like Hayek it was proposed that it should replace the minimum wage and various social security programs.
I don't agree that you can do away with the minimum wage (people should have a guarantee of at least a minimum marginal rate of return for an hour of their labour) but it would certainly take pressure off the minimum wage and we could certainly do away with social security programs.
The added benefit is that if you set the tax and welfare systems on the same curve, you eliminate the issue of interaction between the two, where income tax and tapering welfare lead to EMTRs well over the top marginal rate.
dibo
Well-Known Member
Interesting column from Greg Jericho in The Guardian: http://www.theguardian.com/business...m-tinkering-income-tax-wont-cut-it?CMP=twt_gu
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Australia needs revenue reform, and tinkering with income tax won’t cut it
A debt levy won't solve the long-term problem of our tax system, but abolishing the tax fuel credit would be a solid start
Clouded judgment: Tony Abbott’s logic is all over the shop when it comes to the proposed tax increase.Photograph: Scott Barbour/Getty Images
The proposed “debt levy” is a good step towards improving the government’s revenue, but it is only a limited solution. While it will help increase revenue it also will increase the government’s already large reliance on income tax. Real revenue reform needs to look beyond income tax if the government wants to find permanent solutions.
There has been a lot of confusion about the debt levy. Firstly let’s cut the bull – a levy is a tax; it’s just a type of tax – usually done for a specific purpose and often (such as with the Medicare levy) charged on a person’s entire income.
Secondly it’s a stupid idea to raise a tax just to pay off a deficit so you can then give a tax break. That’s not so much robbing Peter to pay Paul, as robbing Peter to pay Peter.
Finally we need to be clear about how the levy will work.
The first reports were that it was to be a levy of 1% for those earning over $80,000, and 2% for those earning over $180,000, and that like the Medicare levy it would apply to all income. By Wednesday this had changed to the 1% and 2% merely being an increase in the tax rates, and would apply only to income earned above the respective thresholds.
This, it goes without saying, makes a big difference. For those earning over $80,000 it is an $800 difference, for those earning over $180,000 it is $3,600.
Indeed a 1% levy on all your income would mean some people would be better off not earning over $80,000. If the levy was charged on all your income, you would need to earn $81,400 before your after-tax pay would be more than had you earned just $80,000:
While 1% may not sound like much, to raise the same amount of tax by just increasing the nominal tax rate would require someone on $85,000 to pay a tax rate of 54% tax on income earned over $80,000 – that’s a fair jump from 37%.
Such a levy, while progressive, would be pretty stupid in the current economic environment. Our debt situation is not urgent, and such a tax increase would smash our already weak economic growth due to consumers cutting back spending.
As Crikey’s Bernard Keane noted, the reduction in spending would also see goods and services tax (GST) revenue fall – making it doubly stupid.
Tony Abbott’s logic on it all was also all over the shop – arguing the increase would be temporary pain but would lead to permanent gain.
Unfortunately the problems with the revenue side of our budget are not temporary.
If we look at the past 20 years, it’s obvious there’s been a fairly dramatic change to revenue since 2007:
That was OK while the mining boom was happening and company tax was soaring. But when the global financial crisis (GFC) hit, income tax revenue fell further to 9.3% of GDP (the lowest on record).
The big income tax cuts during this time were to the top tier. The threshold for the top rate of tax went from $62,500 in 2003-04 to $180,000 by 2008-09. As I noted two weeks ago, that saw it rise from about 1.3 times the average wage to about 2.5 now.
Crucially though, there has been little change in the ratio of the second-highest tax threshold: it has shifted between 108% to 137% of the average wage, and is currently about 110%.
But 10 years ago 15% of taxpayers were in the top tax bracket, and they raised 51% of the tax; the latest figures show only 3% pay the top tax rate and now they raise 26.2% of total tax.
So while some commentators warn of the dangers of bracket creep andeven argue the top tax threshold should have already been raised to $203,000, the reality is that fewer people in the past eight years have been paying the top tax rate than at any time in our history.
Thus increasing the top two tax rates is a sensible way to increase revenue, because it is not so large that economic growth will take much of a hit, and it certainly targets the wealthiest.
However reducing the tax, as Abbott says will happen in three years, will only see revenue fall again. Moreover the debt levy does nothing to solve the long-term problem of our tax system which, ironically, is that we rely too much on income tax:
By 2017-18 the government is expected to rely on personal income tax revenue more than it ever has since the introduction of the GST.
Direct taxes such as personal income tax and company taxes account for about 70% of government revenue. This is not an efficient way to raise tax. As we saw during the GFC, such taxes can drop pretty quickly during economic downturns. They also tax labour and capital – and thus create disincentives to work and to invest.
Most nations in the OECD have a broader tax base and direct taxes account for only about 60% of total revenue (and less if you exclude social security contributions).
The problem is exacerbated when you consider that our company tax rate needs to remain competitive with other nations because companies (unlike most workers) can leave or choose to invest elsewhere.
For now Australia remains an attractive place to invest, but in the future it is likely we will have to reduce our company tax rate to remain competitive. This was the main reason the Henry tax reviewrecommended lowering it over time from 30% to 25%.
But doing that without changing anything else will place more burden on personal income tax.
The deficit levy will go some way to restoring the government’s revenue but ironically will exacerbate the problems with its tax base – especially because the government will also abolish the mining and carbon taxes.
For real revenue reform, tinkering with income tax won’t cut it. The issue of broadening the GST, or abolishing the fuel tax credit, ending the freeze on fuel excise indexation, remain to be tackled. Lenore Taylor reported on Wednesday that the government was considering abolishing the tax fuel credit. Doing so would give this budget the real sniff of one that is serious about revenue reform; the debt levy does not.
Australia needs revenue reform, and tinkering with income tax won’t cut it
A debt levy won't solve the long-term problem of our tax system, but abolishing the tax fuel credit would be a solid start
Email
Clouded judgment: Tony Abbott’s logic is all over the shop when it comes to the proposed tax increase.Photograph: Scott Barbour/Getty Images
The proposed “debt levy” is a good step towards improving the government’s revenue, but it is only a limited solution. While it will help increase revenue it also will increase the government’s already large reliance on income tax. Real revenue reform needs to look beyond income tax if the government wants to find permanent solutions.
There has been a lot of confusion about the debt levy. Firstly let’s cut the bull – a levy is a tax; it’s just a type of tax – usually done for a specific purpose and often (such as with the Medicare levy) charged on a person’s entire income.
Secondly it’s a stupid idea to raise a tax just to pay off a deficit so you can then give a tax break. That’s not so much robbing Peter to pay Paul, as robbing Peter to pay Peter.
Finally we need to be clear about how the levy will work.
The first reports were that it was to be a levy of 1% for those earning over $80,000, and 2% for those earning over $180,000, and that like the Medicare levy it would apply to all income. By Wednesday this had changed to the 1% and 2% merely being an increase in the tax rates, and would apply only to income earned above the respective thresholds.
This, it goes without saying, makes a big difference. For those earning over $80,000 it is an $800 difference, for those earning over $180,000 it is $3,600.
Indeed a 1% levy on all your income would mean some people would be better off not earning over $80,000. If the levy was charged on all your income, you would need to earn $81,400 before your after-tax pay would be more than had you earned just $80,000:
While 1% may not sound like much, to raise the same amount of tax by just increasing the nominal tax rate would require someone on $85,000 to pay a tax rate of 54% tax on income earned over $80,000 – that’s a fair jump from 37%.
Such a levy, while progressive, would be pretty stupid in the current economic environment. Our debt situation is not urgent, and such a tax increase would smash our already weak economic growth due to consumers cutting back spending.
As Crikey’s Bernard Keane noted, the reduction in spending would also see goods and services tax (GST) revenue fall – making it doubly stupid.
Tony Abbott’s logic on it all was also all over the shop – arguing the increase would be temporary pain but would lead to permanent gain.
Unfortunately the problems with the revenue side of our budget are not temporary.
If we look at the past 20 years, it’s obvious there’s been a fairly dramatic change to revenue since 2007:
That was OK while the mining boom was happening and company tax was soaring. But when the global financial crisis (GFC) hit, income tax revenue fell further to 9.3% of GDP (the lowest on record).
The big income tax cuts during this time were to the top tier. The threshold for the top rate of tax went from $62,500 in 2003-04 to $180,000 by 2008-09. As I noted two weeks ago, that saw it rise from about 1.3 times the average wage to about 2.5 now.
Crucially though, there has been little change in the ratio of the second-highest tax threshold: it has shifted between 108% to 137% of the average wage, and is currently about 110%.
But 10 years ago 15% of taxpayers were in the top tax bracket, and they raised 51% of the tax; the latest figures show only 3% pay the top tax rate and now they raise 26.2% of total tax.
So while some commentators warn of the dangers of bracket creep andeven argue the top tax threshold should have already been raised to $203,000, the reality is that fewer people in the past eight years have been paying the top tax rate than at any time in our history.
Thus increasing the top two tax rates is a sensible way to increase revenue, because it is not so large that economic growth will take much of a hit, and it certainly targets the wealthiest.
However reducing the tax, as Abbott says will happen in three years, will only see revenue fall again. Moreover the debt levy does nothing to solve the long-term problem of our tax system which, ironically, is that we rely too much on income tax:
By 2017-18 the government is expected to rely on personal income tax revenue more than it ever has since the introduction of the GST.
Direct taxes such as personal income tax and company taxes account for about 70% of government revenue. This is not an efficient way to raise tax. As we saw during the GFC, such taxes can drop pretty quickly during economic downturns. They also tax labour and capital – and thus create disincentives to work and to invest.
Most nations in the OECD have a broader tax base and direct taxes account for only about 60% of total revenue (and less if you exclude social security contributions).
The problem is exacerbated when you consider that our company tax rate needs to remain competitive with other nations because companies (unlike most workers) can leave or choose to invest elsewhere.
For now Australia remains an attractive place to invest, but in the future it is likely we will have to reduce our company tax rate to remain competitive. This was the main reason the Henry tax reviewrecommended lowering it over time from 30% to 25%.
But doing that without changing anything else will place more burden on personal income tax.
The deficit levy will go some way to restoring the government’s revenue but ironically will exacerbate the problems with its tax base – especially because the government will also abolish the mining and carbon taxes.
For real revenue reform, tinkering with income tax won’t cut it. The issue of broadening the GST, or abolishing the fuel tax credit, ending the freeze on fuel excise indexation, remain to be tackled. Lenore Taylor reported on Wednesday that the government was considering abolishing the tax fuel credit. Doing so would give this budget the real sniff of one that is serious about revenue reform; the debt levy does not.
The Guardian is an ALP newsletter...
Probably time to focus on the commission of Audit
http://www.businessinsider.com.au/the-commission-of-audit-is-out-heres-what-you-need-to-know-2014-5
Probably time to focus on the commission of Audit
http://www.businessinsider.com.au/the-commission-of-audit-is-out-heres-what-you-need-to-know-2014-5
dibo
Well-Known Member
Even if it were true (and I don't think it is), that would be no reason to presume that what Jericho argues is incorrect.
On the Commission of Audit - what a laugh!
- States to levy income tax? What, are they going to start their own defence forces again?
- All patients to pay not $6, but $15 to go to the doctor?
- Pensions to be slashed?
- HECS to get dramatically more expensive?
- Minimum wage cases to be abolished and a new, lower benchmark set?
- Road tolls levied federally, family benefits to be slashed and a wave of privatisations and department mergers?
If this is what is required to 'fix' the budget (and for a hint: it's not - they've barely even looked at the revenue options) then the treatment is worse than the disease.
dibo
Well-Known Member
The SMH has had a chat with a bunch of economists (business economists, not even the bolshie university types) who aren't at all impressed by the notion of a budget emergency:
Economists sceptical of Abbott's 'budget emergency'
Date
April 30, 2014
Jonathan Swan
National political reporter
View more articles from Jonathan Swan
Follow Jonathan on Twitter Follow Jonathan on Google+ Email Jonathan
Commission of Audit report to be released
The extent of potential federal budget cuts will become clearer today with the release of a review into government spending. Nine News.
Interviews with four chief economists at banks and financial institutions revealed a common scepticism with the “budget emergency” described by Prime Minister Tony Abbott and his Treasurer, Mr Hockey. All economists cited Australia’s “enviable” budgetary position compared to other rich countries, and none thought the speculated “deficit levy” on high income earners was an intelligent way to repair the budget.
Treasurer Joe Hockey with Prime Minister Tony Abbott: The urgency of a budget deficit may be exaggerated, according to leading economists. Photo: Dominic Lorrimer
“I don’t think you could make the case that there is a budget crisis,” said HSBC chief economist Paul Bloxham, responding to Mr Abbott’s description of the “emergency” that would force dramatic changes in the budget.
Mr Bloxham said he did not think a deficit levy on wealthy Australians was necessary “because I don’t think we need to urgently get the budget back to surplus".
“It needs to be done in the medium term,” he said, adding that he would prefer the government made structural reforms – such as broadening the base of the GST – rather than the short-term fix of a “debt tax”.
Bank of America Merrill Lynch chief economist Saul Eslake said it was important to get the deficit under control in the longer term, but there were serious risks involved in moving too quickly.
“The economy is still fairly soft. Growth is below trend,” he said. “I don’t question for a moment the seriousness of the long-term problem. But I don’t see any particular urgency about 2014-15 or 2015-16.”
On the most recent figures the Australian government’s debt is $191.5 billion, forecast to rise to more than $600 billion. The forecast deficit is $47 billion, but all economists said these figures were tiny – compared with other OECD countries – as a percentage of the overall economy.
“Most countries would be envious of Australia’s public finances as they currently stand,” said Barclays Australia chief economist Kieran Davies, who, like the other economists interviewed, believes long-term, structural changes to the economy are required rather than short-term fixes like a debt tax.
Ideas floated by the economists included abolishing negative gearing, taxing trusts like companies, broadening or raising the GST, reducing the capital gains tax discount and tightening tax breaks for high income earners’ superannuation. There was no budget urgency that would justify temporary “debt tax” rises, they said.
“We don’t need a surplus tomorrow,” said Chris Richardson, economist and partner at Deloitte Access Economics.
“We don’t even necessarily need it in five years time. I’m more than happy with us getting back to sustainable fiscal finances over the long term. “The politics would tend to suggest moving earlier rather than later but on the economics there’s no rush.”
Read more: http://www.smh.com.au/federal-polit...t-emergency-20140430-zr1uo.html#ixzz30RAvb0mk
Economists sceptical of Abbott's 'budget emergency'
Date
April 30, 2014
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Jonathan Swan
National political reporter
View more articles from Jonathan Swan
Follow Jonathan on Twitter Follow Jonathan on Google+ Email Jonathan
Commission of Audit report to be released
The extent of potential federal budget cuts will become clearer today with the release of a review into government spending. Nine News.
- Autoplay ONCanberra to be cut to the bone
- Abbott moves to quell MPs' anger over 'debt tax'
- All about the Commission of Audit
Interviews with four chief economists at banks and financial institutions revealed a common scepticism with the “budget emergency” described by Prime Minister Tony Abbott and his Treasurer, Mr Hockey. All economists cited Australia’s “enviable” budgetary position compared to other rich countries, and none thought the speculated “deficit levy” on high income earners was an intelligent way to repair the budget.
Treasurer Joe Hockey with Prime Minister Tony Abbott: The urgency of a budget deficit may be exaggerated, according to leading economists. Photo: Dominic Lorrimer
“I don’t think you could make the case that there is a budget crisis,” said HSBC chief economist Paul Bloxham, responding to Mr Abbott’s description of the “emergency” that would force dramatic changes in the budget.
Mr Bloxham said he did not think a deficit levy on wealthy Australians was necessary “because I don’t think we need to urgently get the budget back to surplus".
“It needs to be done in the medium term,” he said, adding that he would prefer the government made structural reforms – such as broadening the base of the GST – rather than the short-term fix of a “debt tax”.
Bank of America Merrill Lynch chief economist Saul Eslake said it was important to get the deficit under control in the longer term, but there were serious risks involved in moving too quickly.
“The economy is still fairly soft. Growth is below trend,” he said. “I don’t question for a moment the seriousness of the long-term problem. But I don’t see any particular urgency about 2014-15 or 2015-16.”
On the most recent figures the Australian government’s debt is $191.5 billion, forecast to rise to more than $600 billion. The forecast deficit is $47 billion, but all economists said these figures were tiny – compared with other OECD countries – as a percentage of the overall economy.
“Most countries would be envious of Australia’s public finances as they currently stand,” said Barclays Australia chief economist Kieran Davies, who, like the other economists interviewed, believes long-term, structural changes to the economy are required rather than short-term fixes like a debt tax.
Ideas floated by the economists included abolishing negative gearing, taxing trusts like companies, broadening or raising the GST, reducing the capital gains tax discount and tightening tax breaks for high income earners’ superannuation. There was no budget urgency that would justify temporary “debt tax” rises, they said.
“We don’t need a surplus tomorrow,” said Chris Richardson, economist and partner at Deloitte Access Economics.
“We don’t even necessarily need it in five years time. I’m more than happy with us getting back to sustainable fiscal finances over the long term. “The politics would tend to suggest moving earlier rather than later but on the economics there’s no rush.”
Read more: http://www.smh.com.au/federal-polit...t-emergency-20140430-zr1uo.html#ixzz30RAvb0mk
dibo
Well-Known Member
For what it's worth, George Megalogenis was writing in the Oz (hardly a Labor newsletter) about the failings of the Howard Government to maintain the budget from 2009:
May 2009: http://www.theaustralian.com.au/arc...a-ruinous-record/story-e6frg7ex-1225712757155
September 2009: http://www.theaustralian.com.au/arc...ral-deficit-land/story-e6frg7ex-1225772087943
November 2011: http://www.theaustralian.com.au/nat...omic-illiteracy/story-e6frgd0x-1226206506049#
May 2009: http://www.theaustralian.com.au/arc...a-ruinous-record/story-e6frg7ex-1225712757155
September 2009: http://www.theaustralian.com.au/arc...ral-deficit-land/story-e6frg7ex-1225772087943
November 2011: http://www.theaustralian.com.au/nat...omic-illiteracy/story-e6frgd0x-1226206506049#
dibo
Well-Known Member
More from the Guardian:
Commission of Audit: a recipe for a poorer, nastier and more brutish Australia
The prescriptions advocated by the Audit are stock-standard 1980s-era neoliberalism: privatise government assets, abolish government agencies, charge citizens more
The report of the Commission of Audit, which weighs five kilos. Photograph: Lukas Koch/AAP
We always knew the Commission of Audit would produce a small government, low spending, neoliberal report.
Why? Because that’s what the government set it up to do.
The Commission of Audit was announced as a supposedly independent body. But the people doing the auditing are mostly rusted-on, hardline conservatives. Tony Shepherd, a former chairman of Transfield, is also the former boss of big business lobby group, the Business Council of Australia. Peter Boxall is a former chief of staff to Peter Costello. Howard government minister Amanda Vanstone is there too. This is a political body, set up to do a very political job.
The giveaway is there in black and white, in the Audit’s terms of reference. These give it “a broad remit to examine the scope for efficiency and productivity improvements across all areas of Commonwealth expenditure, and to make recommendations to achieve savings sufficient to deliver a surplus of 1% of GDP prior to 2023-24.” Top of the list: to “ensure taxpayers are receiving value-for-money from each dollar spent” and “eliminate wasteful spending.”
Framing an exercise like this as delivering value for money and cutting waste ensures that the debate is all about government spending. There is no acknowledgement that the real cause of the current deficit is a shortfall in revenues, not a blow-out in expenditures. Nor is there any mention of the fact that the Commonwealth’s spending is low by OECD standards, and in fact is broadly consistent with spending levels in the later years of the Howard government.
The Audit ignores all this. “We have spent beyond our means for too long,” it complains, bemoaning the “sixth consecutive budget deficit.”
It’s as though that minor event known as the global financial crisis never happened. This is truly the “autistic” economics that a group of French university students protested about in June 2000.
The prescriptions advocated by the Audit are stock-standard 1980s-era neoliberalism. Privatise government assets. Cut red tape. Abolish or amalgamate government agencies. Charge citizens more for government services, like visits to the doctor. Slash government benefits, especially for the most vulnerable. Make students pay more for their education. Reduce foreign aid. Abolish national protections, like a national minimum wage. Halt Commonwealth support for the homeless.
This is a recipe for a poorer, nastier and more brutish Australia. If implemented, it would mark the beginning of the end of the Australian fair go.
By far the most radical proposal is to junk a century of federal-state relations and return huge swathes of the Commonwealth’s functions to the states. This is cloud cuckoo stuff. The states are struggling to fund the services and functions they currently provide. It is absurd to believe a tiny state like Tasmania can provide the kind of advanced public services that all citizens demand. Australians should not be condemned to lower standards of living and poorer public services just because they live in a small state.
The idea to give the states a 10% income tax tells you all you need to know. Despite a mania for reducing complexity, the Commission of Audit wants to cut federal tax rates, only to increase them again with an extra income tax for the states. At the same time as it complains about duplication, the Audit wants to take single, federal programs and devolve them to eight separate states and territories. Go figure.
We don’t need to ask ourselves what Australia would look like if this radical plan were implemented. Just look across the Pacific. The United States has a small federal government as a share of GDP, and devolves many public services to its states. It has a vestigial or non-existent social safety net. It has low taxes and many social services are privatised. In other words, it is exactly the sort of country the Commission of Audit would like to see Australia become.
How is the small government, market-is-best ideology working for the US? America has endemic intergenerational poverty, massive inequality, crumbling infrastructure and lower life expectancy that Australia. America’s public finances are much worse than Australia’s, with huge deficits and a growing public debt. Its economy has grown much more slowly than Australia’s over the past decade; its middle classes have actually shrunk since the mid-1970s.
You’d have to be a certain sort of person to want this future for Australia. You’d have to be driven by ideology, not evidence. You’d have to have internalised a certain type of economic theory that tells you that markets are always better, and that governments are always worse. You’d have no fear of cuts to government benefits or services, because your large personal fortune ensures you can always pay the best for everything.
Needless to say, no one who worked on this Audit was a homeless person, a worker on minimum wage, or someone with a permanent disability. Instead, an unrepresentative and partisan group has used shoddy arithmetic and junk economics in an attempt to destroy a century of Australian social welfare.
Commission of Audit: a recipe for a poorer, nastier and more brutish Australia
The prescriptions advocated by the Audit are stock-standard 1980s-era neoliberalism: privatise government assets, abolish government agencies, charge citizens more
-
- Ben Eltham
- theguardian.com, Thursday 1 May 2014 16.06 AEST
- Jump to comments (83)
The report of the Commission of Audit, which weighs five kilos. Photograph: Lukas Koch/AAP
We always knew the Commission of Audit would produce a small government, low spending, neoliberal report.
Why? Because that’s what the government set it up to do.
The Commission of Audit was announced as a supposedly independent body. But the people doing the auditing are mostly rusted-on, hardline conservatives. Tony Shepherd, a former chairman of Transfield, is also the former boss of big business lobby group, the Business Council of Australia. Peter Boxall is a former chief of staff to Peter Costello. Howard government minister Amanda Vanstone is there too. This is a political body, set up to do a very political job.
The giveaway is there in black and white, in the Audit’s terms of reference. These give it “a broad remit to examine the scope for efficiency and productivity improvements across all areas of Commonwealth expenditure, and to make recommendations to achieve savings sufficient to deliver a surplus of 1% of GDP prior to 2023-24.” Top of the list: to “ensure taxpayers are receiving value-for-money from each dollar spent” and “eliminate wasteful spending.”
Framing an exercise like this as delivering value for money and cutting waste ensures that the debate is all about government spending. There is no acknowledgement that the real cause of the current deficit is a shortfall in revenues, not a blow-out in expenditures. Nor is there any mention of the fact that the Commonwealth’s spending is low by OECD standards, and in fact is broadly consistent with spending levels in the later years of the Howard government.
The Audit ignores all this. “We have spent beyond our means for too long,” it complains, bemoaning the “sixth consecutive budget deficit.”
It’s as though that minor event known as the global financial crisis never happened. This is truly the “autistic” economics that a group of French university students protested about in June 2000.
The prescriptions advocated by the Audit are stock-standard 1980s-era neoliberalism. Privatise government assets. Cut red tape. Abolish or amalgamate government agencies. Charge citizens more for government services, like visits to the doctor. Slash government benefits, especially for the most vulnerable. Make students pay more for their education. Reduce foreign aid. Abolish national protections, like a national minimum wage. Halt Commonwealth support for the homeless.
This is a recipe for a poorer, nastier and more brutish Australia. If implemented, it would mark the beginning of the end of the Australian fair go.
By far the most radical proposal is to junk a century of federal-state relations and return huge swathes of the Commonwealth’s functions to the states. This is cloud cuckoo stuff. The states are struggling to fund the services and functions they currently provide. It is absurd to believe a tiny state like Tasmania can provide the kind of advanced public services that all citizens demand. Australians should not be condemned to lower standards of living and poorer public services just because they live in a small state.
The idea to give the states a 10% income tax tells you all you need to know. Despite a mania for reducing complexity, the Commission of Audit wants to cut federal tax rates, only to increase them again with an extra income tax for the states. At the same time as it complains about duplication, the Audit wants to take single, federal programs and devolve them to eight separate states and territories. Go figure.
We don’t need to ask ourselves what Australia would look like if this radical plan were implemented. Just look across the Pacific. The United States has a small federal government as a share of GDP, and devolves many public services to its states. It has a vestigial or non-existent social safety net. It has low taxes and many social services are privatised. In other words, it is exactly the sort of country the Commission of Audit would like to see Australia become.
How is the small government, market-is-best ideology working for the US? America has endemic intergenerational poverty, massive inequality, crumbling infrastructure and lower life expectancy that Australia. America’s public finances are much worse than Australia’s, with huge deficits and a growing public debt. Its economy has grown much more slowly than Australia’s over the past decade; its middle classes have actually shrunk since the mid-1970s.
You’d have to be a certain sort of person to want this future for Australia. You’d have to be driven by ideology, not evidence. You’d have to have internalised a certain type of economic theory that tells you that markets are always better, and that governments are always worse. You’d have no fear of cuts to government benefits or services, because your large personal fortune ensures you can always pay the best for everything.
Needless to say, no one who worked on this Audit was a homeless person, a worker on minimum wage, or someone with a permanent disability. Instead, an unrepresentative and partisan group has used shoddy arithmetic and junk economics in an attempt to destroy a century of Australian social welfare.
dibo
Well-Known Member
Latest Essential poll has interesting attitude numbers: http://essentialvision.com.au/category/essentialreport
People appear to associate looking after the economy with looking after business.
People don't seem to see their interests and the economy's interests as directly linked, and appear to be OK with making personal sacrifice for the sake of the economy.
This ties into an idea of every person pitching in for the national interest, but with the national interest implicitly redefined as big businesses' interest.
It's the same line of thinking that underestimates inequality and thinks that even vaguely redistributive policy necessarily harms the economy and the national interest (hence the "it's a nice idea, but we can't afford it" objection to better funding for public health, education, welfare...).
The Libs and their mates have been banging it in for so long it becomes received wisdom.
People appear to associate looking after the economy with looking after business.
People don't seem to see their interests and the economy's interests as directly linked, and appear to be OK with making personal sacrifice for the sake of the economy.
This ties into an idea of every person pitching in for the national interest, but with the national interest implicitly redefined as big businesses' interest.
It's the same line of thinking that underestimates inequality and thinks that even vaguely redistributive policy necessarily harms the economy and the national interest (hence the "it's a nice idea, but we can't afford it" objection to better funding for public health, education, welfare...).
The Libs and their mates have been banging it in for so long it becomes received wisdom.
midfielder
Well-Known Member
Truthful could be the first PM to loose an election after coming from opposition ...
A very good mate and wise political watcher said to me this morning ... have you noticed how much Truthful and the Dudd have in common... I said in those famous words "Please Explain"" both seem to be running the government out of their office and keep making captains calls ... saying if the polls keep falling then the night of the long knifes my reappear...
A very good mate and wise political watcher said to me this morning ... have you noticed how much Truthful and the Dudd have in common... I said in those famous words "Please Explain"" both seem to be running the government out of their office and keep making captains calls ... saying if the polls keep falling then the night of the long knifes my reappear...
dibo
Well-Known Member
I don't know what you mean by this. Can you explain?
To much poll driven policy has taken the ALP away from the parties core values. In my opinion
VicMariner
Well-Known Member
Might explain the rise of the PUP and independents. For left leaning voters Labour has moved to the right and the Greens are perceived to be too far to the left.
dibo
Well-Known Member
PUP are right wingers and most indies aren't really anything - populists mostly, sometimes well meaning populists but populists nonetheless.
I've posted before about why I think ideology is important.
I can summarise my views this way - ideology gives a belief structure, and if you don't believe in something, you'll fall for anything.
I've posted before about why I think ideology is important.
I can summarise my views this way - ideology gives a belief structure, and if you don't believe in something, you'll fall for anything.
midfielder
Well-Known Member
Just an aside .. is it only me or does the rapid of the PUP party concern anyone... it's not like it's a right wing party hell we have enough of those it's just Fat Tony as we saw with the Fold Coast is @!@!@ lets not get the site sued ...
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