Friday, May 4, 2018

Today by Paddy Manning

Warring pub tests: corporate tax cuts
Feel the authenticity

The Business Council of Australia and The Monthly Today must go to different pubs. Where they found a lone economist who is absolutely certain that a tax cut for big business would increase wages for ordinary workers, I found half a dozen punters who don’t believe it for a second.

The BCA’s anti-anti-business campaign is called “For the Common Good” – funny, because that’s the title of Bill Shorten’s book, pitched as essential reading if you want to understand the next prime minister of Australia.

As we learnt on the ABC’s 7.30 on Monday, the BCA is trying to raise a stupendous $26 million from its 130 members for a fighting fund ahead of the next election, in a campaign to counter the influence of “anti-business” forces like GetUp! and the unions, and which Labor believes is nakedly partisan.

The BCA’s For the Common Good campaign is run through a subsidiary called Centre Ground. This organisation also campaigned in the recent South Australian election, and has been in the news this week over whether it had used controversial data miner Cambridge Analytica, which is accused of manipulating voters through social media ahead of the Trump and Brexit elections in 2016. Under pressure, the BCA has clarified that it has not engaged Cambridge Analytica, which in any case went broke this week (although The New York Times is reporting that the company has been reborn, as Emerdata).

Many of the BCA’s members are multinationals, so you might think that the government’s Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Bill 2017, proposing to ban foreign political donations, might limit the pro-company tax cut campaign. Not a bit of it, according to GetUp!, whose submission states: “multinational corporations with business in Australia will have free rein to campaign and donate without additional restriction. The draft legislation restricts foreign donations to charities engaged in political activity, but puts no restriction whatsoever on corporate donations to organisations like the BCA, which are counted as subscriptions”. The bill was the subject of a recent inquiry into the foreign interference laws by the Joint Standing Committee on Electoral Matters, which made fifteen recommendations, but stopped short of endorsing the bill.

The next federal election may be the first in Australia in which the new data-driven micro-targetting and dark advertising techniques are employed at scale. The BCA points to the admission of WA Labor secretary Patrick Gorman, that last year the party targeted voters who liked UFC with messages that Labor would remove a ban on cage fighting.

No matter if the BCA uses the most sophisticated techniques in the world, it will have to do better than this “Pub Test”, which promotes the message that company tax cuts will increase wages. The cheery pub test involves putting a series of yes or no questions to Professor Tony Makin from Griffith University. It goes like this:

Q: But Tony, some politicians say that company tax cuts just benefit big company bosses. Is that right?

A: No, there are far more widespread …

Q: Just a simple yes or no.

A: No!

Q: So will a company tax cut be good for Australian workers?

A: Yes.

Q: Will it increase wages?

A: Yes.

Q: Are you really sure it will increase the wages of Australian workers?

A: Yes.

Q: Finally, maybe the most important question, will you buy the next round of beer?

A: No.

Q: [Eye-roll] Economists …

I’m not sure where the BCA drinks, but at the Huntsbury Hotel in Petersham in Sydney’s inner west, I get a very different reaction. The punters are generally in favour of tax cuts for companies with a turnover below $50 million – in fact a couple run their own businesses – but none of them were aware that the rate had already been cut. Research released [$] by AlphaBeta this week found the same thing: a third of small businesses had no idea their taxes had gone down.

Punter support plummets when it’s pointed out that we’re talking about tax cuts for big business, including the banks. Here’s one small-business operator:

Q: Will a company tax cut be good for Australian workers?

A: Probably not, because it won’t be passed on.

Q: Will it increase wages?

A: I wouldn’t think so for a minute.

Two Irish brothers who run a small carpentry business respond in the following way when I say the government and BCA want to cut the tax rate for big business from 30 per cent to 25 per cent:

Brother 1: Aren’t these companies going to be earning more money then … obviously 5 per cent more? They’re not going to give it to their staff!

Brother 2: No Way! It’s going to all go to the higher-up people, people that are already earning millions of dollars.

Brother 1: … and they’re going to give them more bonuses, and that’s what it is.

Brother 2: Exactly!

Brother 1: … smaller people never get what they want. We’re in business together and we’re paying, what, 20 per cent tax and we give away – what did we pay the tax man last year? $32,000 between two of us? We’re not making shitloads of money – it’s just a small carpentry business, me and my brother, and we pay our taxes, everything’s through the books so … If a company’s earning that much money, it’s not going to go to the workers; if there can be a rule that it’s share the wealth – share the love – then brilliant.

The bartender? “I don’t think it’ll increase wages, because I don’t think they’re going to pass that on to the common worker, they’re just going to go “you beauty, we’re going to extra mega-millions of dollars than what we’re making already!” So why would they give it over to the average Joe Blow? They’re going to turn it into profits for themselves and their shoulders. That’s my opinion.”

Last word goes to the millennial woman playing pool with her mates.

Q: Will it increase wages?

A: No.

Q: Why not?

A: Because a bank isn’t going to hire more people. If they’ve got more profits, it’ll just go to their investors. They’re not going to open more branches because they’ve got more dollars, that’s not how it works. But if you give me a wage increase, I’m going to spend that shit like that!

Q: Do company tax cuts just benefit big company bosses?

A: Yes.

Q: Will a company tax cut be good for Australian workers?

A: No.

You can’t get more definitive than that.

since this morning

Beleaguered financial services giant AMP has appointed [$] former Commonwealth Bank chief David Murray as its independent chairman, just days after the departure of Catherine Brenner.

Malcolm Turnbull has announced [$] an independent review of the public service, chaired by former Telstra CEO David Thodey, saying many of the public service’s fundamentals date back to the 1970s.

The wife of a convicted Islamic State recruiter gave the terrorist organisation’s salute, by raising her right index finger, as she left court in Sydney after being found guilty of refusing to stand for a judge.

Two brothers accused of plotting to attack a passenger plane with a bomb hidden in a meat grinder have pleaded not guilty in the Sydney Supreme Court.

Bill Shorten has backed [$] WA senator Louise Pratt as a “very good candidate” to run for the seat of Perth being vacated by Labor MP Tim Hammond.

in case you missed it

Energy Security Board chairwoman Kerry Schott, architect of the National Energy Guarantee, said [$] there is no longer an investment case to build new coal-fired power stations in Australia because “the cost of coal is always going to be more than the cost of wind and sun”.

Fairfax Media reports that ABC boss Michelle Guthrie has written a grovelling apology to Kevin Rudd after the Cabinet Files scoop backfired.

Labor has warned that the United States is looking with “bemusement” at Australia’s lack of leadership in the Pacific as China dramatically expands its footprint in the region.

Junkee reports that a Victorian Greens candidate Kathleen Maltzahn has backflipped, saying she no longer supports the “Nordic model” of sex work legislation, which criminalises clients of sex workers.

by Alex McKinnon
The Nation Reviewed
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‘Apple and Knife’: a riot of unruly women
A collection of playful and provocative short stories by Intan Paramaditha

Paddy Manning

Paddy Manning is contributing editor (politics) at The Monthly and has worked for the ABC, Fairfax, Crikey and The Australian. He is also the author of three books, including a recently updated unauthorised biography of Malcolm Turnbull, Born To Rule?

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