Wednesday, March 28, 2018

Today by Paddy Manning

They think we’re dumb
We’re tough on business, and tough on the causes of business


Once again, Australia’s business leaders have decided to do battle with their imaginary enemies, launching a full-tilt year-long campaign to remind us that a lot of people work for companies, buy things from companies, or have shares in or superannuation invested in companies. Click here for some big numbers courtesy of the Business Council of Australia, and a short video with the key message: “When business thrives, the whole country thrives.”

It is hard to think of a worse-timed launch than last night’s well-planned do in Parliament House: on the same day that the government conceded it had fallen two short of getting its company tax cuts passed in the Senate, and the AFR published [$] the results of a secret BCA survey in which more than 80 per cent of executives said they would either use the proceeds of a tax cut to boost returns to shareholders or invest in the company, and less than one in five would hire more or offer wage rises.

So the prime minister joked valiantly with a few workers who were trotted out by the BCA to endorse the campaign, including Brenda Palmer, the “oldest checkout chick in Australia” who’d worked for more than 50 years at Coles. But his key message – “what we are fighting for here is not bigger dividends for companies or bigger pay cheques for executives … what we’re fighting for here is the viability and the competitiveness of Australian businesses” – had been undercut.

Supposedly the business campaign will help persuade Australians to support the government as it prosecutes a policy debate almost two years old, something the public shows absolutely no sign of doing. Even the government’s friends are sceptical. When investigative journalist Michael West tweeted that half the BCA members paid little or no tax, former liberal pollster Mark Textor tweeted back: “This is in fact the major issue blockage to even the first stage of public acceptance of major Corp. tax reductions for voters. The other is the absence guarantee or ‘deal’ on wages flow through rather than theory or modelling.”

But the well-paid hyper-sensitive pro-business lobby brooks no objection: either we are for them or against them. It won’t marshal the evidence or engage in a debate; it simply insists. It was the same thing this morning on RN Breakfast. Former BCA president Tony Shepherd insisted, citing Treasury modelling, that company tax cuts would eventually boost growth, and went on to claim it is a “no brainer”, “we can’t afford not to” and “business in Australia has done an outstanding job over the last 200 years in growing the economy”. The Australia Institute’s director, Ben Oquist, by contrast, has unpicked the Treasury modelling that supports the company tax cuts, had done analysis of precisely where the benefits of a tax cut will go, and ran rings around the BCA’s arguments this morning.

Spare a thought for these business leaders: they have better things to do, like making more money. The time they put into something like the Business Council is voluntary, and therefore in their minds in the public interest. It’s true their time is obscenely valuable by the hour. They then have to face the wolves of the press. The answer is to stay as uncontroversial as possible, and so we end up with a vacuous agenda that is borderline patronising: we are reminded of the laws of supply and demand, economics 101, almost like explaining over and over that what goes up must come down. But they don’t like the slightest challenge – even being asked more than two questions in a row on a given topic may be interpreted as aggression. A case in point was when, on Sky News, BCA president and former managing director of Origin Energy, Grant King, could not point to a single country where trickle-down economics had worked. He wound up with a generality: “I think the answer lies in competitiveness; if we are not competitive in our tax rate, then you’ll get the reverse of trickle-down economics, we will have less activity … It may be hard to prove in fact, but reducing tax rates create more activity.”

Mathias Cormann simply reverts to red-baiting, as he did last night: “On this side of parliament, we understand the historical failure of socialism. We understand that socialism makes everybody poorer. And you know who it makes poorer first? Low-income earners have the most to lose from a socialist agenda.”

The central problem is this: inequality is at a 70-year high after Australia has had a record-breaking 26 years of uninterrupted economic growth. If the wealth generated over the last quarter-century hasn’t been shared around fairly by now, it never will be. And corporate tax cuts would seem likely to exacerbate the inequality. The long-term Treasury modelling jars with the lived experience of millions that economic growth does not deliver wage increases. It is not anti-business to demand evidence, or a guarantee, that continuing to cut company tax will deliver wage rises; the accusation is ridiculous. 

since this morning

In an exclusive, Fairfax Media’s David Crowe and Peter Hartcher report that a key adviser to Prime Minister Malcolm Turnbull helped to formalise a job transfer for Barnaby Joyce’s partner, according to new details about the controversial decision to secure the new position in a ministerial office.

The Victorian head of the Construction, Forestry, Mining and Energy Union, John Setka, is likely to head to the High Court after Victoria’s top judges rejected his bid [$] to have a criminal blackmail charge thrown out.

Russia’s ambassador to Australia has denied that the Kremlin has placed spies in its Australian embassies, six days before two of its diplomats will be ejected at the order of the prime minister.

The AFR’s Christopher Joye writes [$] that Australia could return to surplus much sooner than expected, and that over the past four months Treasurer Scott Morrison has delivered a surplus amounting to $3.4 billion.

in case you missed it

Independent senator Tim Storer has explained [$] why he does not support the government’s big business company tax cuts, doubting the present system “is sufficiently robust to support a medium-term fiscal strategy of budget surpluses on average over the course of the economic cycle”.

The Guardian had flagged that resources minister Matt Canavan has announced a resources taskforce to help the government increase exploration, improve the “social licence” for mining and increase coal exports to Asia.

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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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