Friday, February 1, 2019

Today by Paddy Manning


Bowen in the hot seat
An almighty scare campaign looms over Labor

Source

The flak that shadow treasurer Chris Bowen has copped this week only reinforces how hard reform can be, even if it is the perfectly rational and defensible closure of an unaffordably generous tax loophole that benefits a lucky few but costs the general public billions of dollars a year. The abolition of refundable franking credits – which allow certain people with very large share portfolios to receive a negative tax rate – is a no-brainer when three million Australians live below the poverty line, and Labor is being so careful with finances that it will not even commit to raising the inadequate Newstart payment that leaves the unemployed struggling on less than $40 a day.

But, rational or otherwise, the people who enjoy those negative taxes – mainly so-called “self-funded” retirees – are not happy about the prospect that they will have to rejig their investment portfolios, and are squealing. The risk for Labor is that this group may convince the general public, as the miners did in 2010, that a threat to one is a threat to all. The Coalition is fervently hoping to stir up just such fears ahead of the next election. As Michelle Grattan writes in The Conversation today, it is exactly how Malcolm Fraser beat Bill Hayden in the 1980 election – by exploiting a stray admission that Labor might consider capital gains taxes on the family home – and similar scare campaigns over tax have been a potent weapon for the Liberals ever since.

As the AFR’s Phillip Coorey reported [$] yesterday, and backed up with commentary today [$], Labor is making a “fraught” political calculation that two-thirds of the 900,000 people who receive cash refunds for excess franking credits already vote Liberal. That was reflected in Chris Bowen’s supposed “gaffe” this week, in which he frankly stated that anyone who hated the policy was “of course perfectly entitled to vote against us”.

Let’s not beat around the bush: this franking credit “reform” is taking $6 billion a year – or an average of $2000 each – from people who, in the main, are living off untaxed self-managed super funds with an average balance that most workers could only dream of. (It would be interesting to know what proportion of that money was invested well before Peter Costello lavished the unsustainable concession upon retirees in 2000.) The wealth accumulation of these “self-funded” retirees has in fact been funded by taxpayers, as The Sydney Morning Herald economics editor Ross Gittins wrote in this searing column last year, describing them as “Australia’s most self-pitying and grasping group”.

What else could the federal government do with roughly $6 billion a year? Well, as Bowen himself pointed out in an op-ed for The Guardian yesterday, the Commonwealth only spent $5.2 billion on public schools in 2014–15. Likewise, he wrote, the Commonwealth spends $11.7 billion on negative gearing and capital gains tax concessions, but only $8 billion on childcare; loses $2 billion in revenue from family trusts, but only spends $1.8 billion on TAFE. It’s a question of priorities.

As the Nine newspapers economics writer Shane Wright observed this morning, Treasurer Josh Frydenberg is sharpening his attack on Labor’s tax plans, and “the Frydenberg-Bowen battle … will be pivotal especially as the economic winds turn”. A prickly character and Keating protégé, Bowen is not there to be liked – he is there to get a job done for Labor, with a clear eye to the historic responsibility presented by the next election.


GOOD OPINION

“South Australia’s Murray-Darling Basin Royal Commission has once again shone a light on one of the biggest rorts in Commonwealth history: the waste of billions of dollars in handouts to irrigators, agricultural groups and farmers under the guise of grants for infrastructure efficiency.” crikey [$]

Crikey political editor Bernard Keane points to the Coalition – particularly Tony Abbott and Barnaby Joyce – for making taxpayers pay twice the going rate for environmental water.

BAD OPINION

“Late last week, 200,000 Victorian households lost power. This occurred after the partial closure of the Portland aluminium smelter in a desperate bid to keep the lights on.”the australian [$]

Federal energy minister Angus Taylor, in an op-ed for The Australian, failing to mention that coal generators offline for maintenance were responsible for the power shortfall.

The Number

The amount of political donations received in total by the Coalition and Labor in 2017–18, according to Australian Electoral Commission figures released today, as reported by The Australian. READ on [$]

The Policy

“The mean temperature for January averaged across [Australia] exceeded 30 degrees, the first time this has occurred in any month.” bureau of meteorology

The list
 
film

“As the film negotiates the chasm between Isabelle and each lover, Denis sneaks in profundity. The film may appear slight – a picaresque romp through the dating world, star-powered and easy on the eye – but discreetly shifts gears to become another of Denis’ fearsomely lucid portraits of desire.” the monthly

portrait

“Three years ago Valerie Khoo traded full-time corporate life in the city to move here with her partner and focus on her art. There is something about Sydney’s northern beaches environment that nurtures your creativity, she tells me. ‘It might be the space … but I think it’s the water.’” The saturday paper

archive

“Amid this cacophony, little is stable, least of all the author. As Louise Adler, CEO of Melbourne University Publishing and the person who has led the publication of political diaries and memoirs in Australia, recently pointed out: ‘Contemporary political memoirs are rarely produced without editorial support – the unacknowledged ghostwriter, the credited co-author, advisers, researchers, fact checkers and a legion of loyal staff.’” the monthly

Competition

The Monthly invites readers to enter the draw for a chance to win one of 25 double passes to At Eternity’s Gate, starring Oscar-nominated Willem Dafoe as Vincent van Gogh, and in cinemas February 14.

Tickets can be used at cinemas nationally, subject to Transmission Films’ terms and conditions.

Entries will close at 11.59pm AEDT on Saturday, February 2, and winners will be notified by Tuesday, February 5.

ENTER HERE

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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