Friday, May 10, 2019

Today by Paddy Manning


Bowen’s bacon
Focusing on the bottom 96 per cent of taxpayers is smart politics

AAP Image / Rohan Thomson

Labor’s fiscal plan, released today, shines a harsh spotlight on a key problem for the government this election: on cash-refundable franking credits, on negative gearing, discretionary trusts and the rest, the Coalition has gone in to bat for a very tiny, very wealthy minority. The politics of aspiration is one thing, but the politics of defending the taxpayer-funded privileges of the wealthiest 1–4 per cent of Australians, versus the interests of everybody else, are unworkable. And while Prime Minister Scott Morrison is defending these awkwardly generous tax loopholes – or ducking and weaving about who’ll benefit from the far-off stages of his tax cuts – he is also boring the rest of us rigid, and missing his opportunity to spell out anything like a vision for the country. So as the final week of the campaign approaches, it seems the tide is going out for the PM, who is beginning to appear as an isolated one-man band or, if you prefer, an empty vessel who lacks [$] a post-election agenda.

It has taken a while for Labor to sharpen its lines, but describing cash refunds for unused franking credits as a “gift”, as Bill Shorten did during the leaders debates, sums up the situation perfectly. As one retiree beneficiary from Port Macquarie complained yesterday, her own adult kids couldn’t see it any other way: “Their father has tried to explain if you don’t earn enough tax to have to pay tax, that’s why you get it back. But it is very difficult for them to get it through to the 40-year-olds why it is not a gift.” Likewise, today’s costings highlight that only 1 per cent of taxpayers will be hit by limits to the deductibility of accounting costs for managing tax affairs, only 2 per cent of taxpayers use discretionary trusts, and only 4 per cent of Australians get cash refunds for unused franking credits. Lastly, only 10 per cent taxpayers negatively gear their properties, and none of them will be affected because the reform is grandfathered. But closing these and other loopholes raises a whopping $154 billion to be spent on tax relief, schools, hospitals and building up healthier budget surpluses to act as a buffer against a sharp economic downturn. All Labor has to do, if it wins the election, is stick to the plan.

In response, the government wheeled out some tired, hollow lines today. Treasurer Josh Frydenberg described the costings as “a con job from a party that can’t manage money”. The PM said [$] there was “something very fishy” about the costings. Rightly, he asked why there was no allocation for the planned investment in child-care workers, for example, or for an increase to Newstart, which is looking increasingly likely, as Shorten has conceded that he is not reviewing the benefit so he can cut it or leave it unchanged. The Australian Financial Review’s John Kehoe writes that Labor’s costings sound too good to be true, and that voters should be sceptical about the ability of a Labor government to keep spending under control. Fair enough, but what about the government’s own forecasts that predict spending restraint not seen in 50 years, which will be necessary in order to fund its hugely expensive tax cuts in the out-years?

The Coalition knows it has erred by devising a re-election strategy that relies so heavily on defending the entitlements of the top 1–4 per cent – that’s why it is ducking and weaving over the $77 billion worth of tax relief that, under its plan, will go to those earning more than $200,000, as estimated by The Australia Institute. An ABC RMIT Fact Check today found that its estimate is, if anything, conservative and that Labor’s use of the figure is “justifiable”.

There is quite simply nothing to be afraid of in Labor’s plan. Is anyone, seriously, concerned that under Labor the country’s tax-to-GDP ratio will hit 24.3 per cent, above the Coalition’s arbitrary, self-imposed 23.9 per cent “speed limit”? In the end, Labor’s plan is no more big-taxing than the Coalition’s – it’s just a question of who benefits, the 4 per cent or the 96 per cent.


GOOD OPINION

“No editor I worked for would have put up with the biased anti-Labor rubbish that, shamefully, the papers now produce on a daily basis … I have many conservative friends who are as disgusted as I am at these newspapers because they know that what they are reading is either distorted or just plain wrong.”

Journalist Tony Koch, a highly decorated, 30-year veteran of News Corp, damns the bias in the newspapers today.

BAD OPINION

“Tony Abbott has been a friend of mine for 30 years. He was a great health minister in my government, always arguing for the strengthening of Medicare. There is only one candidate in the Warringah electorate and that’s Tony Abbott … Tony Abbott is the person you should support.”

Former prime minister John Howard, in a letter to voters in Warringah.

The Number

The amount of tax News Corp is paying in Australia, according to Australian Financial Review senior writer Neil Chenoweth.

The Policy

“GDP growth is expected to be around 2¾ per cent over both 2019 and 2020. This is lower than previously forecast, reflecting the revised outlook for household consumption spending and dwelling activity … The near-term outlook for consumption growth has been revised lower because weaker housing market conditions and income growth are likely to continue to drag on spending ... [D]welling investment is still expected to decline significantly over the next couple of years.”

From the Reserve Bank of Australia’s May 2019 Statement on Monetary Policy.

The list
 
archive

“Australian voters have been told for decades that we need to ‘tighten our belts’ and ‘live within our means’. But in recent years they finally heard a potential prime minister argue that if we don’t cut the company tax rate, if we don’t cut the top personal tax rate, and if we close a bunch of tax loopholes, then we can afford to simultaneously increase spending on essential services and reduce the budget deficit. It’s not rocket science, but it’s radical when viewed in the context of contemporary Australia.”

TELEVISION

“With the weight of the previous seven seasons’ 65-odd hours of thwarted heroics and cruel tyranny, there’s an undeniable momentum to Game of Thrones and its looming finale. Despite the planned prequels, it may well be the last show people obsessively watch around the world at the same time.”

PROFILE

“Aldous Harding is a shapeshifter. Feast your eyes on the compelling music video for her new single ‘The Barrel’, featuring, well, there’s no fair description for it other than ‘That Hat’; just go and witness it for yourself. Then there’s the way Harding’s vocals can vary so dramatically from song to song that she may as well be seven completely different singers. Or her shy defiance when dealing with other humans on a personal level – this is not a people-pleaser.”  

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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