The Politics    Tuesday, April 16, 2019

Fiscal wolf in sheep’s clothing

By Paddy Manning

Fiscal wolf in sheep’s clothing


The PM’s tax cuts mean radical austerity

Don’t be fooled. John Howard used to say that he wanted Australians to feel “comfortable and relaxed”, which turned out to be code for a GST, goons on the waterfront, the Tampa election, the calamitous invasion of Iraq, WorkChoices, and a decade lost to climate inaction. The Coalition is now trying to pull off a repeat performance. Behind our latest prime minister’s footy-loving, “daggy dad” persona is a radical policy agenda that will bury the good old Australian concept of a “fair go” so deeply that it may be irrecoverable. The surest sign of that is today’s Australian Financial Review story [$] that reveals the Coalition will have to make cuts to services of some $40 billion a year by the end of the decade if it wants to balance the books and simultaneously afford the stage-two and stage-three income tax cuts it has in store from 2022 and 2024. That $40 billion a year would pay for a lot of health, education and aged care. So, when Scott Morrison talks about a “fair go for those who have a go”, Grattan Institute analysis of his government’s budget papers suggests that may well be code for austerity more extreme than anything Australia has seen in the last 50 years.

This is not scaremongering: it’s set out in black and white in the budget. Shadow treasurer Chris Bowen hinted at it last week, telling the National Press Club that under the forecasted budgets government spending falls from close to 25 per cent of GDP this year to around 23.6 per cent of GDP by 2030, well below historical averages. A difference of 1.4 per cent of GDP doesn’t sound like much but, as Bowen said, “claiming that reduction in spending – with no outline of where the cuts will come from – magically makes their expensive and regressive tax cuts suddenly affordable”.

Grattan Institute analysis has borne out Bowen’s claim: that small 1.4 per cent difference turns out to be $40 billion a year. As the Grattan Institute’s Danielle Wood told The Australian Financial Review this morning, forecast cuts to spending of that magnitude require some “heroic” assumptions. The government argues that it will be able to make those cuts because fewer people will be in welfare due to higher job creation, or because interest payments on debt will be lower. That’s hardly convincing: we are heading for an economic downturn and a veritable hurricane of automated job destruction, and the government has doubled net debt over the last six years.

Why are these forecast spending cuts necessary? To be able to afford the radical flattening of the income tax scales that the Coalition plans in 2022 and 2024, which will put anyone earning up to $200,000 a year on a top marginal rate of 30 per cent, as helpfully outlined by Grattan’s economists in this piece for The Conversation. Grattan Institute chief John Daley told me that those tax cuts were highly regressive: “Overall the Coalition tax cuts as planned are only affordable if we see spending restraint that we have not seen for the last 50 years. Credit where credit’s due, the Abbott–Turnbull–Morrison government has had lower spending growth than pretty much any of its predecessors … However, the numbers that are built into the forwards assume spending growth materially lower than we have seen at any stage for the last 50 years, at the precise point at which we are expected to see substantial ageing of the population. Let’s just say it looks kind of aggressive.”

Who do the Coalition’s stage-two and stage-three tax cuts benefit? Daley is crystal clear: “The tax cuts as proposed essentially get rid of the effects of bracket creep for high-income earners. For people in the middle, it doesn’t help them that much. So it really is true that these are a regressive set of tax cuts.”

Which tells you everything you need to know about “daggy dad” Morrison and his affable treasurer, Josh Frydenberg: they don’t come across as hardline as Tony Abbott or Peter Dutton, but their goals are the same.

Listen to The Politics Podcast, with Rachel Withers


“People forget Bob Hawke’s election campaign in 1990 … [when] Labor lost nine federal seats. Over the last 20 years we’ve only really recovered probably four of those nine … This is the first opportunity since 1990 for Labor to really strike back into [those] eastern suburbs, which have been just a stronghold for the Liberal Party.”

Former Labor powerbroker Stephen Conroy tells Sky News Australia why Melbourne’s east is a key battleground in this election.


“The Chinese people come to Australia because they want good education for their children, good environment, they want good things for their next generation, not to be destroyed – they use the word destroyed – by these sort of concepts of same-sex, transgender, intergender, crossgender and all this rubbish. To them this is just ridiculous rubbish.”

Gladys Liu, Liberal candidate for the Melbourne seat of Chisholm, in a 2016 interview with Guardian Australia.

The Number

The upper estimate of the weekly oil revenue that Australia is accused of “siphoning” from Timor-Leste by failing to ratify last year’s maritime border treaty. The total is estimated to be more than Australia’s aid to the country since the treaty was signed.

The Policy

“AEMO should contemplate a national CO2 emissions budget for all economic sectors, and include a scenario where the electricity sector delivers deeper cuts than currently contemplated.”

The Australian Energy Council in a submission to the Australian Energy Market Operator (AEMO), which will now model a “step change” scenario that is consistent with the Paris target of limiting warming to 1.5 degrees.

The list

“Though adapted from a short story by Haruki Murakami, Burning feels rather more indebted to Patricia Highsmith. For one thing, there’s the duality of the male antagonists, as reciprocal and ultimately destructive as that between Tom Ripley and Dickie Greenleaf (The Talented Mr Ripley) or Guy Haines and Charles Bruno (Strangers on a Train). For another, there’s the same uneasy mood, and the sense, consistent across both Highsmith’s and Lee’s work, that social etiquette is merely a veil drawn across violence and chaos.” 


“Australia’s premier scientific research agency is distancing itself from the federal government’s decision to give final federal environmental approval for the Adani Group’s Carmichael coalmine in central Queensland. The Commonwealth Scientific and Industrial Research Organisation, whose advice was cited alongside that of Geoscience Australia as the basis for the decision, says it was only responsible for answering a narrow set of questions, not giving the project’s whole groundwater plan a tick of approval.” 


“Gross domestic product, in excluding the unpaid labour of one gender, [feminist economics pioneer Marilyn] Waring tells me, is based upon ‘an ideology of applied patriarchy’. Because GDP only looks at activities in the marketplace it counts the work of drug dealers but not of hospice volunteers, the production of nuclear weapons but not women’s unpaid work. Human activities of great value are made invisible, treated as valueless.”

Paddy Manning

Paddy Manning has worked for the ABC, Fairfax, Crikey and The Australian. He is the author of Body Count: How Climate Change Is Killing Us, Inside the Greens and Born To Rule: The Unauthorised Biography of Malcolm Turnbull.

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