Showing posts with label Abbott economics. Show all posts
Showing posts with label Abbott economics. Show all posts

Sunday, 20 May 2018

A call to arms in support of Our ABC

The Guardian, 17 May 2018:

The announcement in last week’s budget that the ABC’s funding indexation will be frozen for three years from July 2019 is the latest in a series of extraordinary attacks by a government that displays an unprecedented level of hostility to the national broadcaster. It represents a real cut to the broadcaster’s operating costs of $84m.

Added to the $254m cut over five years announced by then-communications minister Malcolm Turnbull in November 2014, and a $28m cut to the enhanced newsgathering service in the 2016 budget, this brings the money taken out of our national broadcaster since the election of the Coalition government to over a quarter of a billion dollars.

Contrast this with the former Labor government’s approach. In 2009, when I worked in the office of communications minister Stephen Conroy, the ABC was awarded the largest funding increase since its incorporation in 1983, with $136.4m in new money to fund the creation of the ABC Kids’ channel and 90 hours of new Australian drama. Four years later, the ABC was given $89.4m to set up the newsgathering service and enhance the digital delivery of ABC programs.

In addition to record funding boosts, Conroy, arguably the best friend in government the ABC has ever had, also ensured the ABC charters were amended to specifically require them to deliver digital services; overhauled the board appointment process to put it at arm’s length from the government of the day; and, in a move that enraged the Murdoch empire, created legislation that specified that any international broadcasting service funded by the government could only be delivered by the ABC. This came after the government’s refusal to award carriage of the Australia Network to News Corp in 2011, a decision that was regarded both at home and internationally as common sense by everyone other than the owners of Sky News.

All this is now under attack. The Turnbull government seems determined not only to undo every measure of financial and legislative support implemented by the last Labor government, but to undermine the ABC’s operations so thoroughly that its ability to provide the services its charter requires will likely be devastated.

The legislation passed in early 2013 prevented the incoming Coalition government from reopening the tender process to award the Australia Network to Sky – so they shut it down entirely instead.

Five years later, the Lowy Institute laments that “[o]nce a significant player in what the British Council calls the Great Game of the Airwaves, the ABC’s purpose-designed, multiplatform international services have suffered near-terminal decline”.

"We must rise up against this concerted campaign of funding cuts and attempts to limit the activities of our national broadcasters"

As far as the board appointment process goes, Turnbull as prime minister and his communications minister Mitch Fifield are doing their best to ignore it: two recent appointees, Minerals Council boss Vanessa Guthrie and Sydney Institute Director Joseph Gersh, were not recommended for appointment by the independent selection panel. Fifield is relying on clauses in the legislation governing the appointment process that allow the minister to appoint from outside the recommended list in exceptional circumstances, but has publicly offered no reason why these candidates were more urgently required on the ABC board than those recommended as more qualified by the selection panel.

It’s also impossible to discover whether the minister has tabled the statement to parliament giving his reasons for ignoring the advice of the selection panel, as required by the legislation. If he has, perhaps those statements explain why Guthrie and Gersh are the most qualified candidates to provide governance of our most trusted source of news.

Despite the selection criteria set out in Conroy’s legislation, the ABC board now includes no one other than the staff-elected director and the managing director, Michelle Guthrie, with media experience and, despite the full board having been appointed by this government, they seem unable to make a case to maintain the ABC’s funding.

But the biggest danger to the ABC is the government’s agenda to reduce its digital services, and it’s here where the ABC – and, in this case, SBS as well – face a truly existential threat. The so-called “competitive neutrality inquiry” into the national broadcasters, currently underway, has ostensibly been launched to satisfy Pauline Hanson’s demands for an inquiry into the ABC in return for her support for last year’s appalling package of media “reforms”, which will reduce diversity and local content across the commercial broadcast media.

Don’t believe it for a second. While Hanson’s hatred of the ABC will assist any future government moves to neuter the broadcaster’s digital activities, this inquiry is yet another gift to News Corp and the commercial media organisations, who have been baying for the ABC’s blood since it arrived on the airwaves more than three-quarters of a century ago.

The $30m of government money given, apparently with few strings attached, to Foxtel last year was really just “compensation” for the fact that the commercial TV operators got a windfall gain with the abolition of their broadcast licence fees and replacement with spectrum fees. This saves the broadcasters around $90m per year (money which is forgone government revenue, by the way) so, of course, Foxtel had to be similarly rewarded for … running a commercial business in a competitive market.

Read the full article here.

North Coast Voices12 May 2018,"Time to show support for the ABC"

Sunday, 13 May 2018

Growing older in Australia is becoming fraught with financial risk

The Guardian, 4 May 2018:

Half of the 51,300 older Australians affected by an increase in the age pension age would move on to Newstart or the disability support pension in the first year alone, new figures suggest.

The Coalition has long proposed increasing the age pension age from 67 to 70, kicking in from 2025-26. The change is likely to make Australia’s pension age the highest in the developed world.

Government estimates show the move would affect 51,300 people in the first year alone, according to a response to questions asked in Senate estimates.

The government also predicts 12,934 people would move from the age pension to the disability support pension and 12,825 to the Newstart Allowance unemployment payment.

The changes have not yet been legislated, but the pension changes remain Coalition policy after being first proposed in 2014.

They would follow Labor’s increase of the pension age from 65 to 67 when it was last in government – a change that is being gradually implemented from July 2017 until July 2023.

The opposition has pledged to fight any further increase to the pension age.

The shadow social services minister, Jenny Macklin, said the data showed increasing the pension age would not necessarily keep older Australians in work, as the government intends.

 “Many Australians won’t be able to work for longer like Mr Turnbull wants them to. Instead they’ll just be forced to live on Newstart or the DSP,” Macklin said.

“Labor understands how hard it is for older Australians to find work, particularly when their job has taken a toll on their body and where there is age-based discrimination in the workforce.”

Tuesday, 1 May 2018

One doesn't have to look very hard to see where Turnbull & Co's budgetary spending money is coming from

Australian Treasurer Scott Morrison is waxing lyrical about the state of government finances ahead of next week's 2017-18 Budget announcements. 

Tax cuts for low and middle income earners, company tax cuts, increased infrastructure spending and no increase in the Medicare Levy - all on the back of increased taxation revenue.

But that is not quite the whole truth. The Abbott and Turnbull governments have been steadily reducing the safety-net income and living conditions of welfare recipients for years in order to increase the budget bottom line.

It has been reported Scott Morrison has found over $8 billion in savings in the forthcoming Budget and one can guess where a significant portion of those 'savings' have been found given past history.

A walk down memory lane.......

Exhibit One

The 2014­–15 Budget proposes to change indexation arrangements for the Age Pension, veterans’ pensions, Carer Payment, Disability Support Pension and Parenting Payment (Single) so that payment rates are only adjusted by movements in the Consumer Price Index (CPI). The measure will save $449.0 million over five years…

The budget savings from this measure arise from lower growth in the rate of payment provided to pensioners. Effectively, pensioners will receive a lower payment over time than they would have had the indexation method not been changed. Lower payments also affect the impact of the pension means test with less people likely to qualify for a payment under the income and assets test over time…

The Government estimates that $1.5 billion will be saved over four years through a freeze on the income and asset test threshold for all Australian Government payments. The thresholds for Family Tax Benefit, Child Care Benefit, Child Care Rebate, Newstart Allowance, Parenting Payment (Single and Partnered) and Youth Allowance will not be subject to annual CPI indexation for three years from 1 July 2014…

A further change to the pension means test, lowering the deeming thresholds, will accrue minor savings of $32.7 million for one year of operation (in 2017–18) but significant savings in the years beyond the forward estimates.....

Exhibit Two

The Australian, 5 December 2016:

The Turnbull government is ramping up efforts to claw back $4 billion believed to have been ­incorrectly paid to welfare recipients, issuing debt notices worth $4.5 million every day in a bid to rein in the ballooning welfare bill.

The Australian has learned a new automated system that matches a welfare recipient’s ­details with information from the Australian Taxation Office is generating 20,000 “compliance interventions” a week, up from 20,000 a year before the crackdown came into effect in July.

Human Services Minister Alan Tudge said the new system, which is expected to generate 1.7 million compliance notices to welfare recipients over the next three years, was helping to meet the government’s debt recovery targets.
“Our aim is to ensure that ­people get what they are entitled to — no more and no less. And to crack down hard when people ­deliberately defraud the system,” he told The Australian…..

In the 2015-16 budget and midyear budget update, the government estimated $4bn in welfare benefit overpayments were likely between 2010 and 2018. Budget papers forecast that the government will achieve savings of $1.7bn over five years through debt recovery….

In March 2015 the Reserve Bank cut its cash rate and cut it twice more by December 2016 and the big banks had followed suit. However, the Turnbull Government cut deeming rates for pensioners once only. The base deeming rate continues to date at 1.75% while CBA pensioner security account interest ranges from 0.50% to 1.10% for a good many age pensioners - giving the government a sly and petty saving over time.

Exhibit Three

In 2017 the waiting period for new claimants of New Start AllowanceYouth Allowance and Special Benefit was increased to a minimum of four weeks for those aged under 25 years and Youth Allowance age eligibility restricted in a  federal government omnibus bill.

This bill also applied further eligibility restrictions to Family Tax Benefit payments, removed the pensioner education supplement,  the annual education entry payment assisting with education expenses for eligible recipients, and and the requirement for employers to provide Government-funded parental leave pay to their eligible long-term employees and other measures. 

Total savings were est. $2.37 billion over six years.

The Department of Social Services has confirmed about 86,600 part-rate age pensioners had their pension cancelled as a result of the assets test changes that came into effect on January 1, 2017

Exhibit Four

In the 2016-17 financial year previous changes to the Disability Support Pension resulted in est. $1.5 billion in government savings. Further savings are expected in projections out to 2027-28.

The Guardian, 27 April 2018:

The federal government has created a “false economy” by restoring the budget bottom line through cuts to the disability support pension and potentially pushing more people into homelessness, a leading economist has said.

Speaking at a budget preview forum hosted by Industry Super Australia in Melbourne on Thursday, the Industry Super chief economist, Stephen Anthony, said the federal budget position had improved due to business receipts and cuts to personal benefit payments, particularly the disability support pension.

“The problem here of course is we’re seeing this spill out on to our streets in terms of homelessness,” Anthony said. “I’d say there’s a bit of a false economy occurring there and I’d ask the tax office to consider the models that they’re using and their reliability because the flipside of what they’re doing is causing a lot of social damage and social harm.”

The Turnbull government has tightened the eligibility criteria for the disability support pension, which the Australian Council of Social Services (Acoss) says resulted in a 63% drop in successful claims for the the pension between 2010 and 20116.

People who are not successful in claiming the disability support pension but are still unable to work have been pushed on to unemployment benefit Newstart, which pays $170 less per week…..

He said even a modest surplus was dependent on the government resisting the temptation to spend money in what is likely to be the last budget before the next federal election, saying “we don’t want to see tax cuts … we need tax reform, not necessarily tax cuts”.

The treasurer, Scott Morrison, this week announced he had scrapped a planned $8.2bn increase to the Medicare levy to fund the national disability insurance scheme, saying strong economic growth in the past 18 months meant it was no longer necessary.

The government has also telegraphed a personal income tax cut to address cost-of-living pressures in an environment of stagnant wage growth.

Anthony said the current budget parametres anticipate that annual wages growth will return to more than 3%, a projection that he said is unlikely to be met.

Monday, 23 April 2018

Micaelia Cash's bragging doesn't change the Abbott-Turnbull 'jobs and growth' numbers

On Thursday 19 April 2018 the Australian Minister for Jobs and Innovation and Liberal Senator for Western Australia Micaelia Cash stated: Since the Government came to office in September 2013, we have created a total of 996,800 jobs — an increase of 8.7 per cent.

What stands out for this voter is the small degree of change that has actually occurred when it come to those much vaunted 'jobs and growth' policies.

Bottom line is that in the years between the 2013 federal election when the Coalition Government came to power and the present day, the national unemployment rate has only fallen by half a percentage point and there are only four less job seekers competing for each job that becomes available.

In January 2014 the Australian population totalled est. 22.63 million, Tony Abbott had been prime minister for less than four months and seasonally adjusted there were an est.11,459,500 employed people across the country. This figure included wage employees, private contractors and business operators.

Up to an est. 1.5 million workers were being paid the National Minimum Wage.

Only 69 per cent of the 11.54 million had full-time jobs. Full-time employment decreased 7,100 to 7,953,000 and part-time employment increased 3,400 to 3,506,500.

Around 951,000 of these 11.45 million people in employment would be classified as underemployed, ie. they were employed in less than full-time or regular jobs or in jobs inadequate with respect to their training or economic needs. 

The workforce participation rate stood at 64.5% and the unemployment rate was 6.0%.

There were est. 728,600 people between 15 and 65 years of age who were unemployed and looking for work.

A total of 139,100 and 142,700 job vacancies were recorded for the months November 2013 and February 2014 respectively.

In January-February 2014 it was reported that there were 20 job seekers for every position currently available.

In March 2018 the Australian population totalled est. 24.90 million, Malcolm Turnbull had been prime minister for more than two years and there were seasonally adjusted an est.12,484,100 employed people across the country. This figure includes wage employees, private contractors and business operators.

Up to est. 1.8 million of these workers were being paid the National Minimum Wage.

Only 68 per cent of the 12.48 million had full-time jobs. Full-time employment decreased 19,900 to 8,514,100 and part-time employment increased 24,800 to 3,970,000.

Around 1.03 million of these 12.48 million people in employment would be classified as underemployed, ie. they were employed in less than full-time or regular jobs or in jobs inadequate with respect to their training or economic needs. It is likely that around 3 per cent  of this group were employed in low-paying and insecure jobs via federal government Jobactive placements.

The workforce participation rate stood at 65.5% and the unemployment rate was 5.5%.

There were est. 730,200 people between 15 and 65 years of age who were unemployed and looking for work.

There had been 220,800 job vacancies recorded by the end of February 2018.

In March 2018 it was reported that there were 16 job seekers for every position currently available.

Wednesday, 25 October 2017

Turnbull Government gets a lesson in 'Be Careful What You Wish For'

“Low wage growth means Australians aren't reaching into their pockets at the shops, Prime Minister Malcolm Turnbull believes.” [Sky News, 6 October 2017]

For years Liberal and Nationals state and federal politicians, along with the business sector, have been insisting wages need to be kept low in the ‘new’ economy.

They got their wish and then began to complain that consumers, who through their spending account for more than half of Australia’s GDP, weren’t spending with gusto anymore.

Apparently not one of these wage scrooges had stopped to consider that government economic policy leading to weaker consumer spending would impact on the national economy.

Now economists are beginning to point out the relationship between cause and effect.

Financial Review, 18 October 2017:

Australia's biggest domestic economic risk is a "skewed consumer cycle" and the government may need to step in with a policy on wages, Commonwealth Bank of Australia chief economist Michael Blythe says.

Normal wage growth is around 3.5 per cent per annum, according to the Reserve Bank of Australia, but Mr Blythe noted that wages are now growing at around 2 per cent per annum, "if you're lucky".

"There's a disconnect between slow wage growth and other economic fundamentals such as the employment rate, which are approaching levels that the Reserve Bank considers normal for a robust economy," he said.

"Given the usual economic fundamentals, like the unemployment rate, you would be expecting to see wages growth faster than it is right now. There's a market failure here, in a way, and governments are there to sort out market failures."……

In Australia, the risk is that low wage growth contributes to changing consumer behaviour.

Amid talk of higher official rates in 2018, Australians are already carrying very high levels of debt. Moreover, workers are concerned about job security, even as households face big increases in energy bills. All of which add up to a "pretty difficult mix", Mr Blythe said.

"Consumer spending is 56 per cent of GDP, so if it[s] underperforming it is a drag on the rest," he said.

To date, households have been running down savings rates, Mr Blythe noted, but "there's a limit to how far you can go on that front and what that tells you is we need to get some more income".

The income story consists of wages, interest rates, taxes and social welfare payments.

But of those four factors, wages are really the only "swing variable" as interest rate cuts or tax cuts are unlikely to occur any time soon and social welfare payments are under pressure from winding back the budget deficit, Mr Blythe said.

Some of the traditional mechanisms that have delivered wages increases in the past aren't delivering the same outcomes in the current environment. Tightening labour markets normally deliver higher wages. As the unemployment rate falls, wage growth tends to come through
"But we've been expecting that for a few years now and that hasn't happened," said Mr Blythe. "There's a fair amount of slack in the labour market, it seems, even though the headline unemployment rate has been falling."

Mr Blythe said that this indicates there's a high degree of underemployment in the economy. "When the economy works some of that off I think you'll get a wage response," he said.
However, he believes that low income growth has already changed consumer behaviour.

"Consumers seem to be less responsive to good news and the risk is they overreact to the bad news coming through…..

"So it's an indication that not all the good news is flowing through and if you were to get a negative shock, for example oil were to go up, you would quite likely see consumers cut back their spending more aggressively than they normally would."

"This kind of skewed consumer cycle remains a risk to the broader outlook I think. It's the main domestic risk we talk about when we look at the economy."

Wednesday, 4 October 2017

More evidence that the far-right in politics and industry are determined to drive working class Australians into generational poverty?

Wage fraud, wage freezes, cuts to penalty rates and companies scrapping enterprise agreements will reduce the retirement savings of millions of workers by $100 billion by the time they retire, a report has found.

The report, the Consequences of Wage Suppression for Australia's Superannuation System by the Australia Institute's Centre for Future Work, says the government will pick up more than one third of the cost, equivalent to $37 billion in lost taxes due to lower super contributions and higher age pension payouts.

It estimates that three million people, or one in four workers, have experienced some form of wage suppression, which will adversely impact their super payout.

The author of the report, Jim Stanford, describes wage suppression as an economic "time bomb". He says while individual families are grappling with the immediate impact of wage cuts, the long-term impact when they retire is yet to play out.


Centre for Future Work at the Australia Institute, Jim Stanford, Ph.D., The Consequences of Wage Suppression for Australia’s Superannuation System, September 2017, excerpt from Summary:

Wages and salaries in Australia’s labour market are exhibiting their weakest growth in the history of the relevant statistics. Hourly wages are growing at less than 2 percent per year, and real wages (adjusted for consumer price inflation) are stagnant or falling. The unprecedented stagnation of wages reflects many factors, including chronic weakness in labour demand and the erosion of traditional wage-setting institutions (such as minimum wages and collective bargaining). But it also reflects, for millions of Australian workers, the aggressive efforts by employers (both private- and public- sector) to deliberately suppress wages below normal levels. These wage-suppression strategies take many forms: from the imposition of temporary wage freezes, to the unilateral termination of enterprise agreements, to the outright theft of wages through below-minimum payments. These pro-active measures to suppress labour incomes, breaking the normal link between labour incomes and labour productivity (which continues to grow at over 1 percent per year1), impose great harm on affected workers, their families, government budgets, and Australia’s macroeconomic performance.
There is another important consequence of these wage suppression strategies that is often not sufficiently understood by workers, employers, policy-makers and regulators: their flow-through impact on Australia’s retirement income system. When workers’ wages are unduly suppressed, then the normal flow of employer contributions into their superannuation accounts is also constrained. They will have smaller superannuation balances when they retire, and will consequently experience a lasting reduction in post-retirement incomes. Moreover, governments will share a significant portion of the resulting damage: they will collect less in taxes on superannuation contributions and investment income, and will pay out more in means-tested Age Pension benefits (since workers’ superannuation incomes will be smaller). These significant, lasting consequences from wage-suppression strategies should be documented and considered. They provide a powerful motive for all stakeholders to challenge employers’ wage-cutting initiatives. They also should be of direct concern to superannuation trustees and administrators – since the capacity of the superannuation capacity of the superannuation system to provide decent, secure retirement incomes for its members is being undermined by this growing pattern of wage suppression.
This report presents results from several quantitative simulations of the impact of wage suppression on superannuation entitlements of affected workers, their long-run retirement incomes, and corresponding fiscal effects on government. The report considers several specific scenarios, corresponding to different instances of pro-active wage suppression strategies that have been experienced by Australian workers in recent years. It traces through the impact of those policies on workers’ wages, superannuation accumulations, and retirement incomes. The simulations also describe the spill-over impacts on government (arising from reduced taxes collected on superannuation contributions and investment income, and increased Age Pension payouts). The simulations confirm that:
* Wage suppression undermines superannuation accumulations by automatically reducing employer contributions. Moreover, the damage is compounded over time due to the subsequent loss of investment income.
* Even temporary wage restraint measures (like temporary wage freezes) have lasting negative impacts on superannuation balances, by altering the trajectory of a worker’s wages for the rest of their career.
* The most dramatic instances of wage suppression – the termination of enterprise agreements by employers, and resulting large wage reductions as workers are placed back on minimum award conditions – can reduce the superannuation balance of a retiring worker by as much as $270,000.
* More modest wage suppressing policies (such as temporary nominal wage freezes, producing real wage reductions that are then sustained through a worker’s remaining years of service) reduce retirement superannuation balances by $30,000 or more.
* Government bears a share of the resulting losses, through both reduced tax collections before affected workers retire, and increased Age Pension payouts after they retire. In the worst-case scenarios, governments can experience fiscal losses of over $50,000 per worker (in real 2017 dollar terms).
* Millions of Australians have been confronted with one or more of these forms of wage suppression from their employers, so the aggregate impacts across the economy are enormous. Based on plausible estimates of the number of workers confronted with each form of wage suppression, the aggregate loss of superannuation balances on retirement (if the pattern of wage suppression is maintained) could ultimately exceed $100 billion (in real 2017 dollars) by the time affected workers retire, and the aggregate fiscal cost to government could reach $37 billion (in real 2017 dollars)………..
1 A recent Department of Finance research paper on productivity trends confirms that labour productivity continues to grow at typical historical rates – advancing at an annual average rate of 1.8 percent over the last five years alone. See Simon Campbell and Harry Withers, “Australian Productivity Trends and the Effect of Structural Change, “ August 28 2017, PublicationsAndMedia/Publications/2017/ Australian-productivity-trends-and-the-effect-of-structuralchange


Thursday, 1 September 2016

Literally millions of Australians in the firing line as Treasurer Scott Morrison continues his assault on the poor

On current settings, more Australians today are likely to go through their entire lives without ever paying tax than for generations. More Australians are also likely today to be net beneficiaries of the Government than contributors - never paying more tax than they receive in government payments.
There is a new divide – the taxed and the taxed nots. [Australian Treasurer & Liberal MP for Cook Scott Morrison, Bloomberg address, "Australia must take action to strengthen our economic resilience", 24 August 2016]

John Passant* writing in Independent Australia on 29 August 2016 is not impressed by Scott Morrison:

THE one sided class war continues. Only the words have changed.

Under Abbott and Hockey it was "lifters and leaners" and "ending the age of entitlement".

The "logic" behind this rhetoric gave us the horror Budget of 2014 and its proposed $80 billion in cuts over time to public health and public education.

Public opposition to that Budget was widespread, and angry. The Abbott Government never recovered and the 18 months of negative polls and the prospect of a Liberal wipe-out at the election, saw Malcolm Turnbull take over and win a bare one seat House of Representatives majority and an unpredictable Senate in the July 2 election.

Treasurer Scott Morrison has found some new weasel words to try to disguise the class war he is leading against the poor, pensioners, the sick, the unemployed and low paid workers.
After years of denying it Morrison has admitted we have a revenue problem, although he called it an "earnings" problem. According to Morrison, the great divide in Australian society is between the taxed and the taxed-nots.

In ScoMo world it is "the taxed" who have been bearing the burden of Budget repair while "the taxed-nots" have been bludging off us. Time for the taxed-nots to pull up their socks and start contributing to fixing the Budget problem.

Just who do Morrison and Turnbull have in mind as the taxed-nots? Could it be the 676 big businesses (36% of the group) which, according to the Commissioner of Taxation’s corporate tax transparency reportpaid no income tax in 2013-14? Not on your life.

Could it be the likes of Don Argus – former Bank of America chairman – and his wife with their tax free pension of $1.2 million a year? Not on your life.

Could it be the 56 millionaires who pay no income tax? Not on your life.

Morrison’s prescription for the earnings problem is not to tax big business and the rich but to cut welfare payments to those who most need them — the sort of people he and others claim pay no tax.

As Duncan Storrar, in replying to one accusation that he pays little or no tax, said on ABC's Q&A:

“I pay tax every time I go to the supermarket. Every time I hop in my car.”

In fact, as I have written previously for IA:

Analysis from NATSEM, contained in the ACOSS report on inequality, shows that Australia’s tax take (including GST as well as income tax) across various income quintiles fluctuates around 25%, with those on lower incomes as a generalisation a bit below and those with higher incomes a bit above that figure. However, it gets worse when we compare the two ends of the income spectrum. The bottom 5% pay 34.2% of their income in taxes while the top 5% pay 30.1% in tax.

In other words, Australia does not have a progressive tax system.

Morrison also argued that there were millions on ‘welfare’ who paid no net income tax. By this he means that the government payments they receive are greater than the tax they pay.
Let’s be clear about this. The sort of people Morrison has in mind – and in his sights – are pensioners, the unemployed, students, the disabled, the homeless, those women fleeing domestic violence, the low paid and the list goes on.

Among these groups, the main people who pay little tax and receive much more in payments and other benefits from government are pensioners — all 2.4 million of them….

Read the full article here.

* John Passant is a former Assistant Commissioner of Taxation in charge of international tax reform in the ATO.

New Matilda, 30 August 2016:

“The new divide – the taxed and the taxed nots”

Here was an opportunity to state categorically that we need to increase our taxes, and to make those who are well-off pay their share. Instead we have been presented with a rambling discourse, dominated by his claim that there is a large proportion of Australians who “go through their entire lives without ever paying tax”.

That is plain wrong.

This year the Commonwealth is budgeted to collect $59 billion in GST, and $25 billion in excise and customs duty on tobacco, fuels and certain imports. That’s around $9,000 a household, in taxes that are practically impossible to avoid. Not even a Carmelite nun can avoid the GST.

And that’s before we consider state taxes such as drivers’ licences and car registration fees, and state and local government property taxes paid directly by homeowners or by tenants through their landlords.

Most of these taxes are regressive. The lower one’s income, the higher is the proportion of that income devoted to consumption and therefore to paying the GST, and the registration fees for a Corolla and a Porsche are pretty much the same.

That’s not to mention road tolls, private health insurance, fees at government schools and higher co-payments in health, all of which are high-cost privatised means of paying what we could be paying more fairly and efficiently through our taxes.

Morrison reluctantly admits that Australia has a public revenue problem, but he fails to acknowledge the yawning gap between what we presently collect in taxes and what we should be collecting if we are to fund adequately the public goods and a social security system appropriate for a high income country.

Our tax collections, as a percentage of GDP, are close to the lowest of all OECD countries – among prosperous developed countries only the USA collects less tax, and contrary to partisan spin, our taxes are falling.

Over the early years of this century Commonwealth taxes were around 24 per cent of GDP, before plummeting to 20 percent during the GFC and recovering to only 22 per cent now.

Read the rest of the article here.


The Australian Goods & Services Tax (GST) taxes the final consumer of a good or service. Most unprocessed and raw foods as well as most education, childcare and medical services are GST exempt. The current GST rate is 10 per cent of the retail cost of goods and services and this tax is paid by est. 23.96 million people living in an est.10 million households. This tax is not included in government calculations of how much net tax is paid by any individual after government pensions/benefits/tax concessions received are deducted. Low income individuals/households pay proportionally more GST that middle and high income individuals/households.

[The Conversation, 24 July 2015]

Thursday, 14 May 2015

The Abbott Government's 2015-16 Budget is like the curate's egg#

"My determination is to ensure that this budget is fair"
[Australian Prime Minister Tony Abbott speaking with 3AW's Neil Mitchell, May 2015] 

Only time will tell just how 'fair' this federal budget is. It still contains elements of Tony Abbott's desire to penalise the poor and vulnerable at every opportunity, his determination to avoid funding climate change initiatives or water savings measures where possible and his seeming need to stifle innovation and science.

Here are some of the features of the Abbott Government’s 2015-16 Budget:

* The government is providing $131.3 million over three years to help the telecommunications industry meet their initial capital costs of retaining all metadata belonging to phone and internet accounts held by Australian citizens.

* Income management will continue for another two years in all twelve locations where it currently operates, with possible expansion to four new communities at a cost of $145.8 million and with these scheme trials ending on 30 June 2017. However, the scheme will no longer include Voluntary Incentive Payments and the Matched Savings Payment.

* The government will also spend $2.7 million over three years from 2014-15 to undertake a trial of new welfare debit card arrangements in up to three communities, based on the recommendations made in the report Creating Parity — the Forrest Review, with locations to be determined in consultation with key stakeholders.

*Low Income Supplement — cessation. This represents the loss of an annual $300 payment to eligible low-income households.

* Personal Contact Interviews will be removed from the repertoire of activities required of individuals receiving unemployment benefits. However, from 1 July 2016, the Government will extend the ‘no show no pay’ principle to missed appointments and activities like work for the dole, to encourage positive job seeker behaviour and compliance. Job seekers who fail to undertake adequate job search will be subject to income support payment suspension until they demonstrate genuine job search efforts. These job seekers would also no longer be able to have the financial penalty waived by agreeing to undertake a compliance activity.

* Cessation of the Large Family Supplement of Family Tax Benefit Part A. Large families will continue to receive a per child rate of FTB Part A for each eligible child in their family.

* Family Tax Benefit Part A — reduced portability. With some exceptions the amount of time Family Tax Benefit (FTB) Part A will be paid to recipients who are outside Australia will be reduced to 6 weeks in every twelve months they are overseas.

1 July 2016 onwards the government is removing all or part of federal paid parental scheme entitlements for to an estimated 79,000 working women expected to take maternity leave. Under federal legislation these women had an expectation of receiving up to $11,500 for maternity leave of 18 weeks duration.

* From 1 January 2017 the government will reduce from 26 weeks to six weeks the period that some recipients of the Age Pension, Wife Pension, Widow B Pension and the Disability Support Pension can be paid their full basic means-tested rate while absent from Australia. After six weeks absence from Australia, pensioners who have lived in Australia for less than 35 years will be paid at a reduced rate proportional to their period of Australian Working Life Residence (AWLR). The AWLR is the period a person has lived in Australia, as a permanent resident, between the age of 16 years and Age Pension age.

* The Government will not proceed with changes to eligibility thresholds for Australian Government payments for the next three years that relate to the Age Pension, Carer Payment, Disability Support Pension, and the Veterans’ Service Pension income test free areas and deeming thresholds over three years from 2016-17. The pension income test free areas and deeming thresholds will continue to be indexed annually by the Consumer Price Index. This means that 170,000 extra pensioners with moderate assets will now receive a full or increased pension. At the same time, the asset test taper rate will increase from $1.50 to $3. This means for every $1,000 of assets over the asset free threshold (eg. $202,000 threshold for a single homeowner age pensioner & 286,500 for home owning age pension couples), the pension rate will reduce by $3 a fortnight. Those who no longer receive a pension will remain eligible for a Commonwealth Seniors Health Card or Health Care Card. The Government has decided not to proceed with the 2014 Budget measure to index pension and pension equivalents by CPI alone.

* The government will pause for a further two years the indexation of 78 programmes under the Administered Programme Indexation Pause measure announced in the 2014-15 Budget. For each programme, the extension of the pause to indexation will apply from 1 July 2017 or 1 July 2018 depending on the original start date of the pause.
All elements of the Indigenous Advancement Strategy do not appear to be resuming indexed funding until 2018-19.
Department of Veterans’ Affairs dental and allied health provider payments will not resume being indexed until 1 July 2018.

* A new single Child Care Subsidy (CCS) will be introduced on 1 July 2017. Families meeting the activity test with annual incomes up to $60,000 (2013-14 dollars) will be eligible for a subsidy of 85 per cent of the actual fee paid, up to an hourly fee cap of $11.55 for long day care, $10.70 for family day care, and $10.10 for outside school hours care. The subsidy will taper to 50 per cent for eligible families with annual incomes of $165,000. The CCS will have no annual cap for families with annual incomes below $180,000. For families with annual incomes of $180,000 and above, the CCS will be capped at $10,000 per child per year.

* Cooperative Research Centres — reduced funding. Lost funding will be $26.8 million over four years from 2015-16.

* Industry grant programmes — reduced funding. Lost funding will be  $31.7 million over three years from 2014-15 and will apply to the following programmes; Commercialisation Australia, Enterprise Connect and Industry Innovation Precincts.

* Regional Development Australia Committees — reduced support. This loss of support activity represents $3.6 million over four years.

* Sustainable Rural Water Use and Infrastructure Programme — reduced funding. Loss of $22.7 million in water buyback funding over two years from 2017-18.

* National Low Emissions Coal Initiative — funding adjustment. Funding for the Australian National Low Emissions Coal Research and Development Project will be reduced by a one-off $3.4 million before 30 June 2015.

* The Government will abolish the Commonwealth Scientific and Industrial Research Organisation (CSIRO) Environment Strategic Advisory Committee, as the function has been reallocated by CSIRO to the relevant flagship advisory committee. IIF Investments Pty Ltd, and its assets, have been transferred to the Department of Industry and Science. IIF Investments was established as a mechanism to deliver the Government’s capital into the venture capital funds licensed under Rounds 1 and 2 of the Innovation Investment Fund (IIF), PreSeed Fund (PSF) and Renewable Energy Equity Fund (REEF) programmes. It will also dissolve the Bureau of Resources and Energy Economics (BREE) and the Consumer Advocacy Panel

* The Government will reduce the company tax rate to 28.5 per cent for companies with aggregated annual turnover less than $2 million. Companies with an aggregated annual turnover of $2 million or above will continue to be subject to the current 30 per cent rate on all their taxable income. Individual taxpayers with business income from an unincorporated business that has an aggregated annual turnover of less than $2 million will be eligible for a small business tax discount of five per cent of the income tax payable on the business income received from an unincorporated small business entity. The discount will be capped at $1,000 per individual for each income year, and delivered as a tax offset.

* Application of the Goods and Services Tax (GST) will be extended to cross border supplies of digital products and services imported by consumers from 1 July 2017.

* Under the new arrangements, increased criminal penalties and a new civil pecuniary penalties regime will be introduced for breaches of the Foreign Acquisitions and Takeovers Act 1975. A reduced penalty period for foreign investors that have previously breached the foreign investment rules in relation to residential real estate has been provided until 30 November 2015. These investors may avoid prosecution, but will be required to divest the property.

* Stronger Relationships Trial — cessation. Those couples with a $200 pre-marriage relationship counselling subsidy will have these honoured up until 30 June 2015 for couples who registered prior to 9 February 2015.

* Expenses under the broadcasting sub‑function are estimated to decrease by 3.2 per cent in real terms from 2014‑15 to 2015‑16 and by 8.5 per cent in real terms from 2015‑16 through to 2018‑19. Due to these cuts the Special Broadcasting Service (SBS) is reportedly withdrawing from the digital platform FreeView so if viewers wish to see a certain documentary, drama, comedy or current affairs show they will have to view it on their television at the time of broadcast and wait for any televised repeat in the future if they miss doing so.

* The Australia Council arts funding will be cut by $110 million between 1 July 2015 and 30 June 2019. This arts funding will be transferred to the Attorney-General’s Department to be distributed at its direction of the Attorney-General.

While Thursday marks the 29th anniversary of Paul Keating's famous "banana republic" warning that ushered in two decades of more disciplined government, more than $1 out of every $4 created by the economy will be taxed and consumed by the Abbott government. 
According to a Treasury measure of the "call on resources", which gauges the tax and borrowings needed to fund the government, the burden will hit 26.7 per cent in 2015-16 and 2016-17…..
The budget papers show the measure will remain at more than 26 per cent for at least four years, until 2018-19. The figure looks better than it seems in the final year, which is when the federal government plans to cut $80 billion in funding to states.....
Between 1987 and 2013 the size of government breached 26-per cent only once, in 2009-10, when the Labor government's stimulus package led to increased borrowing. It climbed above that level for only the second time in 26 years in 2013-14, which was the Coalition's first budget, and it has remained there since.