Taxing denial
Most of the major party focus in the last week has been on interest rates and economic management. The battle for bragging rights about which party is supposedly the best economic manager is faintly ludicrous, given that both sides at various times have made a point of emphasising how similar their basic tax and economic policies are to the other – with the partial exception of workplace relations. The posturing about supposedly conservative good economic management is even more absurd – and indeed somewhat alarming – when one realises that these almost identical economic policies are neither conservative nor even very coherent.
As he often does, George Megalogenis in The Australian has nailed it very clearly.
The twin tax cuts are unique because they return much more than bracket creep in 2008-09. The timing could not be more unhelpful given that inflation is forecast to break through 3 per cent early next year.
Reserve Bank governor Glenn Stevens didn’t mention the tax cuts in his statement explaining Wednesday’s interest rate rise. But surely both sides of politics noticed the following passage: “The world economy is still expected to grow at an above-average pace led by strong growth in China and other parts of Asia. High global commodity prices remain an important source of stimulus to Australian spending and activity.”
At $15.4 billion, the China-sourced personal tax cut will surely feed demand. If Howard, Costello or Rudd believe otherwise, they need a crash course in economics 101.
The task for Australia’s political class is to rediscover the language of moderation. Leadership at this stage of a 17-year growth cycle means telling voters that they can’t have it all.
As Megalogenis says, “there is something more than spin going on here. It is a form of denial.” And seeing we all seem to be happy to be sharing in the denial, I’d suggest there’s more than a touch of the Emperor’s New Clothes about the situation too.
5 Comments, Comment or Ping
Stuart
I was listening to the radio on my way home the other day, and there was a snippet on the news about Howard and Rudd going at it hammer and tongs over the “fairness test”. I spluttered, without even thinking about it, “Put a bloody generator on them!”
Spin, rhetoric, lies, deception, and generally treating the voter with contempt. Sums up the election campaign perfectly.
Oh well, I voted last week (hooray for pre-polling), so I have an iron-clad excuse to not listen any more. Still doesn’t stop me railing at the idiocy of the two major parties, though.
Nov 11th, 2007
philip travers
The mining companies are in the Liberal camp,Senator.Now Minchin is postulating a labor shortage..to me its all plain crap,because why plan mines and invest if you are that stupid you cannot figure out where your labour is coming from!?Its actually a form of moving blackmail to once again impose on other interests and the community,farmers may have an excuse with the same stupid attitude,but, they are actually working physically,but miners ,except for the very small are engaged in propoganda to keep up the price of commodities,force government to listen to them on transport efficiencies, Howard has cried foul about overseas financial pressure which comes again through commodity prices,share trading,like BHP and Rio- Tinto..its all a swifty pulled over us week by week.What about the use of rail between mines,and the endless legalities there!?We should treat what come out of miners mouths with a great deal of circumspection.And as for car companies,generally I feel for workers,but shit… its pathetic the industry, when it comes to fuel safety price and design..I have been pseudo-active to fully active on green type issues for years say, 30,and, well I am also bloody jealous of how the car industry is constantly supported.GMH use to make trains,why dont they go back to it,instead of fucking around,give us a hand out to revive us again!? F…the cross subsidies!
Nov 11th, 2007
JULIEN
I like George Megagalogenis, his one of the few journos that cut cut through all the bullsh*t.
Sad really (do’nt mean to sound harsh) but as long as many/most?? people are to ignorant and selfish to no any better we will get the same ol bullsh*t from both sides of politics. eg
Are their people out their that really believe the “1 st homeowners” grant is helpful? inflationary is’nt it? why does’nt the government use that $7000 to fund public/build housing? I’m sure many 1 st time buyers would object to this but if we fund public housing it would create less demand in the private sector and that would benift evey one, and lets not for get building more appartments (not homes) would lower prices. Australia’s “boom” has been a lending one and not building one! No party will do it that will be considered to “left wing” for many though people seem for get that one of the most right wing governments in the world (Singapore) their government is the biggest land lord owner in the world!
Scrap negative gearing, property “investment” is lazy and parastic, why not invest the money in the productive economy? Some people claim it will hurt the poor (usually made by the parastic property investors) garbage many countries do not have negative gearing on investemnts and they pay less as % of their income then here in australia and even if that where the case (rents rise) would’nt more people end up buying out right a home creating less demand in the rental market?
I no the above will never happen, though can some one confirm Keating scraped negative gearing in the early 80’s? I’ve been told rents did sky rocket? if thats the case could’nt they phase it out over an extended period so they do’nt “spook” the market?
Nov 12th, 2007
CORAL
That’s right, Phil. Any idea that there is a labour shortage is “plain crap”.
Taxes are collected every time we blink, but where the hell is the money going? It certainly isn’t going into services.
For 20 or more years, this country has been exporting work to take advantage of Asian slaves (clothing trade, motor vehicle manufacture etc), and now the government is going “one better” and importing workers to drive wages down in Australia.
If the government wants to get young people living on the dole out to work, it needs to ensure that employers pay them a “working wage”, instead of a “dole-sized wage”.
The minimum wage in this country is nothing more than a disgrace.
We may be told that the inflation rate is currently below 3%, but that’s “plain crap” as well.
The cost of food and household products has risen by 20% in the last year, with retailers taking advantage of the drought when pricing NON-FOOD items.
At the same time, shop workers are running around like ants in an ant colony and having their hours and/or wages cut.
In recent years, housing price increases have averaged out at 30% per annum – to say nothing of fuel prices.
I think the current REAL rate of inflation would be somewhere in the vicinity of 15% to 20%. For decades, it used to be twice what the government told us – now it is probably more than 5 times what they say.
Housing, food, job security and a “living wage” are not dispensable luxuries we can afford to live without.
Nov 13th, 2007