But we’ve done tax reform – haven’t we? (Part 2)


Last week we briefly looked at some of the problems with the current tax system. It seems that a number of those who should have a high level of understanding of the fundamental flaws in the current taxation system agree that the system needs reform.

Price Waterhouse Coopers suggest:

. . . there is a clear need for comprehensive tax reform — done the right way. The ‘right way' means increasing those taxes that have the least effect on investment and employment, and at the same time reducing reliance on taxes that distort incentives to work, invest and transact business. It also means addressing those factors which increase the complexity of the tax system and the cost of compliance.

Business Spectator reports:

Without widespread tax reform, the Australian government faces a prolonged period of sluggish wage growth and poor productivity. That might sound pessimistic but that’s the simple equation laid out by outgoing Australian Treasury secretary Dr Martin Parkinson.

Peter van Onselen wrote in The Australian (pay walled):

To the extent that consensus among tax professionals on the best way to collect revenue can be found, broad-based taxes are preferable to direct taxes. That’s because direct taxes such as income tax fall victim to bracket creep and stifle productivity. They feed into higher wages, too, which can affect inflation and Australia’s international competitiveness adversely.

But broad-based consumption taxes such as the GST can be regressive, in so far as they hurt lower-income families disproportionately to higher-income families given their flat application.

But this is a situation that can be easily overcome, is generally overstated and certainly isn’t a reason to abandon GST reform, which must be tackled boldly by our political leaders. It is always possible for policy decision-makers to make up for regressive GST application on the spending side.

Firstly, lets discuss the difference between ‘broad based’ and ‘direct’ taxes.

A ‘broad based’ tax is something like the Medicare levy. Everyone who pays tax pays a percentage based on their level of income to fund the ‘free universal’ healthcare system supported by the government. Distortions exist to ‘manufacture’ compliance with various social policies such as the surcharge made to those on higher incomes without private health insurance. GST is another ‘broad based’ tax: as the value of the tax is based, however, on the goods or services being purchased, rather than people’s incomes, someone on $40,000 per annum proportionally pays a higher rate of tax than someone on $140,000 per annum should they decide to purchase the same product. This distribution effect can be ‘engineered’ out through use of rebates etc. — as was promised with the Carbon Pollution Reduction Scheme (Carbon Tax).

Direct taxes are charges such as income tax. You pay a certain percentage based on your income. While someone who is in the fortunate position to pay tax on the highest ‘margin’ pays more dollars than someone on the lowest margin, the person on the lower margin usually contributes a greater value of their annual income.

So, according to the experts, the problem is the complexity and ‘side effects’ of the current tax system: to fix the problems, move to broad based taxes based on equitable criteria and simplify the system. Sounds reasonably easy, doesn’t it?

This is where the politics comes in. In 1975, Asprey and Parsons handed over the full report of the Taxation Review Committee. The Asprey Report received little attention from Whitlam or Fraser: it did contain, however, discussion around the major taxation reforms of the 1980’s and 1990’s (capital gains, dividend imputation and GST to name a few).

The Rudd/Gillard government commissioned Ken Henry, former treasury secretary, to perform another review of the taxation system in 2010. Henry’s review (which was told not to look at the GST — one would assume for political reasons) suggested a number of reforms to improve the taxation system. The politics surrounding the review was that ‘a package’ would be recommended. Ken Henry obviously disagreed. The Henry Review advised:

The review has aimed to set strategic directions for the future architecture of the Australian tax and transfer system. It has not produced a one-off tax policy package, and it has not advanced the detailed design or timing of measures. Indeed, it is neither possible nor desirable to make all of these changes (138 recommendations) too quickly.

In the words of John Hewson:

. . .those expectations were there, so when they were thwarted, the Review was all too easily dismissed, politically, as “just another study/review/inquiry”, easily essentially shelved by the media, although [the government] also all too easily “cherry-picked” with attempts to implement just a handful of its recommendations.

Against this background, the [then ALP] government only picked some “high profile” recommendations immediately, such as the mining tax, and when that backfired, it then only did smaller issues, quietly, leaving the bigger issues like savings and State taxes untouched.

Hewson goes on to note that the Rudd/Gillard government implemented 40 of the Henry Review’s recommendations but the Abbott government has since reversed the implementation of all but seven of them — without identifying the recommendations came from the Henry Review.

This piece started with a comment from an accountancy/business services firm (Price Waterhouse Coopers) stating what it believes is necessary. Not to be outdone, others have expressed their opinion as well, including Ernst & Young, The Conversation here and here, the Housing Industry Association, Newscorp’s The Australian (pay walled) and Prosper, an organisation that has been campaigning for a century for a greater reliance on property taxes to replace direct taxes. There are no doubt others as well — time precludes finding them and space from listing them.

Each group that enters the tax reform debate overtly or covertly expresses an opinion that would assist their members or customers — as is their right. It certainly doesn’t help any government in designing a fair and equitable solution for all of society, especially when affected industry groups commission and use selected facts in television advertising that certainly don’t mention that compensation to taxpayers was a part of the deal.

Politically and economically, tax reform is a hard ask. Hawke/Keating and Howard/Costello both were successful to a degree in implementing reforms to the Australian taxation system. There are also those that suggest the whole system should be replaced by ‘flat taxes’.

Of course there are a number of versions of ‘flat tax’ from the ‘pure’ — everyone pays a percentage of their income with no deductions or rebates allowed — through to systems that allow deductions, negative taxes and other arrangements. Wikipedia discusses some of the different versions here.

The economics editor of The Australian argues that ‘flat tax’ is an economic necessity (pay walled). In 2010, Abbott, then opposition leader, suggested a version of flat tax would be beneficial and commented it was recommended by the Henry Review. The ALP disagreed. Greg Jericho, writing on ABC’s The Drum website, suggests that ‘Unless you’re wealthy, you’re not going to like flat taxes’. Jericho makes the point that flat taxes are by their nature regressive, as they are a ‘broad based’ tax.

Remember the disparity in the actual proportion of a person’s income when buying a product we looked at a couple of hundred words ago? Twenty per cent of $140,000 is $28,000 and 20% of $40,000 is $8,000. So the person on $140,000 still has $118,000 per annum to spend while the person on $40,000 only has $32,000. Regardless of the dollar amounts, the person on the lower income is paying more value from their income when a broad based tax (such as a GST or ‘flat income’ tax) is levied. Certainly there can be some ‘engineering’ of the tax system so that the value contributed by both the higher and lower income earner can be made fairer but that is adding to the cost of managing the tax revenue and reduces the ‘purity’ of the revenue collection system.

Hewson, in his paper, suggests that Hawke/Keating achieved some tax reform because they crafted a message supporting the need for change to the then system by way of the ‘Tax Summit’ and demonstrating that change would reduce the level of tax evasion, such as the ‘bottom of the harbour’ scheme that was apparent in the 1970’s and 80’s. He also claims that his “Fightback” package, that was taken to the 1993 election, was the subject of various campaigns to create fear, uncertainty and desperation. To an extent, it is a fair call. Hewson also suggests that 1% of tax revenue is taken by the administration of the tax revenue system — demonstrating its complexity.

It seems that a simplified revenue collection system is a given to make our taxes work harder. Another factor that needs to be considered is the current rhetoric from political parties of all colours that the country’s budget is closely related to a household budget and has to either balance or be in surplus.

To simplify the current revenue collection system, tax reform is needed. If tax reform is discussed, every ‘special interest’ group in the country will have its say in an attempt to protect the interests of their members/customers. While ‘flat taxes’ are superficially attractive, they do have a tendency to favour those earning a higher income unless ‘engineering’ is performed to make the tax impost fairer (in which case what is the point of a nominally one-size-fits-all ‘flat tax’ system?).

Something that recent governments have painted themselves into a corner on is the mythology that the country’s budget is similar to a household budget and must be balanced or in surplus. It doesn’t — as Australia issues it’s own currency. The Conversation recently discussed ‘Why the Federal Budget is not like a household budget’ and noted:

The real calculation faced by government should not be about how much money the government has — it has an infinite amount. The calculation should be about the capacity of the economy to absorb government spending without driving inflation.

Seeking a balanced budget and automatically borrowing any deficit spending (as we currently do) is an effective but unsophisticated way of ensuring government spending doesn’t cause runaway inflation. Taxes and government borrowing remove money from the private sector, creating space for government spending (which injects money into the private sector). Remember, the government does not have to borrow or tax in order to finance spending because they can create money.

The Political Sword has previously looked at the fallacy of the balanced budget debate here and here. Peter Costello (former treasurer) not unsurprisingly has a comment on the difficulty of balancing budgets versus tax reform:

This is harder than balancing a budget and I've done both.

John Hewson’s push to become prime minister in 1993 failed due in part to a lack of understanding of his tax reform measures. John Howard found that he could not pass the GST without diluting the ‘purity’ of the tax to appease the Australian Democrats; Julia Gillard had to negotiate to get a ‘watered-down version’ of the Mining Tax through the Senate. So far, Abbott’s government has not demonstrated that it can negotiate well enough to ensure that the minor parties and independents in the Senate would commit to a package of reasoned and logical tax reform.

During October 2014, Abbott called for a mature debate on inter-governmental relations in general and the GST in particular. It is unlikely to happen until either the current government learns how to build a consensus as Hawke and Howard did or has the numbers and the motivation to do something for the common good. Either way a mature debate cannot be conducted in 30 second sound bites so loved by our current prime minister and the media.

What do you think?

About 2353

This week 2353 completes his ‘Tax reform’ discussion and paints the political difficulties of achieving tax reform. As he writes, almost everyone agrees we need tax reform but we don’t seem able to come to agreement on what should be done. Please tell us your views of tax reform and how we can achieve it.

Come back next week for Ken’s view of "President Abbott: or why prime ministers should be not immune from removal by their party".



Rate This Post

Current rating: 0.5 / 5 | Rated 11 times

Ad astra

1/03/20152353 Thank you once again for enlightening us about tax reform in your informative, liberally referenced, and lucidly written piece. Today you spell out the difficulties that encumber any attempt at tax reform. The habit of political opponents using tax reform proposals to demean those proposing them is so common that it seems an impossible task for any government unless bipartisan agreement can be engineered. In the current political climate, that will not happen. When will we have statesmen with a clear vision of what options there are for tax reform, who can articulate what is necessary, who can persuade the public to their view, and who can engage their opponents and all the stakeholders in meaningful and purposeful dialogue, free of self interest and adversarial political intent? If that sounds like the impossible dream, that is because it is!

John Skene

1/03/2015There is one type of tax that no one talks about and that is a debit tax on bank withdrawals. If it is as low as 1% on all money withdrawal or transfer from a bank, building society,credit union accounts just think how much money the government would get.

2353`

2/03/2015John Skene - thanks for the comment and welcome to [i]TPS.[/i] A bank account debits tax (with one fo the best acronyms ever - BAD Tax) was implemented in the 80's and disappeared as part of the GST reforms. You're right, it would contribute a lot of money however it was seen as a tax on withdrawing your own money.

Ken

2/03/20152353 Abbott won't consider tax reform unless he can find a three word slogan for it! I do like the 'Robin Hood' tax idea - the financial transactions tax and from what I recall it only has to be at the level of a fraction of a cent in the dollar to make billions because it will capture major transactions between banks. Of course, the banks and other financial institutions have argued strongly against it.

Casablanca

2/03/2015George Brandis censured by Senate after criticism of Human Rights Commission president Gillian Triggs Emma Griffiths Updated 2 minutes ago Labor Leader in the Senate Penny Wong moved a motion this morning censuring Senator Brandis for failing to defend Professor Triggs from "malicious attacks". "This attorney has directly attacked the independence of a senior statutory office holder within his own portfolio," she told the Senate. "Never before has an attorney-general failed to defend an institution but actively joined in the attack." http://www.abc.net.au/news/2015-03-02/brandis-censured-by-senate-after-criticism-of-gillian-triggs/6274294

Ad astra

2/03/2015Casablanca Brandis and Abbott are so arrogant that a censure motion will be tossed of as inconsequential - Abbott has already expressed 'complete confidence' in the Attorney General. Their hubris knows no bounds.

totaram

2/03/2015"This is harder than balancing a budget and I've done both." - Peter Costello. This fool, who thought he was doing all these things, understands nothing, and didn't do any of those things. You cannot balance a budget because you cannot predict exactly what the private sector will do, and that determines what your revenues will be. And "balancing budgets" or "achieving surpluses" is just stupid anyway, because that is not what a government is supposed to be about, except to neoliberals like this idiot, who sold off everything he could to "achieve surpluses and balance budgets". Any surpluses he achieved were purely accidental because of the mining boom, and they were not good for the economy because they caused the private sector to run up huge deficits. Once again, the purpose of tax reform is: 1) simplification to cut the cost of compliance So you don't need a highly paid consultant to save you tax by finding loopholes- which only benefits the rich because only they can afford these tax consultants. 2) to remove incentives for unproductive investments and speculation. So people don't invest all their money in buying and selling property, which pushes young people out of the housing market, and deludes others that they have created "wealth", just because property prices have gone up. So money is not used to pump up the stock market and other "financial products" which simply create asset bubbles. In this context, a financial transactions tax would be very welcome. Some variety of this is already in existence in some countries. 3) to nudge investments in socially desirable directions as informed by science and evidence. Taxes to reduce drinking, smoking, gambling, eating junk food, and other undesirable behaviours. We already have high excise an other taxes in areas and raising them would be great. 3) to improve equity and fairness by looking after the most vulnerable in society and targeting those who can easily afford to pay. Increase the medicare levy for example a health care will become "affordable". And "education cess" on all tax payers, including corporations could help "fund" education much better. This actually an investment and so it doesn't really need to be "funded" but we can make that argument for those who things it is an expense. Means testing the health insurance rebate, the superannuation tax benefits, etc. etc. are all well known examples of these types of "taxes". I find it hard to believe that most people will be against all these measures. It can only be because they are brainwashed by the Murdoch and other media. A well orchestrated campaign on social media should be able to counter that by now.

totaram

2/03/2015Of course, I forgot: 4) to prevent money being ripped off by multinationals, since this actually worsens our trade deficit and may require, at some stage, that we borrow in foreign currency, which is dangerous. Also apologies for typos etc. Easier to see when you post the comment but not so visible to old and tired eyes in such small font before posting.

Casablanca

3/03/20152353 Thank you. Yet again you have been ahead of the game in providing us with great insights into a subject that is under particular investigation by academics and government. I have posted a small clutch of articles below which also deal with tax and revenue. Most pertinent is #2 by Miranda Stewart, Professor and Director of the Tax and Transfer Policy Institute at Crawford School of Public Policy, The ANU.

Casablanca

3/03/20151. Australia's Future Tax System Review - The Henry Review. 2010 The Review took a 'root and branch' approach and examined Australian and State government taxes, and interactions with the transfer system in order to make recommendations to position Australia to deal with the demographic, social, economic and environmental challenges that lie ahead. http://www.taxreview.treasury.gov.au/Content/Content.aspx?doc=html/home.htm 2. It’s time to choose what kind of tax system we want Miranda Stewart. 2 March 2015, 6.28am AEDT Five years ago the Henry Review undertook a detailed examination of Australia’s tax and transfer system. Today, the Tax and Transfer Policy Institute at ANU’s Crawford School has revisited the Henry Review, as the Australian government prepares to release its tax white paper. Tax reform should not be piecemeal, but should be considered across the system as a whole. Australia raises less tax overall than many comparable countries, including Canada and New Zealand. https://theconversation.com/profiles/miranda-stewart-329 3. FactCheck: is Australia spending over $100m a day more than collected in revenue? Miranda Stewart and Guay Lim. 13 February 2015, 2.42pm AEDT Verdict: It is true we are spending over $100 million a day more than we’re collecting in revenue and nearly $40 million a day on the interest on the debt. However, we compare favourably to other countries on deficit and debt. You don’t need to worry too much right now about your $4.66 a day in “overspend”. But you do need to join a debate about tax reform that asks what you want government to do, how we can reform taxes to ensure prosperity, and how we can fund public goods fairly and sustainably for the future. https://theconversation.com/factcheck-is-australia-spending-over-100m-a-day-more-than-collected-in-revenue-37172 4. Trusting Treasury: When To Say Yes, When To Say No Ian McAuley. 2 Mar 2015 In tough economic times, Treasury's advice carries more weight. But they are not the font of all knowledge.... When the economy is buoyant, as in the boom times up to 2008, governments can (and do) override Treasury advice. But in tough times, Treasury carries much more authority. Unless there is some Lazarus-type economic recovery in the near future, our next government will have to pay much more attention to Treasury. https://newmatilda.com/2015/03/02/trusting-treasury-when-say-yes-when-say-no 5. Joe Hockey's penny-pinching will constrain growth Richard Denniss. February 27, 2015 Joe Hockey's blinkered approach to debt and cuts to spending are holding back economic recovery... There are three main ways that we can deal with the enormous cost of the population growth. We can increase taxes, we can cut spending on existing services, or we can borrow money. The fairest and most economically efficient way to fund the upfront needs for all that social infrastructure is to borrow the money and repay it over the very long life of the assets – especially when there are record low interest rates. The least fair, and least efficient, way would be to cut pensions and spend less on health. Needless to say, the Abbott government has opted for the latter. http://www.canberratimes.com.au/comment/joe-hockeys-pennypinching-will-constrain-growth-20150227-13qhy9.html 6. Much obliged Richard Cooke November 2014 The poor face onerous rules while rich corporations avoid tax with impunity Australian politicians love the idea of mutual obligation. But the disparities underlying it are becoming more and more extreme. Welfare recipients are painted as getting “something for nothing”, and pushed into more and more restrictive versions of the social contract. Meanwhile, corporate citizens are happy to take subsidies and shirk tax, and can expect little or no punishment if they break the law. Some are trying to excise themselves from society altogether. The government has talked tough about tax and regulation at the G20, while gutting enforcement agencies at the same time. Don’t expect that to change. http://www.themonthly.com.au/issue/2014/november/1414760400/richard-cooke/much-obliged 7. Australia's Economic Policy Challenges John Fraser, Secretary to the Treasury, 27 February 2015 Over the past two decades, I have observed the performance of the Australian economy and the debates about fiscal policy and structural reform largely from afar. My outsider's perspective was that, while our economy was performing comparatively well and our levels of government debt were well below those of most other advanced economies, this owed much to the hard decisions on structural reform made through the 1980s and 1990s, the fiscal repair of the late 1990s and the good fortune of being endowed with commodities that have been in high demand by China since the early 2000s. Now, there is a real question as to where our future prosperity will come from as the growth dividend of past reforms fades and growth in demand for our natural resources eases, especially against the headwinds of a weak global economy and an ageing population. http://www.treasury.gov.au/PublicationsAndMedia/Speeches/2015/Australias-Economic-Policy-Challenges 8. John Fraser questions IMF view on austerity debate Jacob Greber. 26 Feb 2015 06:47:06. New Treasury secretary John Fraser has cast doubt over the International Monetary Fund's credibility in recent years for its argument that some budget tightening around the world had done more damage than good. In a pointed response, Mr Fraser - speaking publicly for the first time as secretary - indicated he took a different view to the IMF on the trade-off between austerity and growth. He noted that United Kingdom's austerity program had been a "clear success" and that there had been clear success in the US as well. http://www.afr.com/p/national/politics/john_fraser_questions_imf_view_on_n1TCt2lLt6r5fTn9aQlDNK

2353`

3/03/2015Thanks Casablanca for the topical links. I really don't know how you do it! The links will give me some 'light' reading tonight.

Ken

3/03/2015Casablanca Excellent articles. It is somewhat scary to read Fraser's speech - and I must admit I read the articles in reverse order, so came to McAuley's comments, which reflect my own view, after reading the speech. If the head of Treasury is thinking that way, we have an underlying problem. While some of Fraser's statements are valid, he does pursue the economic rationalist view that private enterprise and competition, and deregulation or self-regulation, are the way to go. There is very little 'humanity' in the Treasury view.

Ken

3/03/2015On matters economic, or at least the share market, have people read the news that the Sydney stock exchange index is at its highest level in seven years. That means since 2008 which means it has been higher in the past. I know it has. It reached about 6400 during the 'tech bubble' around 2000-2001. So, in this wonderful economy we have, and despite the mining boom during the Howard years, our market activity, as reflected by the share market, has been lower for the past 14-15 years. That suggests that if I had had shares since the 1990s that grew at the same rate as the stock market they would have reached a peak around 2000 and would not yet be back to the level achieved at that time. And we are told that things have gone well for much of that time - that's not what the stock market tells me. (Yes, I know the tech boom was a 'bubble' but it does raise questions of how much growth we have actually achieved in the past 15 years.)

Casablanca

3/03/2015Superficially, the polls were better for Abbott. Only a couple of writers drilled down to the less palatable statistics. Peter Hartcher still sees Abbott as a 'dead man walking'. 1. Living by the polls will be Abbott’s fate from now on Michelle Grattan. 2 March 2015, 11.07pm AEDT The result is to reinforce the image of modern politics as a permanent election campaign, with announcements and re-announcements piling out on top of each other, and trash being dumped. A big question is what impact this poll-to-poll, event-to-event existence will have on the formulation of the May budget. Last year the crazy brave budget message seemed to be “to hell with the polls”. This year the polls will be well to the fore in Abbott’s thinking during budget discussions. Assuming he is still leader by then, Abbott needs a budget that does not push down the polls or upset the Senate too much....Just to rattle the government’s cage, Palmer announced on Monday that the two Palmer United Party senators would not vote on any legislation until the government “chaos” ended. https://theconversation.com/living-by-the-polls-will-be-abbotts-fate-from-now-on-38248?utm_medium=email&utm_campaign=Latest+from+The+Conversation+for+3+March+2015+-+2492&utm_content=Latest+from+The+Conversation+for+3+March+2015+-+2492+CID_f8d4c2f91a48e5a3b631d661d29e97bb&utm_source=campaign_monitor&utm_term=Abbotts%20survival%20strategy%20reinforces%20the%20image%20of%20politics%20as%20a%20permanent%20campaign 2. Federal Ipsos has Labor lead down to two points Adrian Beaumont 2 March 2015, 1.11pm AEDT I believe that the Coalition vote is improving because people think that Abbott will soon be gone...An important qualification with Ipsos is that all four of its polls, conducted since it replaced Nielsen as Fairfax’s pollster, have shown a clear lean to the Coalition relative to other pollsters. As a result, this poll should be interpreted as being at least 52-48 to Labor. https://theconversation.com/federal-ipsos-has-labor-lead-down-to-two-points-38209 3. Abbott gets poll help as Bishop complicates leadership question Michelle Grattan. 1 March 2015, 9.16pm AEDT When people were asked to compare the attributes of Abbott and Turnbull, the prime minister came off poorly across the board...Abbott lagged behind Turnbull on the ability to make things happen (43-56%); having a clear vision of Australia’s future (42-58%); competence (39-74%); having a firm grasp of economic policy (38-70%); trustworthiness (36-55%); openness to ideas (35-69%); being a strong leader (33-60%); having a firm grasp of social policy (29-64%); and having the confidence of his party (21-52%). Abbott was seen as more inclined than Turnbull to be easily influenced by minority groups (30-23%). Abbott’s rating has fallen generally on the attributes since the question was last asked in December. He has tumbled 32 points on having the confidence of his party, and 11 points on competence. https://theconversation.com/abbott-gets-poll-help-as-bishop-complicates-leadership-question-38211 4. Is Bill the ALP’s Squishy Version of Tony? Paul G. Dellit. March 1, 2015 Thus it is that both Tony and Bill claim the right to lead their Parties because they beat Julia and Kevin, and also to retain their leadership because if they were themselves beaten, someone else would become leader and changing leaders is frowned upon by the people. Just look what happened to the ALP when Kevin and Julia were beaten by Tony/Bill. So a case can be made for the proposition that the non-bully, Peta-less, sans suppositories Bill is just like Tony . . . only squishy.... Malcolm is an intelligent man albeit with a Godwin-like glass jaw. Plain and simple, he is stuck in a Party in which contains a number of less-than-intelligent right wing ‘trickle-down-tea’ addicts. He could as easily find accommodation with traditional ALP values but could never accept nor be accepted by the ALP faction system. If Malcolm replaces Tony, he will be opposed by LNP right-wingers except those who believe he will save their seat. And if Malcolm replaces Tony, one hopes that the ALP will feel liberated enough to consider replacing Bill with a leader who stands for something and is courageous and articulate enough to take the argument up to the Government. If the ALP sticks with Bill, the disaffected ALP supporters who vote on issues and questions of principle may make the Hobson’s Choice of voting for Malcolm at the next election. http://theaimn.com/is-bill-the-alps-squishy-version-of-tony/ 5. Liberals should fear disunity, not Labor Paula Matthewson. 2 March, 2015 And now the most retrospectively hypocritical of the criticisms levelled by Coalition MPs during the darkest days of Rudd's destabilisation campaign have been exhumed on social media, reappearing like Twitter zombies in an act of ironic retribution.... While it might be amusing to hold up a mirror to the Liberal Party as a sardonic reminder that no party is immune from leadership tensions, there is a world of difference between the views of the politically engaged on Twitter and how the broader public sees the leadership tribulations of Rudd, Gillard and Abbott... While the dispatch of Rudd came as a surprise to the general community, a similar move on PM Abbott would not leave voters wondering why. http://www.abc.net.au/news/2015-03-02/matthewson-liberals-should-fear-disunity-not-labor/6272824 6. How Abbott mishandled the attack on Triggs Amanda Vanstone. March 2, 2015 - 12:15AM The high ground was there for the taking, and Tony Abbott chose to stay down in the boxing ring. I can't help but wonder whose advice Abbott was acting on. He has had endless complaints about the way his office runs and the manner in which his chief-of-staff conducts herself. The advice comes from all quarters: backbenchers, his party organisation and his friends. He stubbornly ignores it, saying that he thinks it is only being said because his chief-of-staff is a woman. It would be different, he says, if her name was Peter rather than Peta. This is of course just poppycock to hide a brutally stubborn belief that he is right and everyone else can go jump. Does he say Triggs would not be criticised if her name was Julian instead of Gillian? http://www.canberratimes.com.au/comment/how-abbott-mishandled-the-attack-on-triggs-20150301-13rsy9.html 7. PM Tony Abbott's 'positive' poll shows he's a dead man walking Peter Hartcher March 2, 2015 - 11:11AM Tony Abbott's supporters will claim today's poll as proof that there is life in his prime ministership yet. Only a superficial reading can support this conclusion. In truth, it shows that it is already dead. But look a little further. Seventy-two per cent of voters say that Abbott does not have the confidence of his own party. In other words, the people believe that Abbott lacks the basic qualification to remain leader. "They have read the writing on the wall for Mr Abbott," says the Fairfax pollster, Ipsos' Jess Elgood. http://www.canberratimes.com.au/comment/pm-tony-abbotts-positive-poll-shows-hes-a-dead-man-walking-20150302-13s2t0.html 8. How Tony Abbott's demise would see the end of Clive Palmer Michael Pascoe. March 2, 2015 - 11:30AM There will be all sorts of collateral damage accompanying Tony Abbott's presumed demise, with Peta Credlin and Joe Hockey only the most obvious. What chance it also means the end of the Palmer United Party? Where does PUP fit in then if there's no Newman or Abbott to embarrass, upstage or generally annoy? It doesn't http://www.canberratimes.com.au/federal-politics/political-opinion/how-tony-abbotts-demise-would-see-the-end-of-clive-palmer-20150302-13sdsd.html 9. Tony Abbott's 'captain’s call' over Tasmanian forest humilated Australia, say Greens Australian Associated Press. 1 March 2015 09.42 AEDT Freedom of Information documents reveal the PM pushed forward with an election pledge to delist world heritage forest despite departmental caution.. One pledge included delisting 74,000 hectares of Tasmanian wilderness world heritage area, an application swiftly rejected by the United Nations’ world heritage committee in June last year. http://www.theguardian.com/australia-news/2015/mar/01/tony-abbotts-captains-call-over-tasmanian-forest-humilated-australia-say-greens?CMP=ema_632 10. Labor’s love lost. Which hill is Labor’s light on again? Rachel Nolan. March, 2015 If Labor is to win the battle of ideas, first it needs to present some. Labor is a centrist party committed to creating prosperity through the growth of a market economy and to redistributing the fruits of that prosperity to social services and, increasingly, to protect the environment. The Greens’ focus is more pointedly on redistribution (and the environment). The Liberals seem ideologically content only when making punitive cuts. Shorten’s job is to make these distinctions clear.Feb 28, 2015. http://www.themonthly.com.au/issue/2015/march/1425128400/rachel-nolan/labor-s-love-lost 11. Business turns on Tony Abbott as cabinet urged to act Mark Kenny, Jared Lynch, Madeleine Heffernan. February 28, 2015 In a development certain to add to the pressure on Mr Abbott ahead of the cabinet meeting, former News Limited boss and now head of Prime Media John Hartigan said Mr Abbott's position now was unrecoverable...Two senior ministers have pointedly reminded Mr Abbott that his tenure as Prime Minister remains the exclusive gift of the Liberal party room and not of voters. http://www.canberratimes.com.au/federal-politics/political-news/business-turns-on-tony-abbott-as-cabinet-urged-to-act-20150227-13r3dy.html 12. Tony Abbott? 'I think he's a tit', Miriam Margolyes tells Q&A Neil McMahon. March 3, 2015 - 6:39AM It took until the very end of Monday night's Q&A for the panel to get to the crux of recent national debate. Tony Abbott: Yes or No? "I think he's a tit," was the five-word summation from Miriam Margolyes, the call-a-spade-a-spade actress whose response to the audience question was the shortest, but by far the most memorable, of those offered by the panel as host Tony Jones passed the matter around for consideration. http://www.canberratimes.com.au/entertainment/tv-and-radio/tony-abbott-i-think-hes-a-tit-miriam-margolyes-tells-qa-20150303-13t6ji.html

Ad astra

3/03/2015Casablanca Thank you for an informative set of articles on government finance. I hope Joe Hockey reads them. No doubt he will read what John Fraser, new Treasury secretary, has to say. Reading what Fraser says is to understand why Hockey picked him. I was amused when watching the recent SBS session on The Monty Python Show to hear John Cleese relate the story of a avid watcher of the Show who asserted: "[i]After watching Monty Python, I couldn't watch the news - these people have no idea what they're doing!"[/i]. 'These people' were of course the politicians, and their advisers. After reading the material you have provided today, portraying as it does the many contradictions in ideology, economic theory, and interpretation of economic events over the years, it is not difficult to conclude that 'these people' do indeed have little or no idea what they are doing, and that economic outcomes are as much the result of chance as they are the result of informed, evidence-based reasoning!

Ross

3/03/2015More to the point, why do we pay income tax at all? Everywhere, on the media and in the street, the consensus is tax funds government services. Yet a little research tells something different. In our Fiat economy the federal government owns the currency, it owns the bank that issues the currency. The dollar is not tied to any tradeable commodity such as gold etc and is effectively worthless. In our economy the dollar is only worth a dollar because we agree with the government that a dollar is in fact worth a dollar. The federal government is not financially constrained in any way and can quite literally spend (issue) as much currency as it wishes to finance it's services. I.E. it doesn't need or even use tax revenues. Income taxes are levied in Australian dollars,the federal government is the sovereign monopoly issuer of the Australian dollar. In basic terms the government gives you the dollars with which to pay your tax. The limiting factor,as in all economies,is inflation. From a little research income taxes are just a basic inflation control mechanism. I'm no professional economist so can someone please correct me if my thinking on income tax is wrong. Or please refute the arguments of economic academia and media. https://www.youtube.com/watch?v=qBpm5sVmGYc https://www.youtube.com/watch?v=i35uBVeNp6c http://www.theguardian.com/commentisfree/2015/feb/11/a-sustainable-budget-surplus-is-beyond-the-governments-control-as-joe-hockey-has-come-to-realise The question of what is meant by government debt also deserves a mention as again a little research refutes government claims. Ross in Gippsland

Casablanca

3/03/2015Australia’s Entire Foreign Policy Strategy Accidently Leaked The Shovel on March 2, 2015 In an embarrassing blunder for the Government, a document containing an in-depth description of the nation’s foreign policy approach was leaked today when Foreign Minister Julie Bishop mistakenly texted it to a journalist, instead of Prime Minister Tony Abbott. http://www.theshovel.com.au/2015/03/02/australias-entire-foreign-policy-strategy-accidently-leaked/

Ken

3/03/2015I like the surge in the 'poles' from The Guardian. http://www.theguardian.com/australia-news/australia-news-blog/2015/mar/03/surge-in-poles-tony-abbotts-flag-count-hits-a-new-high

totaram

3/03/2015Ross: You are correct. There is no need to pay income tax. However, you seem to have missed the point that, in order to ensure that the fiat currency is used, there has to be some tax. Additionally, taxes give the govt. "fiscal room" in which to spend, (without causing inflation). They need to spend in order to get their currency into circulation, and in order to provide essential services such as defence, regulations, health, education etc. etc. Once we agree on that, the question becomes, what sort of taxes to we want to have from a socio-political perspective. Please see my post above for details. As for govt. debt, that is issued in order to meet the reserve bank target interest rate, which in turn is supposed to target inflation, but was also supposed to ensure full employment, but that objective seems to have been conveniently forgotten. It again has nothing to do with "funding" govt. expenditure, as claimed by various numpties.

2353`

4/03/2015Ross, You are basically correct and I linked to some previous [i]TPS[/i] pieces discussing this above. As totaram points out, unlimited money supply does apparently cause inflation, so taxes and charges are a process where the government manages the quantity of money in the economy. There is also the 'moral' issue around paying for the services you consume - in a similar way to public transport and other subsidised services.

TalkTurkey

5/03/2015Comrades Yesterday I was party to what I think was the single most poignant piece of irony I have ever head. Like this: I went to the Adelaide version of March in March which wasn't a march but a static gathering (again) in Light Square, a small inner-city patch of green, maybe a hectare. Many of the only-about-two-thousand who were there were union members in safety-coloured coats. They weren't as seething as I'd like by any means butthat's another story. Anyway the bloke on the mike starts his speech acknowledging that this is Kaurna (aboriginal) land ... And I commented to 3 CFMEU blokes who were near me, [i]"I haven't seen one Aboriginal person in the whole crowd!" [/i] and one of them says - - (and this is not a joke, it's true)- [i]"Oh, they all moved out this morning, they sleep here at night but when they found out we were coming they left!" [/i] * Indeed there was not one Aboriginal person there - several Negroes, it's not like the crowd's racist (although there were no Indians, few if any 'persons of Middle Eastern appearance' and probably no Asians neither. So obviously the union movement isn't all that inviting to people of ethnic backgrounds other than Western European. But it's sad that, of these Ab-original owners, who as a people are still so totally dispossessed and marginalised that they spend their nights camped in a bleak little public park, none felt welcomed enough to join that crowd of the very people who need to be fighting for their inclusion. So the acknowledgment of country really sounds a bit hollow. Good-willed yes, but then the road to hell is paved with good intentions as my Dad used to say. And how am I any better than the rest of us? I'm not. But at least I noticed. I don't think anyone even noticed except me, and those 3 blokes I mentioned it to. , here are the Someone else said something aboutthem having been 'moved on'

TalkTurkey

5/03/2015Made a mess of that last post at the end, sorry. N'importe pas. What I was going to say was, someone else said something about the Aboriginal people having been 'moved on' - Id on't know the strength of that, but here as everywhere Aboriginal people are harassed by cops and local authorities. There are Aboriginal people camped in Adelaide's parklands all the time. Always have been. It's shameful.

Khtagh

5/03/2015Breaking news Another broken election promise, Abbott has reneged on the $16 million to Cadburys this morning, this is so typical of Abbott, once he has the political outcome he want he just forgets/ignores anything he likes, promises, ethics, morals, all optional with him.

Ad astra

5/03/2015Folks I have just now posted [i]The Angry Voter and the Parrot[/i] on [i]TPS Extra[/i]. Enjoy. http://www.tpsextra.com.au/post/the-voter-and-the-dead-parrot

Patriciawa

6/03/2015Joe Hockey is so cocky! Thinks he'll wear a green tie, Then tell lie after lie, Smile at the camera a bit And Aussies will fall for it! But that's not true about you! And nor me either! is it? So what is all this shit That we're having to buy? We didn't vote for this guy! Did we?

Patriciawa

6/03/2015PS - Sorry about the bad language! [i]Mea Culpa![/i] But nothing else seemed to fit! Did it?

Bacchus

6/03/2015:D Patricia - fits perfectly :D

Ad astra

6/03/2015Patriciawa You echo my feelings. This 'grown up, adult party' of economic vandals must rate as the worst government in living memory: incompetent, indecisive, weak, and vengeful. Today we hear that the real boss, Peta Credlin, has dictated that no Labor government appointee to statuary authority is to be reappointed. Vindictiveness writ large.

Ad astra

6/03/2015TT What a sad story you relate! Australia's original inhabitants too often are relegated to the bottom of the pile.

Paul of Berwick

6/03/2015This is either sad, typical, or worse... http://www.theguardian.com/australia-news/2015/mar/06/coalition-ban-on-second-term-for-labor-appointed-agency-directors-brutal Why can't we have the best people for the job?

Ken

6/03/2015Paul of Berwick Indeed, why not the best people? Rudd, for all his faults, did not have a 'night of the long knives' as regards the heads of the public service departments when he took over (some Labor people later thought that was a mistake) whereas Howard and Abbott got rid of quite a few departmental heads. Rudd also was not averse to appointing former opposition politicians to government statutory positions - like Nelson as ambassador to the EU (and then later Gillard appointed him to the War Memorial). Labor seems to have a less vindictive record in this regard. If Abbott and co. are now refusing to re-appoint people merely on the basis that they were originally appointed by Labor, they are putting politics front and centre in such appointments and that is not how it is meant to be and, as the article points out, is definitely not in the best interest of good governance. But did we expect good governance from this mob???

Casablanca

6/03/2015 [b]What more do we want? Half.[/b] Calla MacGregor | Mar 05, 15 03:21 PM This week Business Chicks held one of our best events. Ever. Here’s why we were blown away by our International Women’s Day breakfast. Celebrating the 104th International Women’s Day, we invited Jane Caro, Tasneem Chopra and Eva Cox to join us as our expert panel in Sydney, and discuss the important things: the achievements, limitations and progression of women in society.http://www.businesschicks.com.au/community/what-more-do-we-want-half?utm_source=Business+Chicks+List&utm_campaign=86028e46e0-E-newsletter+9+October&utm_medium=email&utm_term=0_2fe27a08eb-86028e46e0-209871257

Ad astra

7/03/2015Folks I have posted just now on [i]TPS Extra: Do our politicians know what they're doing?[/i] http://www.tpsextra.com.au/post/do-our-politicians-know-what-they-re-doing

Casablanca

8/03/2015Our future hijacked by our past Jack Waterford . March 6, 2015 - 11:45PM The lesson from looking back is that the best investments one can make in the future, and in future generations, is by intelligent and thoughtful spending now. Investment in the health, education and happiness of the general population, not least the emerging one. And in the geographic cultural and social environment in which we live. It's the people and the land who are this nation's great capital asset, and they are assets we are letting depreciate. http://www.canberratimes.com.au/comment/jack-waterford-our-future-hijacked-by-our-past-20150306-13uyew.html

Casablanca

8/03/2015We still have a GP co-payment by stealth Opinion Stephen Duckett. 5 March 2015 The $5 GP co-payment may be "dead, buried and cremated" but the Medicare rebate freeze remains, and will ultimately have a much bigger impact on patients than the other move would have. http://www.abc.net.au/news/2015-03-05/duckett-we-still-have-a-gp-co-payment-by-stealth/6282094
How many umbrellas are there if I start with two and take 2 away?