Thursday, 10 May 2018

In the battle of the tax cuts Bill Shorten is doing well

Bill Shorten outbids Turnbull's tax cut for lower and middle income earners





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Shorten pledged to give bigger income tax cuts for 10 million taxpayers.
Lukas Coch/AAP



Michelle Grattan, University of Canberra

Opposition leader Bill Shorten has launched a tax bidding war, promising to top the government’s tax relief for lower and middle income earners, as he prepares to fight a string of byelections in Labor seats.

The Labor alternative almost doubles the budget’s relief for these taxpayers, incorporating the early part of the government’s plan and then building on it.

Delivering his budget reply in Parliament on Thursday night, Shorten pledged to give bigger income tax cuts for 10 million taxpayers. Some four million would get A$398 a year more than the $530 under the government’s plan.

Labor’s “Working Australians Tax Refund”, would cost $5.8 billion more than the government’s plan over the forward estimates.

Labor’s alternative comes as debate intensifies about the latter stage of the government’s plan, when a flattening of the tax scale would give substantial benefit to high income earners.

The ALP hardened its position against that change as modelling cast doubt on its fairness. The opposition launched a Senate inquiry which will report mid June on the tax legislation, introduced into parliament on Wednesday.

The government says it will not split the bill, which it wants through before parliament rises for its winter break, but will be under pressure to do so including from the crossbench.

Under Shorten’s proposal, the ALP would support the government’s budget tax cut in 2018-19. Once in power, it would then deliver bigger tax cuts from July 1 2019, when it began the refund.

In Labor’s first budget “we will deliver a bigger better and fairer tax cut for 10 million working Australians. Almost double what the government offered on Tuesday”, Shorten told parliament.

The Labor plan would give all taxpayers earning under $125,000 a year a larger tax cut than they would get under the budget plan.

In a speech heavy on the theme of fairness, Shorten said: “At the next election there will be a very clear choice on tax. Ten million Australians will pay less tax under Labor”.

He also pitched his budget reply directly at the campaign for the byelections.




Read more:
View from The Hill: 'Super Saturday' voters get first say on tax






“This is my challenge to the Prime Minister. If you think that your budget is fair, if you think that your sneaky cuts can survive scrutiny, put it to the test. Put it to the test in Burnie, put it to the test in Fremantle and in Perth.

"I will put my better, fairer, bigger income tax cut against yours. I’ll put my plans to rescue hospitals and fund Medicare against your cuts. I’ll put my plans to properly fund schools against your cuts and I’ll put my plan to boost wages against your plan to cut penalty rates and I’ll put my plans for 100,000 TAFE places against your cuts to apprenticeships and training and I’ll fight for the ABC against your cuts.”

In the Labor model, a teacher earning $65,000 would get tax relief of $928 a year, $398 more than the $530 offered by the government.

A married couple, with one partner earning $90,000 and the other $50,000 would receive a tax cut of $1855, making them $796 a year better off under Labor than under the government.

Shorten said Labor could afford the tax cuts it proposed because it wasn’t giving $80 billion to big business and the big four banks. Also, it had earlier made hard choices on revenue measures.




Read more:
Politics podcast: Mathias Cormann and Jim Chalmers on Budget 2018






An ALP government could deliver “the winning trifecta” – “a genuine tax cut for middle and working class Australians; proper funding for schools, hospitals and the safety net; and paying back more of Australia’s national debt faster”.

Shorten said that the Liberals were proposing to radically rewrite the tax rules in their seven year plan. Research had revealed that $6 in every $10 would go to the wealthiest 20% of Australians, he said .

“Very quickly, this is starting to look like a Mates Rates tax plan”.

“And at a time of flat wages, rising inequality and a growing sense of unfairness in the community”.

Other initiatives he announced include:

· A plan for skills, TAFE and apprentices costing $473 million over the forward estimates.

· Abolition of the cap on university places, re-instating Labor’s demand driven system, at a cost of $140 million over the forward estimates.

· Reversing cuts to hospitals and establishing a Better Hospitals Fund, seeing an extra $2.8 billion flow to public hospitals. This would cost $764 million over the budget period.

· Invest $80 million to boost the number of eligible MRI machines and approve 20 new licences – which would mean 500,000 more scans funded by Medicare over the course of a first Labor budget.

The Conversation· Provide $25m to the Commonwealth Public Prosecutor to establish a Corporate Crime Taskforce. The Taskforce would deal with recommendations for criminal prosecution from the banking royal commission.

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

The Coalition budget - there yesterday, gone today

Under Labor you will pay less in tax because I think that you are more important than multinationals, big banks and big business.
          -Bill Shorten in his budget reply speech
 It is more than 50 times I have been in Canberra and commentated on a federal budget in one form or another. I cannot remember another occasion where the impact of a government's plans has lasted for so short a time. The front pages of the papers this morning told the story. Barely a mention of goodies for the public bar a couple of minor references in the Sydney Daily Telegraph and The Australian.
Tonight Labor's Bill Shorten put budget matters back into the discussion but not in a way that Prime Minister Malcolm Turnbull would like. That conservative commentator Andrew Bolt got it right.


The budget - Helping the rich get richer

Most of the benefits from the budget tax cuts will help the rich get richer





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Chris Samuel/Flickr, CC BY-SA



Robert Tanton, University of Canberra and Jinjing Li, University of Canberra

In the federal budget, Treasurer Scott Morrison promised tax cuts to all working Australians in the form of an offset and changes to tax income thresholds. But our analysis of Treasury data shows that while the government advertised these as payments to low and middle income Australians, most of the benefits would flow through to high income earners in future years.

If all of the stages of the tax plan passed parliament, there would be a sharp increase in benefits for people earning above A$180,000, due to the reduction of their marginal tax rate from 45% to 32.5%.



Taxes in most countries are progressive. This means that the more you earn, the higher your marginal rate (the additional amount you pay for each dollar earned).

There are good reasons for this - progressive tax systems mean those on a lower income pay a lower average tax rate, while those on higher incomes pay a higher average tax rate. This reduces income inequality - as you earn more, for each dollar you earn, you will pay more in tax than someone on a lower income.

With the 2018-19 budget, the proposal is for a “simpler” tax system from 2024-25. This means a reduced number of tax brackets, and a lower rate of 32.5% to those earning between A$87,001 and A$200,000.

Treasurer Scott Morrison said following the budget:

Well, you’ve still got a progressive tax system. That hasn’t changed. In fact, the percentage of people at the end of this plan, who are on the top marginal tax rate is actually slightly higher than what it is today.

However this new tax system from 2024-25 is less progressive than the current system. It means higher income inequality - the rich get more of the tax cuts than the poor.

As part of the new proposal, low and middle income earners get a tax offset in 2018-19, with high income earners getting very little. This part of the plan is progressive - more money goes to lower income earners.

However, by 2024-25, the tax cuts means high income earners gain A$7,225 per year, while those earning A$50,000 to A$90,000 gain A$540 per year, and those earning A$30,000 gain A$200 per year.



Of course, another factor of tax cuts is that they only benefit those who are employed. Tax cuts don’t benefit people like the unemployed, pensioners, students (usually young people) and those on disability support pensions.

The conversation Australians need to have is how we should be spending the revenue boost we are seeing over the next few years. We can either spend this windfall gain on benefits to high income earners, in the hope that this will flow through spending to everyone else; or maybe we should encourage young people into housing through an increase to the first home owners grant, or increased funding for our schools, universities and health system.

The ConversationWe’ve developed a budget calculator so you can see how your family is affected by the 2018 budget.

Robert Tanton, Professor, University of Canberra and Jinjing Li, Associate Professor, NATSEM, University of Canberra

This article was originally published on The Conversation. Read the original article.

Tuesday, 8 May 2018

The media should ignore all budget events expected to occur further out than a year.

The Owl finds it hard to take seriously all those predictions and projections about what will happen in two, three, five or even 10 years because of this budget.
The one thing for certain is that most of the outcomes will be very different to what the budget documents say.
The media would do its customers a favour by ignoring all events expected to occur further than a year away.

Wendy and Peter give a singalong version of the federal Australian budget


WENDY:
Peter where do you live
PETER PAN:
It's a secret place.
WENDY:
Please, tell me!
PETER PAN:
Would you believe me if I told you?
WENDY:
I promise.
PETER PAN:
For sure.
WENDY:
For sure!
PETER PAN:
I have a place where dreams are born,
And time is never planned.
It's not on any chart,
You must find it with your heart.
Never Never Land.
It might be miles beyond the moon,
Or right there where you stand.
Just keep an open mind,
And then suddenly you'll find
Never Never Land.
You'll have a treasure if you stay there,
More precious far than gold.
For once you have found your way there,
You can never, never grow old.
And that's my home where dreams are born,
And time is never planned.
Just think of lovely things.
And your heart will fly on wings,
Forever in Never Never Land.
You'll have a treasure if you stay there,
More precious far than gold.
For once you have found your way there,
You can never, never grow old.
And that's my home where dreams are born,
And time is never planned.
Just think of lovely things.
And your heart will fly on wings,
Forever in Never Never Land

Monday, 7 May 2018

The steady and substantial decline in the average hours worked every month

When the Australian Bureau of Statistics started collecting the figures back in 1979 the average worker was working 153 hours a month. The latest ABS figures for March this year show that the average has dropped 139 hours a month.


That 9% fall in hours worked is one reason why the employment growth the government will no doubt congratulate itself on in Tuesday night's budget is not resulting in much wages growth.