On a mission to upset everyone

Having upset the rich with their ‘debt levy’, and with 72% of people thinking it a broken promise, Abbott and Hockey are on a mission to upset the rest of us by re-indexing the fuel excise.

Richard Denniss told the 7.30 Report that the tax was good policy.

Sinclair Davidson told Waleed Aly that if you must tax, then taxing consumption is better than taxing production. The fuel excise taxes consumption. He forgets that sole traders (like me) driving a ute or a van would pay the tax. Nevertheless the LNP backbencher Ken O’Dowd in the linked article appears to be wrong:

A Federal Government MP has spoken out against plans to raise the fuel excise, warning it will force up the cost of everyday groceries.

Farmers and miners don’t pay fuel excise. That tax concession is worth some $13 billion, which the Greens would like to abolish.

Davidson also pointed out that fuel excise was a regressive tax, it disadvantages the poor. Those with time to ring up are letting Mr O’Dowd know:

“The phones haven’t stopped, especially with our older folk. We got off on the wrong leg, talking about increasing the pension age, I don’t think it was explained too good. It really concerned a lot of old people that they were going to lose their rights.”

It hardly matters now what the budget detail turns out to be – the damage has been done.

Meanwhile company directors are losing faith. Only 30% of company directors expected the new administration to have a positive impact on their business decision making, down from 70% when the LNP took over. Furthermore:

This loss of confidence has also translated into a fall in the proportion of directors who believe the Federal Government understands business – from 55 per cent last year to 48 per cent now.

Fully 80% say that achieving a budget surplus in the next three years is not a priority.

Wayne Swan says he left the budget in good shape. Chris Bowen has been saying that Joe Hockey has doubled the deficit by changes to Government spending and changes to Government assumptions. The ABC FactCheck verdict:

Since the election, the official forecast deficit has doubled. The economic assumptions are different from those used before the election, and spending decisions have been made that were not in the previous forecasts. Mr Bowen’s claim checks out.

Here’s the table that tells the story:

PEFO_cropped_600

The PEFO of August 2013, prepared independently by Treasury and Finance, shows a surplus for 2016-17. Leaving aside Hockey’s moral austerity crusade, it does appear that he has confected the crisis.

28 thoughts on “On a mission to upset everyone”

  1. Brings to mind Paul Kelly’s song “I’ve done all the dumb things”.
    I expected to be pretty unhappy with some of their actions but never to see such ineptitude, so many lies and so much blatant hypocrisy.

  2. The pre-budget sales pitch/softening up/whatever you want to call it has displayed a level of political incompetence thjat is almost beyond belief. These characters have no idea how to run a country. They probably couldn’t even run a chook raffle.

  3. Howard froze the fuel tax because it was calculated on fuel price and fuel prices had risen dramatically at that time. It would have been better in the long term if he had cut it free from the price of fuel and converted into an indexed tax based on fuel consumption. At that point, fuel consumption was a rough indication of tonne km and the damage a vehicle was causing to the road.
    The story is becoming more complex now as we move to electric vehicles. Free-loading pure electric vehicle owners are able to avoid this tax altogether! There is a case for replacing the fuel tax with a tonnes km tax based on the unladen vehicle weight. Would require periodic readings of a a secure speedometer to work.
    I would actually like fuel taxes to be higher and the extra money used to:
    1. Subsidize public transport to the point where it costs less to use public transport compared to an already owned car. In Brisbane it costs me over 3 times as much to use public transport compared with driving my small car without a passenger.
    2. Remove all tolls on roads, tunnels bridges etc. In Brisbane all the tolls are charged on roads etc. that BYPASS congestion. (Congestion and transport emissions would be reduced if the tolls were removed because litres/km are usually lower for toll roads compared with normal congested roads.)
    3. Replace registration and 3rd party people and property insurance so victims are not disadvantaged when they have an accident caused by someone in an unregistered vehicle.
    Some would argue that increasing the fuel tax would help drive down emissions. However, the price of fuel has little effect on total fuel consumption. The studies i have seen say that a 10% increase in the price of fuel results in a “2% reduction in total fuel consumption in the short term rising to 6% over time.

  4. You will all be pleased to know that Joe Quixote of tilting at windmill fame is immensley proud of his first budget.

    Asked how he plans to sell broken promises to voters, Mr Hockey said the Government would be “selling a better Australia.”

    Tony Abbott’s tax promises

    The Prime Minister’s mooted “deficit levy” is being interpreted as breaking a pre-election commitment not to raise taxes. ABC Fact Check investigates.
    More than 200 spending programs will be axed and about 3,000 jobs are set to go from the Australian Tax office.

    Programs within the environment, transport, industry, Indigenous and agriculture departments are all within the Government’s sights in accordance with the Coalition’s election promises.

    If I were a Labor party mole or an infiltrator from a foreign country I would be immensely of the damage this budget will cause to the LNP.

  5. John

    Subsidize public transport to the point where it costs less to use public transport compared to an already owned car. In Brisbane it costs me over 3 times as much to use public transport compared with driving my small car without a passenger.

    But what about if you didn’t own a car? What about buying a bike and joining a car sharing scheme? Or even just hiring a car when you really need one? – possibly less often than you think

  6. I’m not quite sure how 28% of people can believe that Abbott and Hockey aren’t breaking all their promises. Such scumbags. But then, my view hasn’t changed on that in years, the surprise which the journalistic class seems to be expressing is the only surprise. But I read enough Mr Denmore and Andrew Elder to understand that.

    But in the case of the re-indexation of the fuel excise, I’m all in favour of it. If there are distributional impacts (and I accept that there are) then they could be dealt with elsewhere in the budget, in a rational and measured world.

    But there’s no sense to the world any more. Outrageous lies can be peddled, with very little accounting for them. Civil society in Australia, which relied to a great extent on trust and people working towards the ultimate common good, is dying, and dying fast. Our so-called journalists are hopeless, their bosses are worse, the Libs have no shame and the ALP are bereft of energy and ideas. There are so many easy, simple, honest reforms of the economy that could take place that would collectively make us all far wealthier and happier and fairer, but vested interests rule the world and call all the shots.

  7. Val: I was a bit surprised that you were advocating a world with no public transport, no private cars and bikes as the normal mode of transport. However, when I thought about it I lived for 20 yrs in towns with no public transport. Towns small enough to visit all our friends by walking. (It helped if you didn’t mind walking in 40 plus heat.) We also used bicycles if we were in a hurry or wanted to go a bit out of town.
    However, in all these places a 4WD was essential if your quality of life depended on being able to launch your boat where you liked and go somewhere out of town for bushwalking, picnicking or canoeing. It could have been a hire 4WD drive although, in some of the places I lived I would feel safer in a vehicle that I had set up with the water, tools etc. that may have been the difference between life and death.
    Bit hard to imagine living where we do in Brisbane with no public transport, a heavy dependence on bikes and hire cars. (Hire cars would probably be based further away than my wife could ride her bike.) The transport impracticalities would mean that we would have to stop visiting most of our friends as well as no longer being able to go to most of the places we go for bushwalking, the theatre etc. Doesn’t sound like a good life to me.
    Part of the public transport problem is that radical right wing governments are obsessed with the idea of “user pays” and, worse still have a very narrow view re who benefits from public transport. (For example, if someone uses public transport during peak hours, car drivers benefit from reduced congestion and a faster trip and the need for very expensive upgrades avoided

  8. This interactive map can be used to find out the median household income and proportion of medicalvisits that are bulk billed for each electorate. No surprise that some of the poorer electorates around Brisbane have bulk billing rates of over 90% but this shouldn’t worry Joe since these places vote Labor and are unlikely to swing. The surprising thing is that rich electorates like Ryan, still have bulk billing rates of 60% even though the median household income is $2200 per week.

  9. Climate Spectator’s Great big tax on everything points out that transport is subidized by the rest of the economy:

    The reality is that driving is subsidised by the rest of the economy.

    According to the Bureau of Infrastructure, Transport and Regional Economics, in 2011-12, total road expenditure by all levels of government and the private sector amounted to $19.5 billion. In comparison, the revenue collected from fuel excise, registration charges, driver’s licence fees, stamp duty and tolls amounted to $18.0 billion.

    And this doesn’t also take into account other costs imposed by using our cars, most particularly the impact on the community’s health.

    The key message is: The reality is that governments need to raise revenue via taxes to pay for things. This is strangely even the case when that government is a Liberal-National one.

    I am not impressed by the way Shorten and Milne are playing the budget game so far. By all means they should emphasize the chronic lying that was such an important part of the Abbott campaign. In the end they should only block things for good policy reasons, not because of broken promises.
    Too many of the problems faced by both federal and state governments go back to the unsustainable tax cuts and concessions to the rich made by Peter Smirk and Howard.

  10. From Roy Morgan:

    Huge majorities of Australian Consumers (88%) & Businesses (77%) are worried about next week’s Federal Budget as Joe Hockey’s Budget rhetoric cuts through

    .

  11. wilful @ 7, I have to apologise on behalf of the management, but I have no idea why your comment @ 6 was held up in moderation.

    Our comments policy says “more than two links in a comment will trigger the moderation or spam filters.”

    The settings say “Hold a comment in the queue if it contains 3 or more links”, same as at LP.

  12. Isn’t the Abbott Carbon Tax clever?

    Val:
    Car sharing is great – except for the insurance industry looking after its pals in the car marketing industry. Car hiring is artificially very, very expensive. Bicycle riding is great – but impractical way out in The Bush. The dumb-bunny rules against owner-operated mini-buses seeking passengers in places big buses won’t go protects the wealth of a handful of scoundrels. Mention “rail-motors” for rural passenger transport and you’ll be burnt at the stake. Most of the barriers to efficient, economical, desired transport are thoroughly artificial and can be abolished at the stroke of the pen …. IF the will to do so ever existed.

  13. JohnD, not only is driving subsidised by the rest of the economy but heavy transport is subsidised by the rest of the drivers.
    Wilful, well said. Except I don’t believe we need to be wealthier, just distribute the wealth better and the fairness and happiness will improve.

  14. John

    According to the Bureau of Infrastructure, Transport and Regional Economics, in 2011-12, total road expenditure by all levels of government and the private sector amounted to $19.5 billion. In comparison, the revenue collected from fuel excise, registration charges, driver’s licence fees, stamp duty and tolls amounted to $18.0 billion.

    Did Tristen Edis include local council spending on one side of the ledger but not Rates payments on the other ?
    If so he’s a long way out.
    On personal transport issues, Id like to see some deregulation in the taxi sector.
    http://www.gizmodo.com.au/2014/04/new-south-wales-just-made-uberx-and-ride-sharing-illegal-again/
    Restricting availability and pushing up cost is what Governments do best.
    And don’t even think about hitchhiking, there are stupid laws against that too.

  15. Oh Jumpey, have faith and trust, just have faith and trust. statistics don’t lie, do they? 🙂

    Wilful @ 6: Civil society in Australia has been severely mauled and bruised, it is in mortal danger …. but it is not quite dead – yet. See if it survives the first two months after the Entitlements Of The Filth Rich Bludget.

  16. G’day Nick,

    jumpy, rates are a property tax, not a road-use related tax.

    Label it anything you want but those chaps working on our local roads in Council trucks aren’t volunteers, their wages come from rates payers.

  17. Abbott and Hockey’s latest effort in upsetting people – disability pensioners:

    Thousands of Australians on the disability support pension (DSP) will have their ability to work reassessed under welfare changes to be introduced in the budget.

    The Treasurer’s office has confirmed thousands of people under the age of 35 will be assessed by independent doctors appointed by the Government.

  18. G’day, wwmmbb. Which queue are you in? I’m halfway along the third queue to the right of Gate 6.. Wish they would hurry up – I don’t want to miss the start of the Double Dissolution either.

    If anyone still thinks the disabled and vulnerable will be in for a fun time by being

    assessed by independent doctors appointed by the Government

    , just ask any war veterans and former peacekeepers (where’s the difference??) what is like to go through the pensions application process for injuries and illnesses caused by being on operational service (that’s the “exciting” stuff you almost get see on TV, way in the background).

    Just to add to the fun, Australia is said to have a “doctor shortage” (to match our “bludget crisis”). However, all is not lost ….Now that the Entitlements For The Filth Rich Party has a Christmas-grip on state governments, I think fly-in-fly-out foreign contractor-doctors will be rushed through the licence-to-practice process (possibly with restrictions to hinder their desires to make more money with the odd bit of surgery in their off-duty hours). These independent contractor-doctors will be given templates and heaven help anyone who does not fit the rigid template, regardless of the realities of their circumstances. I wouldn’t put it past the Entitlements Party’s red guards to hand out under-the-table bonuses to FIFO contractor-doctors for each disabled and vulnerable victim they knock off a pension. This whole mess is driven by extremist pie-in-the-sky ideology and the Entitlements Party’s several decades of laziness, neglect and lack of foresight; it has nothing whatsoever to do with saving revenue.

  19. jumpy: “Label it anything you want but those chaps working on our local roads in Council trucks aren’t volunteers, their wages come from rates payers.”

    Of course. That’s why they were included under expenditure from local council. I’m merely suggesting why rates weren’t included on “the other side of the ledger”, which was specifically a list of road-use related charges.

    That said, “the other side of the ledger” doesn’t include revenue from traffic fines either, which would easily total >$1 billion each year across the country.

    And a large component of the “social cost” he lists ($4.2 billion) is simply vehicle repair.

    Another large component is “property damage” ($4.3 billion), which presumably very often means repairs to street signs, traffic lights, barriers, kerbs etc – which have already been included under expenditure…

    Another $1.4 billion is administrative costs of the motor insurance industry, which is hardly “the rest of the economy”…

    And another $5 billion is “output losses” due to car crashes, which Edis can’t use to make his point without factoring in the “output gains” from having roads in the first place…

    And so on.

    (http://www.bitre.gov.au/publications/2010/files/sp_003_Risbey_Cregan_deSilva.pdf)

  20. Hockey is saying that when they promised “no new taxes” it didn’t mean they wouldn’t change existing taxes!

    I don’t think being a smart arse will help his cause!

  21. Tony and his pals have done a terrific job of upsetting serving members of the Australian Defence Force. Thought you gentlefolk might get a chuckle out of this ‘Compare the pair” ad put out by the Alliance of Defence Service Organizations (ADSO)
    http://standto.org/fg-indexation/394-compare-the-pair-superannuation

    You have to work very hard indeed to upset ADSO. Tony would be well advised to seek an appointment with His Excellency – and to take a short-list of his potential successors with him.

  22. At the moment there is a lot of scope to increase government revenue before it reaches the point where revenue taking really would be causing damage. (I can remember paying 60 cents in the dollar marginal tax during the seventies – it wasn’t damaging the economy or reducing my desire to make more money. Scandinavian countries have been high taxing, high welfare and leading economies for a long time – Healthy, well educated countries with a fair distribution of wealth tend to do well.)
    When there is scope to raise more revenue the logical way to govern is to work out what really needs to be done to make the country a good place to live for all Australians.
    What we are seeing in Australia is a country where artificial limits are being placed on revenue raising, government spending and budget deficits. The result is that a country where things that should be done aren’t being done. A country where things like asset sale decisions are being made on the basis of debt reduction instead of decisions being made on whether it is better for particular assets to be owned and run by governments or private enterprise.

  23. John D.: The underlying problem with all the illogical asset sales and the inefficiencies and high costs to the whole economy that such sales inevitably cause can be summed up in a single word: CORRUPTION. The sooner we all realize that Australia nowadays is no less corrupt than were some Asian and Latin American countries in the last century, the sooner we can come to grips with fixing the economy. So long as we keep pretending that we Australians are too nice to tolerate all the manifest corruption around us, we will sink deeper and deeper into poverty.

  24. Problem with asset sales is that there is too much unrealistic ideology involved and there is no process for checking that proposed sales are being done for the right reasons using the right process. Other problem is that the sort of people who favour it are the sort of people who can afford access to things like the North Shore forum while potential opponents cannot. Some of the supporters may represent the interests of those that will benefit from an asset sale. Others may be businessmen who have the arrogant believe that they can do much better than governments even though they really don’t understand the difference between running a business and governing.

  25. Good point about the difference between running a business and governing …. they are miles apart.

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