1. Taxing times
The Turnbull Government was mightily pleased when the Senate voted for tax cuts worth $144 billion over the next seven years. Here’s how they voted:
Labor, the Greens and independent Tim Storer voted against the tax package. Storer called the third phase cuts, where the 32.5% rate is extended to $200,000, reckless.
The swing voters in the end were Centre Alliance senators from SA (ex-X) Stirling Griff and Rex Patrick who
- both voted for the plan despite saying they disagree with the third stage which delivers a tax cut of $7,225 a year for a person on $200,000 from 2024-25 while someone on $30,000 would get a tax cut of $200 a year.
Senator Griff said he and Senator Patrick would be “more than happy to support any moves” Labor made to unravel the third stage if it won the next election.
These dipsticks really did come down in the last shower. If you can stand it, listen to Griff explaining himself to Patricia Karvelas. They really believed the Government when they said they would under no circumstances split the bill. They are assuming that a future government, even a LNP government, would act sensibly and reverse the Stage 3 cuts rather than cut expenditure if the economy did not perform as brilliantly as the budget predictions.
Leyonhjelm would always support lower taxes, no matter what, but I thought Hinch had some brains.
Here’s Storer’s media release before the vote, but after “Senators Patrick and Griff voted to guillotine debate barely thirty minutes into examining amendments to the biggest tax cuts in Australia’s history.”
Nick Xenophon would never have voted to guillotine a debate in that way.
2. Is it fair?
“Thoroughly fair”, according to Turnbull. They are pitching to “middle Australia”.
- “We want you to realise your dreams,” Mr Turnbull told a press conference after the vote.
Here is what happened, from the AFR:
- The cuts will cost $144 billion over a decade. Stage one, costing $22 billion, begins on July 1 and is worth up to $540 a year for people earning up to $90,0000. Stage two kicks in on July 1, 2022, which will be towards the end of the next term of Parliament.
It will take the $90,000 threshold under which the 37 per cent tax rate applies to $120,000, meaning everyone under that income will pay a maximum 32.5¢ in the dollar.
Stage three begins on July 1, 2024. It will abolish the 37 per cent bracket and apply 32.5 per cent to all earnings between $41,000 and $200,000, covering 94 per cent of workers.
Labor opposed stages two and three which combined would cost $120 billion.
The Coalition has billed the cuts as supporting ‘middle Australia’, meaning those earning $80,000 plus. Jacob Greber in Tax cuts are awful for middle Australia. To pretend otherwise is misleading points out that median earnings are only $52,988, or $46,800 if you are a woman:
This NATSEM graph from Peter Martin shows where the savings go in relation to the quintiles, and how the quintiles divide:
For those who say the poor pay no tax, look again:
Turnbull is saying that Shorten wants to take more of your money away, and tax more. However, Labor proposes to implement $73 billion worth of tax relief. According to this article:
Labor plans to keep the shape of the Low and Middle Income Offset. It will still phase in from the point where workers start to pay tax, run at full throttle for the 4 million taxpayers earning between $48,000 and $90,000, and taper off so it phases out at about $125,000.
But Labor is offering a maximum tax cut of $928 a year for middle-income earners – the Coalition’s $530 plus an additional $398 promised by Labor. And for the 2.4 million low-income earners promised $200 a year by the Coalition, Labor will give them an extra $150 for a total $350.
Everyone who earns less than $125,000 a year – that is, most Australians – will get a bigger tax cut under Labor.
The AFR on page 4 had this table with an article ‘Realise your dreams’:
Update: This image from The Conversation shows the initial and final effect of the LNP’s tax policy:
It shows the LNP government initially targeting mainly those in the $50 to $100K incomes with some crumbs, and then later favouring later those above $90K.
This table from the AFR shows the step changes in the rates:
This one shows the difference in tax paid between now and 2024-25:
Update 2: From an AFR article Voters back debt reduction over tax cuts in May, looking at what voters want from the Budget:
Hospitals, Medicare, education, schools and infrastructure come out way ahead of personal and business tax cuts, which is Labor’s point. However, economic growth and employment is right up there. Turnbull is linking tax cuts, especially now for business, with economic growth and employment.
Wayne links Labor’s priorities with economic growth also, but the case is harder to make. We may find out to our sorrow if the economy goes pear-shaped and Turnbull’s promise that tax cuts would not be restored and ScoMo’s promise of limiting revenue to 23.9% of GDP remain in place.
3. Welcome to a police state?
Andrew Wilkie says that had the Espionage and Foreign Interference Bill been in place in 2003 when he alerted the Australian people that our government’s reasons for going to war in Iraq War were based on a lie, he would have faced 25 years in prison. When these laws pass, as they will with Labor’s support, protesting against the Adani mine could be deemed sabotage.
Wilkie says the problem is that “national security” and “foreign interference” are so broadly defined they could mean almost anything.
Lenore Taylor agrees, and worries that journalists will feel intimidated, and hence self censor. Labor has had a ‘public interest’ defence included, but you need deep pockets for that to be any use.
- Five years ago I was one of the authors of a story revealing Australian intelligence agencies had spied on the Indonesian president Susilo Bambang Yudhoyono and his wife. The story was embarrassing for the Australian government and caused a short-term crisis in bilateral relations, but I firmly believe it was also in the public interest. Under these laws we would have been similarly exposed to criminal prosecution under the harsher laws.
Similar, that is, to Fairfax and the ABC reporting on alleged misbehaviour by special forces in Afghanistan.
We are meant to understand that the government will act with sensible restraint.
4. Indigenous treaty
Possibly the most important event of the past week was Victoria passing historic law to create Indigenous treaty framework.
Also the Melbourne electorate of Batman was renamed after the Indigenous activist William Cooper following a public campaign to rid it of its ties to a man accused of involvement in the massacre of Aboriginal people.
Radio National’s excellent Rear Vision program broadcast the first of three In the shadow of Terra Nullius: Part 1 invisibility to survival.
It explains how at the time of Federation the Indigenous population had sunk to about 100,000. They were viewed as an inferior race, as were all ‘primitive’ people, who would fade away, not fit for purpose in a civilised world.
Would that the founding fathers could listen to Megan Davis, Pro Vice-Chancellor Indigenous and Professor of Law at the University of New South Wales, talking with Tracey Holmes on The Uluru Statement one year on.
Davis was involved with organising the production of the Uluru statement. Totally impressive. They will prevail.