Scott Morrison’s consistency problem

Wed, 17 May 2017  |  

In arguing the case for cutting the company tax rate from 30 per cent to 25 per cent over the course of the next decade, Treasurer Scott Morrison claimed that one of the key effects of such a move would be to boost investment, employment and wages growth. 

Let's use the inverse of that logic when it comes to hiking company taxes.

Specifically, does Mr Morrison think that hiking company tax rates will mean lower investment, employment and wages?

If the banks are stumping up an extra $6.2 billion in tax over the next 4 years, that’s $6.2 billion that will not be available for them to invest, employ or pay out in higher wages.

If, as seems certain, the banks claw it back the $6.2 billion from customers, that’s $6.2 billion less customers will have to spend, invest and employ.

No? Yes?

For the story to stack up, Morrison must see the bank tax as negative for investment, employment and wages. Economics is simple when the spin anf hypocrisy is taken out.

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Paying Their Fair Share

It’s the age-old question: why don’t governments deliver policies that are good for the electorate? Well, the answers are numerous.

Politics and policymaking should be simple. After all, being in government and delivering what voters want — making them happy in other words — and increasing the chances of re-election seems to be the proverbial win-win scenario.

Which begs the question, why don’t political parties do it?

Why don’t they deliver policies that are good for the electorate and good for their re-election chances?

Let’s cut to what the voters, in general, want.

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Sun, 20 Aug 2017

This article first appeared on The New Daily website at this link: https://thenewdaily.com.au/money/finance-news/2017/08/16/stephen-koukoulas-unemployment/ 

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Australia has given up on solving unemployment

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Treasury reckons that the lowest the unemployment rate can go without there being a wages and inflation breakout is around 5.25 per cent.

The Reserve Bank of Australia notes something similar, forecasting that even when the economy is growing strongly at an above-trend pace, the unemployment rate will hover between 5 and 6 per cent.
The current unemployment rate is 5.6 per cent or some 728,100 people – enough to fill the Melbourne Cricket Ground about seven times.

Given the Treasury and RBA estimates, it looks like Australia will never see fewer than about 700,000 people unemployed – no matter what kind of improvement we see in the latest jobless figures on Thursday.
It seems to be a peculiarly Australian issue. In the US, the unemployment rate is 4.3 per cent, in the UK it is 4.5 per cent, in Japan it is 2.8 per cent while in Germany, the unemployment rate is 3.9 per cent. And none of these countries is experiencing a wage/inflation problem. Indeed, even with the very low unemployment rate in Japan, wages are actually falling.