Why don’t governments deliver policies that are good for the electorate?

Mon, 21 Aug 2017  |  

This article first appeared on The Adelaide Review site at this link: https://adelaidereview.com.au/opinion/politics/paying-fair-share/ 

 ------------------------------------------------

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.

A policy framework where each person who wants a job gets a job is key. In addition, access to quality and affordable health care and education, from kindergarten to university to trades training is fundamental. There are other issues that are basic, simple and fair.

Voters want the government to provide aged-care services that treat the older members of society with dignity. We want decent infrastructure, especially pubic transport and roads. We want people who are doing it tough to be supported by a welfare safety net — a decent rate of pension, unemployment benefits and disability support.

So far, so good.

Here comes the challenge for policymakers. Undoubtedly, these things are all expensive and that is where the policy problems start to get messy, namely where to raise tax and other revenue to fund these if, as is necessary, the budget is in balance over the course of the business cycle.

A recent Per Capita Tax Survey showed that most people don’t mind paying tax to fund these services with the proviso that others in the community pay their fair share.

And this is probably at the nub of the whole political and policy issue. Australia’s tax system is reasonably fair, but there is room for improvement. For wage and salary earners tax is not only paid on incomes, but a further 10 per cent is slugged in the form of the GST, plus there is other tax paid when you buy petrol, cigarettes, alcohol or a luxury car. The overall tax rate for someone earning, say, $80,000 a year, is relatively high.

It can be argued that it is high because the tax system is not progressive enough. The top marginal tax rate applies to just three per cent of income earners. Lowering the threshold would capture more revenue from those earning multiples of average earnings. But lowering the top threshold is not on the political agenda, even though such revenue would help fund what voters want.

Another big issue is company tax and not only for Australian-based firms but to foreign entities that through a myriad of cute and complex tax arrangements end up paying effectively little or no tax in Australia. Through these loose tax laws, businesses are not paying their fair share, which annoys voters and creates other problems for the government as the move to budget surplus is thwarted.

At this point, the current government has been a poor manager when it tries to manage overarching policy issues.
The government has a platform to dramatically cut the company tax rate and it is funding this by cutting education funding, tightening up on health, raising the cost of university education, cutting trades training funding — some of the very things people want — plus borrowing at a record pace, putting the triple-A credit rating under threat. It is little wonder they remain well behind in the public opinion polls.

The good news is that history shows that the funding of services people want has been tackled with sensible policy changes.

Compulsory superannuation is reducing the number of people who receive the age pension. The Medicare levy raises revenue to at least partially fund the health system and disability insurance. The HECS (or HELP) scheme enhances access to university education while providing some cost recovery. The goods and services tax improved the efficiency of the tax system and collects a significant proportion of overall revenue.

It appears that the Labor Party understands the message. It is aiming to provide better services and is doing so by trimming the absurdly unfair tax concessions of negative gearing for established dwellings and reducing the capital gains tax concessions that overwhelmingly favour those on high incomes. While there is still a lot of detail to be fleshed out in the lead into the next election, it appears that Labor will fund its extra spending by these and other revenue measures including a hike to the top income tax rate.

Even this far out from the next election, it seems a winning strategy.

More revenue measures may be needed, but with the election still around two years away, the policy agenda of both sides of politics will slowly evolve. Suffice to say, the party that can argue for fair tax measures, to fund the things people want, will romp in.

comments powered by Disqus

THE LATEST FROM THE KOUK

Marriage equality – what’s God got to do with it

Sat, 23 Sep 2017

This article first appeared on the Yahoo7 website at this link: https://au.finance.yahoo.com/news/religious-marriages-slump-record-low-054148504.html 

 -------------------------------------------------------------

Marriage equality – what’s God got to do with it

The debate surrounding the survey on marriage equality is throwing up a range of issues that sit oddly with over 100 years of historical marriage patterns of heterosexual Australians.

Social media feeds, on line news, the radio, newspapers and television are heavy with people discussing the issue of marriage equality whose only real claim to be heard is their religious belief and their status within their church, synagogue, temple or other religious lobby group.

There are few, if any, declared atheists or marriage celebrants on these news and chat shows outlining their views on same sex marriage. This is despite there being more people of no religion than any other faith.

For some unknown reason, the overwhelming bias towards those with a religious affiliation promotes them to a point where they have a special status to pontificate as to whether people should vote yes or no to the marriage equality survey. Their views are getting a disproportionate coverage, including relative to how Australians are now choosing to get married.

For over 100 years, Australians getting married have been shying away from church based ceremonies and instead are opting for a marriage celebrant to allow them to legally tie the knot.

This alone should put the status of religious organisations and their spokespeople as authorities on the issue of marriage on very thin ice.

Penny-pinching on education leaves the nation lagging

Wed, 20 Sep 2017

This article first appeared on The Crikey web site at this link: https://www.crikey.com.au/2017/09/20/koukoulas-penny-pinching-on-education-leaves-the-nation-lagging/

----------------------------------------------------------- 

Penny-pinching on education leaves the nation lagging

Educational attainment is a proven path to higher incomes, not only for the individual concerned, but also for the nation as a whole.

The latest research from the Organisation for Economic Co-operation and Development, Education at a Glance 2017, shows that in each of the 38 countries in the survey, adults with below upper secondary education were paid an average 25% less than someone with upper secondary education. There was an even more extreme difference with a 56% average pay advantage for those attaining a tertiary education against upper secondary schooling.

Put together, this means that someone with a tertiary education will, on average, get roughly double the income of those with below upper secondary education.

The public policy implications of these findings should be obvious.

The first step should be to ensure that all children get fundamental reading, writing and arithmetic skills, without which completion of upper second education is impossible, let alone the step to tertiary education.
Targeted, sufficient and productive public investment in human capital (education) via skilled teachers and high level, up to date resources for students are a bare minimum. Any shortfall in this infrastructure to provide a good start to education will show up in a short fall in educational attainment in later life with negative implications for the economy.