Here's why the political debate over tax is getting hot

Fri, 23 Mar 2018  |  

This article first appeared on the Yahoo7 website at this link: 


Here's why the political debate over tax is getting hot

Just about all economists agree with the general principal of budget management that the Federal budget should be in balance over the course of the business cycle and that the level of net government debt should be low enough to ensure the maintenance of Australia’s triple-A credit rating.

These big picture fiscal themes even have bipartisan support with both the Coalition and Labor arguing that they will both deliver a sound budget position when in government. But like someone planning to travel from Dublin to Cork, there are different routes that can be taken to get there. What is the best policy mix that will meet the end point of budget management of balanced budgets and low government debt?

In broad terms, there are two paths that the government can take to balance the budget and contain government debt.

One is to spend less money by cutting government funded services on education, health, roads, pensions and the like while keeping the tax base lower than it would otherwise be. Such a strategy can comfortably balance the budget as fiscal austerity trims the spending side.

The other way is to have tax laws to ensure there is enough revenue in the government coffers so that services can be provided to a large number of people at a high quality. If the tax system is progressive, the much of the revenue raise will be through fair means.

Some very basic accounting shows that if taxes are cut and therefore revenue to government falls, government services will need to be further curtailed if the budget is to be repaired and debt is to stabilise.

Which is where the current political debate over tax is getting hot.

The Coalition government is planning to deliver cuts to company tax cut that will cost the budget $65 billion over the next 10 years. In addition to this, it has indicated that the budget in May will include plans to cut personal income tax rates, the cost of which will be determined on budget night.

For those cuts to be much more than the price of one sandwich a week to the average tax payer, the cost to the budget is likely to be a further $50 billion over the next decade. The opposition Labor Party, conversely, is planning a range of tax measures that will boost revenue collections. Negative gearing rule changes, a scaling back of capital gains tax concessions and the change in dividend imputation tax payments to wealthy shareholders will raise substantial revenue that could be used to not only ensure a budget surplus and lowering of government debt, but will also allow for an expansion of funding for schools, universities, health care and the like.

Before these issues move front and centre in the election campaign, the government has the budget to deliver in May.

On budget night, the government will still almost certainly maintain its forecast for a budget surplus in 2020-21. A sharp lift in iron ore and coal prices is delivering a revenue boost. At face value, this will seem like a great outlook, which makes it all the more challenging for Labor to sell its tax plans to the electorate. The risk from the Coalition’s strategy, conversely, is linked to the fickleness of commodity prices. While they are strong, the budget numbers will look sound. But as we saw in the period from 2012 through to 2015, a shortfall in prices can cost the budget dearly. A slow down in Chinese economic growth, an escalation of the Trump tariff wars could easily undermine the commodity price outlook.

The budget and policy plans on tax will dominate the economic debate over the next year, which may also be categorised by which services will be cut to allow for taxes to be cut versus which services will receive a spending boost from the extra tax revenue.

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How Labor lost the federal election SO badly

Thu, 07 Nov 2019

This article first appeared on the Yahoo Finance website on 20 May 2019 at this link: 

How Labor lost the federal election SO badly

The Coalition did not win the election, Labor lost it.

The tally since 1993 for Labor is a devastating seven losses out of nine Federal elections. By the time of the next election in 2022, Labor will have been in Opposition for 23 of the last 29 years. Miserable.

The reasons for Labor’s 2019 election loss are much more than the common analysis that Labor’s policy agenda on tax reform was a big target that voters were not willing to embrace.

Where the Labor Party also capitulated and have for some time was in a broader discussion of the economy where it failed dismally to counter the Coalition’s claims about “a strong economy”.

In what should have been political manna from heaven for Labor, the latest economic data confirmed Australia to be in a per capita recession. This devastating economic scorecard for the Coalition government was rarely if ever mentioned by Labor leader Bill Shorten and his team during the election campaign.

This was an error.

If Labor spoke of the “per capita recession” as much as the Coalition mentioned a “strong economy”, voters would have had their economic and financial uncertainties and concerns confirmed by an elevated debate on the economy based on facts.

This parlous economic position could have been cited by Labor for its reform agenda.

Why animals are a crucial part of the Australian economy

Thu, 07 Nov 2019

This article was written on 31 October 2019: It was on the Yahoo Finance website at this link: 


Why animals are a crucial part of the Australian economy

Animals are a critical part of the Australian economy, either for food, companionship or entertainment.

But every month, millions of sheep, cattle, pigs, chickens, fish and other animals are bred and then killed. Most of them are killed in what we define as ‘humane’, but no doubt tens of thousands are horribly mistreated, as are a proportion of the animals we keep as pets.

Animals are slaughtered to provide food for human food consumption, to feed other animals (your cats and dogs are carnivorous) and for fertiliser.

The Australian Bureau of Statistics collects a range of data on animal slaughterings and the most recent release of the Livestock and Meat data release included the following facts.