Opinion Domestic Politics BF style

[sobrave]

Fuel costs are gonna stink. The pointless excise cut will be gone in a couple of months. Diesel will be sitting about $2.50 and unleaded not far behind.

Oh well, maybe it'll keep a few P platers in landcruisers off the road.

 

[Festerz]

Reality check on the lack of spending wiggle room for the incoming government:

 

[PortWTF]

We have a huge structural deficit that won't get better without removing a heap of tax concessions and welfare payments. Neither side will really want to fix it due to the political damage it will cause.

 

[edgie]

...

Oh well, maybe it'll keep a few P platers in landcruisers off the road.

Wouldn't bet on it.

 

[dirty2]

Fuel costs are gonna stink. The pointless excise cut will be gone in a couple of months. Diesel will be sitting about $2.50 and unleaded not far behind.

Oh well, maybe it'll keep a few P platers in landcruisers off the road.

P players have plenty of cash... Families doing it hard well thats a different problem.

 

[Grave Danger]

I usually wheel this one out for the person with many threads on this board, but might get to use it for the new Libs leader pretty soon...

 

[Festerz]

We have a huge structural deficit that won't get better without removing a heap of tax concessions and welfare payments. Neither side will really want to fix it due to the political damage it will cause.

Perhaps the new government could start on the the middle class welfare payments and tax concessions like negative gearing?

If they are in minority government the Greens could push them to do just that.

Back in 2019, when Shorten said he would limit negative gearing and reduce the capital gains tax discount the independent Parliamentary Budget Office estimated it would raise about $32.1 billion over a decade. Would also help housing affordability issues for new home buyers.

 

[Lawnchair Larry]

There is one hammer that would nail the problem of Chinese intervention in the Pacific islands.
We offer to take ALL of the inhabitants of these islands as climate refugees should those islands appear imminently to go under water, with the caveat that they cease current interaction with China NOW.
Controversial I know.

 

[Janus]

Perhaps the new government could start on the the middle class welfare payments and tax concessions like negative gearing?

If they are in minority government the Greens could push them to do just that.

Back in 2019, when Shorten said he would limit negative gearing and reduce the capital gains tax discount the independent Parliamentary Budget Office estimated it would raise about $32.1 billion over a decade. Would also help housing affordability issues for new home buyers.

Lol, they want to stay in power, not get turfed after 3 years. The thing that you're suggesting was the very reason why Shorten didn't win in a landslide in 2019, and Albanese promised that they wouldn't go back to that well.

Modern Monetary Theory says that as long as you have the ability to pay the interest on your debts, it doesn't matter what the deficit is, so long as the money that is generated/used is spent on things that increase a nations productivity. Negative Gearing increases productivity because it encourages the building of new houses. Tax concessions to the middle class increases productivity because the middle class is going to be the class that has the highest proportion of discretionary spending to real wages in an economy (those that are rich are more concerned about building wealth through real assets than spending money). This encourages business to thrive and the economy to keep producing more.

Albanese and Labor have talked a good game when it comes to bringing manufacturing back to Australia. Now is not the time to * around worrying about budget deficits if you want to get in front when it comes to things like green steel, battery technology, nuclear fusion (which requires hydrogen-3 aka tritium to run, meaning you need a nuclear fission reactor to actually fuel it) etc.

 

[sobrave]

We have a huge structural deficit that won't get better without removing a heap of tax concessions and welfare payments. Neither side will really want to fix it due to the political damage it will cause.

The entire taxation system needs reform. But you'd have to go into an election saying you're gonna reform the tax system to get away with it.

 

[RussellEbertHandball]

Remember the recession we had to have. Not sure how Labor can continue running deficits if inflation keeps running away.

Interesting to see there next budget as most of the factors pushing inflation up is supply interruptions that won't come down by trying to taper off demand with higher interest rates, higher taxes and reduced Government spending.

RBA seem hell bent to try and pull demand down, will be interesting to see if Labor take a similar approach. At the very least suspect the tax cuts of a flat 30c rate up to 200k budgeted for 1 July 2024 will be off the table.

JobMaker Plan - bringing forward the Personal Income Tax Plan

On 11 May 2021, as part of the 2021–22 federal Budget, the Australian Government announced it will extend the low and middle income tax offset (LMITO) for 2021–22.

www.ato.gov.au

Recessions always see budget deficits. The cyclical component goes into larger deficit than before recession or wipes out the surplus. The structural component of the budget is where government has some control.

 

[Festerz]

The entire taxation system needs reform. But you'd have to go into an election saying you're gonna reform the tax system to get away with it.

I think the Hawke/Keating reforms to the exchange rate, foreign exchange and competition policy framework in the 80s/90s indicates that is not necessarily true. It's all about the detail and how they are sold.

The point in my post conveniently missed by Janus were these words:

"If they are in minority government the Greens could push them to do just that."

Because if the greens do hold the balance of power they have said they will do just that - it was in their election committments.

And the tabloid driven scare campaign attacking the Shorten taxation reform agenda that Janus post refers was short on facts and reality. And ignores the general angst in 2022 around the crippling rise in rents and residential housing for new home buyers that was seen as THE major issue alongside climate change in the election campaign.

I think that removing negative gearing and capital tax breaks for the second or more investment property on the purchase of new properties from the date of the implementation of the changes (i.e. not affecting pre-existing arrangements) is likely to receive overwhelming support if framed, debated and marketed truthfully and SENSIBLY without BS scare mongering as happens in an election environment.

 

[PortWTF]

Lol, they want to stay in power, not get turfed after 3 years. The thing that you're suggesting was the very reason why Shorten didn't win in a landslide in 2019, and Albanese promised that they wouldn't go back to that well.

Modern Monetary Theory says that as long as you have the ability to pay the interest on your debts, it doesn't matter what the deficit is, so long as the money that is generated/used is spent on things that increase a nations productivity. Negative Gearing increases productivity because it encourages the building of new houses. Tax concessions to the middle class increases productivity because the middle class is going to be the class that has the highest proportion of discretionary spending to real wages in an economy (those that are rich are more concerned about building wealth through real assets than spending money). This encourages business to thrive and the economy to keep producing more.

Albanese and Labor have talked a good game when it comes to bringing manufacturing back to Australia. Now is not the time to duck around worrying about budget deficits if you want to get in front when it comes to things like green steel, battery technology, nuclear fusion (which requires hydrogen-3 aka tritium to run, meaning you need a nuclear fission reactor to actually fuel it) etc.

Trouble is the tax concessions overwhelmingly benefit the very well off, not the middle class. If they targeted the middle class with tax concessions then you might be on to something, but they don't. A few years ago the figure was 73% of the CGT discount went to the top 10% of earners.

But agreed, among the many reasons Shorten lost is because of the tax concessions he was going to get rid of. It was suggested that even those who didn't benefit at all from those concessions were not happy to see them go, as they were aspirational goals of the middle class to be able to utilise them in the future.

 

[PortWTF]

I think the Hawke/Keating reforms to the exchange rate, foreign exchange and competition policy framework in the 80s/90s indicates that is not necessarily true. It's all about the detail and how they are sold.

The point in my post conveniently missed by Janus were these words:

"If they are in minority government the Greens could push them to do just that."

Because if the greens do hold the balance of power they have said they will do just that - it was in their election committments.

And the tabloid driven scare campaign attacking the Shorten taxation reform agenda that Janus hyperbolic post refers was short on facts and reality. And ignores the general angst in 2022 around the crippling rise in rents and residential housing for new home buyers that was seen as THE major issue alongside climate change in the election campaign.

I think that removing negative gearing and capital tax breaks for the second or more investment property on the purchase of new properties from the date of the implementation of the changes (i.e. not affecting pre-existing arrangements) would receive overwhelming support if framed, debated and marketed truthfully and effectively.

Well there's your problem

 

[Festerz]

Well there's your problem

Yep. Which, as I said before the election, is why I hope the independents hold the balance of power. Because it is the only way I can see these major issues being properly debated and changes implemented any time in the near future.

Both the ALP and the Liberal National Party Coalition went to the election with basically a 'no change' platform in relation to national housing policy because the scare mongering that would have resulted if they suggested any major changes.

The previous government's refusal to fix CGT distortions, failure to implement promised effective money-laundering laws (which has meant black money from China surged into Australia) and self-managed superannuants competing against first home buyers, have all made residential property less affordable and locked millions of Australians out of the market. That simply cannot be allowed to continue if we are serious about helping people get into their own homes.

 

[RussellEbertHandball]

The entire taxation system needs reform. But you'd have to go into an election saying you're gonna reform the tax system to get away with it.

No it doesn't. You just need some decent reforms to certain areas, not the whole bloody lot, where some political capital has to be spent. So spend that political capital with laser like precision.

As the pandemic has shown the feds mainly employ pen pushers in canberra, the real work is done by the states as per section 51 of the constitution. The only real thing the feds could do was call in the defence forces and write cheques and make bank transfers.

Ok it had people manning the borders, but they weren't doing anything proactive like state govt employees.

Fix up the vertical fiscal imbalance and you fix up a lot of waste and hot air. Give the states back income taxing powers that they gave the feds in 1942 during the middle of WWII. That crisis finished a long time ago.

If they don't have the guts to give it back then like the GST set out a formula to give the states the amount equivalent to an effective handing back of tax powers would achieve. Ie paying 30 cents in the dollar income tax, you know 18c gets kept by the feds and 12c goes direct to the states. Stop the annual charade of fights between canberra and the states for more money.

 

[sobrave]

Morriscum was an international embarassment.

France’s ambassador to Australia, Jean-Pierre Thébault, has declared the Morrison government was widely seen as “refusing to take responsibility” on the climate crisis. He also said the breakdown of France and Australia's relationship was linked to the “deceitful attitude” taken by “a certain administration”.

Eight months on from the Aukus-fuelled rift, Thébault said he now had “huge hopes” for rebuilding the relationship between the two countries.

 

[Festerz]

The entire taxation system needs reform. But you'd have to go into an election saying you're gonna reform the tax system to get away with it.

Every respected economist agrees with you on that - or at least the need to undertake a clear path to reform.

And every major review of the Australian tax system has said much the same. What ends up happening though is piece-meal fiddling at the edges with an eye not on the future but the immediate electoral impact.

The last comprehensive review of the tax system - The Henry Tax Review - was released in December 2009. And only a handful of its 138 recommendations were ever implemented and even then not in the way they were recommended to be implemented ('bastardised" to use Prof. Henry's word).

Australia's Future Tax System Review Final Report | Treasury.gov.au

In the 2008–09 Budget the Australian Government announced a comprehensive ‘root and branch’ review of Australia’s tax system. The aim is to create a tax structure that will position Australia to deal with its social, economic and environmental challenges and enhance economic, social and...

treasury.gov.au

So the research and the work has been done. But largely ignored.

On housing tax reform for example, the 2009 review recommended there be symmetrical tax treatment of interest and rent and capital gains to stop the perverse incentives that sees money being ploughed into negatively geared rental property rather than going in to finance productive business investment - a taxpayer funded distortion that has got worse every year.

And the reliance on personal income tax as a % of Commonwealth tax revenue has continued to increase.

It's a mess. But good luck to any politician who thinks they can do anything about it. Vested interests with a decent one sentence scare mongering slogan will thwart any hint of proper reform.

 

[RussellEbertHandball]

Every respected economist agrees with you on that - or at least the need to undertake a clear path to reform.

And every major review of the Australian tax system has said much the same. What ends up happening though is piece-meal fiddling at the edges with an eye not on the future but the immediate electoral impact.

The last comprehensive review of the tax system - The Henry Tax Review - was released in December 2009. And only a handful of its 138 recommendations were ever implemented and not in the way they were recommended to be implemented.

So the research and the work has been done. But largely ignored.

On housing tax reform for example, the 2009 review recommended there be symmetrical tax treatment of interest and rent and capital gains to stop the perverse incentives that sees money being ploughed into negatively geared rental property rather than going in to finance productive business investment - a taxpayer funded distortion that has got worse every year.

And the reliance on personal income tax as a % of Commonwealth tax revenue has continued to increase.

It's a mess. But good luck to any politician who thinks they can do anything about it. Vested interests with a decent one sentence scare mongering slogan will thwart any hint of proper reform.

The Henry Tax review had one big problem IMO - it was about me,me,me,I,I,I - all 138 recommendations was about tax reform and new taxes for Canberra, including gambling taxes. It completely ignored the states.

If we are going to have a federation, and nothing says the people of all of Australia are going to vote to get rid of it, then any meaningful tax reform has to be about the feds+state and even local government taxes, not just a money grab from canberra.

Perrottet was on the right path re federation reforms before he became premier. But he has dropped that as he has other issues to worry about. His replacement Matt Kean hasn't talked much about them since he took over.

If the constitution says land management belongs to the states, why should the feds put on a mining tax of products of a particular state but not others? And totally ignore indigenous rights to those resources. Henry stuffed it up and the politicians made it worse.

There has to be a better alignment of who provides the services and who collects the taxes to provide those services, and get rid of the annual stick out the begging bowl to canberra for more.

 

[Festerz]

The Henry Tax review had one big problem IMO - it was about me,me,me,I,I,I - all 138 recommendations was about tax reform and new taxes for Canberra, including gambling taxes. It completely ignored the states.

I'm at the risk of going down another off topic rabbit-hole debate that would bore everyone in this website except me. But your comment is simply not true.

State tax reform and the issue of the imbalance between tax collection and government expenditure between the three tiers of government (Commonwealth/State Local) was a specific term of reference in the review and covered in the Final reports, e.g.:

"For as long as the States have significant expenditure responsibilities, they should have access to significant and sustainable tax revenue. Furthermore, the States should also have some autonomy over the amount of tax revenue they raise, so they are accountable for their expenditure decisions."

The Henry Review panel specifically recommended an intergovernmental agreement between the Commonwealth and the States to coordinate expenditure and reform across Australia and this WAS one of the recommendations implemented by the Rudd Government (the Inter-Government Agreement on Federal Financial Relations) with the establishment of COAG and policy committees (and policy specific funding agreements) covering all major policy areas where the Commonwealth and States have shared constitutional responsibilities such as health, education, aged care, water, Indigenous issues etc.

IMHO the COAG model was a qualified and enduring success in view of the constitutional impediments that exist in our Federation not just in who does what in terms of services but what taxes can be legally levied by respective tiers of government. Although obviously it could never fully overcome the fundamental political differences between the states and the commonwealth on areas of responsibility and funding.

The Abbott Government dumped the COAG process on election but it is interesting to note that as soon as the covid-pandemic hit Scott Morrison re-instated a coordinating body he called 'National Cabinet' to coordinate activities in relation to how we responded to the pandemic that (at least partially) had a lot in common with the COAG model.

I imagine the Albanese government is looking at re-invigorating a streamlined COAG process in its first term of government.

The Resource Rent tax recommendation of the Henry Tax review was a small component of the Review's overall focus and recommendations but because it became a huge political battle ground between the Rudd Government and the Mining lobby (which the Rudd Government lost) it has sadly become the sole thing for which many know about the review.

 

[RussellEbertHandball]

I've got no interest in going down another off topic rabbit-hole. But that is simply not true.

State tax reform and the issue of the imbalance between tax collection and government expenditure between the three tiers of government (Commonwealth/State Local) was a specific term of reference in the review and covered in the Final reports, e.g.:

"For as long as the States have significant expenditure responsibilities, they should have access to significant and sustainable tax revenue. Furthermore, the States should also have some autonomy over the amount of tax revenue they raise, so they are accountable for their expenditure decisions."

The Henry Review panel specifically recommended an intergovernmental agreement between the Commonwealth and the States to coordinate expenditure and reform across Australia and this WAS one of the recommendations implemented by the Rudd Government with the establishment of COAG and policy committees over all major policy areas where the Commonwealth and States have shared constitutional responsibilities such as health, education, aged care, water, Indigenous issues etc.

IMHO the COAG model was an qualified and enduring success in view of the constitutional impediments that exist in our Federation not just in who does what in terms of services but what taxes can be legally levied by respective tiers of government. Although obviously it could never fully overcome the fundamental political differences between the states and the commonwealth on areas of responsibility and funding.

The Abbott Government dumped the COAG process on election but it is interesting to note that as soon as the covid-pandemic hit Scott Morrison re-instated a coordinating body he called 'National Cabinet' to coordinate activities that had a lot in common with the COAG model.

I imagine the Albanese government is looking at re-invigorating a streamlined COAG process in its first term of government.

How is this off topic and down another rabbit hole? Its a thread about domestic politics, not football.

All throughout the report the review talks about better management and efficiencies of taxes and regularly talks about what Canberra can do, if Canberra takes over etc. Read all of it, not just the terms of reference.

The report was commissioned by the federal government, not the states, so it focuses on the federal governments taxes and where it can take over more taxes. Nowhere does it go into great details about the states rights to those taxes. There are cursory acknowledgements. It regularly talks about states should remove taxes because they are inefficient because they don't follow an economic rent procedure, and the replacement tax being run by the feds.

The recommendations are for the feds to do things, not the states.

 

[Festerz]

How is this off topic and down another rabbit hole? Its a thread about domestic politics, not football.

Because it is getting into a tortuous debate about the minutiae of something that I reckon is probably of little or no interest to many (outside you or me) in a footy forum.

The recommendations are for the feds to do things, not the states.

Yes. Which is where the subsequent Inter Government Funding Agreements and the COAG process, as recommended by Henry came into play - as refined into Rudd's 'Cooperative Federalism Reform Agenda' thingy. Because the Review Panel understood fully the complex pre-existing political, legal and policy environment they were working within.

 

[Dylan8]

My electorate is almost a perfect split between Labor, Libs and Greens lol. Super weird.

 

[It Just Is]

Reality check on the lack of spending wiggle room for the incoming government:

I assume this is based on conservative estimates of commodity prices e.g. Iron ore at much less than $130 a tonne. Still, I’d love to know how we found ourselves in this position in such a very short space of time. Hard to blame COVID in 2025-26.

 

[Festerz]

I assume this is based on conservative estimates of commodity prices e.g. Iron ore at much less than $130 a tonne. Still, I’d love to know how we found ourselves in this position in such a very short space of time. Hard to blame COVID in 2025-26.

These numbers represent estimates of the gap between Federal Government income and expenditure - including transfers. The large upward trend in the Federal Government deficit was evident pre-covid but obviously was impacted by it signficantly. These are big numbers but, as REH said previously, they are not on their own anything to get over alarmed at. But they do obviously limit the spending capacity of a budget-conscious incoming government in uncertain economic and geo-political times.

The debt itself isn't the main problem, it's what the debt was spent on that's the issue. e.g. Pork barrel projects and wasted expenditure on large scale capital projects such as the cancelled French Submarine contract.

And a rhetorical question: With a trillion dollar debt to deal with, should we really be outlaying $171 billion on unspecified/designed nuke subs that won’t be available for at least 20 years in the current climate of growing national security concerns?