Well its election time here in Australia and we may have a tie. I don’t normally stray into politics but the situation calls for some commentary.
For my overseas readers we have 3 levels of government (Federal, States and local councils). Federal elections, which cover all of Australia are important for a number of reasons primarily as they most directly affect the economy, the environment, government services (although this is a shared responsibility between the federal and state governments in say education and health), trade agreements and a few other services and areas.
We have two major parties across Australia: a Liberal/National Coalition established around 1944 which is generally seen as right of centre and a Labour Party, which is the oldest party and seen and to be left of centre. Over the years we have seen some smaller parties come and go with the Greens now seen as a third-party. We also have the rise of the independent representatives which I believe is a growing phenomenon across the globe.
I watched my regular talk shown on our ABC television called Q&A where politicians and other commentators answered the public’s questions naturally enough on the unknown election results. There were lots of claims made as usual and I thought a quick fact check and comment worth noting.
Before I do there are many calls being made for our Prime Minister Malcom Turnbull to resign as the results of the election, whatever they are, are disappointing for the current Liberal/National Coalition Government. Calls are being made by his own parties far right conservative faction and their public commentators like Andrew Bolt much to the excitement of those with a left viewpoint. Well whatever the result I don’t agree with that call for in my view those far right conservatives in many ways tied Turnbull’s hands together with the public viewing his back-downs on earlier views poorly.
However to some points raised:
- the economy is in deficit (true – $37 billion in 2016) and this is bad. Well that’s a viewpoint not shared by reliable independent sources but what is agreed is that if we let this continue and grow it will be bad. I think bad is defined as living beyond our current means and leaving a sizeable debt for future generations to pay off that will affect their quality of life.
- Our net debt ($326 billion), which is lower than many of the worlds leading economies, can be reduced by successive budget surpluses (differing promises made by both major parties). Many people, including myself, doubt the effectiveness of these promises.
- The major sources of annual government income ($411 billion) are from tax e.g. personal income tax ($216 billion) and company tax (68 billion).
- The major sources of annual expenditure ($450 billion) include in order: pensions ($61 million), medicare ($45 million), family tax benefits ($22 million), public hospitals ($20 million), disabilities income support ($18 million) and a host of other services around $10 million including residential care, pharmaceutical benefits, non-government schools.
- Source: Treasury Pre-election Forecasts
Firstly as a voting Australian I like to be told the some simple facts (apparently this is hard although not so as I found out above) and not facts influenced by party values and beliefs. There are two ways to improve the budget deficit improve revenue and decrease expenditure and its usually a combination of both that political parties use to achieve their goals (e.g.reduce government debt.).
Revenue is expected to increase (2.5%) but that’s not enough so we have to cut some expenditure and here is where the hurt is and there’s little believable narrative from either side that’s balanced enough to believe. No-one wants to be hurt by cuts but I would like to think if its shared around a little its more palatable.
The voting Australian public, if told the simple facts (some are presented above) I think would accept a combination of fair and just strategies to make a declining budget deficit and pay back our debt over time.
Here are some of my thoughts based on the current suite of policies:
- tax cuts to small business only (up to 5% as they are the major employer across Australia – 46% of employment in the private sector or 4.6 million according to Treasury ) however lets define small business (currently it’s under $2 million turnover). In effect that’s a saving of approximately $50,000 a year on a $2 million dollar business which I dare say will keep some in business and allow other businesses to perhaps expand a little – not quite employ a full-time person. I say stay in business firstly for those small companies with no employees (61% of companies) are the ones most likely to fold. Of the companies that had employees 28% had 1-4, 9% had 5-19, 2% had 20-199, and less than 1% had 200 or more. The L/C government wants small businesses defined as under $10 million as I gather that’s where the 37% of companies that have employees are situated. These tax cuts over time will also include their capital infrastructure which boosts productivity and hopefully wages. No problems here and I would suggest no problems with most voters however its the all or large businesses tax cuts that most people object to (the 3% of companies) as it won’t stop the large multi-nationals shifting their profits to overseas places with lower tax rates. I think the profit-sharing argument for tax cuts to big business is not yet proven to the voter or sustainable in our economy.
- Increase some taxes (e.g. tobacco, super over $250,000) and improve tax avoidance as proposed by both parties.
- the labour proposal of changing negative gearing bears some consideration. I’m informed over 2/3’s of the people who do this earn around $80,000 annually (I know one) and I gather this is their superannuation at work. However the 1/3 of people (I know a few) must own considerable property and there comes a point where one must ask whether our economy can continue this tax advantage for them. Tax incentives to invest in new property is a compromise I think. This is a big item.
I was always going to comment on this one. As I understand it “Gonski” was affordable until a Labour Prime Minister said no school would be worse off. This promise made it difficult to fund “Gonski” but was politically more acceptable.
We have a real issue in the under performance of many lower socio-economic communities (some independent schools are located in these communities particularly the low-cost Catholic schools) and this is an economic as well as a social justice issue. We cannot afford as a community to continue to have large sections of our community under perform at school and lower their life opportunities (employment) which often leads to increased healthcare costs as well. If we are to cut government services costs over time we must address some of the core divers and this is the biggest.
The answers on what to spend the additional school revenue on I think are clear: improving teacher effect (both social and academic outcomes) class by class is the biggie and reducing the effects of disadvantage. A simply example of this is to give a wider range of experiences and relationships for students in lower socio-economic communities in a bid to improve their limited vocabulary development and improve self-esteem and resilience. Simply put learning is both exciting and frustrating at the same time and requires real perseverance to be successful. That’s hard for some students who have a closed mindset where feedback/failure/error is not welcomed or acted upon.
One of the issues schools in all sectors face particularly those in well off communities is the ever-increasing expectations placed on schools by parents and this includes the best of the best facilities some of our schools seem to need. Taxpayers as well as parents are paying for these expectations and we need to reign in these expectations and costs for all concerned. Maybe then we can afford to spread the tax dollar a little further and cut educational disadvantage, one of the main drivers for people to improve. That’s a hurt for some as I said earlier.
This seems to be a rant but what I am saying tell us some facts and how your policies address these facts and not slogans and then we might not get hung parliaments which are really in no-ones best interests.