October 22 Edition
Well this is the week when we see the Government back in Parliament again and trying to keep up the positive momentum the new PM while the Opposition tries to re-set its approach to become seriously competitive again. The Opposition has gone mad on the ‘rich dude’ while the Government is watching what is going on at the Union Royal Commission.
Elsewhere we have all sorts of changes emerging with the funding of railways and so on - as opposed to the previous administration. Just how real any innovation agenda we will have to wait and see about.
As always politics and policy inevitably get mixed up in all this so a wide range of views get canvassed.
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Here is some other of the recent other news and analysis.
The Political Scene.
Half-truths obscure the debate over superannuation tax breaks
Date October 14, 2015 - 12:00AM
John Daley and Brendan Coates
Most of those who benefit from super tax breaks are high-income earners, not those in the so-called "middle".
The superannuation debate is plagued by myths. This month, the super industry lobby group the Australian Superannuation Fund Association issued a report to bust these myths and defend the existing tax breaks for superannuation. Unfortunately, the report replaces many of the myths with half-truths – which can be even more dangerous.
The most blatant half-truth is the ASFA's claim that three-quarters of the benefits of superannuation tax breaks go to middle-income earners. The ASFA defines middle-income earners as those earning between $37,000 and $180,000 a year. That enormous spread includes those just outside the top 3 per cent. Those people who earn more than 19 in 20 Australians may be surprised to find themselves described as "middle-income earners".
And then the ASFA glosses over the bottom 40 per cent of income earners, with incomes less than $37,000, who benefit very little from super tax breaks.
A more sensible definition of "middle-income" would start with those who are actually in the middle. In 2012-13, the median taxable income in Australia was $41,561. If we include, say, the 30 per cent of taxpayers on either side of this figure, the share of super tax breaks going to "middle-income" earners drops to less than half – nowhere near the three-quarters claimed by the ASFA.
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Turnbull, Shorten and aides to tackle policy challenges
- The Australian
- October 17, 2015
David Uren
Malcolm Turnbull has promised new economic leadership but confronts the same old problems that bedevilled his predecessor: a budget in need of repair, an inefficient tax system, poor productivity and a fractious federation.
The Senate, which cruelled the aspirations of the Abbott government, remains as obstructive as ever. Labor, the Greens and assorted independents show no sign of shifting from their insistence that none but the wealthy may be left worse off by new legislation.
There has been an immediate shift in rhetoric with the new leadership. Turnbull summons excitement in the potential for innovation and the transformation of our cities, while declaring the cabinet will be open to all ideas free of ideological preconceptions.
New ministers are learning their briefs, making their first tentative forays into their policy areas and establishing taskforces to tackle a variety of issues.
With an election due within 12 months, the new cabinet is under pressure to clarify its mission and provide some detail of the policies that will differentiate it from Labor and from the Abbott government.
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Turnbull government revives Harper review, Professor Harper welcomes the news
Date October 17, 2015 - 12:15AM
Gareth Hutchens
Australia's retail trading hours could be radically overhauled, and ride-share services such as Uber more readily welcomed into the country, after the Turnbull government said it will launch an "enthusiastic response" to the Harper review of Australia's competition laws.
It means the long-standing monopoly-power held by existing taxi services could be broken up, and traditional retail hours loosened dramatically, while road transport regulations could be significantly modernised.
It also means laws governing where pharmacies can be located will be reconsidered, as will aggressively competitive behaviour from big businesses looking to expand.
Treasurer Scott Morrison says the Harper review has the potential to unlock "enormous opportunities" for the economy and Australians can expect an enthusiastic response to it from the Turnbull government.
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General Budget Issues.
Australia’s future must come before playing politics around the Budget
- TERRY McCRANN
- Herald Sun
- October 10, 2015
JOE Hockey’s first Budget was all blood, sweat and tears and broken promises — although not nearly as many as the media (and the opposition) hysteria suggested.
His second Budget earlier this year was almost the exact opposite. Hockey stressed “jobs, growth and opportunity”. The highlights were not the cuts or the tax hikes of 2014 but a $5.5 billion package for business and a $4.4 billion one for families.
Obviously, there now won’t be a third Hockey Budget. So what will the First (Scott) Morrison Budget look like?
The answer to that depends on whether we get it before or after the election. That timing might also determine whether it’s both the first and last Morrison Budget.
And that after that it would be back to a Wayne Swan big deficit future with the treasurer, Chris Bowen, in a Shorten (or Albanese? Or Plibersek?) Labor government.
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Scott Morrison is staring down the barrel of a future of deficits
- The Australian
- October 15, 2015
David Uren
The debate between Scott Morrison and his opposite number Chris Bowen about whether the budget faces a spending problem, as the Treasurer asserts, or a revenue problem, as Labor prefers, brings to mind Mr Micawber’s famous advice to Charles Dickens’s David Copperfield: “Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.”
It is the gap between the government’s spending (too high) and its revenue (too low) that is the problem. It has been intractably stuck at about $40 billion for four of the past five years.
Research presented by the International Monetary Fund to finance ministers and central bank governors last weekend undermines the key assumption on which Treasury’s forecast of a return to budget surplus by 2019-20 is based.
The IMF has been troubled over the failure of world growth to meet its forecasts. Every time the fund has looked at world growth in the past five years, it has had to downgrade its forecasts. If the world economy had grown in line with the forecasts it made five years ago, the economies of the advanced world would be 14 per cent bigger than they are while those of the developing and emerging world would be 23 per cent bigger. But the forecasts of employment the fund makes for advanced countries have been much closer to the mark. Indeed, for a range of countries, including Germany, Japan, South Korea and Britain, employment growth has been better than the IMF predicted, although output growth has been worse. More workers are producing less output than was expected.
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Fact check: Do eight out of 10 taxpayers pay for Australia's social services bill?
October 14, 2015
Newly appointed Treasurer Scott Morrison has declared that Australia has a spending problem, not a revenue problem.
- The claim: Treasurer Scott Morrison says that there are "eight in 10 income taxpayers required to go to work every day to pay for the $154 billion social services bill".
- The verdict: In 2015, tax paid by fewer than the top five out of 10 income taxpayers is sufficient to fund Australia's social services bill. Furthermore, social services are paid from the consolidated revenue fund, which comprises all taxes raised by the Federal Government, with personal income tax providing just under half the total. Mr Morrison's claim is misleading.
Mr Morrison told ABC's 7.30 that while revenue as a proportion of GDP was within long-term averages, spending is at peak levels not seen since the Global Financial Crisis.
He illustrated the extent of Australia's spending problem by saying that most income taxpayers work every day to fund social services in Australia.
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The glaring hole in Scott Morrison’s plan
ANALYSIS: Australian workers don’t just ‘work, save and invest’. They also ‘spend’ … or at least they used to.
All week, Treasurer Scott Morrison has been leaping to his feet in Question Time to tell Labor that “you can’t tax your way to surplus”, and that the choice at the next election is between steady or falling taxes with the Coalition or rising taxes with Labor.
On Wednesday, the “work, save and invest” Treasurer explained that his plan was to cut spending from 25.9 per cent of GDP this year, to 25.5 per cent next financial year and 25.3 per cent next year.
Low taxes and a slow reduction in spending will, so he says, eventually bring the federal budget back into balance and with luck allow the government to pay down the current debt – net federal debt is expected to peak next year at 18 per cent of GDP.
There is one big flaw this plan, however.
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Budget 2015-16: Revenue problem for Treasurer Scott Morrison as takings fall short
Date October 16, 2015 - 6:16PM
Peter Martin
Economics Editor, The Age
Weeks after Treasurer Scott Morrison declared his budget had "a spending problem, not a revenue problem", new finance department figures show revenue falling short.
The figures for the first two months of the financial year show revenue of only $61.113 billion in July and August, well short of the $63.336 billion expected when the budget was delivered in July.
Tax revenue is down $1.7 billion down on the budget forecast due to both slower than expected wage growth and weaker than expected dividend payments.
Superannuation tax receipts are about 20 per cent short of expectations and the resource tax has brought in less than half of what was expected due in part to the lower oil price.
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No longer a nation of home owners, now we're renting
Date October 17, 2015 - 5:20AM
Peter Martin
Economics Editor, The Age
Analysis
Once a nation of homeowners, we are becoming a nation of renters.
It's been two years since the latest update on housing occupancy and the one released on Friday show the proportion of households renting has edged up to 31.4 per cent. The proportion owning outright is only a point or two in front, at 32.5 per cent. Around 35 per cent of homes are mortgaged.
Back before the tax change that ignited negative gearing at the end of the 1990s around 40 per cent of households owned outright, and only 28 per cent rented.
It's the flipside of the boom in second properties that has made Australia a nation of landlords. The Bureau of Statistics says an extraordinary 1.5 million households now own properties they don't live in. Among high earners 39 per cent own a second, third or fourth property.
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Health Budget Issues.
NSW to push treasurers on GST increase to meet federal health cuts
Date October 15, 2015 - 6:31PM
Sean Nicholls
Sydney Morning Herald State Political Editor
NSW Treasurer Gladys Berejiklian will continue the push to increase the GST from 10 to 15 per cent to address a looming health funding gap at a meeting of her state and federal counterparts in Sydney on Friday.
The meeting with new federal Treasurer Scott Morrison is expected to cover implementing the abolition of the $1000 GST-free threshold for online purchases from overseas and establishment of a national register of foreign ownership of land titles.
Mr Morrison has also placed the recommendations of the Harper review of competition policy on the meeting agenda.
The review urged reforms across government sectors including health and education to which Mr Morrison has said he is keen to have the states and territories respond.
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Health funds lobby to lift fees
- The Australian
- October 17, 2015 12:00AM
Health fund members are set to be slugged with higher premiums, with insurers warning the federal government the private system is buckling under the pressure of rising costs and wasteful healthcare.
Despite regulators and Health Minister Sussan Ley acknowledging affordability is an issue, health funds are preparing to make applications in the coming weeks for premium increases that will flow through to members in April.
The managing director of Bupa’s health insurance business in Australia, Dwayne Crombie, yesterday said the erosion of the federal insurance rebate exacerbated any decision to pass on costs. Labor means-tested the rebate, reduced its scope and indexed it to inflation rather than the cost of premiums, prompting some members to reduce their level of cover or dump their policy completely because of the cost.
“The consumer is certainly looking a bit distressed,” Mr Crombie said. “We desperately need to figure out how we can slow down the rate of growth in the system, how we can make it more affordable and how the private system can complement the public system and still be sustainable.”
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Homeopathy Plus! director Fran Sheffield banned from promoting 'vaccines'
Date October 14, 2015
Amy Corderoy
Health Editor, Sydney Morning Herald
A homeopath who has repeatedly claimed to be able to prevent whooping cough with homeopathic "vaccines" has been banned from selling the products for five years and she and her business fined $138,000.
Central Coast homeopath Fran Sheffield is an advocate of alternative medicines who authorities have apparently been unable to prevent from making misleading claims about the benefits of homeopathy in contravention of federal medicines laws.
But the Australian Competition and Consumer Commission took Ms Sheffield to federal court, claiming she was misleading consumers with her business Homeopathy Plus! and its promotion of supposed whooping cough vaccines.
In December, the court found Homeopathy Plus! was making unreasonable and untrue claims that conventional whooping cough vaccines were ineffective, and homeopathic vaccines were a safe alternative.
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It has been an interesting time with the new Government settling in and all sorts of options now back on the table, including the Harper Competition Review - pharmacy might be worried. Health is also clearly under review as far as its budget is concerned. Lots to keep up with here! The next few weeks in Parliament will be telling as we run up to Christmas.
Enjoy.
David.
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