Updated 4 Aug 2014, 10:25amMon 4 Aug 2014, 10:25am
The Federal Treasurer has dismissed a report that new Treasury figures show the Government knew the budget would leave low income earners disproportionately worse off. Joe Hockey says the information released under freedom of information doesn't show the full picture of the budget's impact. But the Opposition says the figures confirm that deliberate decisions of the Government have made the budget unfair.
Treasurer Joe Hockey – and many other treasurers in developed countries – have a poor grasp of economics, wrongly conflating national fiscal policy with running a household budget. UNSW Professor Geoff Harcourt explains (via The Conversation).
THOUGH MONEY AND FINANCIAL FACTORS are integrated in complex ways in the workings of the economy, ultimately it is real resources – work forces (sizes and skills), capital goods and natural resources – that set the upper limit at any moment of time on the size of the community’s standard of living.
And yet that hasn’t stopped successive Australian Federal treasurers – along with their counterparts in other advanced capitalist economies – increasingly using terms which reflect misunderstandings of the role of fiscal policy in economic policy.
When used by treasurers, phrases such as “we cannot afford it financially” or “where is the money to come from?” or “you are using taxpayers’ money”, confuse affairs of the state with what should be left to the workings of individual households.
Obsessed with the relationship of government expenditure and taxation, many treasurers suffer from deficit size fetishism, and fall victim to the “balancing the budget over the cycle” fallacy. Many also get caught up with hypothecation — matching specific government expenditures with particular tax sources.
Some confuse the significance of the national debt to income ratio for the present and future operations of the overall economy, especially the supposed link between them and the welfare of future generations relative to the welfare of the present generation. The “we’ll all be ruined” fear.
read more: http://theconversation.com/why-treasurers-should-go-back-to-economics-school-29851
Key crossbenchers say they are surprised the Abbott Government is threatening new cuts and tax hikes if the budget stalemate continues in the Senate.
Ministers used the five-week winter break to try and convince cross-bench senators of their economic vision for the country.
They promised "courteous negotiations" but yesterday Finance Minister Mathias Cormann ramped up his threat to increase taxes if savings get stuck in the upper house.
Education Minister Christopher Pyne later would not rule out university research cuts if his overhaul of higher education was blocked.
"I hope it was just a thought bubble," independent senator Nick Xenophon said.
"Slashing university research would be a very provocative and counterproductive move in the context of negotiations with the crossbench."
Family First senator Bob Day said he supported the overall aim of the budget but did not understand some of the political tactics employed by the Government.
"It's more important to do it right than do it quick," he said.
"There has been some progress on the budget campaign. I just think the tactics over the last little while have left a little bit to be desired."
Mathias is an imbecilic neo-fascist like the rest rest of them... What can you expect from the Abbott regime: "you-pay twice-as-much-is-not-like-giving-a-kidney-away" Pyne. Idiots... No... I actually mean BLOODY IDIOTS!!!!
At last, a senior Coalition minister has threatened to consider tax increases, rather than just more cuts to health, education and welfare benefits for the needy ("Ministers warn of new taxes", August 25).
I expect Finance Minister Cormann will now require the wealthy with family trusts to pay nearer to the normal marginal tax rate of around 45 per cent rather than the current rate, sometimes as low as 15 per cent; that he'll insist on a crackdown on bodgy maintenance expenses claims for negatively geared investment properties, and he'll increase the capital gains tax on the sale of negatively geared investment properties from the current concessional 50 per cent rate to say 75 per cent, or even 100 per cent. Just imagine what projects of national importance could be funded with the billions of dollars gathered by ending these tax perks.
He might consider removing the tax concessions for large payments into superannuation, and even look at the diesel fuel tax rebate for the big mining companies. Go for it Senator Cormann.
Bill Bowron Farrer (ACT)
If the government carries out its threat to increase taxes the big question is who will be targeted, the rich or the average citizen? On current form, all bets are on the latter.
Alan Morris Eastlakes
Now we have elected representatives threatening the electorate that the government will make life even more difficult if it cannot get its own way with the budget. Talk about your petulant, private school prefects.
Julian Hare Penshurst
The government wants changes that will put up the cost of living or warns it will put up taxes. It is Hobson's choice, isn't it?
David O'Connor Eden
Hooray! After 11 months in office the penny finally drops. The irony is that these government ministers think increasing taxes is a threat when in fact it's exactly what we want them to do.
First, reinstate the carbon tax or introduce an emmissions trading scheme. Then improve and expand the mining tax, phase out the diesel fuel rebate, abolish upper class and corporate welfare, phase out negative gearing, reduce superannuation concessions and increase marginal income tax rates for the wealthy.
Finally, the sophistry regarding the proposed $7 GP co-payment needs to be called out for the lie it is. Not a cent of it is going towards reducing the budget deficit, and yet Senator Cormann repeatedly talks about it in that context.
Brendan Jones Annandale
The budget will not be fixed until the tax system is fixed.
Ben Morris Wollongong
A little known consequence of this unpopular budget is the cut to federal funding of a widely used career-planning website. The myfuture website is a resource commonly used by the whole community, but more specifically young people. The symbolism of the Abbott government taking away from young people something called my future does not escape me.
Eric Sekula Mount Colah
So, members of Team Abbott are threatening to increase taxes and redirect research funds if the budget measures are not passed. Please, let them threaten an early election and then bring it on. Please.
Don Carter Oyster Bay
Giving up the dream of owning your own family home? Why not pay for your university degree with a kidney? Sometimes Christopher Pyne is way smarter than even he believes.
Keith Russell Mayfield West
While refusing to rule out cuts to university research, Education Minister Christopher Pyne has had a shot at the uni students and the quality of their protests. He referred to an instance of them hanging their protest banner upside down. Has Mr Pyne considered that maybe the students did it deliberately. An upside down flag is internationally recognised as a distress signal.
Robyn Stinson Randwick
Prime Minister Tony Abbott has hosed down threats of increased taxes and cuts to research if key budget measures are not passed, but Finance Minister Mathias Cormann has repeated his weekend comments that a future government would have to raise taxes if tough decisions were not accepted..
Senator Cormann warned on Sunday that the only alternative to blocked budget measures would be to raise taxes. And Education Minister Christopher Pyne raised the prospect of research grants being cut if his plan to deregulate the university sector was rejected by the senate.
In mathematics, one important notion is the "loading" of a factor in an equation. For example if a factor is 2 and the loading is 3, the equivalent is 6.
In information and fact checking, the loading is called CONTEXT. When the hypocritical fact-checker at the ABC, says that "Fact check: Labor blocking $5 billion of its own savings measures" and gives a tick to Cormann about saying so, he lightly dismisses the "loading" or the context:
"An Opposition spokesman told Fact Check Labor opposes the R&D tax incentive and higher education savings because they were "measures initiated by Labor in government to invest in the Plan for Australian Jobs package and the Gonski education reforms."
"On coming to Government the Coalition slashed funding from the Plan for Australian Jobs... They also broke their promise to honour Labor's Gonski education reforms. In doing so they removed the fundamental reason for the savings being made in R&D and higher education," the spokesman said.
The Opposition will not support changes to the tax cuts associated with the carbon tax because: "Labor budgeted to defer the tax cuts until 2018-19, not cut them permanently."
"The bill introduced by Joe Hockey that purports to be a Labor savings measure keeps the tax free threshold at $18,200 permanently," he said.
This context is good enough for me to say that Cormann — and the ABC "fact checker" — is talking bullshit.
Mr Pyne told Sky News that Senator Cormann was simply making a point about Labor's spending record.
"I think Mathias Cormann used a colourful phrase," he said.
"I have to say it's unusual for Mathias to use a colourful phrase but it's obviously captured the attention of some people."
Deputy Labor leader Tanya Plibersek said Senator Cormann's comments detracted from issues surrounding the budget.
"I think it is extraordinary that we have a PM who talks about shirtfronting the leader of [another] nation and we now have a Finance Minister who thinks he is Arnold Schwarzenegger," Ms Plibersek said.
"What Mathias Cormann is missing is that this budget hurts vulnerable Australians."
The opinions expressed in this site are those of the various authors and contributors and do not reflect those of the site, the site owners or hosting agencies.
Contributors please note that this site is archived in the National Library of Australia in perpetuity.