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Not So Taxing Times

The Minerals Resource Rent Tax has commenced and it’s causing problems for the Gillard Government, including in particular, the Treasurer. What most people would not have expected is the way in which it is causing trouble for Wayne Swan. Instead of having to defend a huge tax grab, the Treasurer today was forced to respond to reports in newspaper The Australian that the MRRT failed to raise any revenue in it’s first quarter of operation. This is a circumstance few would have seen coming, though tumbling commodity prices should have provided somewhat of a warning to the pundits.

You see, the Minerals Resource Rent Tax, the renegotiated version of Kevin Rudd’s Resource Super Profits Tax was designed in an interesting way. Even though the name was changed, the new iteration was still a tax on profits. Therefore, when profits were high, the tax would be paid and when they were low, it would not.

Budget papers, released earlier this week in the Mid-Year Economic and Fiscal Outlook showed that the government believed the tax would still raise $2 billion this financial year.

A failure to clearly sell the way the tax works is the main reason that the response today was as it was. Too little time was spent saying that the tax would not raise revenue in bad times, but would in good times.

It is also a failure of design. If the ALP wanted to be sure of revenue then pegging the new tax to profits as they did was not the way to achieve a certain stream of revenue, especially one so easily impacted by poor commodity prices. To make matters worse, the new mining tax is not to prop up revenues with proceeds put away for future benefits. No, the tax revenue raised was to pay for promises made by Labor.

Clearly the turn of events this week, including the broader revenue shortfalls announced as part of MYEFO, make the prospects of returning to surplus extremely unlikely. Commodity prices for one would have to not just get back to where they were, but likely higher to make up for the time when the price was below expectations. Those prices could yet stay low for some time.

But the tough week, more accurately the tough day today did not end there for Mr Swan.

Speaking to reporters in Brisbane today, Treasurer Wayne Swan twice made a mistake when saying how much revenue the Minerals Resource Rent Tax would provide to the budget bottom line. Twice the Treasurer said that the tax would make $9 billion this financial year.

Actually, the resource rent tax is set to make $9 billion, not over the first year, but over the forward estimates, the next four financial years. It was a case of third time lucky for Mr Swan.

Ordinarily a simple gaffe like that does not mean much. It happens to politicians from time to time. However,for a Treasurer battling for a surplus and not having the numbers add up, it adds to a perception of confusion and uncertainty on the part of Wayne Swan and the Gillard Government.

The Opposition of course were crowing, enjoying a day where again, the Treasurer has been squirming over economic issues. But the celebration should also have been a tad on the difficult side for them too. The tax raised no revenue, so it was not doing the damage to the economy and businesses that the Coalition had warned about.

Federal Labor are seeing any remaining hope they had of returning the budget to surplus, which was delusional in the first place, evaporating before their very eyes.

But it is not the surplus the ALP should be most worried about the most. It is a worry, but the least of them. What they should be worried about the most is how much they might have to borrow to pay for the spending promises associated with this new tax of theirs.

Channelling ‘The Boss’, But Still Bashing the Bosses, Well Some of Them

The rich person bashing seems to be coming in waves. First we had the phase of talking down the likes of Clive Palmer, Andrew ‘Twiggy’ Forrest and Gina Rinehart. This first particular episode of the politics of envy came from the moment Wayne Swan’s article in The Monthly made its way into the public eye.  The second wave, which we’ve been pre-emptively warned about will commence this evening with renewed attacks highlighted by the Treasurer as coming our way when he gives the annual John Button Lecture in Melbourne tonight.

Let’s be honest, it’s not about all billionaires and other extremely rich people, if it was Mr Swan would have targeted the likes of Frank Lowy, Kerry Packer, Harry Triguboff and others. He hasn’t, it’s all about the mining billionaires, the ones who’ve spoken out against the Minerals Resource Rent Tax. The others don’t even rate a mention. Does Swanny think that they pay enough tax? He clearly does, there’s no additional profit tax being proposed for them.

While we’re being honest, who wouldn’t complain about having to pay extra tax? Let’s face it, we’re all self-interested individuals, well most of us at least. I’m pretty sure that just about anyone, from the richest among us to the poorest among us would be uncomfortable having to pay extra tax. This is especially the case when the services provided with the money people already pay in tax aren’t exactly all glowing examples of efficiency and the smart use of money.

Is it really smart for the Treasurer of our nation to be publicly knocking someone for having an opinion? Why not knock the countless individuals that don’t want to pay more tax and in many cases want to pay less tax? We all know that happens too.

Let’s get serious again for a minute. Clive Palmer employs an estimated 3000 plus people across his businesses. Andrew ‘Twiggy’ Forrest through his company Fortescue Metals Group (FMG) employs over 2000 people. Not only that, but Mr Forrest, through his Australian Employment Covenant has reached his target of finding 50,000 jobs for indigenous people a massive and very worthwhile initiative. Gina Rinehart, for her part employs and will seek to employ in the future a not insignificant number of people either.

Do we really want to bash Australians that create so many jobs? Do we really want to attack those at the head of companies which are involved in an industry which has played a major part in saving us from recession? Those who own companies in an industry that is currently still saving us from very poor economic results? I don’t think so.

Is Wayne Swan’s claim that these particular individuals are having too much of an influence on democracy actually true? Well actually no it isn’t. Pretty sure the Deputy Prime Minister has actually gone ahead with both the carbon tax and the mining tax despite the protestations which spawned the spending of millions of dollars on advertising campaigns against the two taxes.

The reality is they’re still going to pay them. That is, they’re still going to pay them until a Liberal Government takes power which you’d say is a dead certainty on the back of continued poor poll figures for the Labor Government. Yes, Clive Palmer is involved within the LNP in Queensland but at the same time I’m pretty sure a central tenet of liberalism is lower taxes and well isn’t that the result? Wouldn’t that play a part in making it easier to do business?

All this lunacy from a man that takes his inspiration from Bruce ‘The Boss’ Springsteen. Springsteen is a guy who’s made millions of dollars from a music career in which some of his song bash the rich, all in the name of making himself feel better about his own substantial wealth, estimated at about $200 million. But hey, his music is brilliant.

Question Time Ahead of Time

Today marks the last sitting day of the parliamentary week and the last day of parliament before the budget is announced in Canberra on Tuesday May 8 by Treasurer Wayne Swan. Consequently economics will continue to be the focus of the day in Question Time and the energy of our politicians will be at an almost anxious high as they try to get attention on their programs for Australia and the Opposition throw everything at the Gillard Government in trying to hold them to account.

The focus of the Opposition will continue to be on the two or three key areas that the Coalition have pursued for some time now  in their Question Time and broader political strategy. The two main focal points of the Abbott-led Opposition questions today will continue to be both the carbon tax and the mining tax which have had varying degrees of focus since both have been announced. They have both now been passed by the government and the Coalition will continue to pursue them as they come into force and for any negative impacts they have.

The Coalition also may ask some questions of the ALP Government about Fair Work Australia and its investigation into Craig Thomson, a long-running affair which has provided much political and parliamentary material for the Liberal and National Party Coalition.

The Opposition is likely to also ask questions of the government about the deal announced today to keep Holden producing cars in Australia for the next 10 years at least.

The government, as has been its strategy all parliamentary year will be to focus on their big programs, at the moment the Minerals Resource Rent Tax (MRRT) and how the revenue from it is projected to benefit the community, including low income individuals and small and big business. Some Dorothy Dixer’s, as has been the case this week may be devoted to other topical or even less discussed policies, like the Murray-Darling Basin Plan which received questions in the House of Representatives yesterday.

The Gillard Government will certainly use some Dorothy Dixer’s to ask ministers associated with the car industry about the deal with Holden to keep car production in Australia for at least 10 years and to highlight the benefits of this for the local and national economy.

The usage of the motion to suspend Standing Orders is another eventuality that cannot be discounted, particularly as we head toward a grand total of 50 of them for this the 43rd parliament of Australia. The motion however is less likely to occur as the topics discussed have been the focus of the motion in the past.What may work in favour of a suspension of Standing Orders is another topical issue presenting itself before Question Time today, likely not the Holden issue, or the fact that it is the last session of Question Time until the parliamentary week beginning the 8th of May.

Look for fireworks and restless pollies slanging remarks across the chamber today in the Lower and Upper House. Expect to see a high number of ejections from both sides and even Ministers sat down by the Speaker for not being “directly relevant” to questions asked by the Coalition and even their own side as they attempt to use Dixer’s for having a go at Coalition policy rather than explaining their own. Get your last fix for over a month from 2pm AEDT today

Question Time Ahead of Time

It’s Tuesday in the last parliamentary sitting week before  a short recess leading into our politicians meeting in Canberra to hear what the May budget will bring. Debate is set to continue to be vigorous through the rest of the week with the of the conflict determined for some time now and redrawn from time to time when topical daily or weekly issues have been uncovered.

There are three main subjects on which Coalition questions during Question Time today could be based, the Minerals Resource Rent Tax (MRRT), Craig Thomson or the carbon tax. The former, the MRRT was passed last night by the Senate and so is most likely to dominate Coalition questions in both the House of Representatives and the Senate.

The Craig Thomson affair was in the news again yesterday because the Coalition demanded a more explanatory medical certificate than was provided in order to grant him a pair for the rest of the week. A specialist has provided advice on the health of Craig Thomson and the Coalition have since granted him a pair. Therefore it is less likely that the Craig Thomson story will play a role in Question Time, except perhaps a question or two on the investigation itself.

Like it has been for some time, since the broken promise and before and after it was debated and passed by the parliament, the carbon tax could also play part in the Coalition strategy.

There is one last possibility for questions and that is any issue that arises in the media today that is very topical which the Coalition may choose to run with for the day in Question Time. It would appear that the mining tax is the most topical issue of the day and that there are no other topical issues that the Coalition will use for its questions in the parliament from 2pm today.

The Gillard Government will focus the use of the Dorothy Dixer on the spending involved with its tax on miners and what this will mean for different constituent groups. The government will certainly too use part of each answer on the Minerals Resource Rent Tax to attack the Coalition for opposing the tax cuts which are funded by the MRRT. Questions on the broader economy are also likely if government questions are not completely dominated by MRRT statements.

One a broader front, the usage again of the motion to suspend Standing Orders cannot be discounted as we head toward its utilisation 50 times some time surely in the near future though it seems less likely to be invoked today due to the fact that all the likely issues to be interrogated today have extensively been used for such motions before.

So it should be a fairly predictable Question Time from 2pm AEDT, though the exact mix of questions is still open for debate and determination at this stage. It cannot be discounted that there will arise, between now and the commencement of Question Time a topical issue that will supersede questions on issues that have already been canvassed for a prolonged period of time.

To watch all the action and theatre, if you’re a politics wonk or just a sucker for punishment, tune in to Question Time from 2pm AEDT on your television or your radio.

The Sunday Sandwich (That’s a Wrap)

Previous weeks in Australian politics certainly could not be topped, especially against political events in recent decades, but that doesn’t mean that this non sitting week of political debate was dull and boring, it had political debate and action that has been a not unfamiliar feature of this minority government.

The week in Australian politics contained two main events and the wash-up from both provided the most debate during this parliament free period before Canberra is back with a vengeance on Tuesday. They were the release of reports, redacted, some not at all into the Australian Defence Force Academy (ADFA) and ADF culture as a whole and the announcement by Tony Abbott that an incoming Coalition government would hold an audit of all government spending save for the promises that have been made by the current Opposition.

By far the biggest debate was spawned from the details coming out of reviews into defence force culture and the so-called ADFA Skype sex scandal which has landed cadets in court.

The commandant of the ADFA, Commodore Bruce Kafer was stood aside in response to allegations made against him after the allegations of the Skype affair came to light. At the time, Defence Minister Stephen Smith made scathing comments about Kafer’s alleged conduct at the time and one of the reviews released findings this week which cleared commandant Kafer of the allegations, triggering calls for Stephen Smith to apologise, even step aside.

Mr Smith of course did neither, fully standing by his comments and this sent the media into a frenzy, quickly forming into the apologise and/or step aside and the good on ya mate, keep it up camps. Either way it appears that there are divisions between the Defence Force and the Department and its Minister, but this is n0thing new in Defence.

One of the reviews also identified nearly 800 “plausible” allegations of misconduct of varying degrees of illegality and recommended setting up an independent body to investigate the allegations, dating back to the 1950s in a thorough manner. It also recommended the use of compensation and even an official apology from the government to those aggrieved by wrongs committed against them in the Australian Defence Force.

Also this week, Tony Abbott the Leader of the Opposition gave a speech to the Victorian Employers’ Chamber of Commerce and Industry in which he outlined some of the priorities of an incoming Coalition Government. In this speech Mr Abbott also announced that, if elected, his government would introduce an audit review committee of all government business, save for the priorities of the incoming administration. This announcement came at the end of the political week but did not fail to elicit a response from various quarters in the ALP Government and even the public sector union over the weekend.

Parliament resumes next week and the Gillard Government looks set to continue focusing their efforts on trying against almost all hope to sell a message based on the economy and its relative strength compared to other nations, particularly the US and Europe as the May budget draws near. This has been something that the government has failed to do since the overthrow of Kevin Rudd, combined with the continued deficits and further taxation.

The Opposition are likely to focus on the economy as a whole too, through the prism of the carbon tax and the mining tax and the perceived effects of such policies on the economy and the people. The Craig Thomson saga is also likely to get a look-in, remaining unsolved as it is to date.

It’s not going to be the biggest of weeks ahead as far as political noise goes, but it certainly will not be among the quietest and the return of Question Time we have to thank for that.

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