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| Dividing the pie - government gets fatter | |
Those of us wanting to see the budgets headlines of old - "Beer and
Cigs Up" were bound to be disappointed by Peter (Smirky) Costello's 10th
budget last Tuesday. Instead it contained a mish-mash of tax cuts, increased
spending and a surplus which had had Kim (Fatboy) Beasely licking his lips. In
the heady days of the 10 billion plus deficits of the ALP dominated '80s,
Finance Minister Fatboy regarded revenue the way he regards fried food, and
surpluses were few and far between. Every was expecting a horror 'post-election' budget after the orgy of
spending which preceded the last election, and many were pleasantly surprised. Perhaps the most confusing reports were those in the Canberra Times and the
Telegraph. The Canberra Times - appealing to residents of Canberra, the
socially aware, middle class public servants with the highest median income in
Australia had a big cartoon containing an ever rising graph titled Greed
Factor, and a beaming (well, okay smirking) Treasurer. The Telegraph a
working class paper if ever there was one, described Smirky as a working class
hero, and was headlined 'Workers: 1, Shirkers: 0'. The Left has surely lost
the plot when the working class vote for The Right. But the left, unfortunately, have a point here. Smirky has moved the top
marginal tax rate up, saving some wealthy Australians some money, and has
lowered the bottom tax rate from 17 to 15 cents in the dollar, but this has
done little to change the crippling effective marginal tax rates suffered by
low income earners, which trap them into poverty. Far more important than how
much tax you pay (or welfare benefits you get) is the amount of money you get
to keep when you earn another dollar. With many families losing 32 cents in
direct tax (and the Medicare levy), and another 30 cents in lost family
benefits, there ain't much incentive to increase your income, or for the missus
to get a part time job. Any tax cut is a good tax cut, and being nice to rich people will decrease
the brain drain as talented hard working people leave Australia to work in
countries with less unreasonably income tax regimes, but middle Australia, and
lower-middle Australia comprise a much larger proportion of the population. Mark (Maddog) Latham's single constructive contribution to Australian
politics was to force the expression 'effective marginal tax rate' onto a body
of people who had been in denial of the concept for nearly a century. And his
legacy seems to be that for once the ALP have a better tax strategy -
organizing cuts to those with the highest effective marginal tax rates. This
would create incentive, and reduce the poverty traps which the welfare state
has imposed on the Australian population. But we do have a 'future fund' - a big pot of money which every tax-payer
has to contribute to whether they want to or not, which will be used largely to
pay superannuation for public servants. Having saddled future generations with
90 billion dollars unfunded superannuation liability for the very people who
spend their lives over-regulating businesses, and inhibiting wealth creation,
our government is going to take it off us in taxes with the expectation that a
fund run by 'an eminent group of Australians' will be able to use the money
more profitably than the people who actually created the wealth. Exactly how 'Eminence' qualifies people to invest money more profitably
than those without Eminence is a mystery known only to our government. But it's not all bad news. Most of us will get an extra six dollars a week
to spend, and at least beer and cigs didn't go up.
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