Don't Believe Everything You Hear from the Leaders
During the Treasurer’s debate at the National Press Club on Monday, Treasurer Josh Frydenberg was put on the spot by Shadow Treasurer Chris Bowen, who asked him to deny the analysis by the Australia Institute that taxpayers earning more than $200,000 would receive $77 billion worth of tax cuts in 2030. This number is based on some heroic assumptions about the number of taxpayers who will move into the top tax bracket in the next ten or so years. Of course the implication that the top taxpayers are getting a special tax cut is misleading because there will no cut to the top rate of tax: the changes come because of the elimination of the 37% tax bracket so that there will be one rate of 30% for taxpayers earning between $47,000 and $200,000. Treasury has estimated that the total value of these cuts is $96 billion so it strains credulity that $77 billion would go to the top 2% of taxpayers when the top 5% of taxpayers are going to pay 36% of the total income tax paid. Nevertheless the fact that Mr Frydenberg can’t put a number on the benefit flowing to the top tier of taxpayers is a real weakness for the Coalition. On the other side of the debate Chris Bowen had difficulty explaining Labor’s proposal to top up the pay of child care workers. The first problem is that Labor’s costings of this programme are based on the fact that there are 100,000 childcare workers whereas there are 193,000. This means the programme will cost twice as much as Labor announced. Moreover Labor has been unable to explain how its wage increases will co-exist with wage increases that are granted by the Fair Work Commission. Chris Bowen also referred to a couple of Labor’s growth promoting policies: the investment allowance and the new tax write offs for small business. The investment allowance offers an instant 20% depreciation allowance for expenditure on capital items over $20,000. The bulk of this money will flow to manufacturing and agriculture companies because the services sector which constitutes 80% of the Australian economy so the boost will be limited. Even where it applies it will be all but wiped out by the increased costs of carbon credits under Labor’s emissions reduction policy. So the contribution to growth of this policy will be zero. The same conclusion applies when it comes to the small business tax concessions. These were announced with great fanfare during the election launch. They amount to $141 million worth of benefits to be paid to small businesses when they hire young or old workers but when they are compared with $7 billion worth on increased taxes on small business they pale into insignificance. At the same time as the Press Club debate was going on Bill Shorten was at Nepean Hospital where he announced $125 million for a cancer clinic and $2.5 million to upgrade the accident and emergency department. What wasn’t mentioned was the fact that Gladys Berejiklian’s NSW Government has committed $1 billion for the reconstruction of Nepean Hospital so that the Labor munificence is totally unnecessary, yet Bill Shorten described it as a much needed provision of assistance. The problem for the average voter is that the true value of initiatives that are flung at them is almost impossible to discern. The media should be able to draw out information through interviews and analysis but journalists seem to be more interested in the soap opera elements of the election campaign.