Labor, full to the brim with fiscal incompetents, led by a truly moronic leader, and yet people still support them..... WHY????? Spending needs to match revenue, Billy boy, not the other way round!!! Judith Sloan does a brilliant job of tearing Short-Term and Labor a new one! #auspol #BSWNBPM #sameoldlabor #springst -A FEW weeks ago, Bill Shorten made an extraordinary statement: “Revenues have to match our spending.” No notion that we might need to cut our coat according to our cloth. Rather, Labor will figure out how much it wants to spend, then make some pathetic attempt to match revenues to these spending plans. I use the term pathetic deliberately. During the years of Labor rule under Kevin Rudd and Julia Gillard, spending rose by 35 per cent while revenue rose by only 19 per cent. There was the no ifs, no buts commitment to returning the budget to surplus by 2012-13, an objective the Labor government missed by a gap wider than the Grand Canyon. The deficit recorded for that year was $19 billion. Notwithstanding the appalling fiscal record of Labor when in government, one of the tactics of the Labor opposition is to declare that the budgetary position would be better had the electorate declined to boot it out. Take this recent comment from opposition assistant treasury spokesman Andrew Leigh: “Even if parliament simply rubber-stamped the budget, the deficit would be bigger, not smaller, than when the government came to office. That’s because they refused revenue from the carbon price, they gave money back to multinationals and back to people with more than $2 million in their superannuation accounts.” Let’s unpick these claims. It’s interesting that Leigh should mention the carbon tax because Rudd as prime minister promised in the election campaign last year to terminate the tax by July this year. After that date there would be an emissions trading scheme linked to the European scheme, with carbon prices currently trading under $10 a tonne. Given that the compensation for the carbon tax was to be retained, it is irresponsible for Leigh to argue that revenue has been forgone by virtue of the abolition of the carbon tax, given that his party intended to abolish it, too. Then we have the hoary myth that the Coalition government has given money back to multinationals. Here he is referring to Labor’s unworkable and unlegislated attempt to revise the thin-cap rules. In point of fact, these rules have now been reworked by the Abbott government. And the attempt by the Treasurer to remove research and development tax concessions for the largest companies, including some multinationals, was blocked by Labor in the Senate. Go figure. And what about Leigh’s reference to Labor’s proposed tax surcharge on superannuation fund earnings of more than $100,000 a year? Again, Wayne Swan never got around to putting this measure into legislation (along with another 91 tax and superannuation measures). But the Murray report has put paid to the idea in any case. The proposal is completely impractical in its application to defined benefit schemes, and the intermittent nature of capital gains in many superannuation funds means that the impact of the new measure would be inefficient and inequitable. If we look at Swan’s final budget in May last year — the one that the apologists maintain would have established a more rapid path of fiscal consolidation than Joe Hockey’s first budget — it was predicated on the terms of trade falling by a mere three-quarters of 1 per cent in 2013-14 and 1.75 per cent in 2014-15. Pull the other one, Wayne. As it turns out, the terms of trade fell by nearly 8 per cent in 2013-14. And in the September quarter of this year the terms of trade fell by 3.5 per cent alone. The reality is that Swan’s final budget was always predicated on a falsehood. It was clear by May last year that commodity prices were on the slide. It was simply unimaginable that the terms of trade would remain essentially steady in 2013-14. And, of course, this assumption led to a series of overly optimistic projections in relation to revenue growth generally and not just in relation to the mining tax. The argument that Hockey should not have allocated close to $9bn late last year to recapitalise the Reserve Bank ignores the ongoing theft that had occurred during Swan’s tenure, when he insisted on special dividends from the bank. While the bank’s governor, Glenn Stevens, was constrained from making a public request for additional capital, it was evident at the time that he was very glad to see the bank’s balance sheet repaired. In any case, the payment of additional capital to the bank is effectively a transfer of funds within the public sector. The bottom line is that it is a myth of colossal proportions that the budgetary position would have been better under Labor. Swan’s last budget was an act of sheer desperation, where figures were effectively plucked out of thin air and based on make-believe projections of minuscule falls in the terms of trade. Only three months after the 2013 budget, the pre-election economic and fiscal outlook, prepared independently by Treasury, put a figure on the fall in the terms of trade for 2013-14 of 5.75 per cent, compared with Swan’s fictitious figure of negative 0.75 per cent. This is pretty much all you need to know. So how will we go using the Opposition Leader’s guiding principle that revenues need to match spending? Labor has ruled out raising the GST, opposition treasury spokesman Chris Bowen supports a reduction in company tax, and rates of excise are probably maxed out. That leaves income tax, where the extent of current and future fiscal drag is truly alarming. We will soon have a situation where those on average weekly earnings will be paying the second highest marginal tax rate of 39 per cent and more than one million low and middle-income workers will be dragged into a higher tax bracket. Bill, that’s not a sustainable policy.- theaustralian.au/wayne-smith-bill-shorten-and-chris-bowens-bogus-fiscal-game
Posted on: Tue, 16 Dec 2014 00:23:58 +0000
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