The Crossroads Are Looming

The upcoming federal election is going to be a pivotal time in Australian politics. The result is likely to affect the direction of Australian Government policy for the next decade. If the Liberal/National Coalition regain power, they will see it as an endorsement of their trickle down philosophy in spite of the blatant example of it not working as demonstrated by the stagnant wage growth in Australia and around the world. If Labor wins then its likely to result in a change of emphasis towards “working” Australians.

The fine tuning of government policy has to start contemplating the type of country that we want to have. For years we have moved toward a society based on fairness and tolerance, a multicultural society that aims to eliminate poverty by the redistribution of wealth. When the Howard Costello duo were running the country, instead of banking the income generated by the mining boom, they decided reduce the tax “burden” on the higher end of town. Subsequent Coalition governments continued this policy. The result (as outlined in the last Coalition Budget) is to provide further tax cuts that will provide tax “relief” for those currently on the third tier of the income tax rates. The cost to the budget bottom line is substantial with independent analysis showing the cost could be as high as $30 billion per year in foregone revenue. (See https://www.theage.com.au/politics/federal/tax-cuts-will-cost-30-billion-a-year-and-may-drive-budget-back-to-deficit-research-finds-20190408-p51c0l.html ) This ignores the tax subsidies provided to Landlords and high end Self Managed Superannuation Funds and the likelyhood of reduced economic growth in the forward period of the budget figures. This will undoubtedly result in continued budget deficits.

The Coalition is claiming success in getting the budget back to surplus despite not actually posting a surplus – they have PROJECTED a surplus next financial year and continued surpluses after that. However, the two areas that are in doubt are the projected growth in GDP and the dubious claim that the rate of government expenditure will only increase by 2.9% as opposed to the 4.3% that it is currently running at.

This means that either the Coalition is deliberately obscuring expenditure cuts or they just have no idea (or credibility). Labor does not get off scot free in this respect either. Ross Gittin’s article outlining the failures of both sides to actually consider the bottom end of town is worthy of a read. The fact that neither side find it politically attractive to increase the Newstart Allowance is to their great shame. Even ignoring the fairness argument, an increase to the Newstart Allowance would provide greater stimulus to the economy than a tax cut to the wealthy. Newstart Allowance recipients are more likely to spend the entirety of their payment than the wealthy are to spend their tax cuts. Politicians, it seems, have lost their sense of conviction repeatedly failing to explain in detail what their policies mean. They treat the voting public like idiots, relying on glib slogans and rehearsed, focus-group driven, one liners.

A great example of this is the proposed reduction to the Corporate Tax Rate for businesses with turnover greater than $50 million per year. The Coalition says that this is required to increase investment and lead to greater employment. This ignores the fact that both employment and investment have increased over the last few years without this tax cut. It also ignores the fact that many of the so called beneficiaries are multinational corporations that pay little or no tax in Australia anyway but they haven’t necessarily increased their workforce or their investments in Australia but neither have they fled our shores with their tails between their legs. The reality is that businesses make investments on the basis of the profits they will earn not on the tax they pay. If they are making decisions on the basis of the tax that they will pay then its a distortion of the market. We all know that according to the theories of Capitalism that governments should refrain from actions that distort the market.

The time has come for Australians to state clearly that they want a multicultural society that protects the old and infirm, encourages innovation, education and hard work, while protecting and helping those needing support to move into employment.

You Cheeky Buggars!

Deloitte Access Economics prepared a report for the Minerals Council Australia stating that although the major mining companies hadn’t paid a lot of tax, they had paid a total of $185 billion in company tax and royalties. To claim that royalties somehow represent a payment of tax is extraordinary – royalties are payments for goods that belong to the people that a private company removes from the peoples’ possession and on-sells. In other words, its the wholesale price of the iron ore that it mines that the company then retails to their customers. Its not tax, its a legitimate (and largely cheap) price that the company pays for raw product.

When BHP, a company established in Australia, exporting iron ore that once belonged to Australia, sells its ore overseas it claims that its owned by the Singapore marketing hub of BHP so no tax is payable in Australia. The ATO believes (I assume by the court cases that are pending)  that this is an accounting fiction and is suing for outstanding tax and penalties of $1 billion.

Its time the mining industry and its minders faced up to their responsibilities as far as tax payments and their responsibility of compensating the Australian people for the product they take and the impact they have on the Austrlaian land mass.

How Stupid Is Our Treasurer?

Morrison is up on his soapbox spruiking the improved financial position of the Australian Government. He pats himself on the back over increased company profitability while ignoring the stagnant wage growth – gosh does that mean that companies are increasing their profits at the expense of employees. And you expect Australian workers to pat you on the back. Then he goes onto say that the prospects of an increase in surpluses is a result of cracking down on welfare payments. Nobody expects that welfare cheats should get away with it but how come corporate tax minimisation and the tax breaks available to the wealthy aren’t targeted by this government. He is also claiming credit for the increase in employment of a thousand jobs a day and that this is led by business. But the reality is, according to Ross Gittin’s article in The Age today, that government infrastructure projects in Victoria and New South Wales have led to creation of 300,000 of those jobs. Additionally, the increase in health related jobs is caused by the introduction of the National Disability Insurance Scheme. While the jobs maybe in the private sector, they are funded by the government.

Stop this crap about small government. We want a just and fair society and we only ask that ALL of society contribute financially to this through taxes. NO MORE TAX CUTS!!

We Should Have Known

The Child Abuse Royal Commission lodged its 100 page report with the Governor General today. Thanks be to them for undertaking the harrowing task of hearing from all those victims of child abuse. Thanks to the victims for sharing your pain in order to allow us, Australian society, to protect our children into the future. To all those silent witnesses who suspected but did nothing, to those criminals who were told but refused to listen and protect children may you all suffer at the hands of your chosen god. Your victims may forgive but we as a society must never forgive or forget – our children are far to precious to allow anyone to get away with it.

To Malcolm Turnbull, you destroyed any lingering hopes I had today by holding a press conference to beg the people on Benalong to re-elect John Alexander so that Turnbull wouldn’t lose government. I had hoped that it was to recognise the work that the Royal Commission had done and to make a commitment to implement and fund all the recommendations made by the commissioners. Sadly, that was just an aside.

I suppose I was hoping that the politicians would stop thinking about themselves and start thinking about Australia as an inclusive society.

If This Was A Business

I’ve just been watching the news reports on the High Court case bought against the government for its use of the Contingency Fund to pay for the Marriage Equality postal survey. It occurred to me that if parliament were a business then the board would be calling for heads to roll. If you look at the enormous salaries paid to members of parliament (and for anybody who thinks that MPs don’t get paid a fortune I suggest you look at the Newstart allowance or wages for cleaners and the like to see the disparity) you have to ask where is their output? Why are they abrogating their duties to the shareholders (the electorate)? I suggest that as they are not carrying out the requirements of their job i.e. governing the country, making decisions that require the enactment or repeal of laws, they should be deemed as being on strike and their wages should be withheld.

Labor, The Greens and the cross benches are all implicated in this. You are all meant to be in parliament to further the good of the nation. Opposition for opposition sake should have died out with Tony Abbott’s demise as Opposition Leader. The public of Australia expect more from our parliament. They expect that the good of the nation is put first. Parliament is elected to act not equivocate. We should not be having a postal survey full stop. Parliament should not be the playground of internal party factions. The people of Australia have elected the parliament to act – get on with it.

A Marriage Equality Bill should be put before the Parliament and voted on. If the outcome does not suit the majority of voters they will have their chance to have their say at the next election. If the government won’t put a bill forward or blocks a Private Members then the opposing parties should pass a vote of no confidence in the government and those Coalition members that have pursued Marriage Equality should, at the very least, abstain from voting.

COME ON PARLIAMENT, ACT!

Change Has to be in the Air (Part 1)

The financial crisis of 2008 bought the failings of the Capitalist System (as it currently operates) in to stark relief. The bastions of capitalism, the banks, had abused their market position to initially write loans to clients with doubtful ability to repay them, using valuations that were dubious at best and fraudulent at worst. The Banks then on-sold those mortgages to unsuspecting/careless brokers and second tier banks. When the inevitable happened and the borrowers were unable to repay their loans, the Banks coerced governments into supporting the Banks with the mantra “To big to fail”.

The end result was that the working poor and the middle class ended up paying for the Banks’ systemic failures through cuts in social services, losing their jobs and losing their homes. The worst  of it was that everybody other than the rich were the ones that felt the pain. Superannuants were hit by the falling stock market and the cuts in interest rates. Governments around the world instituted austerity programs, cutting pensions and raising taxes on ordinary people. Social services were curtailed and yet not one banker in the United States was prosecuted. When questioned about such outrageous schemes such as short selling (where you sell shares that you do not own at a discount in order to drive the price down so you can make a profit by forward selling the same shares at a later date for a higher price) the response was that its legal because we’re the players in the market and we make the rules. I’d like to see anyone else who sells property that they don’t own,  successfully argue to a judge that what they did wasn’t fraud.

But this was all just a sideshow in the market place. The recent research released in the United States showing that the wealthiest in society have increased their wealth in the last twenty years by 80% and that productivity per capita has shown a marked increase (although its slowing now) while at the same time real wages have dropped by almost 8%. As Artificial Intelligence (AI) and robots start eating into employment rates in the developed world the days of full time employment are disappearing.

In Australia, the problem has already reached previously untouched rates of under-employment and part time employment. With housing costs in the major capital cities rising to heights that make home ownership much harder for ordinary workers attain and even rental rates beginning to verge on the unsustainable something has to give. Its this sort of exclusion from society that leads to anti-social behaviour and increased crime rates. Even as the unemployment rate falls, wages are not increasing. This stagnation in wages growth hurts the economy in several ways – reduced ability to spend means that GDP drops on a per capita basis (and the capitalist system relies on increased consumption to keep the wheels turning) and the tax take by governments is reduced. But there is a solution.

(In the next instalment we talk about one possible solution)

The Robots Are Coming

Zan and Dr Karl’s guest today  is Quantum Physics Professor Stephen Bartlett. While they discuss heady quantum mechanics  topics, it confirms that with the increase in computing power, especially when quantum mechanics can be fully utilised in computing, the robots are coming. ABC news have been running articles all week on the future workplace that includes robots. As noted in the article on the 7.00 PM News, 5/7/2017, it will not just be labouring jobs that will be lost or those doing repetitive tasks. There are already computer programs that can find case studies in law that means lees junior lawyers or law clerks doing research for court cases.

Time for a new societal structure – stay tuned.

Amongst the Sadness, a Shining Light

In a world saddled with sadness as innocents abroad have their lives or loved ones taken by acts of violence either malevolent or accidental, a light has shone in the world when researchers at RMIT revealed their success in creating a paint made of  cheap and readily available materials that has the ability to use Solar Energy to convert airborne water into Hydrogen and Oxygen. The fact that they have achieved this is remarkable in itself but then they topped that by deciding to release the details without seeking a patent so that the technology can be taken up by others to make it commercially available as soon as possible.

The details of their work were revealed in The Age ( Solar Paint -16/07/2017 ) and I can only say that I find their reasoning reassuring – there are good people in the world. Lets just hope that the businesses that take advantage of their largesse don’t attempt to take advantage of consumers. This has the potential to change the world for the better – Donald can forget about ignoring Climate Change, this one discovery has the potential to reduce our greenhouse gas emissions back to previously unobtainable levels.

Thank you  RMIT lead researcher Dr Kourosh Kalantar-zadeh and your team.

You’ve Gotta be kidding me!

The Business Council of Australia (BCA) has teamed up with the BHP CEO, Wesfarmers CEO, Qantas CEO and the boss of Energy Australia to demand that the Senate crossbench pass the company tax cuts. According to the BCA, the full company tax cuts should be left on the table because, wait for it, “it is the only plan  Australia has got to drive growth and investment”. You are joking right? The only hope, according to these clowns, is that multinational companies who currently spend most of their time dodging paying of their fair share of tax in Australia must get this tax cut because its the only thing that they have come up with to improve growth in Australia. I would suggest that these CEOs hand in their collective badges if that is the best that they can offer their shareholders. Where are the visionary plans, where is the investment in new sources of energy production, where are the plans for creating meaningful jobs, instead  a tax cut so that the rich can have an extra coffee on Sunday served by a part time worker on reduced penalty  rates. How about coming up with full time jobs for young Australians, not in shuffling paper and pretending to create wealth by shuffling said paper, but in real wealth creation jobs such as manufacturing or agriculture.

We all know that at best, by the Productivity Commissions own research, after 20 years the expected increase in GDP due to this tax cut is less than 4% OVER TWENTY YEARS. This is not a plan, this is simply the rich continuing to line their pockets while governments have to reduce their services in order to balance the books. If the rich want to see what happens when the poor say enough is enough, just continue on this path of greed and indifference to the plight of ordinary working Australians. Its appalling the way that young people are being treated at the moment with only casual work and/or part time work, house prices and rents getting further out of reach, employers using sham contracting to further cut wages… all of this is leading towards a dangerous situation.

The American Dream

For those wishing to see the future of Australia as seen through the eyes of the Liberal dries and their cronies, have a look at the Four Corners (http://iview.abc.net.au/) episode broadcast on 13th March 2017. Prepared by a french documentary team, it shows the end results of a low wage policy and how extremely profitable companies are abusing their power and using dubious methods to cut the wages of their employees. One example, GE, distributed $26 billion to its shareholders last year while at the same time closing a locomotive factory in one state and opening a new one in Texas where they are able to pay their employees half what they are paid at the existing plant.

We continue to see this sort of behaviour in Australia. The Liberals privatised the power market in Victoria with the promise of cheaper power through competition between retailers and improved efficiencies in production of power. The end result has been ever increasing cost of electricity to consumers and ever increasing profits to both power retailers and wholesalers . Its worth noting how the retailers have no qualms in ripping off consumers that return solar energy back to the grid. Retailers pay wholesalers approximately $0.28 per kilowatt for power but only pay customers $0.06 for the power they produce to then sell it to the next door customer for full price. The market supposedly has its behaviour controlled by market pressure but, as we constantly see, this is simply untrue. Large companies collude to limit pay rises for their employees while scratching each others backs when it comes to executive pay. Consumers have little power in the market – they have to take the prices offered because companies operating in a global market can sell their goods to whomever pays the highest price (e.g. natural gas shortages in Australia because the asian consumers will pay more for it). Governments cannot force them to take lower prices as they would then be accused of attempting to nationalise an industry or of breaching free trade agreements. The reality is that the rich, that is the shareholders, don’t care what poor people have to pay as long as the  rich continue reaping obscene profits and have the ability to live the lifestyle they desire.

Rich Australians, compared to their overseas counterparts, are more self serving and less altruistic. Occasionally one of them makes a grand gesture that makes it into the media because it is so rare. I commend those people but would encourage them to become the conscience of the rich and show them they need to share the wealth with all Australians, especially their employees.