Contributed by Joe Montero
Australia’s Scott Morrison government remains as committed as ever to delivering its tax cuts.
A big part in May’s election campaign was the promise that millions are going to be handed out to citizens. Everybody is supposed to benefit. The reality is, most will get little. Those nibbles that may come, are designed to cover a simple fact. The tax cut is really about providing significant relief to the wealthiest portion of Australia.
Most will get a tiny short-term benefit, compared with the lavish handout earmarked for the top end, and the crumbs for the rest, will be quickly eaten away, with cuts to government spending on services.
This is how the intended tax cuts will work.
To receive the full benefit for the first stage, your yearly income must be less than $120,000. you might then get up to $1,080 each year, over the next four years. The will total to $15 billion over the period.
During this time, the next stage will begin. A much bigger handout of $33 billion will be given to those whose yearly income is above $180,000, and a further $26 billion will go to that small group making more than $200,000 a year. This will total $59 billion.
This comes from the government’s own figures. They are a smoking gun that tells the real story. One which hadn’t exactly been broadcast, and for very good reason. The bottom line is that the Morrison government to continue the process of income distribution upwards, and remains as committed as ever, to advancing modern day neoliberal economics to a new level.
Whether from the viewpoint the interests of business or the wage earner, this is economic vandalism. It appeals to the basest greed for immediate gratification, and to the the hell with the consequences attitude.
Decades of experience have made it abundantly clear, that this is a failed economic policy, is contributing to economic downturn and the threat of a more serious economic collapse.
But Scott Morrison, his team, and the behind the scenes backers of the coalition, are in no mood to let the facts get in the way of a good story, especially one, which lines their own pockets along the way.
The Prime ministers’ latest pay rise, making him one of the richest heads of state in the world, at the same time as the effective income of so many is being cut, is a good illustration of this greed.
Repairing the economy when market forces have not been able to do it, means government intervention to stimulate it, and to ensure that appropriate growth occurs in a properly balanced, healthy and sustainable way. This is not happening for Australia.
Income could be transferred downward through provision of services that would leave the majority with more disposable income. Much more could be spent on developing infrastructure and building new technologies. Assistance could be given to nurture a social economy, more closely linked to the needs of individuals and communities than the bulk of the present economy is.
Transferring the $33 billion currently earmarked for the richest income earners to this purpose, would go a long way to meet the cost.
At a time when most of the economic indicators are pointing to an impending further deterioration of the economy, taking a new approach has become even more important. This is not going to happen.
The flip side of the tax cut generosity is that it will significantly lower government revenues. This means less money to pay for what the government provides now. A new black hole of $95 billion over 5 years will have to be filled, and spending cuts are inevitable.
Analysis from the Grattan Institute suggests that a minimum of $40 billion worth of cuts will be necessary. This and the coming economic storm will mean that education health an income support services will be hard hit. They are important components making up the social wage, lifting up the real income of most of the population. And it’s doubly important, when the rise is the wages share is stagnant, as is the case today.
This will quickly reduce benefits from any tax cuts to zero.
All of this is being denied for now. It was certainly hidden during the election campaign. The Scott Morrison government should at the minimum, be expected to adopt a much higher regard for honesty, and to put the whole lot on the table.
They have no mandate to put into effect what most of Australia has not agreed with. Justice and economic sense demand, that we must all strive to put a stop to it.