Crikey Says

Aug 22, 2014

Crikey says: govt has lost the battle on fairness

Murdoch’s bullying tactics on show as Shorten outs himself. Abbott rehashes the hysterical anti-terror ritual. Flexibility, flexibility, flexibility: how the Oz could make money. Paul Kelly’s Plibersek faux pas. Back in the day when Young Labor partied hard. Sydney’s gay newspaper spat. Obeid book apology costs a mint. Salvos batten down the hatches. Why journos are leaving Ferguson. And Crikey shreds leaked News Corp accounts (but you can still read our stories here).

Outgoing Treasury Secretary Martin Parkinson has identified one of the key problems at the heart of the government's efforts to sell its budget -- and indeed its broader economic strategy. The perceptions of unfairness that have dogged the government from the moment Joe Hockey delivered the budget could have been offset by signalling that it would address the extraordinary benefits that high-income earners derive from the tax system in areas like superannuation in its tax white paper. As Crikey has been arguing since well before the budget, it is a bad look for a government that insists there is a fiscal problem (it used to be an "emergency", or a "crisis", but that rhetoric has now been cooled down) when it deliberately walked away from its predecessors' measures to modestly increase taxation on superannuation earnings for (very) high-income earners. The budget only confirmed this was the case, showing the cost of superannuation tax concessions, which primarily flow to high-income earners, will blow out from $30 billion this year to nearly $50 billion in four years' time. That is exactly the sort of area the government should have been flagging as coming under review. The broader point, of course, is that fairness is not the key area in which government intended to debate the budget. It was intended to be sold as a "growth budget", driving jobs and infrastructure construction to offset the ending of the mining construction boom while slowly returning to surplus. Instead, since budget night, the only issue has been equity. And despite Parkinson's wise words, that battle is one the government has now lost.

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2 thoughts on “Crikey says: govt has lost the battle on fairness

  1. Alex

    Here sits I, middle-income, very comfortably well-off, paying less tax thanks to superannuation concessions. Now, I choose to take advantage of these because I see no benefit in ‘donating” to the government, but, it ain’t right! Maybe I compensate by directing more money to genuine charities, maybe I don’t, but, there are people who will be far worse off than me, paying more tax, or at least a higher ttax rate, and when your poor, each dollar foregone counts for so much more.

    This sort of policy leads to greater inequity, and in the longer run, lower overall wealth, as so very well illustrated by the good ol’ US of A. And, if yfou think that higher taxation rates reduce prosperity, take a look at Scandanavia, with some of the highest average wealth levels in the world.

    Of course, what puts fear into the wealthy is the word “average”. It implies equity, i.e. the loss of their equity and privileges.

  2. AR

    Thanks [email protected] – you saved me the effort to write almost exactly the same thing. I benefit hugely, think it unfair but am not currently feeling masochistic.

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