Morrison's dilemma: Awash with money, but not enough

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Me thinks the next elections is going to be all about handouts and big spending...

Cheers,
Oracle.

 

How about using it to clear off a bit of debt, and/or invest in some projects?

More handouts? Really.

Blacky

 

I agree. It seems to be a completely wrong time to be handing out tax cuts. Of course that is exactly what Shorten will be promising at the election. It is concerning.

 

Exactly. Pay down some debt or invest it into infrastructure or put it into the Future Fund.... But don't hand it back... Costello and Howard made that mistake in the 1990's, and we are paying for it now because the surpluses dont run forever.... FTB anyone? dividend imputation on heat, anyone? CGT halved, anyone?

 

Hold on.. he's funding those with the closure of double dipping imputation and by NOT backing company tax cuts for companies turning over more than 10 million I believe... . Thats @ 120 Billion over 10 years right there. Now whether you like his ideas or not, let's at least try and be fair and reasonable and balanced when criticising a position.

You'd apply balanced scrutiny to the numbers of an INV property... why not do the same here?

Im not especially enamoured with either set of dodo's, but I am at least willing to take the bias off and consider the numbers at face value...

 

Ok. So Shorten is planning to pay for tax cuts by raiding super funds. The policy will raise $5.5bn per year. That is a tax. So pretty much imposing a tax to find tax cuts. That is concerning.

Better?

 

Like the GST, right?

 

Yes, the GST is a tax.

 

Much better.

Why is it concerning though? The pie is only so big. Australia has to start deciding how it wants to distribute it. There are some policies that are just far too generous, and we simply cant afford them. Super is already the greatest tax lurk out there, and then it goes completely tax free at pension age . That's all fine and dandy...I take advantage of it as well..... but the dividend imputation refunds are a luxury we can no longer afford. And they arent the only one. There are other examples as well. Petrol Excise. Even neg gearing. I should know. I milk the bejesus out of it myself and havent paid a cent of tax in years...yet I earn several hundred K.

So I have no problem with the various parties putting policy out there for discussion... because
I also ( shock surprise) have no problem having some of my tax concessions reduced in order to keep the lights on around the joint. I know thats very socialist of me, but I kinda think I won the lottery being born here, and even if I give up a little bit I'll still have it pretty damn good . And its actually in my interest to keep the place ticking along so that my years of hard work dont get devalued if the joint goes belly up....

I want my property prices to at least hold water.... and if the next generation cant get a leg up somehow, who's going to ensure that happens? You? Me? We need the next generation to keep us in the manner to which we have designed our investment strategies... so call it selfish, but a little selflessness will ensure that.

 

Is it socialist to pay tax though? I do not think it is. It's insane for people on high salaries, or even medium ones, to go to extreme lengths to not pay tax and then moan when the govt looks at cutting health services or cut the pension to people who can easily afford to pay for their retirement.

 

Im suggesting that if I was unable to avail myself of quite so many write offs ( which I do for selfish reasons) .... its probably in my interests to do so in the longer term ( also for selfish reasons)

In was being facetious about it being socialist. Its actually quite a smart capitalist business move for the longer term , I think.

But before I go giving the Govt too much money ... I think they need to do a far better job of cracking down on corporates...

 

A few write offs make sense. I think some could be rolled back though.

 

70% of all tax revenue is spent on welfare. As the population ages this will get worse as GST revenue will shrink and welfare increase.

Tax reform has to occur and that wont mean tax cuts (without major changes to neg gearing, CGT, super and other concessions which keep being discussed and discarded.) In the past 30 years its been handouts and new social initiatives which have never been funded. eg NDIS, CGT discount and ending taxation of super earnings and pensions

 

all the more reason to start pulling the band aid off sooner rather than later, so it hurts less.

 

Good news story overall - budget is singing along tracking towards surplus based on an economy performing very well (jobs & profit mainly). Not sure what they'll do with it or how to play it, politics will dictate that unfortunately.

On the whole, very impressive fiscal and economic performance for the past year or two. Something to sell come next election (jobs growth mainly). The libs whole mantra was 'economic leadership'. His delivered results on that, and the next budget will formally show it.

The pie is so big...i think thats a general principle the labor government have with some of their policies. The pie size is set, so lets remove some perks and things we can't afford, and spend it on things a developed country can benefit from (make our hospitals and schools better). IMO Its politically courageous, they're clearly taking an approach with a number of bold changes (housing, super, businesses, etc). While i don't agree with it, its nice to see a clear position and policy to back it up.

The Libs economic and fiscal approach is that the 'lets grow the pie'. Growing it will fix the structural budget issues and we can keep the perks/bells and whistles. Based on this set of data, the Lib's approach is working. The fiscal results that are coming out are mainly a result of the pie being bigger. I.e. profits, jobs growth, population, meaning more income and less forced expenditure (welfare associated with lack of jobs growth).

Appears to be an increasing size divergence in policy/approach. It seems to be further apart than in recent elections where it was closer together.

 

I will take a bet that there is no budget surplus coming when we were last told it would occur.

Budget surplus won't be reached in 2020-21, but it doesn't matter: Fitch

When they start to praise jobs being created its another way of saying the budget is looking a mess. They blame the long history of opposition overspending and borrowing and never blame their own spending. With a election coming both sides will build a base on enhanced growth etc and then after they are elected blame the other for the mess. Budget deficient will remain. Shorten has a tax plan...Tax the hell out of all and sundry and avoid a bigger surplus. And hand more out to those who dont even produce any economic activity - Welfare recipients.

 

Not sure about that. I don't know your assumptions - federal vs state, etc.
But according to here and here, the numbers for "welfare" are 35% or 28% of budget.
Have you a source for 70%? Offhand, It just looks like a big scary plucked out of the air to make it seem scary...

 

That's what I thought. But hadn't checked yet. Around thirty per cent sounds correct.

 

38.19% - I was incorrect

And a further 28% for Education and Health...Total of 66% of budget. A further 4.1% funds interest (only) on debt. 70% doesnt even go towards a single actual service that supports the country.

And this number excludes GST. GST already is handed out to the states. The 70% is also arrived at if GST and the 38% welfare bill are added together.

Source - 2017 Notices of assessment and the lovely bar graph Joe Hockey bought in

 

C'mon health and education support the country. We want literate and intelligent and well people. It directly supports the ability of the people to defend the country if things got grim.

Welfare is good for the country too. Good for retailers, good for civil peace. Sure, it could be more intelligently spent perhaps. There will never be a perfect system though.