Fuck...here we go.

Hockey's budget applies a cleaver, not a brain

DateMay 26, 2014

Ross Gittins

According to Treasury secretary Dr Martin Parkinson, the budget is replete with ''structural reforms''. According to his boss Joe Hockey, it will ''drive the productivity required to generate economic growth''. Sorry, not convinced.

As a vehicle for micro-economic reform, the budget gets less impressive the more I study it. Parkinson seems to be referring to reforms to the structure of the budget itself, which will build ''fiscal resilience'' over the coming decade.

That's true enough in terms of returning the budget to a sustainable surplus (business cycle permitting). In the process, however, the budget cuts will do little to raise the efficiency with which the government performs its own tasks, nor the efficiency of its interaction with private industries.

Rather than making what the government does more cost-effective, it just stops doing as much. It makes the federal government smaller, but not better. It's a giant exercise in cost-shifting: to people on pensions, to the young jobless, to university students, to the sick and, to the tune of $80 billion, to the states.

It's about crude spending cuts, not about using science to improve efficiency. Does anyone seriously believe imposing yet another temporary increase in the ''efficiency dividend'' on the public service will lead to cost savings without any decline in the quantity and quality of services provided to the public?

Hockey's talk of productivity improvement seems mainly a reference to the budget's increased spending on public infrastructure. I guess we shouldn't complain about the Liberals' belated recognition that adequate infrastructure increases the productivity of the private sector - it would be news to Peter Costello - but the money does need to be well spent to maximise the benefit.

Monuments and pork-barrelling do little for productivity. And I'm not convinced the Libs' bias - federal and state - towards expressways and against public transport is the way to get the greatest productivity gain.

Next exhibit on the micro-reform list would be the deregulation of university fees. The claim that this will unleash competition and so make the tertiary education ''industry'' a lot more efficient is so debatable I'll leave it for another day.

Along with Tony Abbott (St Ignatius, Riverview) and Christopher Pyne (St Ignatius, Adelaide), Hockey (St Aloysius, Sydney) has repudiated the Gonski reforms which would have put federal grants to schools on a needs basis. He's left grants to private schools unreformed and unmeans-tested, while grants to public schools will cover an ever-declining share of their costs.

Leaving aside questions of fairness (and partiality), this is a micro-reform negative. Adjusting grants to reflect students' disabilities would have done much to increase the skills, employability and workforce participation of kids at the bottom of the distribution. It could have been done more cheaply than Labor planned by reducing grants to privileged schools to compensate.

Medical services account for 9.5 per cent of gross domestic product, meaning we have few industries that are bigger, even though much of the industry is government-owned or heavily government-subsidised.

There is plenty of room for the reform of excessive schedule fees for certain procedures, perverse incentives and overservicing, particularly by the corporate sausage-machines that have been permitted to take over so much of general practice.

The doctors' union could be obliged to allow nurses and other health professionals to perform many routine procedures. Many evidence-based reforms could be implemented to reduce waste and increase productivity in public hospitals without reducing the quality of care.

Much could be done to reduce the cost of the pharmaceutical benefits scheme by taking a tougher line with foreign drug companies over generics and the ''evergreening'' of patents, not to mention the chemists' union.

Paradoxically, overseas experience says greater efficiency can be achieved by imposing a cap on the growth in total scheme spending, thus requiring medical representatives to make harder choices about which new drugs are really worth listing.

So what was done? Hockey introduced a $7 charge on GP visits, tests and scans that will be costly to collect and will get at the corporate overservicers by hitting every patient and will discourage the poor from seeing the doc, whacked up an already high co-payment for pharmaceutical scripts and slashed projected grants to public hospitals.

For good measure, Hockey stopped wasting money on all that preventive medicine stuff. Brilliant. Must have taken a genius to dream all that up.

Finally, ''corporate welfare''. The foreshadowed toughness didn't materialise, save for a brave decision to take the ethanol subsidy from a very generous political donor. But the opportunity for sharing the pain - and doing much to force change on a lot of corporate ''leaners'' - was missed.

Twitter: @1RossGittins


Read more: http://www.smh.com.au/business/hockeys-budget-applies-a-cleaver-not-a-brain-20140525-38wq8.html#ixzz32jBmy9N0

http://www.smh.com.au/federal-politics/political-news/westfield-short-26b-on-tax-report-20140528-394rm.html

Frank Lowy's Westfield shopping centre empire pays less than a third of the corporate tax rate, a report has found, sparking calls for an inquiry into the tax contribution of Australia's biggest companies.

Surely there is a way to make companies pay their fair share.

An analysis of Westfield's financial results over nearly a decade by a university academic found the taxman has forgone as much as $2.6 billion from Westfield if the 30 per cent company tax rate had been enforced.

The report by Roman Lanis, a senior lecturer in accounting and tax at the University of Technology, Sydney, found the combined arms of Westfield pay an ''effective corporate tax rate'' of just eight cents in the dollar - far below the official 30 per cent rate levied on business in Australia. On average, the top 200 sharemarket-listed companies in Australia pay 22 cents in the dollar.

The report does not allege Westfield has done anything illegal, and nor does Fairfax Media.

Westfield, which is due to face shareholders at its annual meeting on Thursday, said the motive of the report was to ''embarrass'' the company as it was funded by United Voice, the union representing cleaners at Westfield's 38 malls.

The union and the company are locked in a dispute over conditions for cleaners who are paid a basic $17.50 an hour.

''Far from being embarrassed, Westfield is proud of its record of tax compliance,'' Westfield spokesman Mark Ryan said.

Dr Lanis' report found that over nine years between 2005 and 2013, Westfield paid an average annual tax of just $140 million on pre-tax profits of $1.7 billion.

The Westfield Retail Trust, a listed offshoot valued at nearly $10 billion, paid an effective rate of zero, his report concluded.

''If [both arms of] Westfield had paid tax at the statutory rate of 30 per cent, it could generate additional annual tax revenues of $541 million,'' Dr Lanis found.

A report by the Uniting Church last year identified Westfield, along with the major banks, for use of tax havens and low-tax jurisdictions. Westfield's highly complex corporate structure includes more than 50 entities registered in tax havens such as Jersey, Luxembourg and Singapore.

The listed property sector, of which Westfield is by far the biggest player, is among the most ''aggressive'' in terms of tax minimisation, Dr Lanis said.

He said it would take public pressure to get the government to act on wider corporate tax avoidance despite commitments Prime Minister Tony Abbott who has vowed to use Australia's leadership of this year's G20 meeting to push for a co-ordinated international crackdown on tax avoidance by global corporations.

''The government said the pain would be shared but if you look at the budget there was very little pain aimed at the corporate sector,'' Dr Lanis said.

''Society has been hit hard by the budget. As a society we need to raise questions and force further investigation. Surely there is a way to make companies pay their fair share.''

Westfield declined to confirm its actual Australian tax contribution but said the report was ''flawed and so obviously written to grab cheap media attention'' by United Voice. ''The 'report' has been generated as part of a long-running industrial campaign to achieve over-award payments for cleaning staff in Australia,'' Mr Ryan said.

United Voice national secretary David O'Byrne said a ''major'' inquiry was needed into corporate tax, combining all political parties, corporate tax, academics and the community sector. He said of Westfield's tax arrangements: ''It's not illegal but it's immoral.

''When the government is launching this attack on ordinary Australians, it is important that they have done all the work that can be done on the revenue side. Joe Hockey said the age of entitlement is over - well, over for who?''

Mark Zirnsak of the Tax Justice Network Australia said it was hard to get to the bottom of corporate tax affairs but said a review of nine years' results by Dr Lanis was ''robust''. ''At the moment, tax law is very secretive,'' he said.

So Rusty explain to me how Australian companies are paying the highest rates of tax in the world?

If these clowns paid their fair share Australia wouldn't have a "budget emergency".

And yes I realise they are doing nothing illegal. That's the problem. Tighten up the rules on these jokers and get the money flowing back into the government again.

The issue is that these avoidance schemes are only available to the large corporations. Rusty should be in support of tightening these rules as the gained revenue can be used to reduce the company tax rate for even small businesses.

So no one has posted the video of a young hockey protesting against a rise in student fees? lol

Or the one from ABC Insiders lol

-PB

Or fucking this :lol:

[youtube]nfJXKG4IB20[/youtube]

Sweet Jesus :lol:

-PB

Masterful.

It's a good gotcha and I smiled but in reality how many of us north of 30 have exactly the same beliefs as we did when we were 22? People change and it's normal.

Still think what the policy is terrible but digging up 20 year old footage really is meaningless.

Yes, but if you're the guy who has been videotaped in such protests then perhaps you shouldn't be the guy dismissing and demeaning the voice of young university students. Or the guy seen to be more than doubling their uni fees.

If there were videos of Pyne fighting fees you may have a point.

http://www.reddit.com/r/montageparodies

I'm not sure why people think the young Hockey video is working against the governments agenda. If anything it shows that young naive retarded socialists can grow up to become bad ass capitalist pragmatists with the benefit of age and wisdom.

Ooh! Rusty makes an appearance.

Can you go back a page and have a read of a post I bunged up there. (The Westfield thingo.)

I've got a question for you regards "everyone doing the heavy lifting".

Have a look at the taxes on corporate income as a % of GDP, we are second in the world only to Norway.
If corporations like Westfield are avoiding paying tax then we should definitely tighten the rules, but one of the reasons they do this it's because it's more profitable for them to pool their profits in low tax destinations while declaring losses in high tax destinations like Australia.

IMO I'm not purporting to be on the side of corporations, we should try to screw them and make them pay as much tax as possible, but at the same time we need to encourage investment here and if they pay to much tax they will take their business, which means jobs, elsewhere. It's about finding the balance between tax revenue, investment and jobs not about making them feel pain because their pain will be ours when they send more of their profits and investment offshore.

I'm not arguing that they should screw them. I just think this 30 cents in the dollar figure that gets bandied about is a bit of a joke. The reality is the companies pay much less than this.

The only real suckers in Australia are your poor old PAYG taxpayers. They'd be the only jokers paying the correct rate of tax.

The point is IF they paid the right amount of tax then there would be no budget emergency.

Not saying we shouldn't be ensuring that corporates pay their taxes but the way I see it, if I build a business big enough to employ 10 people and these people all pay income tax, I should be rewarded with a tax break for helping Australia. If I build a business big enough to employ 20,000 people, all paying income tax and helping money go around the economy, I should be rewarded with a bigger tax break.

They pay their PAYG taxes and by spending their money are also paying a shedload of GST. When they buy property they pay stamp duty. When they buy petrol they pay fuel tax. If they buy cigarettes they pay tobacco tax.

They also buy lunches, pay private school fees and get homes renovated.

Sure I've set up a business that makes me a fortune (in this example only, unfortunately). But instead of begrudging me the wealth perhaps you could consider how hard and smart I worked to set it up, and how many people I employ who pay tax to the government. 20K if I remember correctly.

Personally, I'd make a rule that the more people a business employs, the less tax it should pay. Watch companies put on more staff and grow.

I'm to sure that it's that colossal, a a few billion here and there, but the $700 billion debt we're heading towards is spending related not company tax related.

Go back to page 505 for a graph showing relative company tax rates. We are not 2nd.

Sounds like the tea party rhetoric from the good old US of A.

I hear you but fundamentally disagree.

You get this.

http://www.aflcio.org/Corporate-Watch/Paywatch-Archive/CEO-Pay-and-You

I'm not saying we should be communist or even socialist but the greater the divide between the have and have-nots the greater the dysfunction of the country as is evidenced by the US.

You're only looking at the statutory tax rates, not company taxes collected relative to gross output. About 6% of GDP is company tax, the OECD average is about half that.

Also worth mentioning the average Asian tax rate is currently 21.91%, having fallen from 29% as late as 2006.

Edited by rusty: 29/5/2014 10:56:11 PM

I don't watch Tea Party debates but if this is what they're into, more power to them.

I hear your fear of the divide, but why does it bother you that someone is earning more than you? Even if it's fifty times more than you?

Create incentive for business and it will thrive and employ people. Then tax will come.

Create disincentives for business and the country suffers. Don't forget - business doesn't owe anyone a job.

By taking more from the top end you're temporarily bringing more money into government coffers. But in the long term this is completely counterproductive as companies begin employing fewer people or take their business elsewhere. And the you have hundreds more laid off.

Which bit of what I said do you disagree with? And how would you go about increasing taxation on companies while ensuring that they continue employing as many people as they do today? Or, hopefully, more people?

And if we are to continue providing a safety net for our most vulnerable, how is reducing the number of people in paid employment going to help with raising revenue for that?

It should be noted that what Westfield are doing was recently ruled to be illegal in america and resulted in companies like Apple and Google having to pay massive taxation fines. The simple fact that we ALLOW companies to behave like this, including mining companies, is abhorrent.

[youtube]ZCYpXWCbKT4[/youtube]

6:30 onwards :-k

-PB

FTFY

[youtube]L1ggMgjYev4[/youtube]
The Pyne character gets me every time :lol:

Edited by mcjules: 31/5/2014 10:48:23 AM

http://www.buzzfeed.com/jennaguillaume/auspol-mean-girls-mashup