Super. Greens offer Abbott $13 billion

The Greens are offering the government a $13 billion budget saving. All it has to do is ditch its commitment not to touch superannuation before the next election.

The plan would tax superannuation contributions on a progressive scale rather than the present flat rate of 15 per cent and 30 per cent for workers earning more than $300,000.

Australians on the 19 per cent marginal tax rate would pay 4 per cent on their super contributions, Australians on the 33 per cent rate would pay 15 per cent, Australians on 37 per cent would pay 22 per cent, and Australians on the 45 per cent rate would pay 30 per cent.

As a supporting measure, the policy would also clamp down on "churning" wages through super funds. It will no longer be possible for Australians over 55 to get a tax benefit just for putting their salary into a super fund while drawing an equivalent wage from the same fund.

The change is backed by the Australian Council of Trade Unions, the Australian Council of Social Service, Anglicare and the Australia Institute. It is builds on a recommendation of the Henry Tax Review.

In the election the Coalition promised not to make any "unexpected detrimental changes" to superannuation.

An independent costing prepared by the Parliamentary Budget Office finds it would save $3.4 billion per year... Over the four years the saving would amount to $13.6 billion.

"The Greens are genuine about raising revenue. We can support people on lower incomes and at the same time raise billions to pay for schools and hospitals just by making sure that the rich pay their way on superannuation," said Greens leader Christine Milne.

The proposal would also fix an inequity. At the moment Australians earning less than $19,400 pay no tax on their income but the standard rate of 15 per cent on their super contributions. The proposal would ensure they paid no tax on their super contributions.

It leaves untouched the highly concessional 15 per cent rate of tax on super fund earnings. Dividend imputation means many super funds pay as little as 7 per cent tax on their earnings.

In The Age and Sydney Morning Herald










Related Posts

. Why Abbott will have to clean up Labor's super tax mess

. Budget 2015. Will Hockey ramp up tax on super contributions?

. Advice for Hockey: Slug super and fix the budget in one hit

Read more >>

Petrol Excise. How the Greens blew it.

Now I've seen everything. The Greens used to be numerate and they used to be smart about the use of price signals.

They are now neither. They are no longer numerate, because they've fallen for one of the oldest tricks in the book. They are no longer smart, because they are prepared to let petrol excise shrink.

Greens leader Christine Milne says she will block the budget move to index fuel excise in line with inflation. It's been shrinking in effectiveness ever since former prime minister John Howard froze it at 38.1¢ per litre.

Back then, in 2001, petrol was $1 a litre, making the excise 38.1¢ in the dollar. Petrol is now nearer 154¢, meaning the rate has collapsed to 25¢ in the dollar.

All through that decade the Greens had been arguing for a price on pollution.

If the petrol excise stays stuck at 38.1¢ per litre as a result of Milne's decision, the rate will slide to 19¢ in the dollar by the time petrol hits $2 a litre. Beyond that it will slide closer to zero.

Do the nine Greens in the Senate really want to be the people who could have revived Australia's sole long-standing pollution tax but decided not to?

That's how it seems.

They're fired up about the way Tony Abbott has tied the indexation of petrol excise to road funding. Which means they have fallen for one of the oldest tricks in the book...

The government says the extra revenue raised from indexing fuel excise will be set aside for building new roads and upgrading existing ones. Note the use of the word “extra”. The Greens have not.

Indexation will raise $112.5 million next financial year, $370 million in 2015-16, and $860 million by 2017-18.

The totals are tiny. Far lower than the $19.5 billion or so each year the Bureau of Infrastructure, Transport and Regional Economics says is spent on roads by all levels of government.

It's entirely possible - even likely - that the extra income from the excise wouldn't have been spent on extra roads at all. The bill the Greens intend to reject does indeed establish “a special account to ensure that the net additional revenue from the reintroduction of fuel indexation is used for road infrastructure funding”. But it doesn't ensure it will be used for extra road funding. It may simply be spent on road work that was going to be done in any event.

Announcing the decision on Tuesday, Milne said: “The package that is going to be put to the Parliament on fuel excise would see revenue raised to go purely to roads, purely to add more congestion to our cities, more pollution from vehicles, and not do a thing for public transport, for getting people to be able to drive less and, when they do drive, to drive more efficiently.”

She is wrong. There is nothing in the legislation she will reject that will add more congestion to our cities, nothing that will add more pollution from motor vehicles, and nothing that would take funding away from public transport.

The Greens were once carbon savvy, numerate and economically literate.

They've fallen for one of the oldest tricks in the book.

In The Age and Sydney Morning Herald

Related Posts

. Rudd takes the easy option on petrol

. Where Gillard gets the Greens wrong

. Spot the carbon tax. Our cost of living has flatlined

Read more >>

Labor is wrong. It is the Greens who are mainstream

Gillard was on about this last year. Remember this crap:

“The Greens will never embrace Labor’s delight at sharing the values of everyday Australians, in our cities, suburbs, towns and bush, who day after day do the right thing, leading purposeful and dignified lives, driven by love of family and nation.”

Here's what I wrote at the time:

My sources were the searchable Essential Report and the Greens' own policies.

Never has it been more important to understand the Greens. Never has a prime minister had less of a clue.

From July the Greens will decide which bills become law and which don’t. The prime minister says they "will never embrace Labor’s delight at sharing the values of every day Australians, in our cities, suburbs, towns and bush, who day after day do the right thing, leading purposeful and dignified lives, driven by love of family and nation”. Maybe, but that’s not what they will be called on to do.

They will be asked to vote on tax bills, on corporate regulation and on all manner of measures relating to economic management.

There are clues as to how they will vote, and if we are to believe her, the prime minister has missed every one.

Gillard thinks the Greens don’t get economics. They “wrongly reject the moral imperative to a strong economy,” she told the Whitlam Institute.

Her sidekick Anthony Albanese says they “tend to be a grab-bag of issues, tend not to have a coherent policy that adds up”.

Her resources minister Martin Ferguson says they want to “sit under the tree and weave baskets with no jobs”.

It's a forgivable impression until you examine what their supporters actually think...

...Asked to rate issues in order of importance in an Essential Media poll in January more Greens rated economic management number one than rated protecting the environment number one.The gap was closer amongst Greens voters than other voters, but the point is there was a difference - Greens put the economy number one.

Polled in November about a specific issue - regulation of the banks, Greens voters were on every measure more closer to economic orthodoxy than Labor voters.

Asked if banks should be restricted to lifting rates only in line with Reserve Bank, 87 per cent of Labor voters said yes. Even amongst Coalition voters 82 per cent said yes. But amongst Greens voters the result was 73 per cent, suggesting they are more likely to have studied economics.

Asked if bank fees should be kept to the cost of providing the service, 93 per cent of Labor and also 93 per cent of Coalition voters agreed. Only 90 per cent of Greens voters thought so.

Asked about a cap on bank salaries 88 per cent of Labor voters were for it. Coalition voters were far less keen at 83 per cent. In the middle, less in favour of hobbling the market than Labor voters although more so than Coalition voters, were the Greens at 86 per cent.

The views of Greens supporters are not outside the mainstream, except that they are likely to be more in touch with orthodox economics than the mainstream.

Greens voters are far more likely than either Labor or the Coalition to support higher taxes on mining profits, a view in line with the International Monetary Fund, the Henry Review and the Australian Treasury.

They are less likely than the majors to be fussed about a return to a budget surplus by exactly 2012-13 (as are orthodox economists although interestingly slightly keener than labor voters on spending cuts in the budget to come.

They are more likely than Labor voters to act against self interest. Only 17 per cent of Labor voters would accept a tax on products purchased online form overseas. A higher 19 per cent of Greens voters would.

And they know more.

An astonishing 10 per cent of Labor voters and 12 per cent of Coalition votes are deluded enough to think half our migration intake is boat people. Only 6 per cent of Greens voters think so.

They are accepting of the mainstream scientific position on climate change - that it is happening and caused by human activity; far more accepting than supporters of either Labor or the Coalition.

And they believe market mechanisms rather than regulations are the best way to get emissions down.

Their tax policies echo those of the Henry Tax Review. Tax breaks for high income earners would go, fringe benefits tax concessions that encourage the needless driving of cars would be scrapped and capital gains would no longer be tax-preferred over other returns from saving.

All income received in whatever form would be taxed at the standard rate and the scales would be rejigged to remove the high effective rates faced by Australians trying to get off welfare.

Henry would do this by flattening the scales and making the first $25,000 earned tax-free.

The Greens aren’t so sure about that, but neither are Labor of the Coalition. The point is that on nearly every area where the Greens diverge from Henry, the Coalition and Labor do too.

On most of the areas where then Coalition and Labor are reluctant to embrace Henry the Greens are keen to.

The big parties won’t touch the Private Health Insurance Rebate. The Greens would kill it, as would Henry.

The big parties aren’t attracted to a death duty. The Henry Review is, and the Greens would bring it in with a threshold of $5 million and an exemption for the family home, farm and small business.

The big parties are grudging about making the mammoth superannuation tax concessions more progressive. Henry isn’t, and the Greens would do it, after a “full review”.

This isn’t an argument in favour of the Greens policies, although as it happens I find them attractive. It is an argument that they fit within the economic mainstream. They are coherent, readily available on the web, and far more than a grab-bag from a “party of protest” that sits “under the tree and weave baskets with no jobs”.

If the Greens have got it wrong on economics, then so too have the economics text books they seem to have read and so too has Ken Henry.

Their real position is important because it is their real position that will determine what gets passed into law in the two to three years ahead, not the misleading dumbed-down characterisations of a prime minister and ministers who should know better.

UPDATE: The latest Essential Report does indeed show Greens supporters out of touch with mainstream Australia on something - asylum seekers. But even here Greens supporters are not as much out of touch as might be imagined. 35 per cent believe the Labor has been too tough on asylum seekers, a surprising 30 per cent believe Labor has not been tough enough.


RECOMMENDED READING:

How can parties that supported things such as carbon trading now oppose them? - NewYorker



Related Posts

. Start your engines. The Newstart inquiry is Go!

. Leigh on the Coalition's hatred of Treasury

. Memo to Julia: You don't have a carbon consensus

Read more >>

Where Gillard gets the Greens wrong

Never has it been more important to understand the Greens. Never has a prime minister had less of a clue.

From July the Greens will decide which bills become law and which don’t. The prime minister says they "will never embrace Labor’s delight at sharing the values of every day Australians, in our cities, suburbs, towns and bush, who day after day do the right thing, leading purposeful and dignified lives, driven by love of family and nation”. Maybe, but that’s not what they will be called on to do.

They will be asked to vote on tax bills, on corporate regulation and on all manner of measures relating to economic management.

There are clues as to how they will vote, and if we are to believe her, the prime minister has missed every one.

Gillard thinks the Greens don’t get economics. They “wrongly reject the moral imperative to a strong economy,” she told the Whitlam Institute.

Her sidekick Anthony Albanese says they “tend to be a grab-bag of issues, tend not to have a coherent policy that adds up”.

Her resources minister Martin Ferguson says they want to “sit under the tree and weave baskets with no jobs”.

Its a forgivable impression until you examine what their supporters actually think...

Asked to rate issues in order of importance in an Essential Media poll in January more Greens rated economic management number one than rated protecting the environment number one.The gap was closer amongst Greens voters than other voters, but the point is there was a difference - Greens put the economy number one.

Polled in November about a specific issue - regulation of the banks, Greens voters were on every measure more closer to economic orthodoxy than Labor voters.

Asked if banks should be restricted to lifting rates only in line with Reserve Bank, 87 per cent of Labor voters said yes. Even amongst Coalition voters 82 per cent said yes. But amongst Greens voters the result was 73 per cent, suggesting they are more likely to have studied economics.

Asked if bank fees should be kept to the cost of providing the service, 93 per cent of Labor and also 93 per cent of Coalition voters agreed. Only 90 per cent of Greens voters thought so.

Asked about a cap on bank salaries 88 per cent of Labor voters were for it. Coalition voters were far less keen at 83 per cent. In the middle, less in favour of hobbling the market than Labor voters although more so than Coalition voters, were the Greens at 86 per cent.

The views of Greens supporters are not outside the mainstream, except that they are likely to be more in touch with orthodox economics than the mainstream.

Greens voters are far more likely than either Labor or the Coalition to support higher taxes on mining profits, a view in line with the International Monetary Fund, the Henry Review and the Australian Treasury.

They are less likely than the majors to be fussed about a return to a budget surplus by exactly 2012-13 (as are orthodox economists although interestingly slightly keener than labor voters on spending cuts in the budget to come.

They are more likely than Labor voters to act against self interest. Only 17 per cent of Labor voters would accept a tax on products purchased online form overseas. A higher 19 per cent of Greens voters would.

And they know more.

An astonishing 10 per cent of Labor voters and 12 per cent of Coalition votes are deluded enough to think half our migration intake is boat people. Only 6 per cent of Greens voters think so.

They are accepting of the mainstream scientific position on climate change - that it is happening and caused by human activity; far more accepting than supporters of either Labor or the Coalition.

And they believe market mechanisms rather than regulations are the best way to get emissions down.

Their tax policies echo those of the Henry Tax Review. Tax breaks for high income earners would go, fringe benefits tax concessions that encourage the needless driving of cars would be scrapped and capital gains would no longer be tax-preferred over other returns from saving.

All income received in whatever form would be taxed at the standard rate and the scales would be rejigged to remove the high effective rates faced by Australians trying to get off welfare.

Henry would do this by flattening the scales and making the first $25,000 earned tax-free.

The Greens aren’t so sure about that, but neither are Labor of the Coalition. The point is that on nearly every area where the Greens diverge from Henry, the Coalition and Labor do too.

On most of the areas where then Coalition and Labor are reluctant to embrace Henry the Greens are keen to.

The big parties won’t touch the Private Health Insurance Rebate. The Greens would kill it, as would Henry.

The big parties aren’t attracted to a death duty. The Henry Review is, and the Greens would bring it in with a threshold of $5 million and an exemption for the family home, farm and small business.

The big parties are grudging about making the mammoth superannuation tax concessions more progressive. Henry isn’t, and the Greens would do it, after a “full review”.

This isn’t an argument in favour of the Greens policies, although as it happens I find them attractive. It is an argument that they fit within the economic mainstream. They are coherent, readily available on the web, and far more than a grab-bag from a “party of protest” that sits “under the tree and weave baskets with no jobs”.

If the Greens have got it wrong on economics, then so too have the economics text books they seem to have read and so too has Ken Henry.

Their real position is important because it is their real position that will determine what gets passed into law in the two to three years ahead, not the misleading dumbed-down characterisations of a prime minister and ministers who should know better.

Published in today's SMH and Age


Related Posts

. On the day of the Canberra carbon tax protest... some sense

. Carbon tax, your questions answered

. Memo to Julia: You don't have a carbon consensus

Read more >>