SPIN DOCTOR: Flawed from the beginning

The Coalition had the wrong message

On the morning after the Coalition’s last defeat in 1983 the conservative commentator Frank Knopfelmacher appeared on ABC radio and was asked why he thought they had lost.

He replied with anger: “They had nothing to say and they kept saying it”.

The same can’t be said about the Coalition this time. It has had a message, but the wrong one.

It was encapsulated in its slogan and the Prime Minister talked it up again in yesterday’s final campaign address, which was overshadowed by the controversy about the distribution of fake campaign material...

As Mr Howard said: “I haven’t heard Mr Rudd talk about full employment. I haven’t heard him talk about further reducing unemployment. Unlike me, he does not have a goal of reducing unemployment to three per cent during the next term.”

That was actually an embellishment on the goal John Howard set at the beginning of the campaign when he said there was “no reason why the current unemployment rate in Australia should not be markedly lower than it is and certainly with a ‘three’ in front of it.”

But the sad truth is that neither goal is something that Australians currently want.

And it should have been obvious. Advertising works best when it hooks into a perceived need. A promise of water works well during a drought. A promise of jobs works well during a recession.

But a promise of even more water when people already have more than they can handle is unlikely to work at all.

Right now almost anyone who wants a job has one and knows that there are more going begging. In the ACT (Australia’s tightest labour market) there are actually more jobs vacant than there are people available to fill them. A promise of even more jobs adds nothing.

It’s the same with John Howard’s broader (and uncomfortably abstract) concept of “growth”.

You won’t find any politician acknowledging it before election day but Mr Howard was broadly right when he told parliament in March this year that working families had never been better off.

A promise of even faster economic growth, an even greater boost in spending power, isn’t particularly compelling when spending power has climbed an extraordinary 25 per cent since the start of the decade.

Particularly not when the Reserve Bank has mentioned “growth” in the same breath as “inflationary pressures” on every one of the last ten occasions on which it has pushed up interest rates.

It is possible the see our lack of interest in the Prime Minister’s primary selling proposition as a classic “insiders” versus “outsiders” divide: The insiders who have jobs aren’t particularly keen on measures such as accelerated economic growth and WorkChoices that might make life uncomfortable for them while reducing unemployment further. The outsiders who want jobs would welcome the growth and welcome WorkChoices.

Or so the argument goes. But the other truth that no politician will acknowledge right now is that there are very few outsiders left. The head of the Treasury Ken Henry made the point in a leaked address to his staff in March. By and large what is good for those of us with jobs is good for the nation.

Electorally and economically the Coalition chose the wrong selling points in this election, and when they had installed the backdrop and started talking they couldn’t stop.

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SPIN DOCTOR: It's welfare Jim, but not as we know it

Expect to hear about a "transition from a welfare state to an opportunity society" when John Howard fronts the cameras at the National Press Club today.

He has coined the phrase just recently and used it in his policy launch, in an address to the Institute of Public Affairs, and in a campaign interview with Laurie Oakes.

Googling by Labor suggests that another Prime Minister came up with the idea first.

Britain’s Tony Blair (a Labour man) three years used John Howard’s formulation saying he wanted to move the United Kingdom “from the traditional welfare state to an opportunity society that helps families with the daily problems they face”.

Both leaders seem to share the same idea of an “opportunity society”.

Despite what they say they don’t actually oppose welfare...

Figures released yesterday by the Australian Institute of Health and Welfare show that welfare spending by all levels of Australian government has ballooned 57 per cent in seven years to a record $90 billion.

That’s faster growth than the consumer price index, which climbed 22 per cent in seven years, and even faster than Australia’s soaring gross domestic product, which jumped 50 per cent.

It is all the odder when it is borne in mind that welfare payments normally shrink as an economy boomed. Fewer people need them.

And the Institute’s figures don’t include a number of the Howard Government’s newer welfare measures directed mainly to better-off Australians such as the $3 billion uncapped private health insurance rebate and billion tax holiday for superannuation payouts costed at $2.3 billion a year and set to grow.

The Prime Minister himself made it clear in his policy launch that he doesn’t object to his sort of welfare.

Right after saying that he wanted to move Australia from being a welfare state to an opportunity society he said: “The Coalition is committed to Australia remaining a great home-owning society, indeed one of the greatest in the world, where the dream of home ownership remains at the heart of the Australian experience and within reach of each successive generation. Today I announce new measures to assist Australians looking to get a foot in the door of their first home.”

John Howard’s vision of an opportunity society is about giving a leg up to people who are upwardly mobile.

When it comes to education he says the Coalition parties are “unashamedly the parties of parental school choice. The blossoming of low-fee independent schools in the last decade, which we have supported, has given many families for the first time real choice over the school to which they send their child”.

In health he supports “a tax break for private health insurance”.

It's welfare, for people who want to get ahead.

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SPIN DOCTOR: Howard's ultimate promise - not to govern.

The Prime Minister, the Treasurer and the Workplace Relations Minister all yesterday condemned Labor’s plans to rollback WorkChoices while at the same time guaranteeing that they would not extend it.

“There will be no further changes to the industrial relations legislation. There is no second wave. We have nothing in the drawer,” the Prime Minister declared.

Just months after he felt it necessary to do a rollback of his own by removing the name WorkChoices, introducing a fairness test and appointing a telegenic Workplace Ombudsman Mr Howard was saying that he and his successor will neither roll things further back nor further forward again – ever...

“A similar guarantee has been given in the same terms by the man who will replace me as Leader of the Party and as Prime Minister if the Government is reelected, well into the next term, and that is Mr Costello,” the Prime Minister assured us. “We have no options, we have no plans, we have no intention in any shape or form of making any further changes to the industrial relations laws.”

In order to get reelected the Prime Minister is prepared to promise policy paralysis – an industrial relations system on autopilot.

He shouldn’t be. Promising never to touch a new system that it still being run in is an abdication of responsibility.

The Workplace Authority says 26,833 workplace agreements have been failed or sent back for changes since May and that it has a backlog of 142,000 agreements awaiting checking.

Frustrated by the process and deprived of the ability to use workplace agreements to cut wages bills, employers have begun to turn back to enterprise agreements.

This probably isn’t what the government had in mind when it introduced WorkChoices. The system probably does need a further shakeup, or at least fine-tuning, an option the Prime Minister has forsaken.

He said yesterday that the documents being sought by the Seven Network relate “entirely to the discussions in 2005 which led to the laws which are now in force”.

But other documents, reported in the Canberra Times in June this year indicate that well after the government’s partial rollback of WorkChoices in May it was considering rolling it forward once again.

The tender documents from the Department of Employment and Workplace Relations sought the services of an economic consultant to report by 13 July on the effect of

. extending the coverage of WorkChoices from 85 per cent to 100 per cent of the workforce,

. cutting award coverage from 19 per cent to 10 per cent of Australian workers, and

. boosting the coverage of AWAs from 5 per cent to 20 per cent of all employees.

The economic consultant has reported, but despite repeated requests the Workplace Relations Minister has refused to release the research ahead of the election claiming that Australians are “all researched out”.

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SPIN DOCTOR: The Chupa Chup campaign

What does John Howard have in common with the manufacturers of Chupa Chups, Olay cosmetics and Kentucky Fried Chicken?

Each manufacturer had its logo inserted into Channel Ten’s recent broadcast of the ARIA music awards for just one 25th of a second – a subliminal technique used to dishonestly create an impression in a viewers subconscious mind, bypassing conscious thought.

John Howard’s Coalition has used a few subliminal techniques of its own in a graph available on its website entitled “The Facts: Home loan interest rates are lower under the Coalition”.

The Prime Minister is fond of it. He used an enlarged version as prop during last week’s press conference on the Reserve Bank’s decision to push up interest rates...




One of the subliminal techniques involves the use of arrows. The arrow headed “average rates under the Coalition” points forwards. For no particularly obvious reason the arrow headed “average rates under Labor” points backwards.

And arrows can hide things. Only 3 of the 6 successive rate hikes since the last election are visible under an unnaturally thick horizontal arrow pointing steadily forwards.

And there’s the question of scale. It looks for all the world on the graph as if mortgage rates are tiny right now –only about one quarter as high as they were in the dark days of 1989. But the current standard variable mortgage rate of 8.57 per cent is actually more than half the Labor peak.

How have the Coalition’s artists done it? In just about the crudest way possible. The bottom section of the graph is cut off. Instead of the vertical axis climbing up from zero it starts at 5 per cent; the statistical equivalent of a head start in a race. It makes it look on the graph as if Australia’s banks charged hardly any interest on mortgages during 2002.

A half a century ago in the best selling guide to statistical deception of all-time the American author Darrell Huff christened the technique “The Gee-Whiz Graph”. His book was called “How to Lie with Statistics”.

Other things are wrong with the graph as well. It makes it seem as if the very steep slide in mortgage rates that began in 1996 was the work of the Coalition. But economic policy works with a lag. The rates began sliding steeply well before the Peter Costello’s first budget. They were likely to have begun sliding in reaction to policy settings in place at that time rather than in the future.

It was much the same when Paul Keating took office as Labor’s Treasurer in 1983. It is true that mortgage rates slid as the graph shows, but they had been sliding for some time under the previous Treasurer John Howard. They peaked at 13.5 per cent under Howard (the maximum rate permissible under the ceiling in force at the time), were at 12.5 per cent when he handed over to Keating and kept falling to 11.5 per cent.

None of this is evident in the graph prepared by John Howard’s party. For some reason it omits his 1977 – 1983 stint as Australia’s Treasurer.

Had it been included it would been apparent that in 1983 Howard left the country with higher mortgage rates than he inherited and that in 1996 Keating as Treasurer left the country with lower rates than he inherited, as has Peter Costello so far.

Actually none of this means a lot without looking at what was happening in other countries at those times. Money is freely traded and rates have been falling worldwide. For a Treasurer to talk about his own success in lowering rates when they have been falling all about him is a bit like a football coach keeping track of his own team’s scores and not those of the opposition’s.

And when the current differential between Australian professional rates and those in the in the US is compared to the differential back when Labor left office in the early 1980’s the result is spooky.

In both cases Australian rates were exactly 2.25 per cent above US rates. We are no better off relative to the nation we compare ourselves with than we were a decade ago, a subliminal cue missing from the Coalition’s graph.

HT: wonderful commentators.

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SPIN DOCTOR: You are wrong, Mr Swan

“Mortgage interest payments are now consuming a record share of household income – higher than any period during the Labor Government.”

- Labor's Treasury spokesman Wayne Swan. November 7, 2007

It is a believable-enough claim made repeatedly by Kevin Rudd and Wayne Swan when they talk about housing stress, but it is wrong.

It is believable because we know that although mortgage rates are much lower than they were under Labor (even after the latest hike) our repayments aren't much lower because we have borrowed so much more.

The claim appears to be backed up by the stats...

Kevin Rudd quotes Reserve Bank figures as showing that a record 9.5 per cent of household income is consumed by mortgage payments these days, far more than the peak of 6.1 per cent reached when mortgage rates peaked under Labor's Bob Hawke and Paul Keating in 1989.

But the stats are misleading, and in an unfortunately little-read document entitled the Financial Stability Review, the Reserve Bank explains why.

One of the reasons that a greater proportion of household income is being eaten up by mortgage payments than ever before is that more of us have home mortgages than ever before.

A bit over a decade ago 27 per cent of us had an owner-occupied mortgage. Now its 35 per cent.

And the number of us with second mortgages for investment properties has exploded. Once responsible for not much of household income, mortgage payments on investment properties now eat up 3 per cent of all income.

Neither of these are signs of housing stress. Getting ahead - yes; but stress, hardly.

And nor most-probably is another explanation that the Reserve Bank points to. Older households are taking longer to pay their mortgages off, and not because they are stressed. In the view of the bank they appear “increasingly prepared to use the equity in their houses for a range or purposes, and to take on additional debt later in life to 'trade up' houses.

Sophistication – yes; stress, probably not.

Any individual mortgagee will most likely be better off than a person in a similar position would have been under Labor in 1989, not worse off.

And because people such as Kevin Rudd and Wayne Swan are paid to read the Reserve Bank reports they quote they ought to know this.

Not that John Howard or Peter Costello are likely to get stuck into them for deliberately or accidentally misrepresenting the truth.

That would involve them declaring that most of us have never been better off. Not a good look in a campaign built around handouts.

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SPIN DOCTOR: Everyone loves renewable energy, again

"Much as it won’t boast about it, the Coalition has actually has the best record when it comes to introducing mandatory renewable energy targets, one of the best in the world."

Do you want your electricity manufactured in wind farms?

You are voting for the right party.

On Monday Labor promised that that 20 per cent of Australia’s electricity would come from renewable sources by 2020.

The Greens had already promised 15 per cent by 2015, and the Coalition 15 per cent by 2020...

The Coalition’s target differs from the other two in that it also allows for the inclusion of so-called “clean coal” power where the carbon dioxide released when the coal is burnt is captured and stored underground, a process that has not yet been shown to work on a commercial scale.

It’s also an easiest target to meet. Around 8 per cent of our electricity already comes from renewable sources (mainly hydro) and legislated targets being adopted in NSW and Victoria will push us towards the Coalition’s 15 per cent anyway.

But, much as it won’t boast about it, the Coalition has actually has the best record when it comes to introducing mandatory renewable energy targets in Australia, one of the best in the world.

Very early in his government in 1997 the Prime Minister trumped his Labor predecessor with an impressive package entitled “Safeguarding the Future: Australia’s Response To Climate Change”. Among the measures was one of the world’s first mandatory renewable energy targets that required generators to take an extra 2 per cent of their power from renewable sources by the year 2010.

So successful was the target that within 2 years of its adoption in 2001 more than 190 renewable power stations had been accredited and it became clear the target would be achieved early.

According to the leaked notes of a senior executive of Rio Tinto obtained by the ABC, John Howard’s Industry Minister Ian Macfarlane told an industry gathering in 2004 that the scheme had "worked too well”.

In 2003 an indpendent inquiry chaired by a former Coalition Senator had warned that “by 2007 sufficient capacity is expected to have been installed to meet the target. As a consequence, investment is expected to fall away rapidly."

It recommended doubling the target and extending the scheme to 2020.

The Coalition rejected the recommendation and much of Australia’s renewable energy industry went offshore.

It has to gear up from something of a standing start to meet the new targets and new wind farms are the easiest way to do it – lots of them.

Economic modeling conducted by McLennan Magasanik Associates for the Renewable Energy Generators of Australia suggests that the targets put little upward pressure on electricity prices, even potentially cutting wholesale prices in the early years as a result of a build up in generation capacity.

Yesterday’s headline talked of an increase in power bills for a family of four of $40 a year, but that is what the modeling projected for 2020, “the year in which the price impact peaks”, after that it should be lower or even negative if it helps electricity companies get into zero emission technologies early ahead of carbon taxes and carbon trading.

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SPIN DOCTOR: Everything old is new again...

Now we are being promised technical colleges “with a special defence twist”. What next? It is certain to be something else new.

Its becoming clear that there aren’t votes in making work things we already have. There are votes in introducing partial replacements that are new.

Consider technical colleges.

Australia’s TAFE colleges probably weren’t perfect, but they could have been improved.

Instead in the last election the Prime Minister promised a new alternative system to sit alongside them, to be called Australian Technical Colleges...

That system has barely gotten off the ground (Queanbeyan’s is due to open next year, but when I checked a few weeks back it had yet to hire teachers) and the Prime Minister has now promised a third system to sit alongside it – Australian Defence Technical Colleges to be set up in the politically sensitive locations of south-east Queensland and Adelaide.

The Coalition has made an art form of it. During the last election it wanted to cut childcare costs, but instead of upping the existing Child Care Benefit it introduced (you guessed it) a new system to sit along side it, the Childcare Tax Rebate.

Unfortunately the Rebate had a design flaw. Parents couldn’t get hold of it until the best part of two years after they had incurred the expense, but at least it was new.

In this year’s budget they moved to fix it up. It’ll now be paid by the same agency that pays out the Child Care Benefit, but at a different time. The Benefit will be paid to the centre to reduce their bills immediately; the Rebate will be paid about a year later.

Labor’s caught the bug. It wants to get laptops to children who would otherwise go without. But instead of handing over money to schools to buy and hand out the laptops it will introduce an Education Tax Refund, also to be paid through the tax system and largely missing the children who really need the computers. But at least it’s new.

There are parts of Australia (not that many) that lack access to high-speed broadband. But instead of fixing things in the black spots where there is a real problem (such as Gungahlin) Labor is proposing to invest $4.7 billion in a shiny new fibre-to-node network to sit alongside out existing ones.

It mightn’t be needed, but its new. And this is an election.

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SPIN DOCTOR: Making sense of the tax wars

The Treasurer says there's a “fundamental error” in Labor's tax plan that would leave 45 per cent of us worse off.

Labor says his claims are “bogus”.

Without the spin, it goes like this.

A week ago Peter Costello promised a three-year program of tax cuts worth $34 billion over three years. For the two years beyond that he promised further cuts, uncosted and dependent on budgetary conditions at the time, but with an end-point – an effective tax free threshold of at least $20,000 and a top rate of just 40 per cent.

By then he said 45 per cent of taxpayers would be facing a top rate of 15 per cent or less, 85 per cent would be facing 30 per cent or less, and so on.

Labor endorsed the three-year plan except the cut in the very top rate and said it would use its best endeavours to eventually get to Costello's proposed endpoints, but one year later.

As well it said it try to would flatten the tax system by that end date, 2013-14, cutting the number of rates from Costello's four to three...

Its “fundamental mistake” according to the Treasurer was to assume that it could reach his goals of 45 per cent of taxpayers paying 15 per cent or less and so on using only three rates.

Would Labor's plan leave 45 per cent of us worse off? Not worse off than we are at the moment. Perhaps worse off than we would be under the Costello plan, but it is hard to be certain.

For one thing it is comparing two “best endeavours” plans. Neither is guaranteed.

For another, by 2014 many of us may be retired or living in a world so different from today's that comparisons made now don't make sense.

And for another any move to cut the number of tax rates (to “simplify” the system) is bound to throw up losers as well as winners. That's one of the reasons Costello has avoided it, and one of the reasons Rudd might have been wise to as well.

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SPIN DOCTOR: Unionists are everywhere... amongst Coalition MPs

The Workplace Relations Minister says the role of unions is “essentially over”. Speaking on AM yesterday Joe Hockey said that while trade unions still had an important safety-net role in some industries, overall Australians were choosing not to join them “because they see them as irrelevant to their lives”.

But not irrelevant to politics. Australian voters elect trade unionists in spades.

Joe Hockey’s Coalition colleague, the Defence Minister Brendan Nelson is a former head of the doctor’s union , the Australian Medical Association.

The Training Minister Andrew Robb used to head the Cattle Council and later the National Farmers' Federation. Both collected dues and lobbied on behalf of their members as do unions.

The Health Minister Tony Abbott was an active member of journalists union, where he once adjitated for a strike.

The Environment Minister Malcolm Turnbull worked at Sydney’s fruit markts while at university and one day stormed into the office of the Trades and Labour Council demanding that it find a union to represent him...

As he told the Canberra Times in January: “I think I had been sacked or I was having some problems with my employer so I went down to the Trades Hall to ask for help. Barry Unsworth listened with a modest amount of interest and said, you should see another Trades Hall official Bob Carr.”

Other Coalition MPs were student union officials, among them Joe Hockey himself who was President of the Sydney University Students Representative Council (as had been Tony Abbott), Gary Humphries who ran the ANU Students Association and Peter Costello, who was General Secretary of the Monash Association of Students.

It could be argued that being a student union official isn’t the same as being a trade union official - but not by the Coalition. It’s television ad refers to Julia Gillard as unionist because she was president of the National Union of Students.

(Peter Costello said Wednesday that she was also a union lawyer and an organiser for the Socialist Forum. In fact she worked for a law firm that took briefs from unions, as did Peter Costello. Costello himself organised for the Social Democratic Students Association of Victoria.)

And Julie Bishop, among heaven knows how many other Coalition Ministers, was a school prefect – elected to represent the interests of her fellow students to those in authority.

In fact, come to think of it, that’s what member of parliament do. No wonder so many former trade union officials and former student unionists get into politics - on each side of the house.

The Coalition ads do more than acknowledge that fact (and the fact that there are more ex-union officials on one side than the other). They say that Labor’s unionists are “anti-business”.

They can’t mean the ex union official Bill Shorten who is about to enter parliament and last year borrowed his mate Richard Pratt’s private jet to rush to the Beaconsfield mine.

Nor can they mean Australia’s most popular Prime Minister (and former union leader) Bob Hawke who was virtually family to the business leader Peter Abeles.

In office Labor’s former union officials haven’t been particularly pro-union. Bob Hawke sent in the military to break a pilots’ strike. Ben Chifley did it to break a coal miners’ strike. The Coalition has never done it.

The sharemarket doesn’t seem to think Labor’s (ex-union) Ministers would be anti-business. It’s been pushing shareprices higher and higher as the election date, and the expected Labor victory gets nearer.

Last night the share price of BHP Billiton closed at an all-time record high.

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SPIN DOCTOR: Brown's green target

Political leaders are noted for ducking questions.

Except Bob Brown.

The Greens leader has been better-known for seriously addressing questions and avoiding spin.

Until yesterday at the National Press Club.

He was asked about his party’s target for ensuring that 15 per cent of Australia’s energy comes renewable sources by 2015.

Given that 2015 is now only eight years away and given that at present renewables supply less than 10 per cent of Australia’s energy (mainly through hydroelectricity, which is unlikley to grow in importance because it is hard to develop and we are running low on water) wasn’t he giving Australians false hope?

Instread of addressing the question...

...and discussing how Australia might possibly reach such a target so soon, Mr Brown descened into polyspeak bordering on abuse.

His answer: “Well, you can vote for John Howard. It’s people with that mindset that hold the country back. The targets that we’re putting here are targets already adopted by people like Arnold Schwarzenegger, like Denmark. I’m not saying to people who want more coal mines, who want more thermal power stations, who want to go nuclear, vote green. Don’t.

He wound up: “Now you might say how dare the Greens do that, you know, how dare the Greens say we shouldn’t flood the Franklin, bad for jobs, can’t do it, you’ll live with blackouts; how dare the Greens say you shouldn’t protect the Daintree forests, close sawmills, bad for business again, you know this attitude that is so predominant because the big parties are so close to the big end of town. They’re not innovators, but we are.”

“That’s what makes me excited about being an Australian leader of a political party which has got the optimism and can point to the parallels overseas and if Arnold Schwarzenegger can do it, so can we.”

But can we?

Last years Switkowski Report outlined where we are starting from. In 2004-05 hydroelectricity supplied 6.7 per cent of our energy, wind 0.6 per cent, and biomass and biogas 0.6 per cent. A total of 7.9 per cent, and most of that from a source that that couldn’t be much increased.

To get 15 per cent of our energy from renewable sources, we would need to build wind, solar and biogas plants at a very fast pace from something close to a standing start.

Australia’s Clean Energy Council is made up of the Australian Business Council for Sustainable Energy, and the Wind Energy Association.

It has put forward an easier to achieve target of 20 per cent of electricity from renewable sources by 2020. It’s easier to achieve because the target date isn’t so soon.

On hearing of the Greens target late yesterday the Council’s chief Dominique La Fontaine expressed doubts.

“Whether or not we can achieve that, I would be confident that we could, but having just seen the policy today I would be very keen to go back to my board and say, okay – how do we feel about this, is it something that industry thinks is feasible.”

The problem is that even if the target is mandatory, as it would have to be, planning approvals for new wind farms, solar stations and biomass projects take time.

The federal government last month announced a longer-term target, 15 per cent by 2020, which would be achievable, and NSW and Victoria are in the process of introducing lesser targets for 2010.

After speaking to the Canberra Times Ms La Fontaine phoned back and said she felt the Bob Brown’s target was achievable. But the industry would need to get to work quickly.

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SPIN DOCTOR: Do tax cuts encourage people to work?

Talkback callers were relentlessly negative about the government’s promised $34 billion tax cuts yesterday, and not just in Canberra. Most saw them as crude pre-election bribes.

But not the Prime Minister and Treasurer. According to them the cuts are about “workforce participation”.

The Prime Minister referred to the workforce 12 times in launching the policy. The Treasurer, 15 times.

On Adelaide radio yesterday Mr Costello claimed that the “whole idea of the tax plan” was to entice people who are at present unemployed to go out and get a job.

“We are saying to low income earners that in three years’ time you won’t have to pay a dollar in tax until you earn $16,000 or more. So you can come into the workforce and you know, probably work a day a week without actually having any tax liability,” he said.

“We are saying to working mothers who may be thinking of coming back into the workforce after the children go off to school or whatever, that you won’t be facing a tax rate which is higher than 15 cents in the dollar. And of course we will be saying to the higher income earners that the top rate of tax will be 42 cents and falling to 40 cents as part of our goal, and so you that you get to keep more of what you earn"...

But does it really work that way? On Monday the Treasurer pointed to Treasury modeling that he said showed that all of the tax cuts introduced since 2000 had boosted, “in a cumulative way, the number of people in the workforce by 300,000 and the changes which we announce today will boost the estimated workforce by around 65,000”.

But he wouldn’t release the modeling. So it’s hard to tell how the Treasury came up with the numbers and what kind of tax cuts it found did boost employment and what kind it found did not.

Fortunately someone else has tackled the question using a similar economic model to that used by the Treasury, the so-called Melbourne Institute Tax and Transfer Simulator.

At the request of the Committee for the Economic Development of Australia Dr Nicholas Gruen last year examined “the impact of marginal tax cuts on Australia’s labour supply” and found that whether there was an impact at all depended on what was cut.

Cutting the top marginal rate, one of the things promised by the Coalition, did little to increase the number of hours workers worked.

Dr Gruen points out that 30 per cent of full time workers already work long hours, as do 56 per cent of managers. Cutting tax rates would be unlikely to squeeze more out of them.

Lower tax could help attract more skilled workers from overseas, although the extent of the gain is “unclear and probably small”.

But to these people the top marginal rate is irrelevant. What matters is the average tax rate, or “How much tax will I pay on any given income?”.

Adjusting thresholds to cut the total tax paid is the best way to attract those workers, rather than cutting the top rate charged to Australia’s millionaires.

The best way to get unemployed Australians into work is to cut tax at the very bottom of the scale, either by boosting the tax free-threshold or by boosting the low income tax offset to achieve the same effect, something the government has done on this occasion, although not on every one of them.

It would get a bigger bang for its buck by going further and introducing a negative income tax, sometimes called an Earned Income Tax Credit – where tax office actually tops up low-income earner’s pay.

The Coalition has baulked at that idea, seriously put forward by CEDA. Labor may not.

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