Paying decent wages not just a fair go, it’s good for business too
The Daily Telegraph, 26 January 2018
In 1914, Henry Ford shocked America when he announced that he would double the pay of his workers, to $5 a day. He didn’t do this out of a sense of social justice or concern for his workers – remember that Ford Motors was known for its aggressive anti-union tactics. He did it because he understood the economic case for decent wages.
At a time when other car makers were trying to cut costs, Ford increased his wage bill by $10 million – more than half the firm’s annual profits. One competitor predicted that the workers wouldn’t know what to do with the extra cash – that they would be ‘demoralised by this sudden affluence’.
PARLIAMENT HOUSE, CANBERRA
THURSDAY, 21 DECEMBER 2017
SUBJECTS: US tax cuts, Malcolm Turnbull’s cuts to universities, Scott Morrison’s delayed action on petrol prices.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Thanks very much for coming along today. My name’s Andrew Leigh, the Shadow Assistant Treasurer. Under the Abbott and Turnbull Governments, Australia has seen high inequality. We’ve seen home ownership fall to its lowest level in 60 years. We’ve seen wages stagnate. And yet the Liberals’ answer to Australia’s economic challenges has been a budget-busting corporate tax cut for big multinationals, paid for by raising taxes on middle Australia.
When they were first asked to show some evidence in favour of this, they produced research which showed that if you looked at the impact of a corporate tax cut for the big end of town, it increased household income by just 0.1 per cent in the 2030s if it was paid for by raising taxes on middle Australia. 0.1 per cent in the 2030s is hardly a pot of gold waiting the Australian middle class. It’s hardly a reason to be blowing out debt still further. It’s hardly a reason to be raising taxes on seven million low and middle income Australians, as Malcolm Turnbull plans to do.
Now the Liberals would have you believe that Australia’s company tax rate somehow ranks us the highest in the world. But the lie was given to that by analysis done by the United States Congressional Budget Office earlier this year. That analysis looked at the statutory corporate tax rate across the G20. It found that Australia had the 10th highest corporate tax rate in the world’s 20 largest economics – precisely at the middle of the pack. After the passing of Donald Trump’s tax cut, we’d move to ninth – still the middle of the pack. This analysis doesn’t take into account the deductions that are available and the effective rates that are available to companies. When the US Congressional Budget Office compared countries’ corporate tax rates on the average rate or the effective tax rate, which is the tax rate taken into account by businesses making investment decisions, they found that we ranked below average in the G20. And that will continue to be the case regardless of what the United States does.
Effectively, the argument that’s being made by the Liberals is that Donald Trump is doing it and we should follow Donald Trump wherever he leads. It’s absolutely clear from independent economic analysis what the Trump tax cut entails. We know from research done by the University of Chicago that the majority of eminent US economists believe that the Trump tax cut will add significantly to the deficit. It will be paid for in the medium term by the middle class and we know that, according to eminent US economists, that it won’t tangibly add to growth. So there are certainly similarities with the plan being spruiked here in Australia, with the snake oil plan being spruiked by Malcolm Turnbull and Scott Morrison, a plan too which in Australia would increase the deficit, would be paid for by the middle class and would not tangibly add to growth.Read more
Feminism is Another Word for Equality
BroadAgenda, 18 December 2017
With sexual harassment scandals roiling Hollywood and Washington, we need more feminists, not fewer. With the gender pay gap about where it was two decades ago, it’s time for men to do our part for greater equity. With Australia’s corporate boards still three-quarters male and our federal parliament still two-thirds male, men need to join women in talking about how fair representation brings better results.Read more
Halting the havens
The Canberra Times, 14 December 2017
We often say that the apple doesn’t fall far from the tree. But for some multinational firms, their tax affairs often do.
In May 2013, Apple’s chief executive Tim Cook was being grilled by US Senators about the nature and structure of his company’s tax affairs.
Those Senators were scrutinising a complex corporate structure, and how Apple had come to amass over $100 billion of largely untaxed profits offshore. Mr Cook’s retort to the subcommittee was ‘We don’t depend on tax gimmicks… We don’t stash money on some Caribbean island’.
As the New York Times reported after the release of the Paradise Papers: ‘True enough. The island Apple would soon rely on was in the English Channel’.
Jersey, to be precise.
Like millions of Australians, my life is better as a result of using Apple products. But I want the company to succeed based on product innovation, not tax innovation.Read more
TIME FOR TURNBULL TO GET TOUGH ON TAX HAVENS AND MULTINATIONAL TAX AVOIDANCE
One in three large firms still pay no tax in Australia.
Data issued by the Australian Taxation Office at 5pm today showed that 732 out of the 2043 companies examined failed to pay any tax the 2015-16 tax year. The companies that paid no tax include 108 firms reporting more than $1 billion in total income.
These figures highlight the failure of the Turnbull Government to make our tax system fairer. The only reason we know that 36 per cent of companies failed to pay any tax is because of Labor’s tax transparency laws, which passed the Parliament in 2013 amid objections from the Coalition.
Despite this, Malcolm Turnbull and his team still believe that cutting company tax rates – and punishing working and middle class families in the process - should be Australia’s top economic priority.
It does not get more out of touch than this.Read more
GARY JOHNS IS UNFIT TO LEAD THE CHARITY REGULATOR
Appointing Gary Johns to head the Australian Charities and Not For Profits Commission is like putting Ned Kelly in charge of the nation’s bank security.
Johns has been a trenchant critic of charities throughout his career. His appointment signals a major escalation in the Turnbull Government’s war on charities, and shows that Tony Abbott and Kevin Andrews still run the Liberal Party
Announcing the appointment, Minister Sukkar admitted that he hadn’t read Gary Johns’ work. For the Minister’s benefit, here’s a few things he may have missed.
‘There is a great deal of impure altruism in the charity business’
- Gary Johns, The Charity Ball, 2014
‘The idea of public benefit needs to be trimmed and tested’
- Gary Johns, The Charity Ball, 2014
“The Abbott Government… should deny charity status to the enemies of progress”
- The Australian, 2 December 2014
PARLIAMENT HOUSE, CANBERRA
THURSDAY, 7 DECEMBER 2017
SUBJECTS: Turnbull Government’s decision to appoint charity critic Gary Johns as head of the Australian Charities and Not-for-Profits Commission.
SHADOW ASSISTANT TREASURER, ANDREW LEIGH: Thank you for coming out this morning, my name is Andrew Leigh and I am the Shadow Minister for Charities and Not-for-Profits. We're seeing today the latest salvo on the Government's war on charities. Since coming to office, the Abbott and Turnbull Governments have attempted to destroy the charities commission, a body recommended by more than a dozen independent inquiries and supported by more than four out of five charities. From 2011 to 2016 the Coalition tried to destroy it. Over the period that they have been in office, the Government has had no fewer than five different ministers responsible for the Australian Charities and Not-for-Profits Commission (ACNC).
Their war on charities has been waged on multiple fronts. They've tried to take charities law back to the 1600s. They've tried to get rid of the charities commission, they've tried to shut down the ability of environmental and legal charities to advocate. They put gag clauses in social services agreements. There's no wonder that we've seen two open letters from the sector calling on the Government to stop their war on charities. Only last week, 25 charities heads were here in Canberra calling on the Turnbull Government to stop attacking charities.
Indeed, we've seen under Michael Sukkar, the fifth minister responsible for the ACNC, bumbling ineptitude. He failed to meet with the board of the charities commission. He failed to reappoint Susan Pascoe - a broadly respected head of the charities commission who the minister today acknowledged had been doing “a good job”.
But the appointment of Gary Johns to head the charities commission takes the war on charities to a whole new level.Read more
HOUSE OF REPRESENTATIVES
TUESDAY, 6 DECEMBER 2017
I have spoken half a dozen times in this parliament in support of marriage equality.
As an economist, we are often faced with public -policy decisions that involve trade-offs: one group made better off while another group is made worse off. This is, to my great delight, not one of those debates. This is a moment where a group of Australians will be made better off. Australians in same-sex relationships will have the opportunity to wed, and no-one will be made worse off.
Heterosexual marriages, like my own, will not be weakened. Indeed, some may be strengthened, given that, as we know, some heterosexual couples have held off tying the knot until marriage equality becomes reality.Read more
Christmas not always a happy time
The Chronicle, 5 December 2017
It’s not just a schmaltzy song lyric.
According to daily happiness surveys conducted by Gallup, Christmas Day really is the happiest day of the year, with 66 percent reporting maximum enjoyment and minimum stress.
But for some, it’s the reverse. One in twenty people report they don’t have enough money to afford gifts for friends and family. For others, Christmas is a poignant reminder of loss.Read more
MONDAY, 4 DECEMBER 2017
Last week, by a vote of 51 to 49, the US Senate passed a major corporate tax cut.
The bill has several similarities with the corporate tax cut being debated here. A survey by the University of Chicago found that 37 out of 38 US economists said the GOP bill would increase the deficit. The 38th later said they didn't understand the question.
In Australia, an Economic Society of Australia survey of 31 economists found two-thirds agreeing that ‘Australia will receive a bigger economic growth dividend in the long run by spending on education than by offering an equivalent amount in a tax cut to business’. Treasury's own estimates say that the government's big-business company tax cut would deliver only a 0.1 per cent increase in personal income - in the 2030s.Read more