How not to cut government spending

The bloke who really runs the economy, Reserve Bank governor Glenn Stevens, has spoken: "There are quite some years of hard repair work ahead for whoever is the government over the period ahead." He was endorsing the earlier warning of Treasury secretary John Fraser and Finance Department secretary Jane Halton that, given the Turnbull government's professed commitment to limiting the growth in tax collections, getting the budget...

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Economists' faith in cutting company tax found wanting

Malcolm Turnbull and the many economists supporting his plan for a 10-year phased cut in the rate of company tax have failed to make the case that this expensive measure would deliver a significant increase in "growth and jobs". Economists are meant to be too hard-headed to believe in the existence of a magic bullet – the single measure that will work wonders in solving our problems. Yet economists throughout the world have...

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Shorten gains tactical advantage over Turnbull

Various of the tax changes the Coalition government is taking to the election are things it earlier said it wouldn't do. And various of the tax changes it now says it wouldn't dream of doing are things it earlier dreamt of doing. What's more, various of the tax increases it ended up copying from Labor – the further swingeing increases in the excise on tobacco, the crackdown on multinational tax shirkers and the cutbacks in superannuation...

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Econocrats’ report card: Turnbull not really trying

Economically and fiscally, the Turnbull government is flying by the seat of its pants. It hasn't done enough to secure future "jobs and growth", nor to get the budget balance improving strongly and government debt falling in coming years. That's the conclusion you draw from the econocrats' oh-so-politely worded commentary in their "pre-election economic and fiscal outlook" issued on Friday, independently of the elected government,...

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Why wage growth is so weak

Are we waiting with ever-growing impatience for the economy to get back to normal, or has the economy shifted to a "new normal"? I think that's the central question in macro-economics today – not just in Oz but throughout the developed world. To put that question in econospeak, are the changes we see before us "cyclical" – just part of the normal ups and downs of the business cycle – or are they "structural", a lasting change...

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THE 2016 FEDERAL GOVERNMENT BUDGET

Talk to Economics and Business Educators NSW annual conference, BurwoodIn this talk I’m not going to give you the basic budget details that you could get - and probably already have got - from many other sources. Rather, I’m going to focus on just a couple of analytical issues about the budget that are new, tricky and contentious. My hope is that, by doing so, I’ll be giving you something new or newish to think about and also...

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Why Turnbull's Google tax would be reasonably effective

So, Malcolm Turnbull and Scott Morrison are introducing a "Google tax" to ensure multinational companies "pay their fair share of tax in Australia". Really? You could be forgiven for being sceptical. Does the Coalition really want to crack down on their generous mates at the big end of town? And, even if they do, how do we know a Google tax will work? My sceptical mind (professionally trained by 40 years of living and breathing...

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Hard-working Aussies help pay for company tax cut

I often think Scott Morrison does a remarkably good Joe Hockey impression, but in this budget he's performed a Wayne Swan sleight-of-hand that's better than Swanny ever did. Consider this. Big business has been desperate for a higher goods and services tax. Why? Because this was the only way the government could afford to grant them their longed for cut in company tax. So when Malcolm Turnbull balked at increasing the GST,...

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How the budget stacks up as tax reform

When politicians announce a tax cut to be delivered after they've been re-elected, there are no prizes for guessing it's an electoral bribe. But they never fail to sanctify the exercise by assuring the lucky recipients that the money they're getting will do wonders for the economy. Malcolm Turnbull is going into this election promising a pathetically small tax cut to the top quarter of taxpayers, which starts – officially, anyway...

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Why Turnbull's super changes are sorely needed

I'll never forget the budget of May 2006. It was during the first half of the resources boom, before the global financial crisis. The economy was booming, tax dollars were pouring into the government's coffers and it was embarrassed at the way the budget surplus kept piling up. John Howard and Peter Costello were competing with each other to shovel money back out the door. Howard liked spending it on middle-class welfare, whereas...

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