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Canberra
Thursday, December 3, 2020
Ian Cubitts
Ian Cubitts

Taxing patience and spending credibility

Australia’s almost 16 and a half million voters began casting their verdicts in the ballot box on Monday. Pre-poll voting is becoming more popular with every election and the Australian Electoral Commission believes it is heading towards 40% this time.

That explains why Labor announced what its leader Bill Shorten described as “a ripper” of a policy last weekend. Australia’s 2.6 million pensioners and the 380,000 holders of the Commonwealth Seniors Health Card will be able to claim dental care on their Medicare card. The $1000 every two years will mean many who simply can’t afford any dental care will at least be able to go to a dentist whereas now they don’t.

At the same time, Labor unveiled a $4 billion plan for cheaper child care for a million families. The lowest income families are promised they will get it for free. Shorten is also promising a government funded boost to child care educators’ salaries. The Labor leader says he can pay for this because of his multi-billion dollar trimming of generous tax concessions for negative gearing, capital gains tax and dividend imputation credits. He can also do it by not matching the Liberals promise of more generous income tax cuts for those earning over $200,000 in five years’ time.

Scott Morrison replied by saying he would not be joining in Labor’s spend-a-thon. Fair enough, but he then begins to run the argument every which way. “Shorten cannot control his spending so he puts his hand in your wallet,” the PM told cheering Liberals on Sunday. Well not exactly “your” wallet; it depends on how high your income and how big your investments. In any case, nowhere is Shorten raising taxes. He is either not cutting them five years down the track or he is cutting tax concessions.

Be very clear, the Budget sees tax concessions on whatever activity as government spending. It means that when they are given to some taxpayers others are paying for it. Morrison’s hand is in someone’s wallet, too.

At least the two protagonists agree on one thing: “the election is all about choices.”

Morrison is counting on voters opting for more of the same with no provision for the rainy day when his revenues from existing tax arrangements fall dramatically as they did at the end of the mining boom. Shorten, in fact, is being more prudent. He is aware that millions of Australians are doing it tougher than they would prefer and that to meet their demands he is cutting concessions to spend the money better elsewhere. In fact, this sort of structural reform was alluded to by former treasurer Joe Hockey as he bade parliament farewell.

The election is coming down to how government can best deliver a fairer go for all Australians. The gap between the top and the bottom has never been wider and is growing; argument enough to confirm more of the same “trickle down” is no longer working.

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