Australian Budget 2005
Unequivocally Good News
I waited to comment on last week's budget in Australia in order to review the measures and also to see what the general reaction was.
As you can see from my comment above, I think this was an excellent budget. Any budget that hands back a significant amount of money (A$22bn) and avoids any new wasteful spending programs is on the right track as far as I'm concerned.
You'd think this would have been a fairly uniform reaction, but oh no! I was amazed at the quite widespread reaction in the media that somehow this was a bad budget. The general gist of things was that the tax cuts are somehow irresponsible and mis-directed. Also, that an opportunity for more government spending on things like infrastructure had been missed (thank goodness for that!).
A lot of commentary threw in the red herring of the potential leadership clash between Howard and Costello (somehow, this budget was all part of that trying to buy popularity). Other comment suggested that the budget made "no sense politically" as by the time the next election comes around everyone will have forgotten about the tax cuts.
Interesting the cyncism behind the last comments. It never seems to occur to the commentariat that the government might simply be doing what it thinks is right, albeit with a degree of rewarding it's core constituency.
Anyway, the sniping continued today with another rediculous article from the pseudo-economist and lefty propagandist Ross Gittins "Treasurer's tax cut justification a bit rich."
Yet another anti-prosperity diatribe is summed up in the opening paragraph.
While last week's budget rewarded the wealthy, the poor got more stick, writes Ross Gittins.
John Kenneth Galbraith, a now deeply unfashionable economist, identified one of the great doctrines of our age as a belief that the rich don't work because they have too little money, while the poor don't work because they have too much. Or, as John Button once paraphrased it, the rich need more money as an incentive and the poor need less money as an incentive.
On the face of it, this criticism along the lines of the old "rich get richer, poor get poorer" makes some sense. A moment's thought reveals it's simply the old politics of envy and the usual collectivist dogma.
To see just how disingenuous the above line is, let's turn things around a little. Instead of implying that somehow the "rich" are being given more, let's observe instead that less is being taken away from them. Instead of implying that money is being taken away from the poor, let's observe that less is being given to them.
Puts it in a different light. The Gittins view is based on the (unstated) assumptions that
1) Rich people are evil and don't deserve their money; and
2) Agressive redistribution of income is a good thing.
There's a lot of bleating about how the biggest beneficiaries are higher rate taxpayers. Well, good! For the last few years they've been the ones who have gained little or nothing from various budgets. They've been the ones who have been taken for granted by the Howard government and basically used as a cash cow to repair public finances and fund the increased spending under this government (which has primarily been directed to low and middle income earners).
Symbolic of this was the hated superannuation tax (oops, I mean "surcharge") on higher rate taxpayers which has rightly been abolished.
Gittins (and others) bleat about how some single mothers and people on disability pensions are penalised in this budget. Well, quite frankly it's about time. Disability pensions have got completely out of control to the extent that there is an epidemic of "bad backs" among Australians. And why should taxpayers subsidise the lifestyle choices of single mothers (or any other group, for that matter)?
I would agree with Gittins on his point that marginal tax rates on extra income for some welfare recipients are increased by the budget measures. This is non-sensical.
The measures to increase the tax thresholds are long overdue and make the tax system much fairer for those who are the producers in society. The problem with the tax system in the past has been that it is very hard for people to become wealthy simply by working hard and earning their way to wealth. The confiscatory tax system that cut in at such low levels of income meant that people made use of corporate structures and other tax shelters as much as possible. It also meant people had a bias towards generating wealth through capital gains, rather than earning income.
The idiot Gittins in his dismissive comments about the incentivisation effect of the tax changes makes no mention of this. Nor any comment about the dis-incentives of the tax structure for people to move to Australia to work.
So, overall, an excellent budget and a step in the right direction. Of course, further progress is needed in bringing down tax rates for everyone.
I waited to comment on last week's budget in Australia in order to review the measures and also to see what the general reaction was.
As you can see from my comment above, I think this was an excellent budget. Any budget that hands back a significant amount of money (A$22bn) and avoids any new wasteful spending programs is on the right track as far as I'm concerned.
You'd think this would have been a fairly uniform reaction, but oh no! I was amazed at the quite widespread reaction in the media that somehow this was a bad budget. The general gist of things was that the tax cuts are somehow irresponsible and mis-directed. Also, that an opportunity for more government spending on things like infrastructure had been missed (thank goodness for that!).
A lot of commentary threw in the red herring of the potential leadership clash between Howard and Costello (somehow, this budget was all part of that trying to buy popularity). Other comment suggested that the budget made "no sense politically" as by the time the next election comes around everyone will have forgotten about the tax cuts.
Interesting the cyncism behind the last comments. It never seems to occur to the commentariat that the government might simply be doing what it thinks is right, albeit with a degree of rewarding it's core constituency.
Anyway, the sniping continued today with another rediculous article from the pseudo-economist and lefty propagandist Ross Gittins "Treasurer's tax cut justification a bit rich."
Yet another anti-prosperity diatribe is summed up in the opening paragraph.
While last week's budget rewarded the wealthy, the poor got more stick, writes Ross Gittins.
John Kenneth Galbraith, a now deeply unfashionable economist, identified one of the great doctrines of our age as a belief that the rich don't work because they have too little money, while the poor don't work because they have too much. Or, as John Button once paraphrased it, the rich need more money as an incentive and the poor need less money as an incentive.
On the face of it, this criticism along the lines of the old "rich get richer, poor get poorer" makes some sense. A moment's thought reveals it's simply the old politics of envy and the usual collectivist dogma.
To see just how disingenuous the above line is, let's turn things around a little. Instead of implying that somehow the "rich" are being given more, let's observe instead that less is being taken away from them. Instead of implying that money is being taken away from the poor, let's observe that less is being given to them.
Puts it in a different light. The Gittins view is based on the (unstated) assumptions that
1) Rich people are evil and don't deserve their money; and
2) Agressive redistribution of income is a good thing.
There's a lot of bleating about how the biggest beneficiaries are higher rate taxpayers. Well, good! For the last few years they've been the ones who have gained little or nothing from various budgets. They've been the ones who have been taken for granted by the Howard government and basically used as a cash cow to repair public finances and fund the increased spending under this government (which has primarily been directed to low and middle income earners).
Symbolic of this was the hated superannuation tax (oops, I mean "surcharge") on higher rate taxpayers which has rightly been abolished.
Gittins (and others) bleat about how some single mothers and people on disability pensions are penalised in this budget. Well, quite frankly it's about time. Disability pensions have got completely out of control to the extent that there is an epidemic of "bad backs" among Australians. And why should taxpayers subsidise the lifestyle choices of single mothers (or any other group, for that matter)?
I would agree with Gittins on his point that marginal tax rates on extra income for some welfare recipients are increased by the budget measures. This is non-sensical.
The measures to increase the tax thresholds are long overdue and make the tax system much fairer for those who are the producers in society. The problem with the tax system in the past has been that it is very hard for people to become wealthy simply by working hard and earning their way to wealth. The confiscatory tax system that cut in at such low levels of income meant that people made use of corporate structures and other tax shelters as much as possible. It also meant people had a bias towards generating wealth through capital gains, rather than earning income.
The idiot Gittins in his dismissive comments about the incentivisation effect of the tax changes makes no mention of this. Nor any comment about the dis-incentives of the tax structure for people to move to Australia to work.
So, overall, an excellent budget and a step in the right direction. Of course, further progress is needed in bringing down tax rates for everyone.
posted by Kevin Francis at
2:02 pm
