One day perhaps someone will be interested enough to trace the point at which the journey into fog began. There can be no respect for the truth without respect for the language. Only when language is alive does truth have a chance. As the powerful in legend turn the weak or the vanquished into stone, they turn us into stone through language. This is the essential function of a cliche, and of cant and jargon; to neutralise expression and ‘vanish memory’. They are dead words. They will not do for truth.
"Death Sentence – The Decay of Public Language" by Don Watson, 2003.
A billion here, a billion there, and pretty soon you’re talking about real money.
Senator Everett Dirksen on fiscal policy, circa 1963.
There are many who believe that George Bush [insert Kevin Rudd] is a liar, a President [Prime Minister] who knowingly and deliberately twists facts for political gain. But lying would indicate an understanding of what is desired, what is possible, and how best to get there. A more plausible explanation is that words have no meaning for this President [Prime Minister] beyond the immediate moment, and so he believes that his mere utterances of the phrases makes them real. It is a terrifying possibiity.
Seymour Hersh "Chain of Command, the road from 9/11 to Abu Ghraib", 2004. The insertions are Ecinya’s. Mr Rudd is more akin to George Bush and distant from John Howard’s good attributes
Mr Walsh, who remade the national economy in the 1980s with Bob Hawke and Paul Keating, is regarded as a tough and uncompromising economic reformer but one who never forgot Labor’s working-class roots. He slammed Kevin Rudd’s reform credentials and style of governing. "The Prime Minister is an economic illiterate," he told The Australian; "an economic illiterate and an egomaniac. He won’t take any hard decisions. He’s capricious. He sees himself as some sort of Platonic philosopher king."
As reported in The Australian 18 November, 2009
The trip had been flawless and successful. It was a pity that among all the good news the ABC’s Jim Middleton reported that on the flight from Pusan to Beijing, in a conversation about Mabo and the premiers, Prime Minister Keating made unflattering remarks about Wayne Goss and called his adviser, Kevin Rudd, a ‘menace’.
"Recollections of a Bleeding Heart: A portrait of Paul Keating PM" by Don Watson, 2002
When the legislative changes for the GST were back in the House of Representatives on 30 June 1999, a little known Queensland Opposition backbencher, Kevin Rudd, told the Paliament: "When the history of this Parliament, this nation and this century is written, 30 June 1999 will be recorded as a day of fundamental injustice – an injustice which is real, an injustice which is not simply conjured up by the fleeting rhetoric of politicians. It will be recorded as the day when the social compact that has governed this nation for the last 100 years was torn up. It will be recorded as the day when the nation’s taxation system moved from progressivity to regressivity. It will be recorded as the day when the Parliament of the country said to the poor of the country that they could all go and take a running jump."
From "The Costello Memoirs", 2008. Hyperbole in magnificent dimesion from out current PM just as he seeks to remove 33% of the States’ GST for his ‘health-care revolution’.
This model, not good luck, is the reason Australia has enjoyed a fifteen year expansion…. It is defined by a floating exchange rate that operates as a shock absorber, a credible medium-term inflation target that governs interest rate policy at the discretion of an independent central bank, a shift towards a more decentralised wage-fixing system, and a permanent budget surplus strategy set at about 1 to 1.5 per cent of GDP.
Paul Kelly, The Australian, May 2006.
The central issues in tax reform, therefore, are slated for the third term at the earliest. And governments are hardly famous for third-term courage. This is a cautious approach. Rudd Labor offers no road map, no broad principles, no statement of intent on future reforms. The juxtaposition between the sweeping nature of Ken Henry’s 138 recommendations and Labor’s caution is conspicuous. Second, with Australia having escaped a recession, Labor’s new focus is to target the resources sector for a revenue redistribution. This is its chief tax priority. This decision will define Rudd Labor. Its presentation is critical yet the government is unsure whether to depict its tax as an economic reform or a populist "soak the corporate rich" mantra.
Paul Kelly, The Australian, 5 May, 2010.
An Apology to Mr Ken Henry
The Prime Minister, Kevin Rudd, has a penchant for apologising in a grandiose way for things that have nothing to do with him personally such as ‘The Stolen Generation’. When confronted with the possibility of apologising for entirely scrapping the Insulation Programme, Mr Combet was given the task while Kevin went to Tasmania, no doubt to wear another hard-hat. Thus it is up to Ecinya to apologise on behalf of the taxpayers of Australia for the trivialising and disdain heaped upon the several years of blood, sweat and tears that produced the 3 volume "Australia’s future tax system" report dated December, 2009.
We have little, or no, doubt that Mr Henry and his colleagues would have wished to present the balanced alternative of including the GST in the tax reform proposals, but he has had the satisfaction of seeing the debate escalate, and though Mr Rudd did not intend this to happen in a way counter-productive to his desire to remain Prime Minister, he has certainly reduced his chances. The very excellent Henry Report has been rendered anorexic by Mr Rudd. Not all anorexic victims die, praise the lord.
Mr Henry and colleagues, we apologise.
PROLOGUE ON LEADERSHIP
Tax reform will fail because there is no leadership on the issue.
A sub-optimal Prime Minister carrying a litany of fiscal disasters on his curriculum vitae cannot be trusted to formulate proper tax policy nor to implement his misguided efforts in a near-enough-to-viable way. At Mr Rudd’s current level of fiscal recklessness Australia will gravitate towards the parlous state of fiscal folly currently in view in parts of Europe and the United States of America. You cannot run policy through the prism of a PM’s ego. Australia has tried that before, and failed. All countries that try it fail.
Prosperity is the tide that carries us all to fulfillment of our material and social goals and aspirations. You cannot be anti-business and pro-jobs.
Mr Rudd uses weasel words like "working families" without definition, prefaces his remarks about "long-term sustainability" and "Australia’s national interest while I am Prime Minister" whilst being engaged in short-term waste and miscallocation of resources. He was elected, not ordained, yet continues to give interviews outside of his church. Presumably Jesus Christ has given prior approval. He talks in platitudes of ‘stronger, fairer and simpler’ as layers of bureaucracy and complexity are added to an already stressed tax and fiscal expenditure system. In 11 years of absolute and relative prosperity John Howard ‘did not meet the challenges of government’ according to Mr Rudd. Boy oh boy, does this guy have a self-esteem problem.
In terms of primevil salesmanship, immediately upon Mr Rudd becoming Prime Minister, the neo-conservatives were responsible for our manifest fiscal and social folly. Now it is the turn of ‘the greedy miners’ where years of toil, often speculative exploration, overcoming extraction, production and transport difficulties and having to sell into often volatile and cyclical markets. But expertise and positioning over time count for nought. Mining companies re-capitalise themselves in the good times to sustain development in the bad times. Many developments do not produce a viable return for years and years.
In looking at the rhetoric coming from Mr Rudd on the tax "reform" package, the paras immediately above and Kevin’s quoted response to the GST in 1999, it seems certain that even when the PM is putting on his trousers each day it is an historic event. The nonsense never ends!
ECINYA’S TAX REFORM PACKAGE
- Extend the Federal parliamentary term to a maximum of 4 years and a minimum of 3.5 years to give policy time to work (or to be modified, abandoned, or fine-tuned).
- Abolish direct donations to political parties by pooling them into a fund with a formula for distribution to retard the growth of crony capitalism and crony socialism.
- Expand the GST to food which will be a big tax, and compensate "the losers" such as pensioners and genuine welfare recipients.
- Capital gains on the sale of residential properties to be treated as ordinary income on a long-term sliding scale basis, say 7-9 years.
- Abolish payroll tax collected by the states via a compensation system and many of the other taxes proposed to be abolished by Henry.
- Increase the tax free threshold and change personal and company tax rates as dramatically as is sensible.
- Have a target rate of total taxes to total GDP similar to the inflation targetting system e.g. 20% in good times.
- Introduce tax breaks on certain forms of savings particularly for younger people specifically saving to acquire a home.
- Have an exceptionally modest federal royalty tax on mining, say about 5% exceeded slightly by the mining royalties currently collected by the states.
KEN HENRY’S TAX REFORM PACKAGE
The key recommendations are set out below and we use the same numbers in our cross-reference commentary. We have ignored the 133 (non-key at this stage) recommendations not taken up by Mr Rudd and his Treasurer.
- Impose a 40% "resources rent tax" on the mining sector.
- Cut the company tax rate from 30% to 25%
- Flatten personal tax rates, increase the personal tax-free threshold from $6,000 to $25,000
- Replace state-based taxes such as payroll tax and stamp duty with broader consumption taxes including land tax on the family home.
- Curb negative gearing.
- Combine all family tax benefits into a single means-tested payment.
- Taxes on interest earned from savings be slashed by 40%
- Remove the medicare levy.
- Restore fuel indexation.
- Introduce traffic congestion charges.
ECINYA COMMENT
- Emphatically disagree.
- Agree.
- Agree.
- Emphatically agree.
- Disagree; in fact capital gains tax on residential investment properties sold should be phased out over a holding period of say 7 to 9 years e.g. gain 100% taxable year 1, 90% year 2, 50 % taxable year 5 etc. No deduction for taxable losses (?)
- Emphatically agree.
- Emphatically agree, except for land tax on the family home.
- Don’t know.
- Don’t know, but do not like indexing anything….. CPI numbers are too rubbery.
- Agree.
Mr SWAN’S KEY CHANGES (our comments are in brackets)
- Impose a 40%"resource super-profits" tax on the mining sector from 2012-13 (expedient rubbish).
- Raise the compulsory superannuation rate from 9 to 12% by 2019-20 (agree)
- Cut the company tax rate from 30% to 28% by 2014-15, two years earlier for small business (Agree, let’s hope that the definition of small business is not the same as for the wrongful dismissal laws. Lot of potential silliness here.)
- Create a $700m infrastructure fund to help build state infrastructure from 2012-13. ( Disagree: Unwieldy, complex, hopefully the Building Education Revevolution and National Broadband are not the templates.)
- Continue to allow workers approaching retirement to top up their super by $50,000 a year. (Agree)