It looks like costing Australian businesses multi-billions of dollars – and taxpaying Australians multi-billions more. Malcolm Turnbull’s woeful election campaign leaves his uninspiring mantra of ‘jobs and growth’ looking less than secure in a divided House of Reps and hostage to an expanded Senate cross-bench. His 10-year deficit-reduction program, already grossly inadequate to deal with mounting budget spending and record debt even before his billions of dollars of election bribes, is in jeopardy along with the tax cuts, both personal and corporate, needed to stimulate the growth without which the Australian economy, and living standards, will stagnate.
What now is the prospect for Treasurer Scott Morrison’s May budget $50 billion in graduated cuts to business taxes over 10 years from 30 per cent (that is well above the OECD average and far higher than in our Asian trading partners) to 25 per cent? This is now at serious risk due to Bill Shorten’s strident opposition (foreign aid for foreign companies, wasteful and flawed with a negligible effect on job creation) to any corporate tax cut to businesses with turnover bigger than only $2 million. This is in curious contrast to successive Labor governments’ cuts to company tax from 49 per cent to 30 per cent and to Shorten’s 2011 support as assistant Treasurer for a cut in company tax in order to increase investment and jobs.
The cuts were supposed to start 1 July for small businesses with less than $10 million in turnover at a 27.5 percent rate and ending up at 25 per cent for all corporations by 2026-27. But due to the election no legislation was passed either for this or the other tax breaks that were sold so poorly in the election campaign that they failed to feature as positives for the Coalition; the published Galaxy exit polls showed company tax as an important (and presumably anti-government) election issue for 23 per cent of Labor voters. Small business will also be crossing its fingers, legs and eyes about the fate of the proposed $450 million benefit from an increase in the tax discount rate for unincorporated businesses from five to eight per cent over the next four years, and to 16 per cent by 2026-27.
And what about the $4 billion tax cut for more than three million Australians from raising the 32.5 per cent marginal tax threshold from $80,000 to $87,000? Under this, half a million taxpayers would avoid being pushed by pay rises into a higher tax bracket, but it was also supposed to start on 1 July, and cannot be implemented as it remains in legislative limbo at the whim of a Senate majority when parliament meets again, probably in August. On top of all this there are serious doubts about the prospects of the $3 billion proposed support for about a million lower-income superannuation contributors and other reforms that were to be funded by what industry leaders have described as the fair and equitable $6 billion reduction in tax concessions on contributions to those superannuation nest-eggs that far exceeded the needs for retirement income
All these positives, benefitting millions of Australians, went largely unheralded. But far more damaging to their prospects of survival was the failure to deal with the agendas that Labor set, with health, Medicare and education being very important issues for three quarters of those who voted Labor. So where were the Coalition’s attack ads citing the list of Labor’s repeated false claims at every election that Medicare was threatened, (‘they lied then and it’s the same old Labor lie again’) or the huge impact on building costs of Labor’s opposition to restoring the ABCC, or the cost of the Heydon-identified union thuggery, defended by (union-subsidised) Labor.
So many missed opportunities as Turnbull’s determination to remain ‘Prime Ministerial’ and not mix it Abbott-like in the rough-and-tumble of an election campaign, came at a heavy political cost. The Liberal logo was missing from television ads for the Turnbull government despite that logo identifying candidates on ballot papers (breaking a basic merchandising rule on point of sale identification), until the last few days, when it became clear that Turnbull was no longer more popular than the Liberal Party.
It was too late, as was Turnbull’s first really forceful campaigning speech – on election night after the campaign was over.
You might disagree with half of it, but you’ll enjoy reading all of it. Try your first 10 weeks for just $10