Prev
Next

Henry: By going after the big guys, little guys will get hurt

Steve Fielding

by Steve Fielding

03 May 05:35am

Must Reads

The Punch is moving house - this is a caption

The Punch is moving house

385

Will Pope Francis have the vision to tackle this? - this is a caption

Will Pope Francis have the vision to tackle this?

122

Advocating risk management is not “victim blaming” - this is a caption

Advocating risk management is not “victim blaming”

251

Filed under: Economy, Election 2010, Henry Tax Review, Ken Henry, Kevin Rudd, Politics, Taxation, Wayne Swan

33 comments

The Henry Tax Review has been released and the Rudd Government has formed its response. So what good things has the government done for the average Australian family? Not a great deal.

Those big trucks have delivered big gains to us all.

I know it’s a brash statement but when you think about it, the Henry Review is some 800 pages long, looking at things like housing affordability, childcare and family assistance. These are the things which families really care about because they are the biggest items which chew into the family budget and affect whether they have any spare cash or not.

But were any of these things mentioned in the Rudd Government’s response to the review which it’s been sitting on for months? The short answer is no.

So what has the government done? Well it’s decided to take a look at the big end of town by taxing the big miners more.

Yes, it’s always popular to sting the big guy and not the little guy who owns the corner shop down the street. But going after the big guy can be a dangerous policy because the government is essentially taxing an industry which has propped up this country throughout the global financial crisis.

There’s a good reason why countries such as the USA and the UK are struggling while the Australian economy is continuing to grow and we can thank our mining industry for that.  I personally don’t think that it’s the best way to look after a group of people which kept our economy flowing in desperate times.

Now at this point you’re probably wondering what Ken Henry had to say about housing affordability, childcare and family assistance given the government didn’t pick up on any of it. Well, put simply he make a lot of good suggestions which would make things much better for families.

In fact, Henry made 14 recommendations in these areas, none of which the PM and the Treasurer had anything to say about in any of their media releases.

In the review Henry recommends providing low income families with a 90 percent subsidy for childcare. A good idea that most people would no doubt support. But as you can imagine, the Rudd Government makes no mention of helping out this bracket of people in making childcare more affordable. In fact, in Henry’s directions for supporting productivity, participation and growth he says there is a need for affordable childcare because it encourages workforce participation.

However, I know that the government can’t be to keen on listening to Henry in this area because it scrapped the construction of 230 childcare centres just a fortnight ago. How embarrassing!

Now when it comes to housing affordability Henry makes a point that housing price pressures need to be alleviated. He mentions this can be done in a number of ways including abolishing stamp duty. Again, this is something the Government surprisingly makes no mention of.

However, even more surprisingly, the review doesn’t make any mention whatsoever of letting first home buyers access part of their superannuation to put a deposit on a house so they can get a foot in the housing market.

This is a model which works well in Canada and one which I think should be looked at in Australia given it’s getting harder and harder for Australians to live the great Australia dream of owning their own home.

So what does the Henry review mean for ordinary Australians? It means the government has a whole swag of good ideas on how to make things easier on families. The big question really is does it have the guts to actually follow through with many of the recommendations made by Ken Henry.

After all, it’s one thing to make a big hype about organising a review and it’s another thing to actually do something. How this Government responds will be the true test of whether it is a government of spin or a government of substance.

Oh and as a side note before you stop reading. It must have been an embarrassment for Ken Henry dedicating more than 20 pages to the Carbon Pollution Reduction Scheme given its been put on the political scrap heap by the Rudd Government.

Most commented

33 comments

Show oldest | newest first

    • John A Neve says:

      06:01am | 03/05/10

      Here we go again, instead of a genuine attempt to fix our taxation system. Our Federal Government has attempted to buy the votes of some of the electorate and squeese a few extra dollars out of the populace.
      But for those who missed out this time, don’t worry, the next Federal Government will tweek taxation to appease those that have missed out, while squeesing another few more dollars out of the people.

      Just when will we get a government that has an open and fulsome taxation review?
      One that looks at ALL aspects of tax, that allows public input and wide ranging debate?

      What we need is one simple, equitable and unavoidable tax.  A tax which lets the people know exactly what they are paying, instead of the current 100+ taxes, many of which are hidden.

      But let’s face it, money is no longer the prime reason for taxation, rather it is about control. By manipulating tax, governents can steer our very lives. Cull out the drinking of alclhol, smoking, reduce the use of motor vehicles etc.

      But it won’t stop any of these “sins”, rather it will limit them to the mega rich or powerfull. Presidenst and PM’s will still smoke cigars, drive about in large cars and partake of al the is not good for the public.

      One tax, a Financial Debits Tax should become the Holy Grail for all Australians.

      Reply

    • Confused says:

      08:29am | 03/05/10

      Genuine question here!

      What would happen to the Australian mining industry should this current “boom” end?

    • John A Neve says:

      09:25am | 03/05/10

      Confused,

      That is an open ended question. Depending on the state of the company, some will be bought out, some will go broke, some will have to tighten their belts, the rest will just keep on keeping on.

    • Brandon says:

      08:47am | 03/05/10

      People seem to think that rudd and co are competent. When you realise their true talent for creating chaos you will except the reasons for doing what they do.

      Reply

    • Evan Findlay says:

      09:58am | 03/05/10

      Steve, once again you demonstrate what a simple little man you are. You state that offering 90% rebate for childcare to low income earners would be popular…. no kidding. But if the taxpayer is paying for 90% why not just go the whole hog and have the taxpayer foot the lot!  Any by paying rebates of 90% on childcare fees does not guarantee that mothers will return to the workforce, possibly quite the opposite. If you don’t have to pay for childcare then you don’t need to work to pay for it!

      Secondly, housing affordability was doomed the moment Howard introduced the first home owners grant some ten years ago. By creating an artificial demand the price of housing was naturally going to escalate. This housing bubble has been allowed to fester for ten years now and no government of any political persuasion will be game enough to burst the bubble. Only market forces will do that and when that will happen is anyone’s guess.

      Thirdly, Australian families have been extremely well looked after under the Howard government. In fact, middle class welfare was about the only policy the Howard government followed with any vigour. Infrastructure, health, education and superannuation all floundered under Howard but if you had children, intended to purchase property or could afford private health insurance then you were showered with unsustainable rebates. And now you want to add more pressure to the public purse by adding more unsustainable rebates for no other reason than it may increase productivity. But then again it probably won’t. Giving more people more welfare just tends to make them more lazier.

      And finally I put a question to you and this question ties in with my point about housing affordability. By allowing people to access their superannuation to put a deposit on a home will do what? The same thing the first home owners grant did….. artificially stimulate the market, a market that is grossly over-inflated already. An economist you are not.  Not only would houses become incredibly more expensive than they are now but you are also diminishing peoples ability to be self funded in their retirement. Most people wishing to purchase a home would be approximately thirty years of age and a modest deposit on a house would probably consume most of their super. This would mean that we would have a generation of Australians with little to no super after putting a deposit of $30,000, because that’s all their super would be worth, on a $500,000 house. And if they should become unemployed or unable to meet their repayments they not only forfeit their home but also a fair chunk of their retirement.  That does not sound like good policy to me.

      Reply

    • Arnold says:

      12:10pm | 03/05/10

      That $30,000 deposit would save $50,000 in interest on a 30 year mortgage.  Not to mention that if it was invested in property, it would generate higher returns than it would simply left in fixed interest assets within superannuation.  Also, that is only on an interest rate of 8%, I wonder what the actual rate will be by the time that the Labor government is voted out.  Will we see rates at 19% like we did the last time Labor was in power?

      And the housing bubble will never burst in Australia until radical action is taken by the governments (state and federal).  “Experts” have been saying for at least a decade now that the burst was imminent, yet it still hasn’t happened.  Even during the worst of the GFC our markets were still holding up (undoubtedly helped along with Rudd doubling the first home owners grant increasing demand). 

      Simple supply and demand factors will continue this pattern.  So either the state governments supply more land for development, or the federal government removes the incentives for people to maintain rental properties (negative gearing and CGT discounts).  Simply blaming the first home owners grant for inflating house values is absolutely ridiculous. 

      The point is that Rudd had a serious opportunity to make some positive changes to Australia’s tax system, but, to paraphrase David Koch, has really whimped out.  I would like to know just how much money was spent in commissioning the Henry Review, for the government to make such a weak response.

    • Evan Findlay says:

      01:47pm | 03/05/10

      Arnold if you are only receiving 8% on your super you need to find a better investment fund. And you proved my point. “Supply and demand will continue this pattern” At some stage, and we are starting to see signs of it now, people will simply refuse to pay the ridiculous amounts being asked for real estate especially when wages are not keeping up, rates are rising, cost of living is increasing, utilities are increasing,as well as the cost of petrol, groceries and rents. Only an imbecile would be paying these sorts of prices and subjecting the next thirty years of their lives to working long hours, scrimping and saving and watching life pass them by just so they have a roof over their head especially when a crash is possible. Just ask the yanks how their housing market is!

      And I agree that Rudd has taken the softly approach to tax but who in any political party wouldn’t when leading into an election. Only a naive fool would advocate land taxes, death duties and congestion taxes when an election is around the corner.

    • Harquebus says:

      02:01pm | 03/05/10

      Subsidies only distort markets and makes matters worse.

    • Arnold says:

      03:15pm | 03/05/10

      8% was the interest rate on the mortgage, Evan, not the return on superannuation.  If that rate goes higher, the amount of interest saved by tapping into superannuation assets becomes higher as well.  In my opinion. that is a great investment in one’s personal wealth.

      Howard took the GST to an election.  That was significant tax reform and one which an entire election was based around.  Since the introduction of the GST, marginal tax rates have dropped substantially to the benefit of all. Why couldn’t Rudd do something like that after spending 18 months getting the Henry Review commissioned? 

      http://www.news.com.au/money/property/australian-capital-city-house-prices-rise-by-20-per-cent-in-year-to-march/story-e6frfmd0-1225861571765

      There is an article released today showing exactly how Australia’s market is performing.

      http://www.news.com.au/money/property/house-price-implosion-claims-ridiculous-says-local-economist/story-e6frfmd0-1225861515696

      And there is another detailing why it is ridiculous to compare Australia with the U.S.  The market forces in the U.S. were always different to that in Australia.  That article was also posted just today.

      Don’t get me wrong, I would love to see the property market deflate as well, but it isn’t going to happen without some hard decisions.  Contrary to what you state in your comment, people are not refusing to pay these prices (an increase of 4.8% in the March quarter alone proves this).  And it isn’t first home buyers inflating the markets, it’s because wealthy investors are looking for somewhere to park their excess cash, receive some tax benefits, and then only pay tax on 50% of the gain when they sell the property.

      And no, these people are not imbeciles for paying these prices, they just understand how market forces work.  They understand that property markets are not going to collapse in the near future.  So what if it costs $500,000 to buy that house today, when you can sell it in two years time for $600,000.  That is a much better return then simply parking cash in a bank account (that is without taking the tax benefits into account as well).

    • BigBob says:

      10:00am | 03/05/10

      Unlike like you Feilding I have worked in the mines in W.A. I worked in Parraburdo and Pinjarra and I can honestly say while I was there I never met one West Australian. People from interstate work those mines and its time the wealth was shared around Australia. You work in hot conditions in very dry climate, no green to be seen, just the odd spinifax and white gum, snakes and roos and emus are the only life you see, beyond your fellow workers. Time Australins benifited out of the blood sweat and tears they put into those mines while working there

      Reply

    • Fred B Goode says:

      08:44pm | 03/05/10

      yawn. I would love to benefit from a venture I took no risk in or made no investment in. sounds all those volunteers working for free are real fools, hold on, did someone force all these people to workout with pay? whats that? they got paid. oh sorry. I hate communists.

    • Shifter says:

      10:30am | 04/05/10

      Hi BigBob,

      I’m Shifter, I’m a Western Australian and I work in the mining industry in the Pilbara region for Rio Tinto.

      Also, Pinjarra’s actually pretty green and temperate, lots of farmers around there…

    • jed says:

      10:32am | 03/05/10

      you have some strange theories here, steve, but at least you see some sense with the ludicrous mega tax on miners.

      i hope you won’t be bought off with with some shiny goodies from labor to vote for it.

      Reply

    • PKelly says:

      10:51am | 03/05/10

      Senator Fielding, for someone trying to engineer a regressive internet filter/censorship into a 21st Century developing digital economy and progressive (let’s hope) mature democracy, you seem to have it in for our Mum and Dad internet home based businesses, technology companies and creative industries (one of our biggest fastest growing sectors.) Lets remember the high tech industries based, state of California alone, has a big enough economy to join the G8. (We won’t mention the economic throes they are in temporalily due to widespread fraud in the banking sector aka sub-dodgey-loans/ lack of competent governance)

      Are our kids and there grandchildren just going to want to dig holes?

      The using super is a good idea though - why is this being held up? The banks not wanting to part with our hard earned cash/super?

      Reply

    • Mitchell says:

      11:24am | 03/05/10

      The Rudd Government is a joke. At least we have some sense in the Senate with the Libs and Fielding blocking crap policy from KRudd.

      BigBob: Quit your complaining. You were well compensated working in the mines and it was your choice to go there.

      Evan Findlay: You’re a joke. Accessing super makes sense. People need to get a deposit from somewhere. And owing your own house when you retire is important. Its already for you because you probably have bought a house. But its no so easy for our youth coming through.

      Reply

    • Evan Findlay says:

      01:32pm | 03/05/10

      If you stupid enough now to purchase property then don’t be blaming governments when the bubble bursts. I don’t own my own house Mitchell and like the rest off your comment it seems also to be based on guess work and assumptions. Mitchell it is not I that is the misinformed fool. You advocate paying incredibly over- inflated prices for housing by robbing your retirement funds and then I suspect you will want the government to look after you in retirement. Go and ask a pensioner how far their pension goes and most of them own their own homes.  You can’t pay for your groceries when all your money is tied up in bricks and mortar.

      But as they say Mitchell, “A fool and his money are easily parted” and you and Mr Fielding certainly fall into that category.

      And unless there is a bust in the housing market not may will get to own their own homes.

    • Shifter says:

      10:35am | 04/05/10

      How about saving a deposit? It not that hard to sacrifice some small things such as say, 6 pints on the weekend instead of 10, and put that away in a savings account. It all adds up, and then you can buy something nice with it. Like a house.

    • BigBob says:

      12:13pm | 03/05/10

      Mitchell I am not complaining mate I am simply pointing out that these are Australian resources that are not only worked on by the people in the state they are in but people from all over Australia. I was definatly not compensated enough for the conditions we had to face that is why these mines go through so many people. I have also worked in Emerald in Queensland and Mount Thorley in Singelton N.S.W . Tell me mate, where is your vast experience in these mines or are you just mouthing off? If you want to work in this industry you need to get off your butt and off the internet and go and get trained!!

      Reply

    • Daniel says:

      12:48pm | 03/05/10

      The mining boom has done totally nothing for NSW.

      Reply

    • Jack from Perth says:

      01:52pm | 03/05/10

      Fisikal [sic] policy is definably one of Fielding’s strongest areas of expertises.

      Reply

    • Harquebus says:

      02:13pm | 03/05/10

      Steve,
      Take a look.
      http://countercurrents.org/peakoil.htm
      You will realize that the mining boom and China’s growth have a limited time span. Smart investors know this, so does KRudd. The Govt is grabbing a share while it has the chance. Investing in infrastructure is a waste of time and money.

      Reply

    • A Bob says:

      03:34pm | 03/05/10

      Thanks. I made a promise to myself to stop looking at things like that a couple of years back. It was too upsetting and there was nothing I could do about it anyway.

      Oh well, if the end of the world is only a few years away at least I won’t have to suffer much longer.

    • Jacob M says:

      02:23pm | 03/05/10

      Mr Feilding your one of Australia’s strangest Pollies and I can’t see any reason to believe you over Kevin Rudd. I put you in the same not to be listened to category as Wilson Tuckey and Bronwyn Bishop..sorry mate

      Reply

    • Dan says:

      05:04pm | 03/05/10

      What’s to “believe”?  Henry did a review, Rudd selected a tinsy bit of it to implement, and now Fielding is criticizing Rudd’s approach and more-or-less accusing him of putting politics before foresight.  It’s all pretty normal stuff.  There’s no statement of belief anywhere there.  The idea of this website is to think and to be stimulated, not to try to choose something to believe.
      I fail to see why Fielding’s connection with a church (and a relatively major denomination at that) should continually colour people’s capacity to listen to argument.  No-one attempts to decry Bob Brown for voting in a way that is consistent with his beliefs and lifestyle.  But as soon as Fielding opens his mouth he instantly can’t possibly make any sense at all because he identifies with one of the World’s major religions.

    • Jacob M says:

      11:55pm | 03/05/10

      I had no idea he had any connection with a church, I thought he was just strange because thats the way he is, but thanks you have explained alot. I definatly will never listen to him now ..thanks again

    • JenfromNanaGlen says:

      03:10pm | 03/05/10

      Henry Tax review, wasted opportunity but that’s Rudd & Co.  Nothing in here for small business owners!  You have to have $5,000 to be able to buy something to write it off as a tax deduction. 

      More super contributions for small business - great.  Why don’t employees have to match dollar for dollar what employers put in if people are so concerned about what their retirement savings are going to be.  Otherwise we risk going the way of Greece!

      Reply

    • JARRAD DAY says:

      04:30pm | 03/05/10

      BIGBOB good on you for working in the mines mate. i’m sure you were paid well for your efforts , how on earth can you think another massive tax on these enormous companies will help our economy.. lets wait to see what comrad KRUDD says when most of the big companies go elsehwere to mine .. like brazil . and then china will come and buy our mines here sell all the materials back to china AT COST and not post a profit ... then we’ll have 40% tax on bugger all…  pull your head in people labour are making a massive mistake and it will cost us all ...

      Reply

    • Marilyn says:

      06:22pm | 03/05/10

      So good old Steve now wants to prop up foreign super national mining companies.

      And private health care, private schools, private wealth.

      Typical of the so-called family first mob who are owned by the fundamentalists and nut bags.

      The question for you Steve old son is did you notice that the worlds economies went pear shaped over the past 2 years and half the world is broke.

      Why should Britain get most of the profits for crap dug out of our soil?

      Reply

    • Margaret says:

      11:26pm | 03/05/10

      You obviously didn’t read the opinion properly or you would realise that the writer was not advocating the propping up of the mining industry t all. As most of the mining industries are majority held by Australian companies, their workers are paid wages, state governments are paid royalties, taxes are paid so I think that the mining companies aaleady contribute to the economy fairly.  After all, it was the mining industry which kept us from suffering a recession like the rest of the world did.

      Our country was never indanger of suffering a financial crisis as we had plenty in the bank accounts to keep us out of trouble. What a good thing we had a treasurer who put money away for a rainy day.  Pity this one didn’t think like that.

    • Jeff says:

      06:36pm | 03/05/10

      Getting more people into their own home is a great thing, for individuals and the economy. The super into first home policy would be a winner if it was to combined with an increased supply to the property market - land releases & higher density town planning. The majority of Australia’s wealth is held in real estate.  I’d much prefer the increased super contributions be spent on tax cuts to allow people to make their own investment choice, instead of throwing the cash into sometimes good but often bad pool of investments.

      Property bubble? Not likely given our culture, economy, shortage of property to buy and of course rent.

      Reply

    • Max Power says:

      06:55pm | 03/05/10

      Why is everyone having a go at Rudd for only implementing 3 recommendations? I for one am glad he has only chose to implement 3, now the damage done by his incompetence will be minimal. Imagine with his track record of screw ups, how bad a state we would we be in if he tried to implement wide ranging reforms.

      Reply

    • Democrat says:

      09:23pm | 03/05/10

      I had expected, when I saw who authored this piece - a Senator, an elected representative no less - that it would be a constructive article.  However, having criticised the government for being selective in the parts of the Report it chose to you, Senator have done the same thing.  Worse though is that in cherry picking your own goodies to dispense to the populace you make no attempt to suggest how you would pay for the 90% deductability for childcare.  I notice Senator that when you support the abolition of stam duty on purchasing a home u don’t also support, or even comment on, the Henry suggestion as to how to pay for that ie levying Land Tax on the Family Home.  As for the CPRS being put on the scrapheap can I remind you that you put it there.  Bring on 1st July 2011 when you will also be out of the Senate and on the scrapheap.

      Reply

    • Stephen says:

      01:58am | 05/05/10

      It’s a bit rich, Senator Fielding, for you to be having a go at the Government for putting the CPRS on the scrapheap when it was you (and those ridiculous graphs) that prevented them from passing it.  You, sir, are a cad and a hypocrite.

      Reply
 
Sorry, comments are now closed for this article.

Facebook Recommendations

Read all about it

Punch live

Up to the minute Twitter chatter

See all tweets

Recent posts

The latest and greatest

The Punch is moving house

by The Punch Team

385

The Punch is moving house

Good morning Punchers. After four years of excellent fun and great conversation, this is the final post…

Will Pope Francis have the vision to tackle this?

by Hannah Harborow

122

Will Pope Francis have the vision to tackle this?

I have had some close calls, one that involved what looked to me like an AK47 pointed my way, followed…

Advocating risk management is not “victim blaming”

by Sarrah Le Marquand

251

Advocating risk management is not “victim blaming”

In a world in which there are still people who subscribe to the vile notion that certain victims of sexual…

Nosebleed Section

choice ringside rantings

From: Hasbro, go straight to gaol, do not pass go

Tim says:

They should update other things in the game too. Instead of a get out of jail free card, they should have a Dodgy Lawyer card that not only gets you out of jail straight away but also gives you a fat payout in compensation for daring to arrest you in the first place. Instead of getting a hotel when you… [read more]

From: A guide to summer festivals especially if you wouldn’t go

Kel says:

If you want a festival for older people or for families alike, get amongst the respectable punters at Bluesfest. A truly amazing festival experience to be had of ALL AGES. And all the young "festivalgoers" usually write themselves off on the first night, only to never hear from them again the rest of… [read more]

Light weight

Gentle jabs to the ribs

Superman needs saving

Superman needs saving

Can somebody please save Superman? He seems to be going through a bit of a crisis. Eighteen months ago,… Read more

28 comments

Newsletter

Read all about it

Sign up to the free News.com.au newsletter