“Analysis of the ACT Budget uncovers some quite startling detail. Most remarkable perhaps is the revelation that the claimed surplus is an illusion,” writes JON STANHOPE
THE squealing of Malcolm Turnbull to being challenged by an ABC economics journalist over the validity of corporate tax cuts illustrates his vulnerability.The Turnbull government’s failed “trickle down” economic theories have come under challenge once again. This time the credibility of the Prime Minister’s corporate tax cuts were exposed by the ABC’s chief economics correspondent and former “Lateline” anchor, Emma Alberici.
The yelps of the Prime Minister revealed the raw nerve and the ABC pulled the analysis from its website with director of programs Gaven Morris arguing it is opinion rather than analysis. Poppycock!
Attempts to remove the article have failed. A “webcached” version is still circulating and can be found here: https://goo.gl/GuA4dV – judge for yourself.
Local Labor MP Andrew Leigh (formerly an ANU professor of economics) lent his support to Alberici in a tweet: “Two observations on ABC tax reporting: 1. @albericie is a Walkley finalist for her work on tax dodging. 2. The Liberals’ own analysis says household benefit of a big biz tax cut funded by higher personal taxes is 0.1 per cent, in the 2030s”.
No wonder Malcolm Turnbull is screaming. Caught out! Again!
The core of the Alberici argument was twofold.
Firstly: “There is no compelling evidence that giving the country’s biggest companies a tax cut sees that money passed on to workers in the form of higher wages”. And second: “Profit margins have risen to levels not seen since the early 2000s but wages growth has been slower than at any time since the 1960s”.In question time the Prime Minister railed against the article exposing his own sensitivity and accusing the Opposition of busily retweeting the article – “One of the most confused and poorly researched articles I’ve seen on this topic on the ABC’s website.” In a further attempt at ridicule he added: “The ABC has the same understanding of the commercial world as does the Opposition.”
The reality is that neither the Opposition nor Emma Alberici are fooled by the Coalition façade of “trickle down” economics. These arguments are simply used to provide tax breaks to those who make big donations to their own political parties.
What has really hit the raw nerve is the methodical way that Alberici exposes the tax-cut arguments as fraudulent.
Beyond the core of her argument she added: “Tax rates don’t matter if you’re not paying tax” and identified that “one in five of our biggest companies haven’t paid any corporate tax at all in at least three years”. No tax! In three years! How far will this go up the nose of almost every salary earner in Canberra and across Australia when they are paying between a third and a half of their salaries in income tax.
The article also analysed the “headline rate” of 30 per cent corporate tax. Instead, it argued, the “effective rate” provides a much clearer picture. In this case, “according to a report published last year by the US Congressional Budget Office, Australia’s effective tax rate, at 10.4 per cent, is among the lowest in the world”. Alberici acknowledged that Treasury does not accept the figure preferring alternative evidence.
These concepts are not new. “Crikey” political editor Bernard Keane argued in September: “Despite Scott Morrison’s insistence, there’s no link between company profits and higher wages. In fact, if there is a link, it may be a negative one”.
He pulled no punches arguing the idea that “corporate profits will lift wages is bullshit”.
Another issue relied on the Australian Services Union identifying average pay rises at less than three per cent a year while at Qantas CEO Alan Joyce is paid close to $100,000 a day. As pointed out in another story by the same author, Qantas has paid no corporate tax for around a decade while “not one of Australia’s major airlines has paid corporate tax since at least 2013, including Virgin and its subsidiary Tigerair”.
Needling a raw nerve with appropriate analysis should be the hallmark of the media. Having the ABC respond to government pressure, tests the credibility of both the government and the national broadcaster.