Malcolm Turnbull’s New Year resolution is apparently to update his slogan – jobs and growth is so 2017, and thus is ready for a rejig.
Not only that, it will be expanded from the traditional three words to four: Let’s keep Australia working. Roll up your sleeves, nose to the grindstone, shoulder to the wheel. There is no time for play and frivolity, arbeit mach frei.
Well, that’s probably not quite what he means, but the idea seems to be that only his government can preserve the nation from the mass unemployment that would ensue under the business-averse Bill Shorten. So toil on, as will he, once he finishes his holidays at the harbourside mansion.
Last week he did stick his swiftly balding head up to don an alarming shirt for Christmas lunch at the Wayside Chapel and cop a fine for not wearing a lifejacket while moving his new boat from his pier to his beach. And he did record a bland, indeed somewhat soppy, seasonal message for the masses.
But by and large our leader disappeared into the festivities, so it was left to his indefatigable Treasurer to fill the vacuum. Scott Morrison has not only re-imaged himself as the defender of Christendom, the warrior king of the church militant in its fight to enhance privilege and discrimination over the secular pagan majority – although that crusade alone would have gained him the headlines he craves.
Tax relief for the wealthy
He has also informed the masses that the need for huge tax relief for the wealthy corporations is not just a matter of jobs and growth – it is essential for the very survival of the nation. If it is not implemented, the cuts finally legislated by Donald Trump in the United States will lead to an immediate exodus of investment from the Americans, leaving us bankrupt and bereft.
Actual economists demanding a reality check are understandably sceptical. For starters, America investment in Australia seldom leads to profits remaining in the country: indeed, many if not most of the biggest US-based multinationals pay a derisory amount of tax to Canberra, if indeed they pay any at all. The coffers will hardly be depleted if they depart.
But even if the understaffed and overworked minions remaining at the Australian Tax Office were able to bring them into line with what is regarded as the norm, there would be no real incentive for them to pack up their bongos and return to Trumpistan.
Trump’s cuts, if implemented, would bring the American corporate rate down from 35 per cent to 21 per cent, compared to the local rate of 30 per cent which Morrison wants to reduce to 25 per cent – so it’s no longer a positive plan for stimulus, it’s just about trying to catch up, says our febrile bean counter. But it’s not quite as simple as that.
As the boosters of the Australian Business Council claim that the world is leaving us behind, they point to the fact that many European countries, too, are reducing their corporate rates – even the Poms are moving towards just 17 per cent. Which is, coincidentally or not, precisely the rate companies in Australia, or at least the more scrupulous ones, also pay – that is their effective rate, the real rate.
The reason is that over many decades conservative coalition governments have devised exemptions, loopholes, lurks and perks for their patrons which have meant that 30 per cent was no more than a fantasy – almost no one pays anything like that figure.
Other countries, including the United States, are more transparent – more honest, if you like. Trump’s 21 per cent will be something close to the number the Internal Revenue Service will actually receive. So in practice Australia will remain competitive.
Indeed, on comparing effective tax rates around the developed world, Australia is in the bottom half of the scale; the average figure across the OECD is about 24 per cent and in Asia – supposedly a home for low tax regimes – it is 21 per cent.
So there is not really a problem; but even if there was, there is no reason to believe that tossing a lazy $50 billion or so to the big end of town would do much good for anyone. In instance after instance, in country after country, it has repeatedly been shown that supply side economics – offering hand outs to the wealthy in the hope that some of the largesse trickles down to the masses – does not work, never has and never will.
Morrison’s own Treasury boffins estimate that, if everything goes according to plan (which of course it never does) there might be about just one percentage point in growth. There could be a boost in tax revenue, too, although less than half what the cuts would cost. But as for new investment – improbable.
Rich get richer
And for jobs, let alone wage rises for those who have them – forget it: it just doesn’t happen. Almost all the loot goes into profits for shareholders, so the richer gets richer and the poor get very little, if anything.
This is precisely the objections being raised by Trump’s tax cuts: he and his cronies will benefit obscenely, thus cementing and increasing the inequality that already plagues his divided and strife-torn nation. But this, it appears, is what Turnbull and Morrison tell us, is the exemplar we must follow: we have no choice. Let’s keep Australia working.
In George Orwell’s dystopian satire Animal Farm the archetypal labourer is the horse Boxer, the willing, good hearted and unfortunately gullible steed whose invariable remedy for all problems is: we must work harder. When Boxer eventually worked himself to a standstill, his reward was to be sent to slaughter and the tannery.
No-one is suggesting that Turnbull plans to display the hides of his hard-working Australians on his living room wall, but the slogan still has an ominous ring to it. However, it appears to be the only idea our Prime Minister and his Treasurer have got, so back to the salt mines. Oh, and by the way – have a happy new year.
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