Turnbull expects to meet Trump next week


Michelle Grattan, University of Canberra

Malcolm Turnbull has flagged he expects to meet US President Donald Trump in New York next week, although late Tuesday his office said the government was still waiting for the formal invitation. The Conversation

The occasion is the 75th anniversary of the Coral Sea battle.

Speaking at the Al Minhad Air Base in the United Arab Emirates during an Anzac commemoration trip that included Iraq and Afghanistan, Turnbull said he looked forward to discussions with Trump “at an early opportunity”. “We’ll be making announcements very shortly about that,” he said.

Turnbull would only make the visit for the Coral Sea anniversary if it provided an opportunity for his first face-to-face meeting with Trump. Even though it would be brief, the timing is awkward – he would be overseas only days before the crucial May 9 budget.

Turnbull, who has had talks with senior administration figures in the past few days, is anxious to get a first-hand feel for Trump.

During his visit to Australia at the weekend, US Vice-President Mike Pence briefed Turnbull on the new administration’s defence and foreign policy assessments, as tensions ramp up with North Korea.

Pence also reaffirmed the US would honour the deal to take refugees from Manus Island and Nauru, while again making clear Trump’s dislike of the agreement the Australian government forged with the Obama administration. Trump expressed this displeasure forcefully in his now-notorious phone conversation with Turnbull earlier this year.

While in Kabul, Turnbull had the opportunity for talks with US Defence Secretary James Mattis.

Asked at his news conference whether Australia needed to do more in the Middle East region, Turnbull said that in both the Afghan and Iraq theatres “there is going to need to be a long-term commitment”.

“But it is one of supporting, above all of training, the Afghan and Iraqi security forces, both military and police, to ensure that they have the ability to defend their own country, to push back the terrorists where they’ve made gains, and to secure the territory that the government is holding.”

He said that as the situation evolved “we’ll consider requests for further support”.

The government on Tuesday announced humanitarian and stabilisation help for Iraq worth an extra A$110 million over three years. This brings to more than $530 million Australia’s humanitarian help for Iraq and Syria since 2014.

During his trip Turnbull met both Iraqi Prime Minister Haider al-Abadi and Afghan President Ashraf Ghani.

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Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

The real reason Scott Morrison is playing down the budget


Phil Lewis, University of Canberra

Despite the Treasurer, Scott Morrison, describing the federal budget as “not a centrepiece”, it has always been regarded as just that – the centrepiece of fiscal policy in Australia. The Conversation

Any changes in federal taxes and expenditure are intended to achieve good outcomes for Australia’s economy, such as low unemployment, price stability and economic growth. In economic terms, government spending should increase and tax receipts fall during downturns in the economy, and the opposite should happen when the economy is booming. This is how the government is able to balance out cycles in spending by the private sector.

Importantly, the budget is made up of more targeted fiscal policies (referred to as “discretionary” by economists) as opposed to automatic processes (referred to as “stabilisers”). The distinction between the two is important.

Automatic processes refer to when government taxes and expenditure generally increase and decrease with the business cycle. They are automatic because these changes in taxes and spending occur without the government having to do anything.

For example, when the economy is growing strongly, employment increases and unemployment falls. This results in unemployment benefit payments to workers, who were previously unemployed, automatically decreasing.

Also, when the economy is expanding, expenditure and incomes for workers and for businesses rise and the amount the government collects in taxes increases. When economic growth slows or becomes negative, the opposite occurs: the amount the government collects in taxes will fall and expenditure on unemployment benefits will rise.

With more targeted fiscal polices, the government takes actions to change spending or taxes. But although the budget is the centrepiece, it is not a very effective means of managing the economy.

The government and parliament have to agree on changes in fiscal policy. The treasurer initiates a change in fiscal policy through the budget in May each year. This must be passed by both houses of federal parliament, which can take many months (some measures have been blocked by the Senate for much longer).

Even after a change in fiscal policy has been approved, it takes time to implement. Suppose, for example, that parliament agrees to increase spending on infrastructure to create “jobs and growth”. It will probably take several months or more to prepare detailed plans for construction projects.

State or territory governments will then ask for bids from private construction companies. Once the winning bidders have been selected, they will usually need time to organise resources, including hiring labour, in order to begin the project.

Only then will significant amounts of spending actually take place. This delay may well push the spending beyond the end of the low point in the economy that the spending was intended to counteract.

Indeed, if the economy has recovered by the time the construction and related jobs come on board then the government spending will mean a shortage of labour in other parts of the economy and few or no new jobs (unless shortages are filled through migration).

Because the budget is a very difficult means of carrying out targeted fiscal policy, it’s become more important as a centrepiece for the government to set out its broad economic strategy – its goals and how to achieve them. But it seems that both major parties are failing even with this goal.

In recent years the view of most economists has been the need to reduce the structural budget deficit and the level of government debt. In 2016-17 net government debt stood at A$326 billion, and was forecast in last year’s budget to increase until at least 2018-19. There is also quite widespread acceptance that our tax system is in need of reform.

There are two glaring omissions from recent federal budgets of both major parties: any plan to significantly reduce the deficit any time soon, and any proposal to embark on meaningful tax reform.

The Rudd and Gillard governments will be remembered for Wayne Swan’s budgets, which consisted of new spending initiatives including the National Disability Insurance Scheme, the National Broadband Network, and the Gonski education funding reforms, but featured no plan to raise revenues to fund them and manage the huge subsequent debts.

Joe Hockey and Tony Abbott’s attempt in the 2014 budget to address government deficit and debt was regarded as a disaster, resulting in the demise of both as leading politicians. Morrison and Prime Minister Malcolm Turnbull are desperate not to make the same mistake, and this severely limits their capacity to do anything meaningful to tackle the deficit and debt issue.

The major problem with successive budgets is that they have not provided a cogent strategy for improving living standards, including addressing inequity for the most disadvantaged Australians, which can only be achieved through economic growth.

Growth entails taking materials, labour and capital to produce goods and services of greater value that people want at prices they are willing to pay. This is best done by the private sector and cannot arise from wasteful government expenditure, accumulating debt or fiddling at the edges with markets, through such things as changes to superannuation or housing finance.

Growth and jobs can only arise from value-adding activities and government policies which facilitate this such as reducing debt, promoting free trade, reducing restrictions on business and labour market reform. This is hard to do and far more difficult than easy options, which explains why we can expect little from the budget to address real reform.

Phil Lewis, Professor of Economics, University of Canberra

This article was originally published on The Conversation. Read the original article.

How Dutton comes out of dispute about Manus claim goes to the question of character


Michelle Grattan, University of Canberra

Peter Dutton has put his credibility in the frame by sticking to his claim about the role of an incident involving a young boy in triggering the Manus Island disturbance that saw Papua New Guinea defence personnel fire shots at the detention facility. The Conversation

Dutton’s well-publicised but strongly disputed allegation will be tested by the investigations being done by the PNG defence and police authorities, while Senate estimates in a few weeks should also provide a chance to probe it.

Dutton is a former policeman, which is just one reason why he should be held to the highest standards of accuracy in making a claim.

How Dutton comes out of this dispute about facts is particularly important, because it goes to the character of the conservative Liberal from Queensland who is touted as a possible future leader.

In notable contrast to the obvious tensions between Malcolm Turnbull and Treasurer Scott Morrison, the prime minister and his immigration minister are walking in lockstep. Dutton is at the heart of Turnbull’s attempt to win voters’ support with tougher policies on foreign workers and citizenship.

When Dutton last week was asked on Sky what he knew about the Good Friday violence he said: “There was difficulty, as I understand it, in the community. There was an alleged incident where three asylum seekers were alleged to be leading a local five-year-old boy back toward the facility and there was a lot of angst around that, if you like, within the local PNG community.”

Pressed on why there was this angst, he said: “Well because I think there was concern about why the boy was being led, or for what purpose he was being led away back into the regional processing centre. So I think it is fair to say that the mood had elevated quite quickly. I think some of the local residents were quite angry about this particular incident and another alleged sexual assault.”

But Manus Province police commander David Yapu rejected this version. He told Fairfax the boy, who he said was aged about ten, had been given fruit in the centre about a week before the violence.

“Then Wilson Security had to intervene and get him out from the centre. That had nothing to do with the latest incident involving soldiers,” Yapu said. “The child incident is unrelated.”

Earlier Yapu was reported to have said the soldiers’ drunken rampage was retaliation following a clash between navy personnel and asylum seekers who were playing soccer in the navy base.

When it was put to Dutton on Sunday that what he’d said wasn’t true, he retorted: “It is true. And the briefing that I’ve had is particularly succinct and clear … I can give you the facts in relation to it or you can take the Twitter version.”

Reference to “the Twitter version” was an obvious attempt to denigrate the alternative account. But that alternative came in the form of direct quotes from a local police commander.

Dutton told interviewer Barrie Cassidy that “there are facts that I have that you don’t”. Pressed on the source of his information he said: “I have senior people on the island. We also have obviously significant contacts with the governor and people of Manus.”

Let’s hope that the evidence-gathering speedily produces “the facts”, whether those facts contradict or back Dutton.

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Ministers should not be allowed to slip away from taking responsibility – as former immigration minister Morrison did over his wrong claims against Save the Children personnel. On the other hand, if Dutton is so certain he’s got the right story, he has every interest in seeing the proof out in public to back it.

Meanwhile at the weekend US Vice-President Mike Pence reiterated that the Americans will stick by the deal the Turnbull government did with the Obama administration to take refugees from Manus Island and Nauru. But Pence didn’t miss the opportunity to again register the Trump administration’s unhappiness with the deal. The honouring “doesn’t mean we admire the agreement,” he told his news conference with Turnbull.

Pence cast the honouring in firmly alliance terms: “The decision to go forward I think can rightly be seen as a reflection of the enormous importance of the historic alliance between the United States and Australia,” he said.

“And whatever reservations the president may have about the details of agreements reached by the prior administration, we’ll honour this agreement, out of respect for that enormously important alliance.”

The firm message-behind-the-message seemed clear: don’t forget we’re doing you a big favour.

Newspoll postscipt

Labor leads the Coalition 52-48% in Newspoll, compared with 53-47% three weeks ago. The Coalition’s primary vote remains at 36% in the poll, published in Monday’s Australian, while Labor has slipped from 36% to 35%, and the Greens from 10% to 9%. Pauline Hanson’s One Nation remains at 10%.

Malcolm Turnbull’s net satisfaction has improved from minus 29 points to minus 25; while Bill Shorten’s net satisfaction has gone from minus 22 to minus 20.

https://www.podbean.com/media/player/jw7bg-69e505?from=yiiadmin

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Turnbull talks tough on foreign workers – deer farmers and historians off welcome list


Michelle Grattan, University of Canberra

Whatever the arguments for the changes governing foreign skilled workers announced by Malcolm Turnbull, make no mistake – this is about an embattled government wanting to send a strong political message. The Conversation

One clue was Turnbull’s reference to placing first not just Australian jobs, but “Australian values”. He made mention of “Australian values” both in his Facebook video and his news conference, when announcing the replacement of the 457 visa.

In this context, “Australian values” is itself a value-laden term.

For Turnbull, it was something of a rhetorical juggle, as he acknowledged Australia as an “immigration nation” and noted the many workers “from war-shattered Europe” who helped build the Snowy scheme, while declaring Australian jobs must be filled by Australians wherever possible.

The government has been under pressure over foreign workers from left and right – from Labor (Bill Shorten introduced a private member’s bill to tighten the 457 scheme), as well as from One Nation.

Pauline Hanson was – of course – quick to claim credit for Turnbull’s move.

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A few years ago another federal government on the defensive went to a like place. In 2013, Julia Gillard pledged to “stop foreign workers being put at the front of the queue with Australian workers at the back”.

Labor sources at the time said she was tapping into what they described as the “economic patriotism” embedded in the “battler” view of the world; Labor research had found a strong view among voters that there were available jobs Australians couldn’t get. Attitudes are unlikely to have changed, and the Turnbull government knows it.

For the record, in response to Gillard then-opposition leader Tony Abbott defended the 457 entrants and accused her of “trying to divide Australians”.

It’s unclear precisely how much difference the Turnbull government’s change – cast to sound dramatic but seen by some as mainly a rebadging – will make.

It is scrapping the 457 visa, under which foreign workers are brought in on four-year visas. It will be replaced by a new Temporary Skill Shortage Visa program with two streams. One will provide a two-year visa; the other, a visa for up to four years.

The list of requirements will include applicants having at least two years work experience in their skilled occupation; mandatory criminal history checks; and the capacity for just one on-shore renewal under the short-term stream. The short-term stream won’t provide a path to permanent residency. There will be tightened English language requirements for the medium-term stream.

The government has given no estimate of the expected outcome of the change.

Turnbull said that at present there were about 95,000 457 visa holders. But he could not quantify the likely impact of the new system beyond saying: “Because we are narrowing significantly the number of occupations and we are increasing the qualifications that visa applicants need to have, it is our expectation that all other things being equal you will see a material reduction over time of people working on these temporary visas.”

But “it depends upon all other things being equal … which they are not. It depends on the demands of the economy, emerging skill gaps, changes in the economy.”

It’s worth remembering that 457 visa workers are less than 1% of the workforce.

The present list of 651 eligible occupations has been cut by 216, to 435. Some 268 occupations will be available under the new two-year visa, and only 167 will be eligible for the four-year visa.

The occupations chopped range widely, including jobs as diverse as deer farmer, project builder, betting agency manager, chemical engineer, horse trainer, singer, antique dealer, and bed and breakfast operator.

It’s not clear precisely how judgements were made on some of them, such as commissioned police officer, policy analyst, television presenter, and archivist.

Some of the deletions – such as “historian” and “archaeologist” – are hardly jobs to which an “Australians first” rule should apply. Nor will their exclusion from the list have much impact on the Aussie labour market.

Then again, much of this is definitional. Quite a lot of the deleted occupations could be re-classified to come within the revised lists.

Indeed, Jenny Lambert, from the Australian Chamber of Commerce and Industry, pointed out that the 457s were “rarely if ever” applied to many of the deleted occupations. She suggested that the problem with 457s has been one of public perception rather than the scheme’s operation. “The perception of the program is the biggest issue and we need to reset it,” she told Sky.

The Australian Industry Group’s Innes Willox said that “the 457 visa system was a highly valued program but misunderstandings of its use and exaggerations of its misuse led it to become a lightning rod for anti-migration sentiments”.

Supporting the reforms, Willox said: “The temporary skilled visa program should now be considered as settled without the need for further reviews and disruptive policy change”.

In other words, business’ main preoccupation is that the importation of foreign skilled workers should be taken off the political football field.

That may be wishful thinking. Meanwhile, eyes will be on whether the government puts any squeeze in the budget on the general immigration program, which has been coming under attack from some critics in a housing affordability debate that’s run increasingly out of the government’s control.

https://datawrapper.dwcdn.net/VfPCm/2/

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Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Labor gains in Newspoll to move to 53-47 lead


Adrian Beaumont, University of Melbourne

This week’s Newspoll, conducted Thursday to Sunday from a sample of 1710, had Labor leading by 53-47, a one point gain for Labor since last fortnight’s Newspoll that looked like an outlier. Primary votes were 36% for the Coalition (down 1), 36% for Labor (up 1), 10% for the Greens (up 1) and 10% for One Nation (steady). The Conversation

30% were satisfied with Turnbull’s performance (steady) and 59% were dissatisfied (up 2), for a net approval of -29. Turnbull’s ratings since the election have tended to be worse than voting intentions would imply, probably due to discontent from the hard right, who will nevertheless preference the Coalition ahead of Labor. Shorten’s net approval was up six points to -22.

The deal to pass company tax cuts for businesses with an annual turnover of up to $50 million was announced late Friday afternoon, two days into Newspoll’s fieldwork period. Thus this poll does not tell us about public reaction to the deal. I expect next week’s Essential will have questions on the deal.

The tax cut deal is a possible danger for Nick Xenophon. Minor parties that are perceived to have compromised on their principles in dealing with major parties can be wiped out. This happened to the Australian Democrats in the years following Meg Lees’ GST deal with John Howard, and the UK Liberal Democrats were reduced to just eight seats out of 650 at the 2015 UK general election, following five years of coalition government with the Conservatives.

60% of Nick Xenophon Team preferences went to Labor at the last Federal election, and 40% to the Coalition. If Xenophon continues to make deals with an unpopular Coalition government, his left-wing supporters could desert.

Essential at 53-47 to Labor

This week’s Essential, conducted over the last two weeks from a sample of 1800, has Labor ahead by 53-47, a 2 point gain for the Coalition since a blowout 55-45 Labor lead a fortnight ago. Primary votes are 37% Coalition, 36% Labor, 10% Greens, 8% One Nation and 3% Nick Xenophon Team. Additional questions are based on one week’s sample.

28% strongly supported the proposed changes to the Racial Discrimination Act that were defeated in the Senate last week, 27% were strongly opposed and the rest either did not have strong opinions or did not know. 51% supported a carbon emissions trading scheme in the electricity sector, with 21% opposed.

Most organisations to whom money given is tax deductible had at least majority support to remain that way, with the exception of churches and religious groups (34% support these being tax deductible, 51% oppose) and groups that campaign on social issues (34% support, 44% oppose).

Asked whether political parties should be able to receive donations from various entities, individual Australian voters were the only supported source (47-39). All other sources of donations were opposed by at least 55-30, with casinos and foreign companies at the bottom (over 70% opposed). 41% thought activist groups, such as GetUp, should not be allowed to accept foreign donations, with 31% in favour.

50% said it was never justified to break the law, while 37% thought it was sometimes justified.

High Court rules that Bob Day was invalidly elected in 2016

Today the High Court, sitting as the Court of Disputed Returns, ruled that Family First Senator Bob Day was ineligible to be elected at the 2016 election, as he had a financial interest in Commonwealth property.

The Court has ordered that a recount be held to fill Day’s seat. Such a recount will very probably elect Family First’s No. 2, Lucy Gichuhi. Since October 2016, when Day resigned from the Senate, the Senate has had 75 members, with 38 votes required to pass legislation. Gichuhi’s election will bring the Senate back to its normal 76 members, with 39 votes required to pass legislation.

Bob Day was the Coalition’s most reliable crossbench supporter, but it is wrong to say his vote has been missed because the requirement to pass legislation was reduced by one in his absence. A key question now is whether Gichuhi will be a Bob Day clone on legislation, or whether she is more left wing. Gichuhi will not be able to take her seat until the Senate next sits on 9 May.

Had the High Court ruled that Day was validly elected, his replacement would have been selected by Family First. Day’s former chief of staff, Rikki Lambert, would have been the favourite. Lambert is now Cory Bernardi’s chief of staff, and would have probably been a Bob Day clone.

A final twist could occur if the Kenyan-born Gichuhi did not renounce her Kenyan citizenship prior to the 2016 election. In that case, following another High Court challenge, the seat would go to Labor’s Anne McEwen. Fairfax commentator Adam Gartrell tweeted that Family First is confident that Gichuhi is a valid candidate.

Tasmania: Shane Broad defeats Brenton Best to replace Bryan Green

Following former Labor leader Bryan Green’s resignation from Parliament on 17 March, a recount was held Monday in his electorate of Braddon to determine who would replace him using Green’s votes at the 2014 election. While both Broad and Best were Labor candidates at the last election, Best had been a troublemaker in the last Parliament; he was strongly opposed to the Labor/Greens coalition government.

After exclusion of other candidates, Broad defeated Best by 60-40. This will be a relief to Labor, which absolutely did not want Best back in Parliament.

French Presidential election update

The French Presidential election will be held in two rounds. All candidates will compete in the first round on 23 April, with the top two proceeding to a runoff election on 7 May.

Current polls give the centrist Emmanuel Macron about 26% of the first round vote, followed by the far right’s Marine Le Pen on 25%, conservative Francois Fillon on 18%, the hard left’s Jean-Luc Melenchon on 15% and Socialist Benoit Hamon on 10%.

In the last fortnight, the standings of the top three candidates are little changed, with Macron just ahead of Le Pen now after being narrowly behind. However, Melenchon has surged at the expense of Hamon. This probably reflects prominent Socialist politicians backing Macron instead of Hamon, causing Hamon to lose votes on both his left and right flanks.

In the second round, Macron continues to lead Le Pen by about 60-40. However, Fillon’s second round lead over Le Pen is down to 53-47 in one survey, which gives Le Pen a chance in the unlikely event that Fillon rather than Macron makes the runoff.

I will be doing an article on this election for the University of Melbourne’s Election Watch in the days before the first round.

Adrian Beaumont, Honorary Associate, School of Mathematics and Statistics, University of Melbourne

This article was originally published on The Conversation. Read the original article.

The government’s company tax cut win a triumph of politics over economics


Brett Govendir, University of Technology Sydney and Roman Lanis, University of Technology Sydney

Now that the first stage of a cut to the corporate tax rate has been passed by the Senate it’s clear the benefits are more political than economic. The cut may signal to the world that Australia wants to be competitive on corporate tax, but it won’t make much of a difference to our largest businesses and multinationals. The Conversation

Company tax cuts have been on the government’s agenda since the 2016 budget, when the cuts were announced. Ultimately, the plan was to reduce the corporate tax rate from 30% to 25% by the 2026-27 financial year for all companies.

The government has secured a cut to businesses with a turnover of under A$50 million, with companies with a turnover of less than A$10 million receiving a reduction in their tax rate (to 27.5%) this financial year. But the second stage of the tax cut is still to be passed, that would give a cut to businesses with a turnover of A$100 million in 2019-20.

The impact is all in Australia’s image

Arms of multinational companies often pay a much lower effective tax rate when compared to their parent company. Until politicians across the globe can agree how to ensure companies pay tax on local earnings, which appears unlikely in the near future, tax rates will remain a signal to multinationals on where to base their business.

The tax cuts have been strongly supported by big companies and even more so by the Business Council of Australia. A major reason put forward by the business community is the need to stay competitive in a global environment.

Our major trading partners such as the United Kingdom and United States are planning to drastically reduce their corporate tax rates and countries such as Ireland (12.5% on corporate trading profit) and Singapore (by 2018 20% capped at $20,000) already have very low corporate tax rates in place. Multinational corporations have the ability to profit shift to lower taxing jurisdictions.

For instance, a multinational can employ tax accountants to structure ownership of intellectual property in a low taxing jurisdiction and reduce gross income by license fees, or via debt loading to a parent company. Tax avoidance is often siphoned through a non-reporting subsidiary, so these accounting tricks occur without the glare of public scrutiny. In other instances multinationals have been able to completely bypass Australian tax by booking revenues overseas.

How it will affect accounting for Australian companies

When you look at what a tax cut might mean to Australian companies, it’s not hard to envisage how a tax cut tied to a specific revenue level creates incentives for accountants and lawyers to exploit new thresholds.

Accounting research from the United States shows companies do take into account tax when considering how to report their profits. For example, a typical strategy is to delay recognising an expense that belongs in the current year, until the next year.

This is usually to make it seem like the company has increased its profits, making it appear better to shareholders. However there have been no studies specifically relating to how companies might do this in relation to revenue (what the Australian government is considering for the tax cut).

At any rate, the net rate of tax on Australian company profits is considerably lower than the current 30% (or the new 27.5%) company tax rate. According to our calculations it should be around 11.3%. This is lower than the company tax rate in other similar economies.

There’s also something unique to Australia which means private companies pay less tax and that’s dividend imputation. This is designed to eliminate the double taxation of dividends in the hands of Australian shareholders.

Since it’s introduction in 1987, dividend imputation has provided strong incentives for firms to pay the full statutory tax rate on all reported profits. The tax paid on dividends flowing to Australian shareholders of Australian companies is reduced by an amount equal to the tax already paid by the corporation, this is known as imputation credits. A shareholder’s marginal tax rate, and the tax rate for the company issuing the dividend, both affect how much tax an individual shareholder owes on what is called a fully franked dividend.

Companies that pay fully franked dividends in Australia, pay on average over 10% additional tax on the same level of earnings than companies not paying franked dividends. Approximately 62.3% of imputation credits are utilised by resident shareholders.

The average effective tax rate of Australia’s largest private companies are much lower than that of the largest public companies (most of which pay fully franked dividends). You can see this in the table below which shows the effective tax rates calculated by two separate studies.

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One of the studies by the union United Voice looked at the ASX200 companies and the otherby lobby group GetUp examined the largest private companies operated by foreign multinationals.

The corporate tax rate does figure in investment decisions of Australian companies and foreign companies wanting to do business in Australia. However, the rate of corporate tax is at best a second order effect in influencing the decisions of foreign companies. Therefore, the gains from the government win in the Senate appear to be more political than economic.

At best the tax cut may somewhat reduce the burden on smaller Australian companies, albeit at a significant cost to the budget, without impacting the largest Australian and foreign multinationals. Although prospects for further tax cuts for the big end of town (which has a greater impact on the economy) are unlikely in the next five to 10 years without Senate crossbencher support.

Brett Govendir, Lecturer, University of Technology Sydney and Roman Lanis, Associate Professor, Accounting, University of Technology Sydney

This article was originally published on The Conversation. Read the original article.

Labor seizes 55-45 lead in Ipsos with the Greens at an unrealistic 16%


Adrian Beaumont, University of Melbourne

This week’s Ipsos, conducted Wednesday to Saturday from a sample of 1400, had Labor leading 55-45, a 4 point gain for Labor since late November. Primary votes were 34% for Labor (up 4), 33% for the Coalition (down 3) and 16% for the Greens (steady). The headline figure in Ipsos uses the last election preferences method; by respondent allocated preferences, it is 56-44 to Labor, a 5 point gain for Labor. The Conversation

Ipsos’ two polls since the last election have both had the Greens on 16%, while no other poll during that period has had the Greens on more than 11%. In the lead-up to the last election, Ipsos had a strong skew towards the Greens. If anything, that skew appears to have increased.

40% approved of Turnbull’s performance (down 5) and 48% disapproved (up 3), for a net approval of -8. Ipsos has given Turnbull far better ratings than Newspoll. Shorten’s net approval was -18, down 2 points.

Surprisingly, 44% supported reducing company tax rates to 25% over the next ten years, with 39% opposed. Two weeks ago, Essential found that 46% disapproved of the $50 billion in cuts to medium and large business, with 24% approving. Presumably, Ipsos did not mention the cost, or which companies would benefit.

63% thought that more businesses would not open on Sundays and public holidays following the reduction in penalty rates, while 29% thought more businesses would open. A Newspoll question from last week found that 59% thought penalty rates should be higher on Sunday, 29% wanted Sunday penalty rates reduced to Saturday rates, and 10% wanted penalty rates for weekend work abolished.

In Ipsos, 78% thought it should be unlawful to “offend, insult or humiliate” someone on the basis of race or ethnicity, with just 17% for lawful. However, Essential this week found 45% approving of the proposed change to replace “insult, offend or humiliate” with “harass”, with 34% disapproving. Question wording can make a large difference.

With Ipsos at 55-45 to Labor, and Essential at 54-46, it looks as if last week’s Newspoll that showed a 3-point recovery for the Coalition to close to 52-48 may have been an outlier. The next Newspoll will be interesting.

Essential at 54-46 to Labor

This week’s Essential, conducted over the last two weeks from a sample of 1810, was at 54-46 to Labor, a one point gain for the Coalition since last week. Primary votes were 37% Labor, 35% Coalition, 10% Greens, 8% One Nation and 4% Nick Xenophon Team – this is the lowest One Nation support recorded in Essential since January. Additional questions are based on one week’s sample.

40% thought racial discrimination laws were about right, 26% too weak and 16% too strict; these figures are little changed from November.

A question on priorities for the government had 46% nominating health, followed by “ensuring big businesses pay their fair share of tax” at 30% and unemployment at 26%. Cutting company tax was at the bottom, with only 3% nominating it as a priority. Since July 2016, health is down 9 points, education and deficit reduction both down 7 points, renewable energy up 6 and same sex marriage up 4.

41% thought Australia’s relationship with the US was becoming worse, with just 6% for better, presumably due to President Trump. 59% approved of the proposal to expand the Snowy Hydro scheme, with just 12% disapproving.

Newspoll’s additional questions are sometimes skewed to the right

While voting intentions and leaders’ ratings questions are asked in the same format every Newspoll survey, additional questions on the public’s attitude to various issues have sometimes been skewed towards the viewpoint of Newspoll’s publisher, The Australian.

In this article, Kevin Bonham was critical of Newspoll’s question last week on Section 18C of the Racial Discrimination Act. Yesterday, we were told that 47% were in favour of a new coal-fired power station, with 40% opposed (paywalled link).

The question is, “Would you be in favour or opposed to the Federal government helping fund the construction of a new coal-fired power station to improve energy security?” It is not established that a new coal-fired power station, which would take years to construct, would improve energy security. Those four last words should have been omitted from the question.

A February Essential found 45% opposed to new coal-fired power stations in Australia, and 31% in favour.

Rebecca White replaces Bryan Green as Tasmania’s Labor leader

Even though the party vote shares indicated a Labor/Greens parliamentary majority, the last EMRS Tasmanian poll had Premier Will Hodgman crushing Labor leader Bryan Green as better Premier 52-20. Partly as a result of this poll, Green resigned from Parliament on 17 March, and Rebecca White was elected unopposed by the Labor caucus. The next Tasmanian election is due early next year.

A November 2016 ReachTEL poll had 31.5% preferring White as Labor leader, followed by Scott Bacon on 19%, Lara Giddings on 15% and the incumbent Green on just 14%. White was ahead in all five electorates, including Green’s electorate of Braddon.

A countback using Green’s votes will be held to decide his parliamentary replacement. Shane Broad and Brenton Best are the contenders, although only Broad has so far announced he will contest. A Best win would be bad for Labor, as he was rebellious in the last Parliament.

Donald Trump’s Obamacare repeal attempt flops

At the 2016 election, Republicans won a 241-194 majority in the US House, and a 52-48 Senate majority. Despite the large House majority, Republicans were unable to pass a bill in that chamber to repeal and replace the 2010 Affordable Care Act, otherwise known as Obamacare. Republican House Speaker Paul Ryan was forced to withdraw the repeal bill, and said afterwards that Obamacare would be the law for the “foreseeable future”.

The repeal bill failed because it lost the support of both hard right and more moderate Republicans. Appeasing the hard right Freedom caucus would have lost more support from the more moderate Republicans, and vice versa. Of course, Republicans could have made their bill centrist enough to attract some Democrats, but that would have been unthinkable!

It did not help Republicans that the public was strongly opposed to their Obamacare replacement plan. Midterm elections will be held in November 2018, and some Republicans were afraid that supporting this bill could cost their party many seats.

Nate Silver’s FiveThirtyEight website has Trump at 42% approval, 52% disapproval using a poll aggregation method. Over the last few weeks, Trump’s ratings have dropped a net six points, likely due to the health care debate.

Adrian Beaumont, Honorary Associate, School of Mathematics and Statistics, University of Melbourne

This article was originally published on The Conversation. Read the original article.

Government behind 45-55% in Ipsos poll


Michelle Grattan, University of Canberra

The Turnbull government trails Labor 45-55% on the two-party vote in the Fairfax Ipsos poll, as the Senate prepares to drastically restrict the proposed company tax cuts and reject changes to Section 18C in parliament’s last week before the pre-budget break. The Conversation

The Ipsos poll has found 44% support the government’s ten-year plan to reduce the company tax rate to 25%, while 39% oppose.

But the Senate is set to back the cuts only for smaller businesses. Malcolm Turnbull on Friday flagged the government would continue to push the full plan, even after a Senate defeat.

The Nick Xenophon Team has indicated it will shoot down the government’s proposed changes to the wording of 18C, which is being rushed to a vote.

Meanwhile, the government is stepping up its moves on energy policy by directing the Australian Competition and Consumer Commission (ACCC) to review retail energy prices.

Announcing the review, Turnbull and Treasurer Scott Morrison said it would examine electricity retailer behaviour, as well as contracts offered to residential and business customers, to ensure consumers benefit from competition in the National Electricity Market.

The government is behind in the polls generally, with some differences in the degree. In Newspoll last week, the Coalition trailed Labor 48-52%, while Essential had the two-party vote at 45-55%.

Taken between Wednesday and Saturday, the Ipsos poll found Labor’s primary vote on 34% and the Coalition’s at 33%. The Greens were on 16%, and the “other” vote was 17%. The two-party vote is on the basis of preferences at the 2016 election.

Turnbull’s approval is 40%; his disapproval is 48%. Bill Shorten’s approval is 35%, while 53% disapprove of his performance. Turnbull leads 45-33% as preferred prime minister. Fairfax has not polled since November, when Labor had a 51-49% two-party lead.

The latest move on energy policy follows Turnbull recently seeking guarantees of domestic supply from the gas producers and announcing the government will expand the Snowy Hydro. There is an inquiry into the future security of the national energy market underway chaired by the chief scientist, Alan Finkel.

In their statement Turnbull and Morrison said that competition in retail energy markets should mean lower prices for householders and businesses. But “retail electricity markets don’t appear to be operating as effectively as they could”. The government was “determined to ensure Australians get a better deal for their energy”.

They said that recent work, including by the Australian Energy Market Commission, Energy Consumers Australia and the Grattan Institute, had highlighted significant concern about the causes of recent electricity price increases on the east coast. Submissions to the Finkel review had also raised concerns.

The ACCC inquiry would identify cost components of electricity retail pricing and how they affect the retail offers made to customers. It would look at whether electricity retailers’ margins and profitability are in line with their costs and risks, as well as considering impediments to consumer choice, such as the clarity of contracts.

It would also examine the competitiveness of offers available to larger business customers, taking into account the conduct of the wholesale electricity market.

The inquiry will have until June 30 next year to report, with the ACCC producing a paper on its “preliminary insights” within six months.

https://www.podbean.com/media/player/egvg5-68f11e?from=yiiadmin

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Coalition rebounds in Newspoll following Snowy announcement, but Essential moves to Labor


Adrian Beaumont, University of Melbourne

This week’s Newspoll, conducted 16-19 March from a sample of 1820, has Labor leading 52-48, but this is a 3 point gain for the Coalition since the previous Newspoll, three weeks ago. Primary votes are 37% for the Coalition (up 3), 35% for Labor (down 2), 10% for One Nation (steady) and 9% for the Greens (down 1). The Conversation

Despite the relatively strong result for the Coalition, Turnbull’s ratings only improved slightly: 30% (up 1) were satisfied, and 57% (down 2) were dissatisfied, for a net approval of -27. Shorten’s net approval was -28, down two points.

On Thursday, the first day of Newspoll’s fieldwork, Turnbull announced an extension of the Snowy River hydro-electric plan, and it appears that this announcement has given the Coalition at least a temporary boost. The public likes infrastructure policies that appear to offer solutions to Australia’s energy crisis.

Labor may also have been damaged by the furore over new ACTU secretary Sally McManus’ comments that workers could break “unjust” laws.

An additional Newspoll question found 47% in favour of a proposed change to Section 18C of the Racial Discrimination Act, while 39% were opposed. Kevin Bonham thinks the long preamble to this question is skewed towards supporting the proposed change.

Essential at 55-45 to Labor

This week’s Essential, conducted over the last two weeks from a sample of 1800, had Labor gaining two points to lead 55-45. Primary votes were Labor 37%, Coalition 34%, One Nation 10%, Greens 9% and Nick Xenophon Team 3%.

Newspoll and Essential disagree markedly this week, but Newspoll has performed well when measured against election results, so I trust it more than Essential.

Additional Essential questions are based on one week’s sample. On attributes of the political parties, Labor was up since June 2016 on positive attributes and down on negative ones, with the exception of being too close to the big corporate and financial interests (up 5). For the Liberals, the perception that they are divided was up 16 points, and “has a good team of leaders” down 9 points. Labor led on all positive attributes and trailed on all negative ones, with some differences of well over 10 points.

77% thought their gas and electricity costs had increased over the last few years, with only 2% thinking prices had decreased. 75% would approve of a reservation policy where a percentage of gas is reserved for domestic use, and only 6% would disapprove. 68% approved of the SA government’s energy plan, and only 11% disapproved. 31% thought coal seam gas mining on farming land should be restricted, 25% thought it should be banned altogether, and only 14% thought there was already sufficient regulation of coal seam gas mining.

In last week’s Essential, Turnbull’s net approval was -17, down two points since February. Shorten’s net approval was -19, also down two points.

Proposed tax increases that were aimed at the wealthy and multinational corporations polled strongly, but removing GST exemptions or increasing the GST rate did not have much support. 46% disapproved of the $50 billion in tax cuts for medium and large businesses, while 24% approved. 43% thought the company tax cuts would deliver business bigger profits, and that this money should be used for schools, hospitals, etc. 25% thought the company tax cuts would bring our tax into line with other countries, and deliver more jobs through greater business investment.

Trust in various media has taken an across the board hit since February 2016, but the ABC and SBS are the most trusted media.

Essential’s polling on penalty rates from two weeks ago found 56% disapproving of the Fair Work Commission’s decision to reduce Sunday penalty rates, with 32% approving. 34% strongly disapproved with just 9% strongly approving. 57% thought the penalty rate reduction would result in business making bigger profits, while 24% thought business would employ more workers. 51% thought the government should legislate to protect penalty rates, while 31% thought the government should accept the decision.

WA election late counting: Labor wins 41 of 59 lower house seats

At the WA election held 11 March, Labor won a massive landslide in the lower house, winning 41 of the 59 seats (up 20 since the 2013 election), to 13 for the Liberals (down 18) and 5 for the Nationals (down 2). According to Antony Green, Labor’s percentage of lower house seats (69.5%) is the highest it has ever won at WA lower house elections.

In the upper house, Labor and the Greens are likely to win a combined 18 of the 36 seats. Below the line votes have not yet been added to the count. The Greens and micro parties tend to perform well on below the line votes at the expense of the major parties. The Greens will be hoping that a below the line surge allows them to defeat the Liberals for the final seat in South Metro region. Below the line votes in that region may also give the Daylight Saving party a seat at the expense of the Liberal Democrats.

If Labor and the Greens combined win 18 of the 36 upper house seats, Labor could attempt to persuade a non-Labor/Greens member to be the upper house President. The President of the WA upper house can only vote when the votes are tied, so such a manoeuvre would give Labor and the Greens 18 of the 35 floor votes.

Dutch election: far right flops again

The Dutch election was held last Wednesday. The 150 members of the Dutch Parliament are elected by proportional representation. Geert Wilders’ far right Party of Freedom had a large lead in the polls in December, but that lead fell as the election approached, and they ended the campaign predicted to win a few seats less than the conservative/liberal VVD.

In the event, the VVD won 33 seats, to 20 for the Party of Freedom. It is likely that the VVD will head the new Dutch government, after negotiations with other parties are completed.

The WA and Dutch elections have both featured far right parties slumping as election day approached. Many supporters of such parties are against established parties, but not in favour of the far right’s policies. As these policies receive more exposure closer to the election, these supporters can desert.

The main reason Donald Trump won the US Presidency is that he won the Republican party’s nomination. Had Trump run a third party campaign, he would not have come close to winning. The US Republican party is already very right wing, and most Republicans utterly detest the Democrats and Hillary Clinton. Many Republicans probably had reservations about voting for Trump, but hated the alternative more.

French Presidential election: 23 April and 7 May

The French Presidential election will be held in two rounds, with the top two vote winners from the first round on 23 April proceeding to a runoff on 7 May, barring a very unlikely majority vote victory for one candidate in the first round.

Current polls have the far right Marine Le Pen leading the first round with 26%, followed by centrist Emmanuel Macron on 25%, conservative Francois Fillon on 18%, Socialist Benoit Hamon on 13% and the hard left Jean-Luc Melenchon on 12%. Other candidates have negligible vote shares.

While Le Pen is narrowly ahead in the first round, second round polling has Macron trouncing her by over 60-40, while Fillon defeats Le Pen by about 56-44.

With the Socialists discredited by Francois Hollande’s ineffectual Presidency (he did not run for re-election), a conservative was the clear favourite to win this election. However, Fillon has been dogged by allegations that he paid his wife and children government money for fake jobs, causing his poll ratings to slide. Last Tuesday, Fillon was placed under formal investigation over these allegations, the closest French equivalent to being charged.

Despite the allegations, Fillon has refused to quit. He won his party’s US style primary in November 2016, and his party has had no legal means to replace him. Nominations closed on Friday, so it is now too late to replace a candidate.

Adrian Beaumont, Honorary Associate, School of Mathematics and Statistics, University of Melbourne

This article was originally published on The Conversation. Read the original article.