Shorten announces company tax compromise but business still critical



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Bill Shorten’s tax cuts compromise follows a fierce backlash from business and an outcry from some senior colleagues.
AAP/Joel Carrett

Michelle Grattan, University of Canberra

Opposition leader Bill Shorten has backed down on his controversial declaration on Labor’s company tax policy, announcing a compromise that would allow firms with turnovers under $50 million to keep the tax cut that will be in place at the election.

This would be a 27.5% rate. But companies would not get the rest of the already legislated cut, which eventually takes their tax down to 25% by 2026-27.

The compromise follows a fierce backlash from business and an outcry from some of Shorten’s senior colleagues, after he declared an ALP government would repeal tax cuts for firms with turnovers between $10 million and $50 million.

While that position had support in the opposition’s expenditure review committee, it had not been taken to shadow cabinet.

The shadow cabinet endorsed the new position on Friday morning.




Read more:
Grattan on Friday: Bill Shorten had a ‘captain’s fall’ rather than making a ‘captain’s call’


Shorten told a news conference that it had become clear in consultations with business and colleagues “that any proposition to change already implemented tax rates … was creating great uncertainty.”

“I have listened to all of the debate, spoken to colleagues, spoken to business. I now accept that simply stopping at $10 million would have created more confusion and uncertainty and it was not the main game,” he said.

Asked whether he had got things wrong, Shorten said: “You can play all the word games you want, but let me be very, very clear. We have changed our position, we have amended our position because politicians who do not listen, politicians who just simply want to stick on one course of action regardless of all the facts, I do not think that helps anyone.”

Shorten said that as well, on the latest figures from the Parliamentary Budget Office (PBO), “we have also found that the cost of this amendment on company tax cuts is not as great as we thought.”

Shadow treasurer Chris Bowen told the news conference that the position Shorten put on Tuesday reflected what Labor’s expenditure review committee thought at that time could be afforded – before the updated PBO figures.

Compared with the government’s legislated cuts, the Labor position saves $2 billion over the forward estimates and $62 billion over a decade.

An ALP government would have to get its repeal legislation through the Senate, which could be a challenge.

Business remained dissatisfied with Labor.

Business Council chief executive Jennifer Westacott said the decision “has created confusion and will hurt business confidence”.

Labor had “failed to properly listen to the business community’s call to reverse its announcement earlier this week to repeal the tax cuts for business with a turnover of under $50 million. Freezing the threshold at 27.5% for those businesses is actually a tax increase on the 25% rate that has been passed by the parliament”.

The Australian Industry Group welcomed the Labor change but said it regretted Labor remained uncommitted to taking the rate to 25%.

The group’s chief executive Innes Willox said: “We look forward to further discussions with the opposition on tax policy with the aim of a bipartisan commitment to lowering Australia’s corporate tax rate for all businesses to a more internationally competitive rate of 25 per cent over the medium term.”

Finance Minister Mathias Cormann tweeted: “Bill Shorten can’t even perform a backflip properly. Turns out he is still pushing for higher taxes on small and medium sized business putting jobs right across Australia at risk.”

The ConversationTreasurer Scott Morrison said Shorten “has shown a complete lack of sensitivity to what our economy requires to ensure that people have their jobs and their wages and can plan for their future with confidence.”

Michelle Grattan, Professorial Fellow, University of Canberra

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

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If politicians want more trust from voters, they need to start behaving with civility and respect


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If the politicians took a higher road, at least there would be pressure on the media to follow.
AAP/Mick Tsikas

Michelle Grattan, University of Canberra

This is an edited extract of The Knowledge Solution, out July 2 from mup.com.au.


It is a paradox of our modern democracy that we have the conditions and tools to enable our political system to work better than ever before, yet all that seems to be discussed today is its dysfunction.

In this country, people are, for the most part, relatively well educated and prosperous. In theory, that should encourage an interested and alert citizenry. The communications revolution empowers the electorate — or should. So much more information is available and instantly attainable than only a generation or two ago, including tools for monitoring events and debates and thus improving interaction and accountability. Today’s plethora of opinion polls ought to be positive for the process, providing constant feedback to decision-makers about what people think and want, and channels for voters to express their opinions.

Yet much of what should facilitate a smooth-running, engaged political system has helped corrode it. In politics, as in other aspects of life, abundance can be good but excess is often harmful. You can end up with too much of everything, and I think that’s what we’ve got in politics today.

We’re lumbered with what has been dubbed the continuous campaign, and that means, as Hugh Heclo, who was an academic expert on US democratic institutions, wrote in Norman Ornstein and Thomas Mann’s The Permanent Campaign and its Future: “[e]very day is election day”.

The leaders never hang up their high-vis vests. This is debilitating for decision-making because, as Heclo notes, there is a difference between “campaigning” and “governing” — and it is exhausting for the public.

Leaders always have to strike a balance between the time they spend with their feet under the desk and the days their boots are on the road, but things seem out of kilter. The permanent campaign encourages short-termism and puts the focus on the immediate media grab and headlines. It fans the politics of negativity, accentuates the adversarial and makes for hyper-partisanship. And it stretches the patience and concentration of voters.

The modern 24-hour news cycle both enables and fosters the permanent campaign, providing platform and spur. Political leaders have given up previous aspirational talk about “not feeding the media beast”. Tony Abbott tried that (for a nano-second) and it did not work too well. Now they argue that if they leave a gap, their opponents will fill the vacuum. Seeing so much of their politicians close up (and often too personal for comfort) has alienated voters, rather than made them to want to involve themselves in the political process.

The ability always to command attention, when there is so much airtime available, also helps small players turn themselves into minor political celebrities. It’s a sign of the times that as voters have increasingly looked to minor parties, these often come with a personal branding. They have been based around individuals, whose names they have taken — Pauline Hanson’s One Nation, the Nick Xenophon Team (subsequently the Centre Alliance), the (now collapsed) Palmer United Party, the Jacqui Lambie Network. “Name” parties fit this age of celebrity. If they had been born in today’s world, the Australian Democrats might have been “The Don Chipp Party”, after their early leading light (and conveniently shortened to “Don’s Party”).

Far from providing a sophisticated channel of community feedback, constant polling has come to be a whip hand over leaders, especially if they are going through a difficult period. This can restrict their room to breathe — that is, to lead — and it is made for the media’s “horse race” coverage of politics.

It means policy is often framed with an eye to how it will go down in the short term, a point that bureaucrats are forced to take account of in their advice to government. At the same time, polling is used as a tool of advocacy, with special interests commissioning polls that seldom fail to get the results they want and will almost always find a market in the media. With the rise of cheap robo-polls, there is a lot more “junk” polling around.

The professionalisation of politics has been building for decades. It has penetrated everything: ministerial offices, messaging, campaigns, the recruitment of candidates, the operation of interest groups and the explosion of a commercial lobbying industry. The more politics is professionalised, the more “insider” it becomes, in the preoccupation with daily “tactics” and in its gene pool of players.

An increased proportion of parliamentarians comes from the political class, having served as staffers to MPs before preselection. The grip of factions within the parties and the shrinking size of the major parties foster the closed shop, giving a leg-up to the insiders when it comes to preselections.

The well-documented decline in the public’s trust in the political system not only makes governing more difficult, but also puts off potential political recruits. When we turn from excess to deficit, what’s lacking — and has been falling for some time — is this elusive but vital quality of trust, the bedrock of a democracy that’s in top health. A recent paper published by the Grattan Institute, A Crisis of Trust, examines the surge in the minor party vote. It concludes:

Culture and economics are insufficient to explain the rise in the minor party vote. The best evidence is that the rising minor party vote is largely driven by declining trust in government: the growing belief that government is increasingly conducted for the interests of the rulers rather than the ruled.

The matter of “respect” is core. From there we can segue to trust. So if we think about what can be done to improve the situation — recognising that it’s only a limited amount and might be beyond the players anyway — let’s begin with the challenge of politicians winning respect, and go to a very basic level.

Politicians behave badly and — thanks especially to the all-pervasive media and that decision all those years ago to allow the televising of parliament — ordinary people see and hear this, and they hate it. In a March 2018 speech, Australia’s former chief scientist Ian Chubb put his finger on it:

I can see on television the people we employ to work in our interests behave in a way we would not tolerate in our own small children. Sadly at a time when trust is so low, contempt so high, it appears they don’t even try to get better. They seem not to understand that trust is what we give them when they earn it, not what they get because they are where they happen to be.

It was notable that when the March 2018 scandal broke around Australian cricketers cheating in South Africa, commentators and members of the public immediately drew parallels with politics, where there is plenty of “cheating” with the truth. Then there is the cricketers’ “sledging” culture and the politicians’ similar practice.
Malcolm Turnbull told a news conference:

I think there has to be the strongest action taken against this practice of sledging. It has got right out of control, it should have no place … on a cricket field.

But when a journalist interjected, “Doesn’t it happen in parliament?” Turnbull let that pass without responding.

It’s a source of perennial wonderment to me that MPs are aware they are disgusting and infuriating the public by often conducting themselves, especially in parliament, like out-of-control adolescents, but they fail to curb this conduct.

Maybe it is the adrenaline of the chamber. Perhaps it is the pursuit of the parliamentary point. And admittedly, we are all living in a world where “anything goes” a lot more than was once the case. Whatever drives MPs, behaving in a manner that would be unacceptable in almost any other workplace is costly to them and to the political process — and could be easily changed by a bit of collective restraint. Sure, parliament will always have its moments, but chaos and insult-throwing should not be the norm.

This awareness should be extended to entitlements. The rules for these have been tightened in recent years after various scandals, and there is now an oversight body. But there is still an inability to understand the sniff test. The companion who accompanies Foreign Minister Julie Bishop to functions around Australia has been sponsored by the taxpayer to the tune of $35,000 over three years, which is within the parliamentary rules. Yet his assets do not appear on the MPs’ register of interests, as would those of a spouse or partner, because she has not defined him as her “partner”.

Parliamentarians should be paid well and have reasonable entitlements. But they should not try to have things every which way, and the public would respect them more if sometimes they, or those attached to them, put their hands in their own pockets.

Politicians’ reputations would also be enhanced if there were a better balance between partisanship and bipartisanship. It’s hard, made more so by the continuous campaign. But MPs will point out that behind the scenes — in committees, parliamentary special interest friendship groups and the like — there’s quite a bit of constructive working together.

It’s usually a different picture in the public arena. Voters would like to see some acknowledgement from time to time that the other side has had a good idea, and more co-operation on worthy projects. This would not at all diminish robust partisanship on core differences, and would improve the chances of achieving desirable reforms.

Politicians could alter the tone, as I have argued above. And they could better organise their workloads, and those of their offices. I appreciate how ministers have to keep up with the fast news cycle, but do staffers routinely have to be up at 4.30am? Do ministers have to make as many media appearances as they do, especially when often they are repeating the same “lines” that have been issued to them, or answering questions on someone else’s portfolio about which they have no personal knowledge? Is it necessary in non-election times to run around the country quite so much?

Excepting the positions of prime minister and treasurer, the job of most ministers is not bigger than that of a CEO of one of the top Australian companies. I suspect they could pare back their workload and their travel by say, one-fifth, and nobody would be saying they were not working diligently. They might even be more efficient.

When we consider how political parties should change to improve our democratic system, the answers run into vested interests, as well as the nature of modern society. Few people want to join the major parties. It’s not just that they are discouraged by factionalism and the powerlessness of the membership. More fundamentally, they have many other calls on their time, and (except for the truest of believers) organisations such as political parties have gone right out of fashion. When they want to be politically engaged, people nowadays tend to be more interested in specific issues, and limited activism or gestures (such as donating to GetUp), than in committing to what is often the drudgery of party membership.

Nonetheless, the withering of the major parties has dangers. Two examples make the point. It contributes to narrowing the sources from which parliamentary candidates are drawn. And with the ALP rank-and-file now having a 50 per cent say in the choice of party leader, a reduced base which is down to the hard core of that party could tilt the vote towards a candidate who has limited appeal to the broad electorate.

These parties will never be what they once were. But their leaders should try harder than they have for some improvement. Neither Bill Shorten nor Malcolm Turnbull has distinguished himself in this regard. An obvious step is to reduce the factional grip on pre-selections. But this must be genuine: it’s no good having “democratic” pre-selections effectively undermined by branch stacking.

There are other obvious, related, areas for change to improve faith in the system, such as more accountable, transparent and timely disclosure for political funding. Some attention is being given to these and they shouldn’t be particularly difficult.

Much talked about is the decline in the share of votes that major parties get, and the rise of the minors, whether they are born out of an issue (the Greens), or they are fundamentally a vehicle for protest and often based on a “name”. At one level, this can be seen as part of the fragmentation of modern life, that is also reflected in areas as diverse as the media and the industrial relations system. The fall in the vote for the major parties also reflects the “detribalisation” of politics and social mobility. People don’t “inherit” their vote from their parents as so many once did.

While the big parties (including here the Nationals as part of the Coalition) are diminished, we should remember that they are not dead. Federal electors still strongly support them. In the three most recent state elections — Queensland, Tasmania and South Australia — the outcomes were majority governments. For some voters, their decision is a choice between a desire for stability (represented by a vote for a major party) versus the urge to express their disenchantment (through an “insurgent” party).

There is no miracle cure for the lack of political trust that is now such a problem. That reflects not just political behaviour, but the more general cynicism of the times and an absence of faith in government. We seem as a community to be in a more bleak frame of mind than in some other periods. Contrast the mood now with that of the late 1960s and early 1970s, when voters were turning to Labor, optimistic that an ALP government would effect important change. If the polls are to be believed, Labor is well-placed to win the next federal election, but people aren’t thinking of a new government in anything like transformational terms.

Leadership can be an antidote to cynicism, though in contemporary politics perhaps only a partial one. Take the example of Bob Hawke as prime minister. People liked him and related to him, and he to them. And remember the commitment to reconciliation in his “reconciliation, recovery and reconstruction” mantra for the 1983 election.

Voters want both an agreed framework within which the political arguments are conducted, and where possible consensus around some of the paths forward.

The reader might well ask why I am putting the weight for spearheading reform on politicians, rather than, for instance, advocating as the priority that the media get its house in better order. I accept some will see this as a cop out, coming from a journalist. The reason is that I think in practical terms it is a fairly hopeless cause to look to the media as the lead agent of change that will promote trust and put our democracy into healthier shape. The collapse of the old business model in the media industry, fragmentation of the market, the nature of news in the modern world, the celebrity culture — all work against that. But if the politicians took a higher road, at least there would be pressure on the media to follow.

The ConversationOur democratic system is resilient but under strain. As we view it, the critical thing is not to let cynicism get the better of us.

Michelle Grattan, Professorial Fellow, University of Canberra

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

From ‘Toby Tosspot’ to ‘Mr Harbourside Mansion’, personal insults are an Australian tradition


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The insults have becoming increasingly personal, but they don’t always work.
AAP/Lukas Coch

Frank Bongiorno, Australian National University

The insults have been flying thick and fast. Malcolm Turnbull is “Mr Harbourside Mansion”, “Top Hat” Malcolm, “the slick merchant banker”, “the top end of town” man. It is a measure of the unhappiness in the Coalition that not all of these epithets were invented by Labor.

Meanwhile, Bill Shorten is, according to Turnbull, a “sycophant”, a “groveller”, a “man who abandoned workers” while he “tucked his knees under” the table of billionaires like the late businessman Richard Pratt.

The red faces, raised voices and flying spittle that accompany the parliamentary trade in insults are meant to convey passion and spontaneity. But we can be confident the lines have been sorted well in advance.

Turnbull’s insults, for example, made in parliament just recently, largely repeat things he said in February last year when he called Shorten “a social-climbing sycophant” and “would-be tribune of the people”. On the other side, Labor has been seeking to present Turnbull as an out-of-touch Sydney snob from the day he took office.

Do such insults work? We know from the research of Australian political scientists – such as my colleagues here at the Australian National University who produce the Australian Election Study – that elections have become increasingly personalised. Most voters do not comb through policy documents. Rather, they use the party leader as a means of making judgments about the things that matter to them.




Read more:
An evening with the treasurer: how governments belt out budget hits and hope someone is listening


So, the Labor Party hopes that, if it can make enough mud stick to Turnbull, it can present him as unqualified to make decisions about the welfare of ordinary people. Being so rich, they suggest, he is out of touch with their concerns.

The Coalition hopes that if it can make its mud stick, Shorten will be seen as a self-serving opportunist who built a union and political career by taking advantage of the workers he was supposed to represent.

There is nothing new here; the appeal on each side is a traditional one.

Labor cartoonists of a previous era would often draw Mr Fat – an obese capitalist – complete with top hat, tails and cigar, the very embodiment of greed and excess. They would sometimes set him beside a brawny, manly worker determined to resist his wiles.

Phil May, ‘Poverty and Wealth; It all depends on the position of the bundle’, Bulletin, c. 1887.
State Library of New South Wales via Monash University Publishing

The anti-Labor images of the union boss as a parasite on the working man, and of the Labor politician as self-serving careerist, have existed as long as the Labor Party itself.

Political name-calling and insults are sometimes like water off a duck’s back. But others can stick. The radical Daniel Deniehy’s lampooning of William Wentworth and his followers in 1854 for wanting to create “a bunyip aristocracy” of titled men to fill a colonial upper house was recalled for generations. (Personally, I’ve always thought the funniest jibe was Deniehy’s suggestion that James Macarthur’s coat of arms as “Earl of Camden” should include a rum keg, a reference to his father’s role in the commerce and politics of early New South Wales.)

Paul Keating’s question about an Andrew Peacock leadership comeback – “Can a soufflé rise twice?” – was perfect in every way, as was his designation of Liberal leader John Hewson, “the feral abacus”.

But Keating’s quips went down better with the press gallery and the intelligentsia than the ordinary punter, and he had to endure insinuations that an enthusiast for Italian suits and French clocks could not be a true Labor man.

Bob Hawke, more than Shorten, acquired a large coterie of “close personal friends” among the rich and the filthy rich. But this was probably an advantage in his early days as prime minister, when he talked of consensus between workers and bosses in the national interest. As the feeling developed that his friends were doing very nicely while most others were doing it tough, the term “rich Labor mates” became shorthand for the idea that Hawke and Keating had sold out the workers.

Hawke was “the silver bodgie”, a reference to the colour of his still luxuriant hair, somewhat like that of a 1950s “bodgie”, a stylish youth somewhat in the James Dean mould.

But some of our political leaders have had nicknames that were more distinctly pejorative. The Sydney Bulletin called Australia’s first prime minister, Edmund Barton, “Toby Tosspot”: he had been known as “Toby” much of his life and a “tosspot” was a vulgar term for an enthusiastic drinker.

“Affable Alfred”, for Deakin, was affectionate but could be used by opponents sarcastically when he wasn’t being quite so affable. “Jolly John”, for John Gorton, sounds affectionate, until you recall that it was a reference to his erratic personal behaviour.

“Honest John” – for Howard – was mainly used ironically rather than descriptively. But Howard’s own claim that Kim Beazley lacked “ticker” is usually seen as having worked on voters looking for strong leadership and doubtful the Labor opposition leader could provide it.




Read more:
Mis-red: why Bill Shorten is not a socialist


Robert Menzies’ critics on the left called him “Pig Iron Bob” after his role, as a member of the Lyons government, in opposing union bans on the shipping of pig iron to Japan. The epithet, which stuck throughout his long career, was intended to remind people of Menzies’ poor judgment and association with the policy of appeasement of the Axis powers. It was a potent rhetorical weapon during the 1940s and even became the subject of radical folksong but, as the years of his prime ministership rolled on after the war, it seemed to do him no obvious harm.

Highly personal assaults can backfire badly. The best example from Australian politics is Country Party leader Earle Page’s savage attack on Menzies in 1939 for failing to enlist in the first world war. Menzies had wanted to serve but already had brothers at the front, so remained behind as the result of a family decision.

The ConversationPage’s career never recovered from the disgust that his attack induced. That didn’t stop the mischievous Labor firebrand, Eddie Ward, from later joking that Menzies’ brilliant military career had been cut short by the war. It’s a tough place, the federal parliament.

Frank Bongiorno, Professor of History, ANU College of Arts and Social Sciences, Australian National University

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

Levying GST on all packages is complicated and risky for everyone involved



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Amazon has restricted Australians’ access to goods from its American site because of the GST reforms.
Shutterstock

Kathryn James, Monash University

If like most Australians you have an online shopping habit, then as of this Sunday you will likely pay 10% more for any goods you have delivered from overseas suppliers.

The reforms rely on local and overseas businesses and platforms (such as eBay and Alibaba) that make more than A$75,000 worth of annual sales in Australia to collect Goods and Service Tax on sales of imported goods worth A$1,000 or less, and then pass on that revenue to Australian authorities. Australia is the first country to require offshore suppliers to collect GST.

Once a platform reaches the A$75,000 threshold, any business making sales to Australian consumers through that platform will need to charge GST regardless of its size.




Read more:
How will Amazon navigate Australia’s taxation system?


However, the complexity of the reforms might jeopardise the necessary cooperation of overseas businesses, and place consumers at risk of paying wrongly charged GST. It could also leave governments locked in to an ineffective way of collecting GST on imported goods.

The government’s own estimates suggest that, after taking into account exclusions and non-compliance, the reforms will capture only half of all eligible sales. This will generate modest revenues of A$300 million over the first three years.

Why the reforms?

There are several good reasons to extend GST to goods bought by Australian consumers from overseas suppliers.

Much has been made of the need to “level the playing field” between domestic retailers (who collect GST on all eligible sales) and overseas retailers (where GST is charged only on sales over A$1,000).

At a more basic level, as a tax on household consumption, the GST should tax the purchases of final consumers. Therefore all imports should be taxed under a GST, as this is where the goods will most likely be consumed.

The choice to not tax imports of low-value goods was made for a practical reason – the cost of customs authorities collecting the GST at the border could outweigh the revenue obtained. Estimates suggest the exclusion cost about A$390 million, or less than 1% of total GST revenues of A$62.2 billion for 2017-2018.

But this has changed with the expansion of online shopping and the development of collection methods other than at the border. These reforms are therefore best understood as a revenue-integrity measure.

What will be the effect of the changes?

As border authorities will continue to collect GST on imported goods worth more than A$1,000, the reforms effectively establish two separate schemes for imported goods.

It is possible for one transaction to be taxed at the point of sale (GST is payable on sales that include low-value goods even if the total value of the sale is more than A$1,000) and again at the border (because GST will continue to be payable on imports where the value of the whole consignment exceeds A$1,000 even if it consists entirely of low-value goods).

So if a consumer buys three pairs of boots at A$400 (A$1,200 total) the transaction might be taxable either at the point of sale (as a sale that includes low-value goods) or at the border (because the total value of the consignment is over A$1,000).




Read more:
Aussie retailers need to adapt to a world built on speed


The reforms contain rules to address this double taxation. For example, it can be avoided by the supplier providing notice to customs prior to importation.

In the event this doesn’t happen, the consumer risks paying the GST twice because no provision is made for refunding GST paid at the border.

Consumers would need to rely on the goodwill of the supplier to refund the wrongly paid GST. The same risk applies if an overseas supplier wrongly charges GST at the point of sale on a GST-free good such as a medical aid or appliance.

All of this will require a lot of cooperation by suppliers with little reward for compliance and only patchy enforcement mechanisms for those that don’t comply.

The response of suppliers and platforms

Despite big players warning that the reforms might “force marketplaces like eBay to prevent Australian buyers from purchasing from foreign sellers”, Amazon has been the only one to act. It announced on May 31 2018 that it would no longer ship from its US website direct to Australian consumers as of July 1.

Consumers will instead be redirected to the Amazon.au site (with Amazon collecting the GST on imports) or would need to engage a redelivery service to ship items bought on Amazon.com to Australia (with the redeliverer responsible for collecting GST).

Although Amazon is right to question the “workability” of the reforms, there is little doubt that Amazon has the capacity to comply, as Treasurer Scott Morrison has suggested.

Amazon’s chosen method to comply with its GST obligations results in either reduced choice for consumers (64 million goods via Amazon.com.au compared to 480 million on Amazon.com) or increased cost (if shopping through Amazon.com).

It also transfers the compliance costs from Amazon to redeliverers (no doubt offset by increased customers) and makes the redelivery provisions in the reforms, intended as a last resort, far more significant.




Read more:
Amazon in Australia might not be the end of retail as we know it


However, Amazon’s move is not simply about its capacity to comply with GST obligations in Australia. It must be understood in the context of governments around the world moving to collect GST and other taxes on online consumer spending.

Australia is the first jurisdiction to move to adopt a vendor-platform collection model and many jurisdictions are poised to follow suit (the European Union, Switzerland and New Zealand have all announced similar reforms). The Amazon response might give them pause for thought, and sufficient pause is all that might be needed.

Amazon would like transporters such as freight and logistics companies and Australia Post to collect GST on imported goods because it means suppliers and platforms like Amazon won’t have to do so.

The transporter method potentially offers a more reliable method to collect GST, but the paper-based international postal system is unable to do so at least until 2023.

Amazon appears willing to take a short-term hit while waiting for technology and regulatory change to make it viable to adopt its preferred method of transporter collection.

The ConversationIn the meantime, consumers should take care when making purchases from overseas suppliers to ensure as much as they can that GST is being correctly charged. And the world is watching.

Kathryn James, Senior lecturer, Law, Monash University

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

Government puts tax cuts for big companies on back burner – again


Michelle Grattan, University of Canberra

The government has pulled its legislation for tax cuts for big businesses – for the second time this year – after its last minute bid to get the Senate crossbench numbers failed.

Announcing the retreat, Finance Minister Mathias Cormann, who had been running the negotiations, reaffirmed that the government remained committed to the cuts, and cast the July 28 byelections as a referendum on them.

Cormann was unable to win Pauline Hanson’s two votes or the two senators from the Centre Alliance.

After flip-flops and with the byelection in Longman at the forefront of her mind, Hanson stuck with her rejection of the measure. The Centre Alliance’s opposition was reinforced by the fact that its lower house member, Rebekha Sharkie, is fighting for survival in the Mayo byelection.

The government had flagged that it intended to press the matter to a vote this week but then decided it did not want to be rebuffed on the floor or parliament.

Cormann told a news conference: “We
need more time to make our argument to our colleagues on the
Senate crossbench – and we, of course, will continue to make our argument in the Australian community.”

“The government remains fully committed to these business tax cuts for all businesses because it is the right thing to do for working
families around Australia.”

This is the second blow on the tax front for the business community this week.

On Tuesday, in what’s been labelled a “captain’s call”, Opposition Leader Bill Shorten announced a Labor government would repeal legislated tax cuts for businesses with turnovers between $2 million and $10 million. Business has reacted angrily to the repeal plan.

The ALP is still considering its position for those with turnovers from $2 million to $10 million. It is under pressure to clarify its policy quickly.

Cormann said the byelections “will
be a referendum on who has the better plan for a stronger economy and more jobs”.

In a reference to speculation about the Labor leadership in the event of bad byelection results, Cormann said, “After the byelections, who knows? We might
have a more business-friendly Labor leader. All sorts of things could
be different on the other side of the byelections.”

He said his message to the people of Longman and Braddon was that they “do have the opportunity to send Bill Shorten and Labor a message. If they don’t like Bill Shorten’s higher taxes on business, on hardworking Australians, on retirees, on home owners, on everyone who moves, then vote against Labor, put Labor last.”

Cormann also targeted One Nation voters. He pointed to polling showing two thirds of One Nation voters in Longman supported lower business tax.

The Conversation“I hope that the fact that One Nation voters increasingly appear to be coming on board with our plan for lower business taxes will, over time, help to persuade Senator Hanson this is the right thing to do.”

Michelle Grattan, Professorial Fellow, University of Canberra

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

Military to get wider role in combatting terrorism



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The ADF’s powers to search, seize and control movement at the scene of an incident will be simplified, expanded and made clearer.
Australian Department of Defence

Michelle Grattan, University of Canberra

Australia’s military forces will be given power to play a bigger part in dealing with terrorist incidents, under legislation to be introduced into parliament on Thursday.

The bill makes it easier for states and territories to seek help from the Australian Defence Force (ADF) to respond to terrorist and other violent occurrences, especially those that stretch the capabilities of state forces. The move was announced by the Prime Minister Malcolm Turnbull in July last year.

The ADF’s powers to search, seize and control movement at the scene of an incident will be simplified, expanded and made clearer. It will also have greater ability to respond to incidents that span more than one jurisdiction.

It will be able to be “pre-authorised” to protect Commonwealth interests and the state and territories from land and maritime threats, in addition to aviation threats. At present the contingent call out is limited to aviation threats.

The changes also add the minister for home affairs to the existing list of those ministers who can have a role in authorising a call out of the ADF in certain circumstances.

The prime minister, attorney-general and defence minister have key roles as authorising ministers. But where the prime minister and one of the attorney-general or defence minister is not available, the remaining minister can authorise a call out jointly with the deputy prime minister, foreign minister, treasurer, or home affairs minister.

The enhanced remit for the defence forces has come out of the Defence Counter-Terrorism Review.

While the government emphasises that the police remain “the best first response to terrorists and other incidents”, Attorney-General Christian Porter said “amendments to the ADF call-out powers are the most significant changes since the provisions were enacted in 2000” before the Sydney Olympics. The “terror threat we face today is greater and more complex than that we faced when these laws were introduced almost 20 years ago”, he said.

Defence minister Marise Payne said Defence had already strengthened the practical support it provided to police, including a broadened program of specialist training and better access to Defence facilities such a rifle ranges.

The latest anti-terrorism legislation comes as, on a different national security front, the Senate is set on Thursday to pass the government’s measures to combat foreign interference, including setting up a register of agents of “foreign principals”.

The measures have bipartisan support after the parliamentary joint committee on intelligence and security agreed on a range of amendments that have narrowed provisions and inserted protections for bodies such as charities.

Whether the register will capture Chinese non-state companies remains unclear.

Asked about the potential application of the register to Huawei, the chairman of Huawei Australia, John Lord, appearing at the National Press Club on Wednesday, said he didn’t see why he should register “because Huawei’s privately owned, does not have government links other than it’s Chinese. And, therefore, I don’t see why I should.

“However, if at the end of the day the act says something to that effect and the legal advice to Huawei is that we should register, we, Huawei, will have no problems with that and I, John Lord, will have no difficulty whatsoever. If that’s what the government wants, we will do it.”

Lord argued Huawei’s case to be allowed to build the 5G network, amid strong speculation that will be banned from doing so on national security grounds.

He said the 5G decision was not just a tough political one but “this is a long term technology decision that could impact our growth and productivity for generations to come”.

“The suggestions that Huawei, the largest provider of 4G technology in Australia today, should be banned from building 5G networks here should be a concern for everyone and every business in Australia.

The Conversation“The implications about limiting access to technology competition will be devastatingly high – and is a short term small mind choice rather than seeking to incorporate all technologies in a solution that also secures our critical structures”.

Michelle Grattan, Professorial Fellow, University of Canberra

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

Erdogan’s victory will have far-reaching implications for Turkey and the Middle East



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Recep Tayyip Erdogan greets supporters after winning with 52% of the vote in the Turkish election.
AAP/Turkish president press office handout

Mehmet Ozalp, Charles Sturt University

Recep Tayyip Erdogan, the incumbent president and main political actor in Turkish politics for the last 16 years, has won yet another election with a majority vote of 52%.

The election was held in the climate of a two-year state of emergency, Erdogan’s considerable weight on Turkish media, and his ruling party’s dominance of the election process. This was no ordinary election and will have historic ramifications for Turkey, its relations with the West and the Middle East.

The election has put in effect the terms of 2016 constitutional changes and ended the fragile Turkish parliamentary democracy that has been in place since 1950. As of June 24, Turkey has ventured into a democratic league of its own.

In the new executive presidential regime, there will be elections and multiple political parties. Once elected, though, the system unifies powers in one person, the president, rather than enforcing the all-important principle of separation of powers in a liberal democracy.




Read more:
Stakes are high as Turkey, Russia and the US tussle over the future of Syria


Erdogan will form the government by appointing ministers from inside or outside the parliament. His presidential decrees will be equal to legislation. As the leader of the ruling AKP party, he will hold the majority vote in the parliament – in effect, he will control the legislative branch.

Erdogan will appoint half of the top council, which appoints judges and prosecutors. The other half will be appointed by the parliament he controls. He will have sweeping powers to abolish the parliament and declare a state of emergency any time.

The new constitution stipulates two five-year terms. If an early election is called during the second term, the incumbent president can be nominated for a third term. This means Erdogan could possibly be in power until 2034.

Erdogan wins elections with an Islamo-nationalistic populism that is a cross between Trump and Putin. Like Trump, he promises to make Turkey great again as a global economic and political power, reviving the past glories of the Ottoman Empire.

Similar to Putin, Erdogan follows a confrontational approach in foreign policy, takes bold military steps in Syria and rallying the population behind him in a nationalistic fervour.

The key lies in Erdogan’s almost absolute control of the Turkish media. This not only raises questions about the fairness of elections in Turkey, but also explains the diffusion of a powerful narrative behind Erdogan’s political success.

The formula is simple: undertake large-scale road, bridge and airport building projects and launch them with media fanfare. This makes even the reluctant supporters say about the ruling Justice and Development Party (AKP), “they are corrupt, but they also work”.

Secondly, anything that goes wrong in Turkey is explained as a Western conspiracy. If rating agencies drop Turkey’s credit rating, it is not because of poor economic and political policies controlled by Erdogan for the last 16 years. Rather, it is explained as Western subversion to undermine the Turkish economic success.

A case in point in illustrating the appeal of the Erdogan narrative is the Dirilis (Revival), a state-funded television series that narrates the foundational story of the Ottoman Empire in the 13th century.

The hero of the series, Ertugrul Bey, father of the founder Osman Bey, often clashes and wins against Byzantine and Crusader forces who are determined to pillage Muslim land and kill innocent Muslim populations. It is the Muslim version of Games of Thrones, watched by millions around the world.

Many see Erdogan as the modern-day personification of Ertugrul Bey, fighting imperialistic forces against all odds to revive Islamic civilisation and become a voice for oppressed Muslims around the world.

His supporters are convinced Erdogan is the greatest leader in Turkish history, one who would make Turkey a world power and bring back pride for Turks and all Muslims. The narrative is intoxicatingly attractive to traditionally religious Turks and masses of Muslims around the world.

This sets the scene for what to expect in Turkey-West relations. The West, the European Union and the US are the antagonists in Erdogan’s narrative, and will continue to be so. He is not likely to mend relations with the EU, let alone make the necessary reforms to gain EU membership.

Aiming to have a growing influence in the Middle East, Erdogan will intensify his relationship with Russia over Syria. Putin will use Turkey to undermine the NATO alliance. This will further stretch EU-Turkey relations, which are already in tatters over the purchase of Russian S-400 missiles.




Read more:
Syria, Russia and Turkey – the uneasy alliance reshaping world politics


Erdogan’s dilemma is that the EU is Turkey’s largest economic partner and he needs funding from Western banks to service Turkey’s growing USD$450 billion foreign debt. This is increasingly worrying Turkish businesses.

During his election campaign, Erdogan travelled to the US and UK to convince lenders and business investors to continue to fund the Turkish government and economy. Erdogan is likely to play out a love-hate relationship with the West.

While Erdogan has no qualms about resorting to anti-Western rhetoric, his supporters forget that it was the same West that hailed Turkey under Erdogan’s leadership as a new hope in the post-9/11 world. Turkey was portrayed as a leader and a model for the Muslim world, where Islam and liberal democracy could harmoniously co-exist.

Turkey could show the world it was possible to stay true to Islamic values and identity while being a first-grade democracy with freedoms and affluence. Other Middle Eastern countries would follow the Turkish success, rising above the seemingly perpetual political turmoil, social discord, economic ruin and inevitable suffering of ordinary Muslim people.

The ConversationBut, 16 years on, Turkey has become just another typical Middle Eastern country.

Mehmet Ozalp, Associate Professor in Islamic Studies, Director of The Centre for Islamic Studies and Civilisation and Executive Member of Public and Contextual Theology, Charles Sturt University

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

Labor would quash tax cuts for businesses with $10-$50 million turnover


Michelle Grattan, University of Canberra

Bill Shorten has said a Labor government would repeal already-legislated tax cuts for companies with an annual turnover between A$10 million and $50 million, but left its position up in the air for those between $2 million-$10 million.

The decision, announced in response to questions at a news conference on Tuesday, does not appear to have gone through shadow cabinet. Nor did Shorten mention it when he addressed caucus on Tuesday morning.

It opened the opposition leader to immediate attack from the government and business.

Finance Minister Mathias Cormann said it was Shorten’s “captain’s call”.

Treasurer Scott Morrison said there were 20,000 businesses between $10-50 million turnover, with an average of 75 employees in those businesses.

“This is terrible news for 1.5 million Australians who work in those businesses that will have to face higher taxes under Labor if Labor is elected,” Morrison said. Shorten had turned former leader Mark Latham’s “ladder of opportunity” into “the snake of envy”, Morrison said.

The Australian Chamber of Commerce and Industry CEO, James Pearson said Labor had sent a “very bad signal to business today”.

The opposition has had a long-standing policy of leaving the cuts in place for the smallest businesses – with turnovers less than $2 million. But by failing to clarify its position for companies up to $10 million, Shorten has left uncertainty for many smallish businesses.

A spokesperson for Shorten said: “We’ve never supported these tax cuts for big businesses – we voted against them and we haven’t changed our position.

“We’ve always supported tax cuts for small businesses.

“As Bill said, we’re considering a threshold of $2 million or $10 million turnover. That will be decided by the shadow cabinet, in the normal way.”

Shorten’s announcement comes days after the speech by frontbencher Anthony Albanese in which he advocated the Labor strike a better relationship with business. The speech was seen as Albanese differentiating himself from Shorten on a number of fronts and positioning on leadership ahead of the Super Saturday byelections.




Read more:
Anthony Albanese sets out his blueprint for Labor


Asked about the decision apparently not having gone to shadow cabinet, ALP sources argued it had been generally known that a Labor government would not leave in place company tax cuts above the $10 million threshold.

But shadow treasurer, Chris Bowen, asked in May how long Labor was going to wait to give certainty to middle-level companies, said for companies above $2 million turnover “it is right and proper that we take some time to carefully work that through. We will be announcing our position, which will be crystal clear, not only to the voters but to the businesses of Australia,” Bowen said.

Labor earlier committed to repealing the tax cuts for big business, now before the Senate, in the event the government manages to legislate them. There is still no indication it can do so.

Whether a Labor government could get any repeals through would depend on the attitude of the Senate of the day.

Shorten’s announcement also comes as he faces criticism over Labor’s controversial advertisement, running in the byelections, that targets Malcolm Turnbull’s personal wealth and how he would benefit from the tax cuts for large companies.




Read more:
Labor makes company tax fight all about Malcolm Turnbull’s money


Shorten doubled down on the attack in the caucus meeting, saying that Turnbull “has no clue about how people actually live, and I do believe his wealth is connected to that”.

The ConversationHe also told caucus that the Longman byelection was very close and Braddon was “very difficult”.

Business size in Australia.
Australian Taxation Office, Taxation statistics 2015/16

Michelle Grattan, Professorial Fellow, University of Canberra

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

Tony Abbott loses traction in his fight on energy



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Before the Coalition party room meeting Abbott had again publicly left the way open to cross the floor when legislation comes to parliament, assuming Frydenberg gets a deal at the COAG Energy Council in August.
Mick Tsikas/AAP

Michelle Grattan, University of Canberra

Malcolm Turnbull and Energy Minister Josh Frydenberg had clear Coalition party room support on Tuesday to decisively stare down a fresh sortie by Tony Abbott on the National Energy Guarantee.

The frustration many government MPs feel about the ongoing argument was epitomised by the comment of marginal seat holder Ann Sudmalis who told colleagues, “The more that people stuff around with this issue, the greater the risk I won’t be here”.

Before the meeting Abbott had again publicly left the way open to cross the floor when legislation comes to parliament, assuming Frydenberg gets a deal at the COAG Energy Council in August.

Asked whether, if the premiers sent back a plan he didn’t like, he was committed enough to cross the floor, Abbott said: “The short answer is yes. I think that I have an obligation to keep faith with the position that the government took to the people in 2013.”

“My anxiety about the national energy guarantee is that it’s more about reducing emissions than it is about reducing price,” he said.

But Frydenberg has been actively mobilising pro-NEG forces in the Coalition to counter Abbott – last week, several MPs spoke out publicly – as well as to lock in backbench support before the final push with the energy ministers.

Ahead of the party room, industry representatives briefed a backbench committee meeting attended by more than 30 government MPs. Their message was that the NEG was the only realistic option available to restore investment confidence.

Those present were Jennifer Westacott, CEO, Business Council of Australia;
Innes Willox, CEO, Australian Industry Group; Mark Vasella, CEO, BlueScope; Arnoud Balhuizen, Chief Commercial Officer, BHP; Vanessa Guthrie, chair, Minerals Council of Australia, and Fiona Simson, president, National Farmers Federation.

Government sources said the briefing, which saw many questions, went well for the NEG supporters.

At the later party meeting, 16 backbenchers spoke.

Two, including Abbott, wanted Frydenberg to bring the detail that he planned to take to the August meeting to the party room first. Two urged greater focus on pricing in the NEG. The four dissidents were Abbott, Eric Abetz, Craig Kelly and former deputy prime minister Barnaby Joyce.

Among the rest, according to the government briefer, there was strong support for both the policy and the process.

Turnbull stressed the importance of getting on with the policy and said that anything from the meeting with the states and territories would come back to the party room.

Frydenberg said the corner had been turned on prices. There was no silver bullet but the NEG was an important part of dealing with prices.

Turnbull declared Frydenberg had the confidence of the party room.

Abetz, speaking on Sky later, said his main concern was to keep prices down. He said the business leaders had told the backbenchers they were still sorting out details of the NEG with the government. Abetz said he didn’t like “signing blank cheques”.

He said that if there was to be a NEG there needed to be a reasonable place for coal, and urged that there should be “a commitment to retrofit some of our existing coal operations or build a new one”.

The ConversationAsked on Tuesday night whether he would cross the floor on legislation Joyce dodged the questioning, saying it was a hypothetical.

Michelle Grattan, Professorial Fellow, University of Canberra

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

Poll wrap: Labor and LNP tied in Longman, Sharkie’s massive lead in Mayo, but can we trust seat polls?



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The Centre Alliance’s Rebeka Sharkie looks to be a strong contestant in Mayo’s by-election.
AAP/Kelly Barnes

Adrian Beaumont, University of Melbourne

Longman and Mayo are two of the five seats that will be contested at byelections on July 28. ReachTEL polls for the left-wing Australia Institute had a 50-50 tie between Labor and the LNP in Longman, and a massive 62-38 lead for the Centre Alliance’s Rebekha Sharkie over the Liberals’ Georgina Downer in Mayo.

These polls represent a two-point gain for Labor in Longman since a late May ReachTEL for Sky News, and a four-point gain for Sharkie since early June. Both polls were conducted with 720 to 740 respondents on June 21 – the day the Coalition passed its complete income tax cuts package through the Senate.

Primary votes in Longman were 39.1% Labor, 34.9% LNP, 14.7% One Nation, 4.4% Greens, 3.7% Other and 3.2% undecided. With Labor well ahead on primary votes, the LNP is benefiting from a strong flow of One Nation preferences.

I believe this is the first Longman poll that has asked for candidate names, rather than just parties. Labor’s MP Susan Lamb resigned over the citizenship fiasco, but will recontest. The LNP’s candidate is Trevor Ruthenberg, former MP for the state seat of Kallangur, which is close to Longman. Both major party candidates are likely to be well-known to Longman voters.

In Mayo, primary votes were 43.5% Sharkie, 32.7% Downer, 9.0% Greens, 8.2% Labor, 4.1% Other and 2.6% undecided. I discussed potential problems with Downer’s candidacy here.




Read more:
Poll wrap: Coalition’s record Newspoll losing streak, and Rebekha Sharkie has large lead in Mayo


The ReachTEL Australia Institute polls for both Longman and Mayo repeated a question on the company tax cuts that I criticised in the above article.

National Ipsos: 53-47 to Labor (54-46 respondent allocated)

A national Ipsos poll for the Fairfax papers, conducted June 20-23 from a sample of 1,200, gave Labor a 53-47 lead by 2016 election preferences, a one-point gain for the Coalition since the post-budget Ipsos in mid-May. Primary votes were 35% Coalition (down one), 35% Labor (down two), 12% Greens (up one) and 6% One Nation (up one).

Labor’s 54-46 lead in the post-budget Ipsos was an outlier, with other polls showing better results for the Coalition. This week’s Ipsos is in line with other polls by 2016 election preferences.

Almost all polling this term has given the Coalition a better position in respondent allocated polling than using the previous election method. This Ipsos poll is an exception, with a 54-46 lead for Labor using respondent preferences, a point better for Labor than the previous election method.

Ipsos is the only current Australian pollster that uses live phone polling. It tends to have weaker primary votes for the major parties than other polls, and stronger primary votes for the Greens and Others.

50% (down one) approved of Malcolm Turnbull’s performance, and 44% (up five) disapproved, for a net approval of +6. Bill Shorten’s net approval was -13, down one point. Turnbull led Shorten by 51-33 as better PM (52-32 in May). Ipsos gives Turnbull stronger ratings than other pollsters, particularly Newspoll.

Turnbull led Shorten on nine of 11 attributes; the exceptions were on social policy and confidence of his party. The largest Turnbull leads were on economic policy (67-48) and foreign policy (64-45). Since April 2016, attribute scores have moved in Shorten’s favour.

In additional questions from last week’s Newspoll, voters favoured Turnbull over Shorten on asylum seekers by 47-30, down from a 52-27 margin in December 2017. 37% thought Labor would open the floodgates to asylum seekers if it wins the next election, 26% thought Labor would improve the current policy, and 24% thought there would be no difference.

ReachTEL’s large error in Darling Range (WA) byelection

On Saturday, the Liberals won the byelection for the Western Australian state seat of Darling Range by a 53.3-46.7 margin against Labor, a 9.1% swing to the Liberals since the 2017 state election. The byelection was caused by the resignation of Labor MP Barry Urban over allegations of fraudulent behaviour. You can read more at my personal website.

The major implication of this byelection to the July 28 federal byelections is that individual seat polls can be very wrong. Just one week before the Darling Range byelection, a ReachTEL poll for The West Australian gave Labor a 54-46 lead, so there was a seven-point error in this poll.

The Darling Range poll was skewed to Labor, but in general seat polls have had large misses in both directions. The Poll Bludger reviewed the performance of seat polls at the last federal election in a July 2016 article. National and state-wide polls have been far more accurate in Australia.

If a seven-point error is applied to the Longman and Mayo polls, then Labor’s two party vote in Longman could be between 43% and 57%, and Sharkie could be between 55% and 69% in Mayo.

Another concern about the Longman poll is the unbelievable age breakdowns. Young people nationally are the strongest demographic for Labor and the Greens, but ReachTEL gave Labor just 20.4% among those aged 18-34, behind One Nation’s 23.0% and the LNP’s 38.8%. Among those aged 51-65, Labor had 53.8% and the LNP just 25.8%.

In brief: Turkish President Erdoğan re-elected

In Sunday’s Turkish election, incumbent President Recep Tayyip Erdoğan, who has dominated Turkish politics since 2002, was re-elected with 52.6% of the vote, avoiding a runoff election. Erdoğan’s AKP party lost its single-party parliamentary majority, but will form a coalition with a right-wing ally.

The ConversationIn April 2017, a constitutional referendum granted far more powers to the president at the expense of parliament. Erdoğan will arguably now have powers comparable to a feudal king.

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

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