Bill Shorten has moved to make the ABC an election issue, promising to reverse the Turnbull government’s $83.7 million budget cut and to guarantee funding certainty over the broadcaster’s next budget cycle.
Ahead of appearing on the ABC’s Q&A program, Shorten and frontbench colleagues declared the Coalition had “launched the biggest attack on the ABC in a generation”.
In recent months Communications Minister Mitch Fifield has sent a stream of complaints to the ABC about stories, both online and on air, contesting facts and interpretations. The Prime Minister’s Office has also complained. Government frontbenchers and backbenchers frequently make cracks at or about the ABC, echoing a theme of many conservative commentators.
The ABC is also under constant attack from News Corp, driven by both ideology and commercial interests. The government has an inquiry underway into the ABC’s competitive neutrality, which was part of a deal with Pauline Hanson but also important in the context of News Corp’s argument about the government-funded ABC encroaching on financially strapped commercial media.
When the government made the $84 million budget cut – which took the form of a freeze to indexation – Treasurer Scott Morrison said “everyone has to live within their means”. Managing director Michelle Guthrie said that “the decision will make it very difficult for the ABC to meet its charter requirements and audience expectations.”
In a statement Shorten, communications spokeswoman Michelle Rowland and regional communications spokesman Stephen Jones said Labor’s commitment would ensure the ABC could meet its charter requirements, safeguard jobs, adapt to the digital environment “and maintain content and services that Australians trust and rely on”.
They said the Coalition since 2014 had “overseen $282 million in cuts to the ABC that has seen 800 jobs lost and a drop in Australian content and services”.
“Labor will stand up for the ABC and fight against the conservatives’ ideological war against our public broadcaster,” the statement said.
The promised investment “demonstrates Labor’s commitment to the ABC’s independence and to maintain the ABC as our comprehensive national broadcaster.
“Now, more than ever, Australians need the ABC – our strong, trusted and independent public broadcaster.
“At a time when too many Australians feel disengaged from their democracy and distrustful of their representatives, Labor wants to restore trust and faith in our institutions. Part of restoring trust is is supporting a healthy public interest media sector, and protecting that trusted institution – the ABC”.
Not so long ago, new South Australian independent senator Tim Storer and Victorian crossbencher Derryn Hinch were set to be the pivotal players determining the fate of the government’s tax cut for big companies.
But after the evidence from the banking inquiry Hinch’s doubts about the measure hardened further, while Storer continued to agonise.
The government then looked towards the Centre Alliance senators, Stirling Griff and Rex Patrick, for the two crucial numbers it needed. The rest of the votes were in the bag.
Only it turned out they weren’t. Pauline Hanson, who commands three Senate votes and thus a veto, has suddenly withdrawn the support she earlier pledged. Hanson has flipped-flopped before but she insists this is for real – that she won’t change her mind again.
Hanson says she’s “so disappointed in this government” after the budget it produced. She has a litany of complaints: inaction on debt; intransigence on immigration; the absence of changes to the petroleum resource rent tax; no appearance of promised apprenticeships, and many more.
Hanson denies her reneging is driven by her political needs in the Queensland seat of Longman, though that claim lacks credibility. Tax cuts for the wealthiest companies, including the banks, would hardly appeal to potential One Nation voters, and this byelection will be a test for Hanson’s party, just as it will be for Labor and the Coalition. Bill Shorten had already been exploiting her closeness to the government.
As much as the Senate is unpredictable, this does look like the end of the government’s chances of getting its company tax package through parliament before the election.
Senate leader Mathias Cormann, the government’s chief negotiator, said he hoped “that this is not the last word” but admitted “it might well be that we won’t ever get there”.
Once again, Shorten has had a lucky break. The tax cut for big companies, which Labor has strenuously opposed, is still on the political agenda. If the Senate had passed it, Labor would have a diminished target.
It also remains on the books. Admittedly the cost is way into the future, but in these times when parties like to talk in terms of a decade, those notional future dollars are useful to Labor.
Also, if the package isn’t passed, Labor doesn’t have to cope with the question: how can you be sure a Shorten government could persuade a post-election Senate to repeal the cuts?
Most immediately, the opposition on Tuesday was making merry with questions about what “secret deal” the government had with Hanson to try to get the company tax cut through.
A Senate estimates hearing saw an angry clash between Labor’s Senate leader Penny Wong and Cormann, when Wong pursued whether the government was willing to meet Hanson’s various demands. As she went through these, Cormann retorted “I know that you always like channelling Senator Hanson”.
Wong, of Asian heritage, responded ferociously: “Don’t tell me I channel Pauline Hanson. I find that personally offensive. I can tell you what happened to me and my family and people like us, when she stood up in the parliament, possibly before you were here, saying Australia was in danger of being swamped by Asians. I will never do anything other than fight her.”
Cormann accused Wong of “confected outrage”; Wong countered “How dare you!”.
But a few hours later the two had made up.
Wong tweeted: “I will never do anything other than stand up to Pauline Hanson and her views, but I know Mathias is one of the decent people in this Government and accept his assurance he did not mean to cause offence.”
Cormann replied: “While we are fierce political competitors, I value the fact that we always aim to engage in the political contest professionally and with courtesy and mutual respect.”
It’s notable how much genuine respect Cormann commands in a parliament characterised by the lack of it.
Hanson went out of her way to stress she wasn’t blaming Cormann for anything – “his colleagues and the government” had let him down, she said. She told her news conference, “I know he’s devastated”, and she’s said to be genuinely upset that she’s left him in the lurch.
The government says that if there’s not a new turn of Senate fortunes, it will take the company tax policy to the election.
Although some argue the measure should be ditched, which is the superficially attractive course, that would potentially bring fresh difficulties. Not only would it open a brawl with business, but it would undermine the economic argument the government has been making for two years. Killing an albatross can be a dangerous business.
It would, however, be popular with the public. Tuesday’s Essential poll reported that when people were asked which in a list of measures they would support to cut government spending, the top item nominated (on 60%) was “not providing company tax cuts for large business”.
The Essential poll brought mixed news on the tax front for the government.
Asked to choose between the budget’s income tax plan and the alternative outlined by Shorten in his budget reply, Labor’s plan was preferred by 45% to 33%. On the other hand, Labor and the Coalition were equal (on 32% each) when people were asked which party they trusted most to manage a fair tax system.
Particularly interesting was the poll’s voting figure. The two-party Labor lead has now narrowed to 51-49% (compared with 52-48% in the last poll). This is the closest result since late 2016, and in line with the most recent Newspoll. It reinforces the point that the contest is tightening.
The Greens are standing out against the bipartisan consensus that tax cuts are needed for middle and lower income earners.
They are ruling out supporting all the budget’s tax relief, and say they are also opposed to the package of larger cuts the opposition has proposed, which would be confined to people in the lower and middle income ranges.
Instead, the funds should be spent on services, the Greens say.
The Coalition tax package will be a focus of this parliamentary fortnight, which sees the House of Representatives sitting and the Senate holding estimates hearings.
The legislation will be passed in the House, while estimates will be used by the opposition to seek the annual cost in the latter years of the seven-year plan, which the government has so far declined to provide. Treasury is before the estimates hearings next week; the Prime Minister’s department is up this week.
The opposition has submitted ahead of time a list of detailed questions about the tax package to try to prevent the delay of answers by officials asking for questions to be put on notice.
Labor supports the first stage of the three-part plan, is vague about the second stage, but has expressed opposition to the third stage, which flattens the tax scale and favours high income earners.
The government says it will not split the bill. It is not clear whether the opposition would vote against the legislation if the government holds firm, or whether the government would be flexible if pushed.
The shadow cabinet meets on Monday night, when the legislation is set to be discussed.
Labor’s alternative tax cuts, announced in Bill Shorten’s budget reply, would be confined to those on incomes up to about $125,000.
While the immediate concentration is on the future of the government’s legislation, the uncertainty of a post-election Senate also raises the issue for Labor of whether an ALP government could get its legislation through.
The Greens said in a statement that the government’s proposed income tax cuts were just a bribe to get the massive company tax cuts passed. People on the minimum wage wouldn’t even see $4 a week, while the wealthiest would benefit the most.
“Both parties’ plans will worsen inequality, and see us lose vital revenue for the essential services people rely upon,” the Greens said.
Greens leader Richard Di Natale said with inequality rising, reinvestment in public services should be the priority.
“For years, politicians have been telling Australians that the budget doesn’t have money to properly fund our public schools, build a world-class NBN, or take action on climate change,” Di Natale said.
“Yet when an election is rolling around both old parties are giving away cheques like a breakfast TV show trying to increase their ratings.”
“This reckless tax auction is nothing more than a distraction from the millions of dollars stripped from our schools, hospitals and social safety net over the past decade.
“While Turnbull is busy squabbling with Labor over how much they want to rip out of Australia’s institutions, the Greens are proud to stand up for Medicare, our public schools and hospitals and the environment”.
When we think about infrastructure it’s most often about bridges or roads – or, as in this week’s federal government AU$1.9 billion National Research Infrastructure announcement, big science projects. These are large assets that can be seen and applied in a tangible way.
But important as these projects are, there’s a whole set of infrastructure that rarely gets mentioned or noticed: “soft” infrastructure. These are the services, policies or practices that keep academic research working and, now, open.
Soft infrastructure was not featured in this week’s announcement linked to budget 2018.
An absence of attention paid to soft infrastructure isn’t just the case in Australia, it’s true globally. This is despite the fact that such infrastructure is core to running the hard infrastructure projects.
For example, the Open SSL software library – which is key to the security of most websites – has just a handful of paid individuals who work on it. It’s supported by fragile finances. That’s a pretty frightening thought. (There’s another issue in that researchers doing this work get no academic credit for their efforts, but that’s a topic for another time.)
There are other high profile, globally used, open science infrastructures that also exist hand to mouth. The Directory of Open Access journals which began at Lund University relies entirely on voluntary donations from supporting members and on occasional sponsorship.
Similarly, Sherpa Romeo – the open database of publishers’ policies on copyright and self-archiving – came out of projects at Nottingham and Loughborough Universities in the UK.
In some ways these projects’ high visibility is part of their problem. It’s assumed that they are already funded, so no-one takes responsibility for funding them themselves – the dilemma of collective action.
Other even more nebulous types of soft infrastructure include the development and oversight of standards that support open science. One example of this is the need to ensure that the metadata (the essential descriptors that tell you for example where a sample that’s collected for research came from and when, or how it relates to a wider research project or publication) are consistent. Without consistency of metadata, searching for research, making it openly available or linking it together is much less efficient, if not impossible.
Of course there are practices in place at individual institutions as well as national organisations. The soon-to-be-combined organisations -Australian National Data Service, the National eResearch Collaboration Tools and Resources project and Research Data Services (ANDS-Nectar-RDS) – are supported by national infrastructure funding. These provide support for data-heavy research (including for example the adoption of FAIR – Findable, Accessible, Interoperable and Reusable standards for data).
But without coherent national funding and coordination, specifically for open science initiatives, we won’t get full value from the physical infrastructure just funded.
What’s needed now? First, a specific recognition of the need for cash to support this open, soft infrastructure. There are a couple of models for this.
In an article last year it was suggested that libraries (but this could equally be funders – public or philanthropic) should be committing around 2.5% of their budget to support open initiatives. There are some international initiatives that are developing specific funding models – SCOSS for Open Science Services and NumFocus for software.
But funding on its own is not enough: we need a coordinated national approach to open scholarship – making research available for all to access through structures and tools that are themselves open and not proprietary.
It’s reasonable to ask whether in the absence of a national body that’s responsible for developing and implementing an overall approach, what the success of a policy on its own would be. Again, there are international models that could be used.
The Netherlands has a National Plan for Open Science with wide engagement, supported by the Ministry of Education, Culture and Science. In that country, the Secretary of State, Sander Dekker, has been a key champion.
The EU has had a long commitment to open science, underscored recently by the appointment of a high-level envoy with specific responsibility for open science, Robert-Jan Smits.
Private interests might take over
Here’s the bottom line: national coordinated support for the soft infrastructure that supports open science (and thus the big tangible infrastructure projects announced) is not just a “nice to have”.
One way or another, this soft infrastructure will get built and adopted. If it’s not done in the national interest, for-profit companies will step into the vacuum.
We risk replicating the same issues we have now in academic publishing – which is in the hands of multi-billion dollar companies that report to their shareholders, not the public. It’s clear how well that is turning out – publishers and universities globally are in stand offs over the cost of publishing services, which continue to rise inexorably, year on year.
This week’s Newspoll, conducted May 10-13 from a sample of 1,730, gave Labor a 51-49 lead, unchanged from three weeks ago. Primary votes were 39% Coalition (up one), 38% Labor (up one), 9% Greens (steady) and 6% One Nation (down one).
This Newspoll is Malcolm Turnbull’s 32nd successive loss as PM, two more than Tony Abbott. However, the past two have been narrow losses.
The total vote for Labor and the Greens was up one point to 47%, while the total for the Coalition and One Nation was steady at 45%. The gain for the left would normally result in a gain after preferences, but rounding probably helped the Coalition again.
39% (up three) were satisfied with Turnbull, and 50% (down three) were dissatisfied, for a net approval of -11, Turnbull’s highest net approval since the final pre-election Newspoll in July 2016. Bill Shorten’s net approval was down two points to -22. Turnbull led Shorten as better PM by 46-32; this is Turnbull’s clearest better PM lead since February.
Newspoll asks three questions after every budget: whether the budget was good or bad for the economy, good or bad for you personally, and whether the opposition would have delivered a better budget.
The best news for Labor was on the third question, where it only trailed by seven points, equal to their deficit after the badly perceived 2014 budget. According to The Poll Bludger, Labor trailed by more during all of the Howard government’s budgets.
This budget was seen as good for the economy by 41-26, and good for you personally by 29-27. The Poll Bludger says it is fifth out of 31 budgets covered by Newspoll on personal impact, but only slightly above average on the economy.
Turnbull led Shorten by 48-31 on best to handle the economy (51-31 in December 2017). Treasurer Scott Morrison led his shadow Chris Bowen 38-31 on best economic manager. By 51-28, voters thought Labor should support the government’s seven-year tax cut package.
Turnbull has delivered a well-received budget, while Shorten’s credibility took a hit after four Labor MPs were kicked out over the citizenship fiasco.
Voters were not sympathetic to politicians who held dual citizenships. By 51-38, they thought such politicians should be disqualified from federal parliament (44-43 in August). By 46-44, voters would oppose a referendum to change the Constitution to allow dual citizens to become MPs.
A key question is whether Turnbull’s ratings bounce will be sustained. The PM’s net approval and the government’s two party vote are strongly correlated, so the Coalition should do better if Turnbull’s ratings are good. Past ratings spikes for Turnbull have not been sustained.
While people on low incomes receive a tax cut, it will not be implemented by withholding less tax from pay packets. Instead, people will need to wait until they file their tax returns after July 2019 to receive their lump sum tax offsets. As the next federal election is very likely to be held by May 2019, this appears to be a political mistake.
In last week’s Essential, 39% thought the Australian economy good and 24% poor. While Australia ran large trade surpluses in the first three months of this year, the domestic economy is not looking as good as it did in 2017 – see my personal website for more.
Ipsos: 54-46 to Labor (53-47 respondent allocated)
An Ipsos poll for the Fairfax papers, conducted May 9-12 from a sample of 1,200, gave Labor a 54-46 lead by 2016 election preferences, a two-point gain for Labor since early April. Primary votes were 37% Labor (up three), 36% Coalition (steady), 11% Greens (down one) and 5% One Nation (down three).
Newspoll is no longer using last-election preferences, so it seems better to compare Ipsos’ respondent allocated preferences with Newspoll, not the last election preferences. By respondent allocated preferences, Ipsos was 53-47 to Labor, a three-point gain for Labor.
Ipsos is bouncier than Newspoll, and the Greens’ support is higher. If you compare Ipsos’ respondent allocated two party vote with Newspoll, the difference is diminished.
Turnbull had a 51-39 approval rating (47-43 in April). This is Turnbull’s best rating in Ipsos since April 2016; Ipsos gives Turnbull his strongest ratings of any pollster. Shorten’s net approval was up three points to -12. Turnbull led Shorten by 52-32 (52-31 in April).
By 39-33, voters thought the budget was fair (42-39 after the 2017 budget). By 38-25, voters thought they would be better off, the highest “better off” figure in Nielsen/Ipsos history since 2006. However by 57-37, voters thought the government should have used its extra revenue to pay off debt, rather than cutting taxes.
Queensland Galaxy: 52-48 to federal Coalition, 53-47 to state Labor
A Queensland Galaxy poll, conducted May 9-10 from a sample of 900 for The Courier Mail, gave the federal Coalition a 52-48 lead, unchanged since February, but a 2% swing to Labor since the 2016 election. Primary votes were 40% Coalition (down one), 33% Labor (up one), 10% Greens (steady) and 10% One Nation (up one). Primary vote changes would normally imply a gain for Labor, but this was lost in the rounding.
By 39-33, Queenslanders thought the budget was good for them personally, rather than bad. By 39-28, they thought the budget would be good for Queensland.
The state politics questions gave Queensland Labor a 53-47 lead, a one-point gain for Labor since February. Primary votes were 38% Labor (up one), 35% LNP (down one), 12% One Nation (up two) and 10% Greens (steady).
Premier Annastacia Palaszczuk had a 46-38 approval rating (44-38 previously). Opposition Leader Deb Frecklington had a 31-28 approval rating (29-25). Palaszczuk led Frecklington as better Premier 47-27 (42-31).
Longman ReachTEL: 53-47 to LNP
The Longman byelection is one of five that will be held soon. A ReachTEL poll, conducted May 10 from a sample of 1,280 for the left-wing Australia Institute, gave the LNP a 53-47 lead, about a 4% swing to the LNP since the 2016 election. Primary votes were 36.7% LNP, 32.5% Labor, 15.1% One Nation and 4.9% Greens.
ReachTEL is using respondent allocated preferences. The two party vote in this poll looks reasonable assuming One Nation preferences flow to the LNP.
National polls and the Queensland Galaxy poll show swings to Labor compared with the 2016 election. It would be highly unusual for a seat to swing so strongly to the Coalition when other polling shows a swing to Labor. In the past, seat polls have been far less reliable than national and state-wide polls.
In better byelection news for Labor, the Western Australian Liberals will not contest either Perth or Fremantle. Fremantle has a 7.5% margin with an incumbent recontesting, but Labor only holds Perth by a 3.3% margin with no incumbent.
This week’s Essential, conducted May 10-13 from a sample of 1,033, gave Labor a 52-48 lead, a one-point gain for the Coalition since last week. Primary votes were 38% Coalition (steady), 36% Labor (down one), 10% Greens (steady) and 7% One Nation (up one).
By 44-28, voters approved of the budget overall. 22% thought the tax cuts would make a difference to their household. 39% supported the tax cuts, with 30% wanting more spending on schools and hospitals and 18% preferring a reduction in government debt.
By 44-40, voters disagreed with giving higher income people larger tax cuts. By 79-14, voters agreed that those earning $200,000 should pay a higher tax rate than those earning $41,000.
In the federal budget, Treasurer Scott Morrison promised tax cuts to all working Australians in the form of an offset and changes to tax income thresholds. But our analysis of Treasury data shows that while the government advertised these as payments to low and middle income Australians, most of the benefits would flow through to high income earners in future years.
If all of the stages of the tax plan passed parliament, there would be a sharp increase in benefits for people earning above A$180,000, due to the reduction of their marginal tax rate from 45% to 32.5%.
Taxes in most countries are progressive. This means that the more you earn, the higher your marginal rate (the additional amount you pay for each dollar earned).
There are good reasons for this – progressive tax systems mean those on a lower income pay a lower average tax rate, while those on higher incomes pay a higher average tax rate. This reduces income inequality – as you earn more, for each dollar you earn, you will pay more in tax than someone on a lower income.
With the 2018-19 budget, the proposal is for a “simpler” tax system from 2024-25. This means a reduced number of tax brackets, and a lower rate of 32.5% to those earning between A$87,001 and A$200,000.
Treasurer Scott Morrison said following the budget:
Well, you’ve still got a progressive tax system. That hasn’t changed. In fact, the percentage of people at the end of this plan, who are on the top marginal tax rate is actually slightly higher than what it is today.
However this new tax system from 2024-25 is less progressive than the current system. It means higher income inequality – the rich get more of the tax cuts than the poor.
As part of the new proposal, low and middle income earners get a tax offset in 2018-19, with high income earners getting very little. This part of the plan is progressive – more money goes to lower income earners.
However, by 2024-25, the tax cuts means high income earners gain A$7,225 per year, while those earning A$50,000 to A$90,000 gain A$540 per year, and those earning A$30,000 gain A$200 per year.
Of course, another factor of tax cuts is that they only benefit those who are employed. Tax cuts don’t benefit people like the unemployed, pensioners, students (usually young people) and those on disability support pensions.
The conversation Australians need to have is how we should be spending the revenue boost we are seeing over the next few years. We can either spend this windfall gain on benefits to high income earners, in the hope that this will flow through spending to everyone else; or maybe we should encourage young people into housing through an increase to the first home owners grant, or increased funding for our schools, universities and health system.
We’ve developed a budget calculator so you can see how your family is affected by the 2018 budget.
Opposition leader Bill Shorten has launched a tax bidding war, promising to top the government’s tax relief for lower and middle income earners, as he prepares to fight a string of byelections in Labor seats.
The Labor alternative almost doubles the budget’s relief for these taxpayers, incorporating the early part of the government’s plan and then building on it.
Delivering his budget reply in Parliament on Thursday night, Shorten pledged to give bigger income tax cuts for 10 million taxpayers. Some four million would get A$398 a year more than the $530 under the government’s plan.
Labor’s “Working Australians Tax Refund”, would cost $5.8 billion more than the government’s plan over the forward estimates.
Labor’s alternative comes as debate intensifies about the latter stage of the government’s plan, when a flattening of the tax scale would give substantial benefit to high income earners.
The ALP hardened its position against that change as modelling cast doubt on its fairness. The opposition launched a Senate inquiry which will report mid June on the tax legislation, introduced into parliament on Wednesday.
The government says it will not split the bill, which it wants through before parliament rises for its winter break, but will be under pressure to do so including from the crossbench.
Under Shorten’s proposal, the ALP would support the government’s budget tax cut in 2018-19. Once in power, it would then deliver bigger tax cuts from July 1 2019, when it began the refund.
In Labor’s first budget “we will deliver a bigger better and fairer tax cut for 10 million working Australians. Almost double what the government offered on Tuesday”, Shorten told parliament.
The Labor plan would give all taxpayers earning under $125,000 a year a larger tax cut than they would get under the budget plan.
In a speech heavy on the theme of fairness, Shorten said: “At the next election there will be a very clear choice on tax. Ten million Australians will pay less tax under Labor”.
He also pitched his budget reply directly at the campaign for the byelections.
“This is my challenge to the Prime Minister. If you think that your budget is fair, if you think that your sneaky cuts can survive scrutiny, put it to the test. Put it to the test in Burnie, put it to the test in Fremantle and in Perth.
“I will put my better, fairer, bigger income tax cut against yours. I’ll put my plans to rescue hospitals and fund Medicare against your cuts. I’ll put my plans to properly fund schools against your cuts and I’ll put my plan to boost wages against your plan to cut penalty rates and I’ll put my plans for 100,000 TAFE places against your cuts to apprenticeships and training and I’ll fight for the ABC against your cuts.”
In the Labor model, a teacher earning $65,000 would get tax relief of $928 a year, $398 more than the $530 offered by the government.
A married couple, with one partner earning $90,000 and the other $50,000 would receive a tax cut of $1855, making them $796 a year better off under Labor than under the government.
Shorten said Labor could afford the tax cuts it proposed because it wasn’t giving $80 billion to big business and the big four banks. Also, it had earlier made hard choices on revenue measures.
An ALP government could deliver “the winning trifecta” – “a genuine tax cut for middle and working class Australians; proper funding for schools, hospitals and the safety net; and paying back more of Australia’s national debt faster”.
Shorten said that the Liberals were proposing to radically rewrite the tax rules in their seven year plan. Research had revealed that $6 in every $10 would go to the wealthiest 20% of Australians, he said .
“Very quickly, this is starting to look like a Mates Rates tax plan”.
“And at a time of flat wages, rising inequality and a growing sense of unfairness in the community”.
Other initiatives he announced include:
· A plan for skills, TAFE and apprentices costing $473 million over the forward estimates.
· Abolition of the cap on university places, re-instating Labor’s demand driven system, at a cost of $140 million over the forward estimates.
· Reversing cuts to hospitals and establishing a Better Hospitals Fund, seeing an extra $2.8 billion flow to public hospitals. This would cost $764 million over the budget period.
· Invest $80 million to boost the number of eligible MRI machines and approve 20 new licences – which would mean 500,000 more scans funded by Medicare over the course of a first Labor budget.
· Provide $25m to the Commonwealth Public Prosecutor to establish a Corporate Crime Taskforce. The Taskforce would deal with recommendations for criminal prosecution from the banking royal commission.
What lessons can we take from this year’s outcome? After two years in Canberra, I haven’t discovered a magic key to the Federal coffers. But here are my general observations.
Intrinsic value is not sufficient
We can’t assume that the broad public support for science will translate into support for specific proposals unless we do the work to explain the benefits, including more jobs and better health.
Being intrinsically valuable is not sufficient. Clarity about what we can deliver is essential when science is competing with spending proposals with obvious and immediate benefits – like more hospital beds.
It helps to remember that most politicians aren’t experts in science policy. I’ve wrestled for years with the term “national research infrastructure”. People I talk to outside the research sector simply don’t understand it. A small change to saying “national research facilities” turns the lights on.
It’s important for politicians to see the outcomes of public investment. They see the dollar figures in the budget papers but they don’t necessarily connect the research breakthroughs they read about in the newspapers years later to the programs that made them possible. It is important to help local members, irrespective of their party, recognise the impact of previously funded programs working for Australians.
Review and communicate
Take stock of progress and give credit to what has been achieved to date before heading back into the arena for the next round. As custodians of public funds, researchers should be proud to share their achievements with the taxpayers who ultimately make them possible.
Finally, I’ve always found politicians to be far more receptive to funding proposals when they see commitment from other quarters. It’s not just the Commonwealth that needs to step up. It’s business. It’s state and territory governments. It’s philanthropists.
If we reach out widely, we can strengthen our advocacy with new allies, and at the same time, help government to focus on the things that only government can do.
Below I highlight some key areas funded through Budget 2018.
I am encouraged that the government has committed to review the investment plan every two years, in recognition of the importance of keeping this discussion firmly on the national agenda.
In addition to these funds, the budget acts on an urgent priority flagged in the Roadmap – high performance computing. $70 million for the Pawsey Supercomputing Centre in Perth adds to the $70 million previously committed to the National Computational Infrastructure in Canberra.
This builds on the $119 million announced for the European Southern Observatory in the previous budget.
The ISA mission to preserve the Great Barrier Reef is supported by $100 million in new investment for coral reef research and restoration projects, as part of a $500 million package announced last month.
The ISA mission to harness precision medicine and genomics to make Australia the healthiest nation in the world is backed with $500 million over the next ten years from the Medical Research Future Fund.
A scaffold for the genomics revolution was provided by the Australian Council of Learned Academies (ACOLA) in the recent Precision Medicine Horizon Scanning report, commissioned by the Commonwealth Science Council.
A forthcoming Horizon Scanning report, on artificial intelligence, will likewise inform the $30 million commitment to AI and machine learning in the 2018 budget. The funding includes a national ethics framework for AI – a welcome development that will position Australia well in the global AI standards debate.
Over four years, $36 million will be provided for the Antarctic science program.
An amount of $4.5 million over four years is aimed to encourage more women into STEM education and careers, including a decadal plan for women in science.
With a focus on GPS technology, $225 million is allocated over four years to improve the accuracy of satellite navigation, and $37 million over three years for Digital Earth Australia. The goal of this funding is to make satellite data accessible for research, regional Australia and business.
There is also $20 million for an Asian Innovation Strategy, including an extension of the Australia-India Strategic Research Fund for four years.
In the business arena, changes to address integrity and additionality (that is, driving R&D to levels beyond “business as usual”) in the Research and Development Tax Incentive (RDTI) will reduce by an estimated $2.4 billion the money the scheme delivers to industry.
As one of the authors of the “3Fs” review of the RDTI – with Bill Ferris and John Fraser – I support the rebalancing of Australia’s business innovation budget. We are a global outlier in our heavy reliance on the indirect pull-through achieved through the tax system, instead of mission-driven direct investment.
With money recouped from the RDTI, scientists and research-intensive businesses should be making the case for more and better-targeted programs. Work remains to be done.
As with many previous budgets, matters relating to energy and climate change were relegated to little more than a footnote in Treasurer Scott Morrison’s 2018 budget speech. And even the contents of that footnote told us nothing new.
This will bring relief to some, but cause frustration for others.
What Budget 2018 did contain was three “announcables” – or, to put it more accurately, re-announcables.
First, Morrison declared that adoption of the federal government’s National Energy Guarantee would save the average household A$400 a year on its electricity bills. This is a bit of sleight of hand. Yes, modelling for the NEG shows that consumers’ bills will be on average A$400 lower than in 2017. But much of those savings will occur before the NEG comes into force in 2020.
Second, the treasurer declared that:
All energy sources and technologies should support themselves without taxpayer subsidies. The current subsidy scheme will be phased out from 2020.
The subsidies to which Morrison refers are from the Renewable Energy Target (RET). But it is hardly news that the scheme will to be phased out from 2020. This has been known for a decade. In fact, it’s a bit of a stretch to say the subsidies are being “phased out” at all.
After 2020, existing or new renewable energy projects will still be able to generate the same renewable energy certificates for every megawatt hour of electricity they produce, which they can then sell to retailers. The ability to generate certificates – and therefore generate a subsidy – will only end in 2030. The difference between the pre- and post-2020 RET is that there will be no annual increase in the target.
Finally, the treasurer pledged that the federal government will keep up the pressure on the big energy companies to give consumers better electricity and gas deals. This announcement is a signal as to when we can expect to see the next real action from the government on energy. It will come in July, when Morrison receives the report on the Retail Electricity Pricing Inquiry, which is being carried out by the Australian Competition and Consumer Commission (ACCC).
This year’s budget may not have had a whole lot of surprises, but it was chock full of crafty timing tricks. The government’s new personal income tax plan is implemented over seven years, the much-vaunted return to surplus begins in 2019-20, and support for the “smart economy” involves $2.4 billion over, wait for it, 12 years.
In fact, it seems that timing tricks are now a thing in Australian politics. Revenues are brought forward and spending pushed back for cosmetic effect.
The Coalition’s company tax cuts are scheduled to be implemented over a full decade, Labor’s plan to cut back on negative gearing has modest short-term impact on the budget but ramps up over time, and on and on.
This gradual, glide-path approach to fiscal policy is sometimes good, sometimes not so much.
Labor’s negative gearing plan is an example of where the long timeframe is both sensible and appropriate. By grandfathering in existing negatively geared properties the Labor plan ensures that folks who relied on existing tax arrangements when making investment plans are not punished. Similarly, current Coalition policy regarding raising the retirement age for the pension is not retrospective.
Protecting reliance interests in this way is important for both fairness and certainty. The principle applies equally to potential changes in superannuation taxation, indexation of the aged pension, and other budget measures past, present and future.
Having said that, both sides of politics could do a better job of protecting Australians who have relied on existing policy settings when making big decisions. The government’s changes to superannuation taxation last year clearly violated the principle, and Labor’s plan to curtail the use of franking credits also runs afoul of it.
But many of these timing tricks are just that—tricks. Take the company tax cut. It is clearly structured to make sure the big revenue hits happen in years eight to 10.
The hope seems to be that voters don’t focus on things that far into the future, but companies possibly do. Add to that the fact that the federal budget is heavily focused on a four-year horizon — the so-called “forward estimates period”.
Four years is a completely arbitrary time frame with no real economic basis. The idea is that it is far enough into the future to be meaningful, but close enough to the present to be predictable. In reality it is neither meaningful nor predictable.
Treasury forecasts are almost always overly optimistic. In the last 20 years of budgets, from both sides of politics, they are almost always wrong.
Yet this forward-estimate timing window, a media that goes along with it, and a public that is starved for time, mean that politicians can get away with pulling good news forward and pushing bad news back; gaming the system.
Indeed, since future parliaments are not bound by today’s legislation, I wonder whether there is any use at all for a government to announce what they plan to do 10 years hence. If history is any judge, then the political party in question probably won’t be in office. Prime ministers and treasurers have a tough enough time surviving to the next election, let alone making it through a decade.
But there is a purpose to this long-term planning with legislative force. It creates a default that a future government needs to reverse. And we know from the Nobel-prize-winning work of Danny Kahneman and Dick Thaler that defaults can have a powerful psychological and behavioural effect — it can change the choices people make, and how they feel about those choices.
Speaking of defaults and timing, perhaps the most natural thing that could be done with regard to the federal budget would be to index tax brackets to wages growth. This would instantly do away with “bracket creep”, where wages growth and fixed tax thresholds lead middle Australia to pay an ever-increasing average tax rate. Governments of all stripes hate this because it forces them to actually raise taxes rather than get a free kick every year which folks tend not to notice very much. In fact, 80% of deficit reduction in recent years has come from such bracket creep.
Timing is likely to be a constant theme in the run-up to the next federal election. We can expect Labor to emphasise their $200 billion “war chest” that they plan to spend over the next decade. Equally, the government looks set to keep pushing the line that the big banks are paying more tax now and won’t get a tax cut until close to 2030.
Timing tricks help politicians avoid dealing with the substance of their policies. That isn’t going to change any time soon.