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7 questions, 70 opinions on major policies facing Australia

As always, Firstlinks readers were eager to share their views on important policy issues facing Australia. We have compiled this document of all comments but to give a quicker look at opinions, a selection of comments is included below.

Thanks to almost 1,000 respondents, the survey is now closed.

1. Should the Stage 3 tax cuts be cancelled?

  • The view that the cuts "only benefit the rich" completely ignores that the previous Stage 1 and 2 cuts (part of the overall package) already targeted all the lower tax brackets.
  • They are long promised, they are not really tax cuts, but a belated return of tax increases from bracket creep (which will accelerate with higher inflation), and although they favour higher income earners, you can't give cuts to the bottom 40% who pay no tax.
  • They were only agreed to avoid a political wedge and are far too costly when so many other top line initiatives need funding.
  • People on over $200k do not need more tax cuts, esp since the top 1% will benefit as much as 65% of lower rungs. Outrageous really.
  • High taxes rates promote 'clever' tax planning and defeats the purpose favouring those with private companies who can capture the lower rates applicable (25%). I consult through a company for that reason.
  • As much as I don't want an increased deficit, people need to have certainty that when the government promises changes to the system, it won't then change it's mind down the track.
  • Distribution of wealth in Australia is becoming top heavy.
  • They are not needed nor necessary. If the government is determined to give away tax revenue, raising the tax-free threshold would be more equitable.
  • Cancelling it may be financially sensible, but we cant deny that we live in a very divisive partisan political environment alongside loud and biased media.
  • Tax Reform is needed to broaden the base away from income tax. 

2. Are prices increasing due to embedded inflationary expectations?

  • Inflation expectations are not yet embedded, but could become embedded if wages chase inflation up.
  • With high consumer demands continuing to be impacted by supply chain issues causing material costs to rise unpredictably merchants are probably hedging their bets in including some degree of extra costs in their quotes as a counter balancing to inflation.
  • The bulk of cost increases have genuine cause but I think it has been much easier to implement cost increases and also get away with a bit of extra thrown in to take advantage of the situation.
  • Restaurants and even some grocers are trying it on and succeeding due to pent up demand from the pandemic. Some higher end restaurants are now charging 25% more for meals to even 50% and more higher for degustation and getting away with it.
  • I don't accept the 'expectation'. I'm changing my buying habits.
  • The RBA Governor should never make comments reaching into the future. The future is very uncertain and he should keep his cards close to his chest. He didn't listen to a lot of economists, who told him to raise interest rates after the emergency was over. He thought he knew better and kept them ultra low for far too long.
  • Like a domino affect, where the prices rise and then wage rises go to off set, adding to inflationary pressures.
  • I do believe Australians are less likely to scrutinise the cost of things as much as past generations. So businesses can get away with more.
  • I think the missing link is fear of unemployment which was all pervasive in the 70's. This was what slowed people spending even when they had a job.
  • Australia manufactures practically nothing now so everything we buy has to be imported with all those associated costs.  

3. Should the childcare subsidies be brought forward to 1 January 2023?

  • Allow nannies to be tax deductible. Much better for shift workers and multi child families.
  • We need to not encourage high fertility rates due to new technologies achieving biological immortality and hence overpopulation risks.
  • Allows for a more flexible workforce and more dynamic economy which will assist with economic growth.
  • Increased childcare subsidies simply lead to higher fees for parents and tax payer with increased profits going to for-profit providers.
  • Give some tax relief to families where mums stay at home (at financial cost) to raise their own kids, in preference to outsourcing the responsibility.
  • There are not enough childcare staff. It will take a long time to increase the number of child care workers and it will need a boost in wages for these workers to retain them and be attractive for new entrants.
  • I think this sort of subsidy has huge benefits for productivity, closing gender wage gaps, improving childhood education and I think a significant net positive to families and the community.
  • It's not about the $, it's about the children - having a parent at home for our children has been amazing and yes, we've sacrificed income and assets, but our children are thriving. You can't outsource it.
  • Employers are screaming out for more workers as we have limited workers coming from overseas currently. Tax revenue collected from these workers would offset the Federal Government's investment.
  • Blows my mind that we are subsidising people earning $500k per year. There is no-one sitting around at home with their kids thinking "if only the government paid $10k more of my childcare fees I'd get a $500k job". 

4. Should a mining super profits tax be introduced?

  • Appropriate mechanisms need to accompany the policy to ensure adverse effects on shareholders (which will be most Australians via their super) aren’t too harshly impacted.
  • In principle it sounds a good idea, but will it be a disincentive for business to invest?
  • Whilst it should produce more revenue, it is "moving the goal posts during the game" and that is not a good practice. The mining companies should be paying a great deal of income tax already. If they are not then that is for the ATO to fix. 
  • We only get one chance to dig it up. A sovereign fund should be established with the tax.
  • It needs to be temporary, as long as there are very high profits.
  • Provided the funds generated are invested and used for the greater good of the nation, as per the Norwegian example.
  • Introduction of this supertax will lessen exploration for future mines on a risk /benefits ratio assessment for investors.
  • Gas, Coal and iron ore exporters are making super profits owing to world issues not as a result of their investment. These resource belong to Australia, it is therefore reasonable that Australia should benefit from this boom. 
  • Mineral ownership should remain with the Commonwealth with a licence given for extraction and a sliding scale of share in the returns.
  • The mining industry is heavily taxed already and additional taxes will discourage research, development, exploration and returns to investors.

5. Should gas supplies be reserved for the East Coast domestic market?

  • We own the gas, we should take care of domestic supply; otherwise the benefits to the economy of exporting will be offset by dis benefits.
  • To some extent yes but again this is a case of moving the goal pasts after the project has been established. There is a big difference between reserving gas supplies and also expecting a subsidised lower price. 
  • Biggest policy failing of State and Federal Government in the last 5 years. So called export net back pricing is delivering domestic prices higher than our export customers domestic economy. 
  • The concept of reserving some local gas for the East Coast Market is attractive, but it should best be out of new fields so that we can honour long term contracts
  • It is crazy that we are rich in this resource yet have one of the worlds highest domestic prices.
  • Yes but not at an over-the-top cost to gas producers. Should apply Australia wide if introduced.
  • This works in WA and was a failure of governments on the East Coast to implement similar measures.
  • Outside of the commercial agreements that need to be revisited this is a no brainer. It is just plain stupid to end up in a situation where gas continues to be shipped offshore and Australian's are rationed gas at a higher price.
  • For efficiency and equity reasons, as well as social and political reasons.
  • Reserving gas supplies will ensure that we will not have energy crisis
  • As a prime producer of gas, it is not acceptable to pay such a high price and allow speculators to benefit because of the current state of energy.

6. Should the October 25 Budget include additional cost of living concessions?

  • We must learn to live within our means. Having low government debt allowed us to withstand several crashes now, and the more debt the government carries, the less robust we are to shocks. 
  • Some modest well targeted actions are warranted, but not broad sweeping handouts.
  • Any assistance would need to be very carefully chosen so that it does not provide a long term burden on the Government revenues
  • Australia needs to make better decisions how it handles its wealth; both in the private personal/corporate sphere and in the public sector. It cannot afford more concessions that defer the reality.
  • I thought we had an inflation problem? Only a fool would try to combat inflation by handing out more cash.
  • If the world is charging higher prices for stuff we must import, then sooner or later we will have to pay those higher prices. Meaning we will have to learn to live with reduced real wealth. However, social security payments need to keep up with real cost increases. As should minimum wages.
  • We need to keep inflation under control, but it’s hard to say that the low paid should be the cannon-fodder in the inflation-controlling exercise when many in our society are much much better than simply ‘well off’ and live with such great excess.
  • No good having fiscal and monetary policy pulling in opposite directions. All this stimulus is what got us here in the first place. It was madness cutting the fuel excise. Way more useful to provide cheap, accessible, and plentiful public transport. When is the diesel rebate going to be removed? Sick of subsidising big business.
  • Governments need to deal with the cause of the problem, not compensate for the consequences of the problem.
  • While politically appropriate, such a measure will place greater responsibility on the RBA to curb inflation (because it is demand side)

7. What other major policy question should we ask?

  • When can we have another complete review of the tax system given that the Henry review sadly got lost in the politics of the day? What are the pros and cons of increasing the rate of GST?
  • Health spending seen as an investment, not a cost. 
  • Climate change policies (mitigation, preparedness) should drive all others. This is an existential threat to not only our species but our planet.
  • Discontinue property investment concessions including negative gearing and capital gains tax discounts.
  • Why are we not investing in more social housing? Residential real estate should not be an investment class but part of a person’s financial wellbeing or base. The percentage of social housing has dramatically decreased over the past 20 years, and we are now suffering from it.
  • Improve education learning across primary, secondary, and tertiary. It is not just about more money for teachers, it is about improving the curriculum, especially in primary and secondary. Less lifestyle choice learning early on and back to basic learning in all sectors. 
  • Increase in immigration of skilled workers in particular in aged care, doctors and nurses.
  • What is a sustainable level of national debt and how can we fund good social and medical services and afford the level of defence spending that is clearly required?
  • Should there be an upper limit (for example $5m per person) on the amount able to be held in any superannuation account, given the considerable tax concessions on earnings within superannuation?
  • Now that we have a legislated emissions reduction target, what is the strategy for achieving this? Vague
    references to 'renewables' are not good enough.

 

Leisa Bell is Assistant Editor at Firstlinks. This article and these opinions are general in nature and do not consider the circumstances of any investor.

 

11 Comments
TD LeStrange
October 12, 2022

Terry. Australia has one big problem, it fails to utilise any product properly, preferring to have holes in the ground rather than a manufacturing base. The excuse was always the cost of the Australian work force compared to that of third world countries. The reality should be evident to anyone, build more fully automated manufacturing units and utilise all aspects of the ore we remove from our ground, so that Australia can truly benefit from its rich resources. Gas is not in infinite abundance;by exporting the bulk of our supply, not only have we left the ordinary Australian with excessively high prices, but we will provide future Australians with the need to import back from one of our biggest users, China, who have enormous supplies of their own which they are reluctant to touch until the rest of the world has run out. Wool is another industry that collapsed. Why export the raw fleece, when we could clean, spin and weave to export a wide variety of cloths, blankets, carpets and lanolin products. An entire pharmaceutical industry needs to be set up to counteract the risk we encountered with covid where many products were actually made in the worst affected Chinese city, Wohan. It is not more immigration that is required, it is for today's people to properly utilise Australia's wealth of resources.

Tony
October 01, 2022

Because our sovereign risk is very low we should make resources companies pay more tax that will add to a Sovereign Fund to compensate Australia for it's depleting resources.

Adrian Watkins
October 01, 2022

Given that our economy & society depend on a healthy natural environment it’s interesting that there’s no mention of the need for Australia to embark upon a massive ecological restoration programme.

David
October 02, 2022

It is my hope that the best thing Australian's can do about the natural environment is to educate their children on its fundamental importance and teach them to love and respect it. Volunteer work in nature conservation and care would also be of benefit. I am not sure massive ecological restoration programs with lots of government money thrown at it is the answer. The Barrier Reef could be an exception here, but if climate change is the main cause of its problems, then that's where the money needs to be allocated.

Steve
October 01, 2022

There seems to be a common theme of govts (of both persuasions) throwing more money at problems such as high cost of housing (via access to super) or child care via larger subsidies (ludicrously to those earning up to $500k !!). Time after time this just adds fuel to the fire as it just increases demand while doing nothing about supply. So prices rise all over again. When govts subsidise up to 90% of the cost of childcare where is the pricing feedback mechanism? (a $100 increase is just $10 to the family, the govt picks up the other $90). And no polly will ever dare to say we need to think about how much we spend on childcare, they won't last 5 seconds. Just how can childcare be more costly than a private school??
At least it looks like the current treasurer is starting to say the money jar is staying on the shelf. Can they stay the course closer to the next election?

John
October 01, 2022

The person who said
""Blows my mind that we are subsidising people earning $500k per year. There is no-one sitting around at home with their kids thinking "if only the government paid $10k more of my childcare fees I'd get a $500k job". ""
They were right on the money !!
There is no reason whatsoever to spend taxpayers money on the wealthy !!

David
September 28, 2022

The economic system is dynamic and complex. As an engineer, I spent a lot of time studying physical dynamic systems, ones with internal momentum and energy storage. They evolve over time in complex ways. When their path needs correcting, some kind of feedback system is required to prevent instability and violent swings away from the desired path. Time is usually of the essence as you must apply opposing forces of the right amount at the correct time to minimise disturbance. Too late makes it worse. Now consider the Reserve bank as the institution to apply such forces to the economy. The feedback is minimal and late. The institution puts off decisions and then over corrects to cause violent oscillations in unexpected places. Not our job if house prices sky rocket, not our problem if people lose lifetime savings. What is needed instead of academic pontifications and wet fingers in the sky is market feedback to correct interest rates incrementally, gently and timely, not on every blue Tuesday at 2:30pm. I appeal to the deep thinkers in the readership to suggest how market mechanisms could be used to replace the Reserve Bank and avoid the wild economic swings that are caused by their very existence.

brett
September 28, 2022

Mining super tax is ridiculous and shows a kindergarten level of understanding of commodities - Large miners have a pipeline of projects and finite capital (especially with greenies trying to cut projects off) - if Australia makes things less profitable then they deploy their cash to other jurisdictions.

Aro
September 28, 2022

That is possible, but, the miners have to decide what levels of risk they are willing to take to make a profit. Some will prefer lower profits in low risk country.

Trevor
September 29, 2022

To Aro. No, Brett is correct. Redeployment is already happening because of "green tape", "red tape", employee legislation, difficulty with native title negotiations, the compliance expense and constant ongoing changes to rules and regulations and the demands by pressure groups on the boards of companies regarding ESG issues , etc They are all taking their toll! And nobody prefers lower profits! You can't begin a project without the necessary financial backing.

brett
September 29, 2022

risk profile of projects include sovereign risk - a large part of that is countries moving goalposts - once considered a minnow despot regime type risk, if oz does this the majors drop us and we sit on unrealised royalties and (normal) taxes for our economy

 

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