Monday, 15 October 2007

...And They're Off!

So two days in and Johnny Howard, the people's friend has unveiled his latest bribe package. He's offering his 'battlers' (so much more noble a word than 'strugglers' or 'plebeians') a $34 billion tax package. Or is he?

Under the new package the average wage earner ($45,000-55,000) will see a $20 a week tax rise. While those earning slightly more or slightly less than average will see an $11 a week rise. Now let's be honest, it's a pittance, piss all. That is not to underestimate the extra money, which is always handy, but if Howard cares that much about the 'battlers' then why does a part-time worker on $20,000 see a 9 per cent rise in income, while someone earning $200,000, ten times as much, sees theirs rise by 15.5 per cent? It's a tax break for the rich conveniently dressed up with some crumbs from the table. Howard is tossing pennies down and crying "dance to my tune and drink my piss you worthless wretches!"

This is an empty and expensive promise. It is another waste of the much boasted about budget surplus. Mr Howard and Mr Costello love to bring up the budget surplus as evidence of their fiscal credentials. They rarely like to discuss how they have achieved this though, which is:

- Drastically cutting health and education spending, resulting in chronic skills shortage due to drag down the economy in a generation.
- Creating a mountain of foreign debt approaching unmanageable proportions (this isn't factored into the surplus calculation which merely measures tax revenue versus government spending)
-Being the highest taxing government in Australian history, despite claiming to be conservatives.

And yet they still boast of the surplus as if it were a good thing in and of itself. They might like to listen to John Maynard Keynes, however unfashionable he may currently be, who said "The whole objective of having a low rate of interest is in order to do things. But if you begin to think it is wise to stop doing things in order to lower the rate of interest, you are standing upside down." The same may be said of the surplus. It is useful to have a surplus to invest in the nation and its economy. To cut investment to gain a surplus is muddled and useless. Yet that is exactly what has happened. All sense has been sacrificed to the great god Surplus.

Now we are seeing some of that money being used, but to what end? They have used the revenue from record high taxes to offer paltry tax cuts, a tiny and incredibly short-term bonus that costs billions. Unlike infrastructure investment, tax cuts do not reap anything. Rather than invest in reducing foreign debt or encouraging skills or better health care they are investing in nothing at all. Like Homer Simpson putting his money in pumpkins and waiting for the prices to keep rising after Halloween they are foolishly squandering the nation's wealth on transitory economic soap wanks. It will do little to help the economy, in fact pumping cash into an already overheated economy will cause inflation and send those precious interest rates up, hurting the very people this break purports to help. Says who? The governor of the Australian Reserve Bank, they who actually control rates. Not usually known for his socialist leanings, he pleaded with Howard to limit any tax cut in order to avoid a rates rise, but he has only partially succeeded. Rates look certain to rise anyway, and this will only make things worse.

Will people see through this initiative? Well, the polls have shifted towards Howard after the announcement, showing that they will most likely not. If you ask a small child whether they would rather have a block of chocolate now or a whole bar in an hour, their lack of understanding and foresight means that they will choose a block now. We may well be living in a world of small children.

No comments: