SMH: pre-release news from the PM?

So, the SMH today carries a story that under an Abbot-led government people will pay more taxes.  According to…..the Prime Minister.  And, what’s more, she hasn’t said it yet, but the news is that she’s going to say it today, in Western Sydney.  Are they reporting news, or are they just part of the political process?

Basically the story is another way of saying that Abbott has promised to repeal the carbon and mining taxes, and all associated packages.  So you’ll pay less for your energy, and you’ll the compensation that was given in return.  And that compensation was lumpy – not everyone got the same – so you can find people who are worse off.  Presumably there are also people who would be better off.

Interestingly, there is no discussion of the fact that the compensation was substantially more than either tax raised, and therefore is creating a budget black hole.  Nor that, under current policy, when the carbon tax turns into a set of carbon credits that are sold on the open market, we’d expect to see a plummet in the price to European levels (since the credits are portable to Europe), and therefore the tax take will lower further still.  In other words, under the current trajectory this policy will create a large budget gap.

My pick is that Abbott can afford to leave much of the politically sensitive compensation in place, with the exception of the “school kids bonus” that was basically just a cash give away.  Because the taxes raise so little money he can safely cut them.  In the case of the mining tax, the smart move would be to encourage the states to increase their royalties at the same time, and ditch Gonski.  The message was that he’d gotten rid of a bad tax and a bad policy, and he’s getting the federal government out of both mining taxes and education.  The states get more money, but more accountability, since they’ve got to pay for their own policies on schools.



2 thoughts on “SMH: pre-release news from the PM?

  1. Its weird, you have the lucky country but none of my friends like eithe Gillard or Tony Abbot. They say they will vote Liberal abbot because he is the lesser evil. Over here we continue our passive affection for John Key

  2. Yeah, my personal view is that Abbott is a reasonably good bloke. When you hear him speak in town halls and the like he doesn’t talk down to people like Gillard does. And I like a guy that spends time on fitness – there’s a lot to respect about that. The Fairfax press really dislike him, but I’m not as convinced. I think the demonising is wearing off – people still don’t like him much, but a lot of people really actively dislike Gillard.

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