08 February 2016

Taxing debates

There is one matter on which Labor and the Coalition, Turnbull and Abbott, and every media organisation represented in the press gallery are absolutely agreed: you can have a public debate about a matter of national importance, but only if you know the result in advance. If you don't, it's all a bit shambolic. Only if the result is managed in advance can the 'debate' be managed in an orderly way. The broadcast media can praise the sheer orderliness of it all, so that when the conclusion comes everyone can say how inevitable it all was and thank everyone for having a go. The only losers are those who thought they might influence the outcome when it was all stitched up well ahead of time.

This is what happened with the latest manifestation of the tax debate.

Press gallery journalists record issues being talked up/down, but even though they have seen several rounds of these debates they cannot evaluate the options, and cannot describe what might happen if those options got up. Mouthing notions of 'respect the audience', their only comment on tax is to churn out another "here we go again!" piece on tax reform that could easily be done by an algorithm. The role of broadcast media in complex public debates is not that valuable when they lack the knowledge and wit to participate. Do they think it's cute, bringing plastic splayds to knife-fights? Are they cleaving to some ancient journo tradition, from days when the population was less educated and expected less from government (e.g. when BEER, CIGS UP sufficed as tax/budget commentary)? You have to fossick for glints on economists' blogs to piece together some idea about taxing and debt repayments, spending and investing. The traditional broadcast media simply are not helpful and have no idea, they have no idea why anyone would want to do that, and have neither the desire nor the wit to get one.

I wish Laura Tingle was not the only journalist capable of examining tax reform from an economic standpoint, and of drawing on a record of proposals over recent years (one that goes beyond "here we go again!"). I wish Jessica Irvine was not the only journalist who remembers Turnbull's tax-policy spam of 2005. I wish Dan Tehan hadn't embarrassed himself on two fronts: not only floating a sixth-rate imitation of Turnbull's raft of ideas, but resorting to two of the press gallery's biggest clowns in foisting the proposals at the public.

This dude thinks he's engaging in a tax debate ands a refugee debate at the same time. He's doing neither. He can't decide whether wages in his magic zone should be low or high. All the bad things facing asylum seekers in detention - abuse, neglect, bad/no healthcare, accommodation, education, or jobs - are present in spades in remote Top End communities. A magic tax zone that demands lots of social services? It's called "Western Australia" and the Treasurer there is an IPA dude who spends every working day having his nose rubbed in his life's works and beliefs. Thanks anyway though!

It's true, as Peter Martin points out, that Turnbull has run out of time to hold and conclude a full debate. I had known Joe Hockey when we were Young Liberals in the early 1990s and he seemed to fizz with ideas; I realise now that he liked the idea of having ideas, which explained his contempt for people who campaigned for ideas to go through to execution. He should at least have left a Green Paper (an outline of the "all options on the table"). Turnbull should still be able to have ideas about tax reform that needn't be cut and dried - a second-term agenda, if you will - rather than "hose down" or "distance himself from" or "refuse to rule out", etc.

If the Liberal Party is going to use coming preselection battles to define its future, let's have the combatants weigh in on tax policy. If Craig Kelly can't even cope with climate change, let's hear from Kent Johns or Angus Taylor or whomever else. All that North Sydney butthurt showed was what happens when those become accustomed to unearned privilege and then have it taken away from them:
  • Charlie Lynn taught Jai Rowell everything he knew about politics (because Rowell is a slow learner, it took longer than ten minutes), and Rowell went after Lynn like Dr Frankenstein's monster.
  • Ross Cameron would have been an Abbott government minister had he not tripped over his own dick. He makes Mark Latham look like a Renaissance man, he embodies what smarm would look like if it could congeal, and has ended up even more of a pointless mediocrity than his father. If I was eking out a living on welfare, and getting abused by muppets like these, I would simply point to Ross Cameron and eventually the debate about contributing to the society that sustains you would subside.
  • When sensible people wonder why Bronwyn Bishop won't just go from public life, you point to people like Jokus Ludicrous as the sort of person who keeps her there regardless.
  • You can see why they're all staunch monarchists: they love a bit of unearned privilege, but they all lack the taste, good grace, and personal security to just smile and wave.
Those three stooges hold a candle for the return of Tony Abbott to the Prime Ministership - with their skills and wit, they may as well hold out for Harold Holt. You can see why Turnbull is pretty safe. When I started writing this blog in 2006 the big press gallery beat-up was that Peter Costello was stalking John Howard for the Liberal leadership, and Abbott's pussyfooting around today is even sillier than Costello's was then. The producer of that piece, Xanthe Kleinig, is the daughter of Jan Kleinig, a moderate Liberal warrior so fierce that in 2004 she "risked expulsion from the Liberal Party" to fight for Peter King against a rightwing insurgency in Wentworth from Malcolm Turnbull.

Abbott is no closer to returning to the Prime Ministership than Peter Costello was a decade ago; any press gallery journalist who insists otherwise can wait for me in the Parliament House carpark (I'm not being belligerent - they really have nothing better to do than hang around and wait for someone who's too busy to meet with them).

Labor have one or two ideas, but they haven't undertaken a broad debate either; they have just thrown together a slightly extended press release based on the democratic processes of a vast national organisation some focus groups and a staffer having to knock something up for an announceable. You might argue that Labor may have a broad-ranging debate if they get into office, but Shorten and Bowen aren't capable even of anything so vacuous as this.

The major parties have bemoaned their inability to attract a broad base of members. It's easy to see this as a problem for them, but it becomes a problem for all of us once that party becomes the government. Jamies Briggs and Clements are symptoms of the same disease, similar pustules on different buttocks. A party organisation so small that it can be wheeled about by clueless control-freaks like John McTernan or Peta Credlin might be hell to work within, but when public debate is fed into such organisation a range of nuanced options quickly becomes burnt offerings and raw deals.

They rely utterly upon the media to have the credibility and suasion with the public parties have lacked for years. Media analysis of tax policy, as with any sort of policy, is all about the horse-race - and horse-race journalism is nobbled once a debate becomes bipartisan. Let us be in no doubt that the structural deficit of the budget is wholly bipartisan, and that neither major party can provide the leadership to guide us out of it.

When politicians and journalists sink together in credibility, politicians and public alike need engagement strategies that the press gallery can't and won't provide. This is not to abandon the importance of good journalism, but it is to abandon the unimportant, bad journalism that the press gallery insists is good enough for the likes of us.



6 comments:

  1. Andrew, the press gallery are as ignorant of economics and how the economy actually works as most of the great unwashed out in voter land.
    When any politician comments on matters economic it's usually frogshit. As Mr Blackadder said to Baldrick.
    "They wouldn't know an economy if it painted itself purple and danced naked on a harpsichord singing "look at me I'm an economy", and these are the ones in charge of the purse strings. Jesus wept.
    Joe Hockey is an economic moron and was one of the worse treasurers this country has seen, his replacement actually looks he will be worse, if that is even remotely possible
    It really is unforgiveable that people can be fed such lies and just nod their collective heads. In this age of the internet, slow as it is, it's not hard to find out how the economy works.
    John Kelly in the AIM gives a good description for a start.
    As for a tax debate, how about a debate on where the money to pay tax comes from in the first place and why taxes are levied at all (and it's not to fund government services).
    Unfortunately this will never happen and we we will have to put with the usual drivel from politicians and the MSM.

    ReplyDelete
    Replies
    1. To understand the federal government’s financial capacity we first need to distinguish between sovereign and non-sovereign entities. State and local governments, you and I and private enterprises are not sovereign. We are strictly limited in our spending capacity and have to fund our spending from net income, savings and borrowings. Too much spending and/or too much borrowing by any one of those entities can result in difficulties in debt servicing, even bankruptcy.
      The federal government issues the currency and can NEVER run out of money; it creates money (sometimes the loaded term “printing money” is used which is incorrect) as the fed government spends by electronic entries. Not much different than score keeping.
      If, as is usual, the private sector and individuals desire to save some of what they earn we tend to have a shortfall in economic activity compared to economic capacity. This shows up in low growth and relatively high un and under employment.
      The federal government has the ability to do something about that by adding money to the economy. This is conventionally called deficit spending but it is a most unfortunate term as deficits add money to the economy.
      In budgetary terms, the difference between tax “revenue” and spending is either a deficit or a surplus. As I said, in the vast majority of cases there will need to be a deficit to support a level of economic activity which has the economy humming along in the goldilocks zone, neither to hot or too cold.
      The size of deficits or surpluses are only meaningful in relation to the state of the economy and if economic growth is low any attempt to run a surplus will reduce activity further and a deficit will probably result anyway, if only due to payments to the resultant workers who lose their jobs.
      It does need to be said that if the federal government attempts to spend “what isn’t there” ie to exceed the productive capacity of the economy we will get inflation. In other words, the limitations of federal government spending are not financial; they are the real on the ground resources.
      The implication of the foregoing is that the federal government can (and should in my opinion) use its financial capacity to spend much more on public services that will benefit all.
      There is much more to be said though, on the role of taxes and the motivations of those who do not want the government to intervene in the economy.

      Delete
  2. The recent GST debacle reminded me of Sir Humphrey's comment on Treasury - "Treasury isn't about deciding what you need, and then deciding how to spend the money. Its about getting as much as you can, and then deciding how to spend it!" Each potential dollar from an increased GST was spent in about five hypothetical ways, while also (apparently) being used to reduce deficit / debt!

    As you've mentioned many times, the whole 'bipartisan = good' attitude has been done to death, and reduces any justification pollies or the press gallery have for their existence. The frequent assumption that "The people are against x, it must be for the reason that we haven't 'explained' x well enough.' Frequently (of course, not always) the disapproval of x is a sign that the majority understand it just fine.

    ReplyDelete
  3. For the most part, political journalists are people who liked words but weren't smart enough to hack it as a better paid type of professional, especially as the job prospects for journalists get ever worse. Why are we surprised that they are not up to the job of interpreting and analysing complex economic policy, legal policy, social policy etc?

    The same goes for a great many politicians, in fact.

    ReplyDelete
  4. " Let us be in no doubt that the structural deficit of the budget is wholly bipartisan, and that neither major party can provide the leadership to guide us out of it. "

    I thought this blog was about analysing press gallery assumptions (group think) rather than agreeing with them. We have a structural problem in the economy but it has nothing to do with the structural deficit. This narrative around government debt being somehow equivalent to household debt - has been generated from a political imperative, not an economic one.

    ReplyDelete
  5. To understand the federal government’s financial capacity we first need to distinguish between sovereign and non-sovereign entities. State and local governments, you and I and private enterprises are not sovereign. We are strictly limited in our spending capacity and have to fund our spending from net income, savings and borrowings. Too much spending and/or too much borrowing by any one of those entities can result in difficulties in debt servicing, even bankruptcy.
    The federal government issues the currency and can NEVER run out of money; it creates money (sometimes the loaded term “printing money” is used which is incorrect) as the fed government spends by electronic entries. Not much different than score keeping.
    If, as is usual, the private sector and individuals desire to save some of what they earn we tend to have a shortfall in economic activity compared to economic capacity. This shows up in low growth and relatively high un and under employment.
    The federal government has the ability to do something about that by adding money to the economy. This is conventionally called deficit spending but it is a most unfortunate term as deficits add money to the economy.
    In budgetary terms, the difference between tax “revenue” and spending is either a deficit or a surplus. As I said, in the vast majority of cases there will need to be a deficit to support a level of economic activity which has the economy humming along in the goldilocks zone, neither to hot or too cold.
    The size of deficits or surpluses are only meaningful in relation to the state of the economy and if economic growth is low any attempt to run a surplus will reduce activity further and a deficit will probably result anyway, if only due to payments to the resultant workers who lose their jobs.
    It does need to be said that if the federal government attempts to spend “what isn’t there” ie to exceed the productive capacity of the economy we will get inflation. In other words, the limitations of federal government spending are not financial; they are the real on the ground resources.
    The implication of the foregoing is that the federal government can (and should in my opinion) use its financial capacity to spend much more on public services that will benefit all.
    There is much more to be said though, on the role of taxes and the motivations of those who do not want the government to intervene in the economy.

    ReplyDelete