Election bottom line: taxes will be going up, not down

Whichever side wins this election, it will be taking on a serious budget problem. Both sides are promising increased government spending on various worthy causes, while also promising that taxes will be cut rather than increased. This implies an ever-growing budget deficit. Do you think either side could get away with that? Only in their dreams.

Modern politicians are quite dishonest in what they tell us during election campaigns. They speak in loving detail about the expensive goodies they’re promising, but avoid mentioning any bad things they might have to do. They never present us with the bill.

And then we wonder why so many promises are broken.

Even before it thinks about the future, the new government will have to deal with unfinished business. The budget Treasurer Josh Frydenberg produced at the start of this campaign projected significant deficits for at least the next 10 years.

This despite the worst of the pandemic being over, and almost all the stimulus programs intended to keep the economy going during the lockdowns having been wound up. And despite the rate of unemployment being at its lowest in 50 years.

Economists know this profligacy will have to be corrected soon. Treasury secretary Dr Steven Kennedy has hinted as much. But that will require unpopular cuts in government spending or increases in taxes, or both.

Scott Morrison hasn’t been interested in doing any of that prior to the election. And economists have accepted that such nasty medicine is always administered after an election, not before.

The pollies won’t warn you of this, but I can. The longer the new government hesitates, the more the Reserve Bank will be obliged to compensate by raising interest rates higher than it otherwise would need to.

But that’s just the first of the budget problems the new government will inherit. The next part is that though – as the failure of its first 2014 budget demonstrated – the Coalition lacks the courage to make deep cuts in major spending programs, it has cut areas of spending that lack political support and kept a lid on spending in areas it hoped wouldn’t be noticed.

One of these tricks is to allow waiting lists and waiting times to blow out. Whenever you hear the word backlog – or spend ages on the phone waiting for “your call” to be so “important to us” that it’s actually answered – you know somebody somewhere is trying to save money by cutting the quality of the service you’re getting.

But penny-pinching is a game you can play for only so long before the worm turns. And after nine years, the pipsqueaks have started squeaking.

Did you catch the story just before budget night of the Minister for Veterans’ Affairs, Andrew Gee, who had to threaten to resign before the government relented and gave him extra funding to reduce the backlog in processing claims from veterans? (This from the guys always so sanctimonious on Anzac Day.)

High on the list of cost cuts is the public service. Who cares about all those shiny bums? Well, when you have trouble rolling out vaccinations, or getting hold of enough RATs, maybe you wonder whether it was smart to show so much knowledge and expertise to the door.

Overseas aid is another favourite for cost cutting, and we haven’t been as generous as we could be with our Pacific neighbours. Do you think, say, the Solomon Islanders might have noticed?

The diplomatic corps is another needless extravagance we’ve cut back on. More economic to wait until our relations with big neighbours deteriorate to the point where we need to spend infinitely more on defence preparedness.

Then there’s the notion that $46 a day is plenty for the unemployed to live on. How much longer do you think governments will be able to get away with that outright meanness? Especially when both sides are planning to give battlers like me a $9000-a-year tax cut in 2024.

It’s already clear the jig is up in one of the biggest areas where successive governments have tried to keep a lid on costs: aged care.

A fair part of those endless projected budget deficits is the $17 billion additional spending on aged care in last year’s budget, following the damning report of the royal commission. But there’ll need to be much further spending on care workers’ wages and training before standards are acceptable.

And that’s before you get to the big increases in spending on the National Disability Insurance Scheme and on defence.

Everything points to strong growth in government spending in coming years. And with budget deficits needing to be smaller rather than larger, this points to taxes that are higher.

Which taxes? Obvious candidates are reduced superannuation tax concessions for high earners like me, plus higher user charges for aged care. But the big one will be more bracket creep. Higher inflation equals higher income tax.

Don’t believe any politician who claims to stand for lower taxes. They can’t deliver.

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Easter offers no escape from our responsibility for climate change

Easter is a good time to look up from the daily business of life – getting and spending – and think harder about what we’re doing and why we’re doing it. How grateful are we to those who make sacrifices for us, and how much of our effort goes into sacrificing for others?

For years, I’ve been proud to support Tearfund, a Christian overseas aid organisation. This year its meditations for Lent have focused on its report, They Shall Inherit the Earth: Christian attitudes to climate change.

Why should Christians be particularly concerned about climate change – or what someone in the report prefers to call “climate justice”?

One reason is that those who are and will be worst affected by climate change tend to be the poor – both those in relative poverty in our wealthy country and those in absolute poverty in less developed countries.

You don’t really understand Jesus and his teaching if you haven’t noticed his preoccupation with the poor.

But another reason is that Christians are called to be “stewards of the earth”.

Tim Healy, a lecturer at Alphacrucis College, says “our acceptance of the God-given mandate to care for the earth is an expression of obedience to Jesus’ command to ‘love our neighbours’ – not only those down the street but ‘down time’ as well.

“It’s those who live in the years beyond our own who stand to benefit the most from our faithful and responsible stewardship,” he says.

Susy Lee, an author, says she prefers the term “climate justice” because “the people most likely to be causing [climate change] are not the people most likely to suffer from it.

“The Kingdom of God has a lot to say about justice. God created the world and asked us to look after it justly.”

The report recounts the experience of Hattie Steenholdt, who was on a Scripture Union beach mission trip when bushfires raged through Mallacoota in the early hours of New Year’s Eve in 2019, and stayed around to help.

“We’re called to be stewards of the earth, and yet we live in a time and a society that puts the self first . . . so it is countercultural to go ‘hey, this is something big that’s going on and we’re all playing a part in it’.”

The Christian notion that we’re all responsible for caring for the earth doesn’t sound a million miles from the Aboriginal commitment to “country”.

Many Australian overseas aid agencies include our First Nations people among those they help. And, when it comes to climate change, our Torres Strait Islanders are (forgive the pun) in the same boat as the other South Pacific nations whose worries about climate change we’ve taken so little notice of.

Aunt Rose Elu, last year’s Queensland Senior Australian if the Year, is from Saibai, one of the seven Torres Strait Islands.

“When I was young,” the report quotes her as saying, “I remember that the sea was beautiful, crystal clear and the sea breeze would blow through the houses so beautifully.

“Recently I was home on Saibai and I was shocked by the changes I saw. I cried for my home. The sea level was higher than I have ever seen it. The walls were not working. The graves of my ancestors are being eroded. The high tide washes them away.”

Kuki Rokhum is a director of one of the local Christian organisations that Tearfund works with in India. She says “it is the poorest countries, and within them the poorest people – who have produced the lowest carbon emissions, and have the least resilience to allow them to respond – that feel most strongly the effects of climate-change related disasters, droughts, floods and extreme temperatures.

“With increased disasters there will be more climate-related displacement.”

Farmers in north-west India are already struggling because of unpredictable rainfall and extreme heat, but they know that future generations will feel the impact of a changing climate even more acutely, the report says.

For the family of 80-year-old Dhulji Meghwal, and many others, rainfall has become sporadic over the past two decades and extreme temperatures have led to dry and degraded soil.

“One bigha of land [around 0.4 acres] used to produce enough for the whole year. Now, that land will produce only enough for six months. People are falling into debt because they are purchasing seed from the market and then not getting the production they expect,” Meghwal says.

Economists eschew “anecdotal evidence” and prefer to stick to lofty concepts, backed up by copious facts and figures. Perhaps they’d be more persuasive if they got down to cases more often - as aid agencies have long understood.

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My new hero, Mathias Cormann, now valiant for truth

I find it hugely encouraging. Don’t know if you’ve heard the glad tidings but, on his road to Damascus – or, in this case, Paris – our own Mathias Cormann, former senator and minister for finance, has experienced a miraculous conversion. He’s gone from persecutor of those who care about climate change to being a leader of the cause.

As we said in my Salvo youth, there is much joy in heaven over one sinner that repenteth. I bet Brother Scott’s joy is unconfined.

And it’s clear from Cormann’s first speech as Secretary-General of the revered Organisation for Economic Co-operation and Development that he’s seen the light on a lot more than climate change. Indeed, the new man is exhibiting a distinct air of wokefulness. He’s now valiant for “stronger, cleaner, fairer economic growth”.

Speaking to a meeting of the OECD’s 37 rich and wannabe-rich member-country Council at Ministerial Level last week, Cormann said: “We need to continue to overcome the immediate health challenge, including by pursuing an all-out effort to reach the entire world population with vaccines.

“This is not just an act of benevolence from advanced economies. It is about sustained virus protection for all of us and about giving ourselves the best chance of a sustained recovery.”

Enlightened self-interest. I love it.

Cormann hasn’t changed his tune on chasing down slippery multinational tax avoiders. “It is very important we [the OECD] continue to lead the global fight against tax evasion and multinational tax avoidance and to ensure that digital businesses and all large businesses pay their fair share,” he said.

“We need to complete this work, including by facilitating agreement on an appropriate minimum level of global taxation and by minimising the profit-shifting that has accompanied the digitisation of our globalised economy.” All well and good.

On other matters, where I come from, there was nothing we enjoyed more than hearing some reformed Trophy of Grace testifying to his former wicked ways. As finance minister, Cormann led the Coalition’s repeated cuts to our overseas aid budget which, as a poor country with a big debt, we were told, we could no longer afford.

The reborn Cormann sees it differently. “We [the rich OECD countries] must also continue to strengthen our development co-operation. Low-income countries need our co-operation more than ever – to ensure access to vaccinations, to trade, to financing to help them deal with the climate challenge,” he said.

Cormann, you recall, was one of Tony Abbott’s lieutenants in abolishing Labor’s (already watered-down) minerals resource rent tax and its “price on carbon”.

At the time we were led to believe Julia Gillard’s carbon tax was the reason the retail price of electricity had risen so steeply. Turned out it was just a small part of the story. Prices stayed high.

But, in any case, new insight has come to Cormann in a blinding flash. “Market-based economic principles work,” he now sees. “Global competition at its best is a powerful engine for progress, innovation and an improvement in living standards.”

True, he admits, competition can be uncomfortable. “It can lead to social disruption which, collectively, we need to better manage.” Love that new thought that we ought to do more things “collectively”. Doesn’t quite roll off Cormann’s tongue, but he’s getting there.

“We need to ensure access to high quality education, upskilling and reskilling to ensure everyone can participate and benefit. We need the necessary social supports for those who struggle,” he said.

Amen to that. No hanging the unis out to dry during the pandemic. No spending a decade starving technical education of funds.

On climate change, he tells us that “more and more countries are committing to net-zero emissions as soon as possible and by no later than 2050.

“The challenge is how to turn those commitments into outcomes and to achieve our objective in a ... way that will not leave people behind.”

It’s easy to be cynical. In my youth, working in a big private-sector bureaucracy and watching people fighting their way to the top, I formed the view that many people were happy to adjust their views to fit their new role in the organisation.

When, with much assistance from the Morrison government, Cormann was travelling the world canvassing support for the top OECD job, many environmental groups were loudly opposing his candidacy. They failed to anticipate the fluidity of his views.

In my limited contact with the man, I found this Rocksolid Roarer of the Right friendly to the point of charming. Remembering how successful he was at getting crossbench Senate support for the government’s controversial measures – and at so little cost to the exchequer – I think he has just the right qualities to succeed in bringing the OECD’s divers members to agreement.

And, after all, he wouldn’t be the first person lately to realise that the climate worm has turned and fossil fuel’s days are ending.

Benediction from the Apostle Mathias: “Protecting ourselves from competition and innovation does not stop it from happening elsewhere – it just means that, over time, those who find themselves behind those protective walls fall further and further behind.”

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