May 04, 2016

Horse 2107 - BEER UP, CIGS UP, What's Up Scott? Nothing!

I tear for journalism in this country. This was one of the only opportunities that you had to genuinely put BEER UP, CIGS UP on the front page of the newspaper and be truthful about it... and... and... you all blew it. I mean come on News Corp and Fairfax, what're you doing? Instead of going for a classic, you both decide to put funny pictures on your front page.
Sometimes I wonder if the NT News actually is the last bastion of actually Australian Australian journalism. You're not the New Yorker magazine. Bah, humbug and blithering blazes!

Scott Morrison's first budget, which isn't a budget but an economic plan, which means that it's the economic plan you have when you're not having a budget, is one of the single most glorious "do nothing" budgets since Peter Costello's "hamburger and milkshake" budgets except that this time you don't get the hamburger.
For the vast majority of people, the effect of this budget is nil.

There is a good reason why the effect of this budget is nil. If Morrison had done what his backers had wanted, then the immediate effects of the resulting cuts would be a loss in the July general election. If Morrison had gone for the traditional pre-election budget of giving away lots of presents, then this would have been seen by the electorate and the media as vote buying; so that wasn't an option either.
Instead what we get is a very calculated set of tax cuts, aimed at moving the swing needle in the election only a tiny amount. As an incumbent government, the Coalition already enjoys a statistical political advantage; so this budget is aimed at tweaking just a few numbers, which it is hoped will swing that small percentage of people upon which the election hinges.

The pushing of the 37% tax bracket from $80,001 to $87,001 isn't radical and only has an actual effect of $316 per year, per person. It has a much more symbolic act though. It moves the average income out of the 37% tax bracket and back into the previous one. The fact that the median income is way way below the average (because the average is pulled to m the right by a very very long tail) is mostly irrelevant. Mr Morrison's narrative is about shouting from the rooftops that he did something - and shouting at a select group of people.
The change in the small business tax rate from 28.5% to 27.5% is also about shouting to a very small select group of people. These two headline acts are about speaking directly to small business owners and practically nobody else, because it's generally assumed by the political strategists that these are the sorts of people who ultimately decide the fate of governments.

Rich people will usually vote Liberal and poor people will usually vote Labor. This is not about fighting over the Top Hats or the Hard Hats but the mad unhatted tea party in the middle.
There has been some scurrying around the issue of superannuation as kind of a nod to the yellers in the echo chambers. There's been the strangest cut to the ABC's budget that I've ever seen, with an increase in finding to the news service.

The thing that talkback radio was losing its mind was the increase in tobacco excise because it falls mainly on the poor. I don't understand this at all. As a public health strategy, increasing the tax on tobacco is pretty much obvious. If you increase the tax, the supply curve shifts upwards and less of the thing is sold - job accomplished. The thing that I find utterly insane about this is that it is purely a voluntary tax. Issues surrounding addiction aside, nobody forces people to go into a shop and buy cigarettes. The choked up, bleeding hearts on Alan Jones' show this morning all sounded as if they'd been wounded. I'm sorry but I just find it difficult to feel sorry.

The other thing that I found ridiculous was the harping on about the budget deficit of $37.5bn. The thing is that when governments run deficts, there is a net injection of money into the economy. For a government that wants to build infrastructure like roads and metropolitan railways, deficits are fine. Scott Morrison isn't the devil incarnate, he's just a Treasurer who has delivered a fairly dull "do nothing" budget for most people. That's fine. He's fine. We're all fine. Not even the rich are getting a free hamburger a week.

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