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Tue 25 Mar

Australia Institute Live: Jim Chalmers delivers fourth budget with surprise tax cuts ahead of election. As it happened.

Amy Remeikis – Chief Political Analyst

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The Day's News

As part of the budget flurry, the prime minister has spoken to FM radio stations all over the country.

Here is a run down of topics from each appearance:

Melbourne radio 101.9 The Fox

Whether the PM will be seeing one of the hosts appear in a musical.

How the PM would go on one of their radio quizzes (he’s done it, got to nine)

More about the musical.

He has a lot in common with his fiance, including that they like the same footy team (it’s how they met) and have the same political views “broadly” but Jodie is “obsessed” with MAFS

The PM is not as obsessed.

He loves musicals. Jodie does not love musicals.

Running dialogue for the host’s appearance in the musical.

The budget.

Crime in Victoria.

The musical.

The PM loves musicals and his mother loved musicals.

‘Bracket creep’ fact check

Greg Jericho
Chief Economist

The past couple week’s Angus Taylor has been going around the marginal seats yelling about how people are paying on average $3,500 more in tax than they were in June 2022 because of “Bracket creep”

And today The Daily Telegraph is running with a story about how the poor Gen Z are going to be hit the most.

Ok, let’s get into this.

First off. Please. Yes, people are paying more tax than they were 3 years ago because (here comes the shock) people are paid more than they were three years ago. That is the basis of our tax system – you earn more you pay more tax.

And as for young people being “hit” the most?  Well, you could have said that every year for the last… err when was income tax invented?? Young people always start from smaller incomes and get more money because they get a better paying job, get more hours, get more experience, get more qualification etc etc. All of this means they earn more and… yes pay more tax (shocking I know, but good on Angus Taylor for discovering how our tax system works).

Getting a better paying job and then paying more tax IS NOT BRACKET CREEP. That is just getting a better paying job and as a result paying more tax – which is how it should work because when you have more income you can afford to pay more tax! Bracket creep is when you get a pay rise that keeps pace with inflation but you end up paying a higher tax . It mostly affects low-middle income earners because a greater percent of their income is untaxed than is the case for someone on say $150,000

The Daily Telegraph story suggest that a full-time worker aged 20-24 has got a 17.1% pay rise since June 2024. Firstly, congrats to them! That is well above the 9.5% pay rise everyone else has got on average! Also “average” is doing a lot of heavy lifting here. Only around 54% of workers aged 20-24 have a full-time job compared to about 70% of the rest of us. So he’s cherry picking a group that already are doing better than most.

But here’s the kicker – the biggest reason why anyone earning around $67,000 that Taylor says he now cares so greatly about it might be paying more tax is because in 2022 the Morrison government ended the $1,500 tax break known and the “Low-Middle Income Tax Offset”. That $1,500 hit was a 2.2% increase in tax for someone on $67,000.

If Angus really cares about bracket creep he would admit getting rid of the LMITO was a mistake that hurt the very people he are now saying have been hit. But if you listen to him he NEVER mentions LMITO

And here’s the other kicker – the old Stage 3 was terrible for helping bracket creep – because most of the tax cuts went to the richest. That FT 22 yo worker on $67,000 got a $1,306 tax cut when the Alp changed the stage 3 tax cuts. Still not enough to make up for the $1,500 loss of the LMITO but a goodly amount all the same. But had the Old Stage 3 gone through as Angus Taylor wanted, that 22yo would have only got a $502 tax cut and be $804 worse off.

Oddly Angus Taylor is not saying much about that now.

Angus Taylor held a doorstop (short press conference) earlier today, where he said a lot of things, not many that make sense, but a lot of things.

The fact check is going to take a little bit and Grogs is tearing his hair out as we speak.

But this bit on the public service cuts the Coalition want to implement is very revealing:

What we’ve said is the public service has got too big. We’ll get it back to the levels it was at when we were last in government. I learnt in my private sector career, I had one unlike this hopeless Treasurer, in the real world, working with businesses across this country, I learnt that you don’t need to have a bigger team to have a better team. You don’t need to have a bigger team to have a better team. And I’ve got to say that this Treasurer seems to think the exact opposite. This Finance Minister seems to think the exact opposite. So we will get it back to a size that we think is appropriate for the times, given the pressures on the budget, and we think that that is absolutely essential at the time like this. Now, to give you a sense of how badly this government has failed, despite the huge growth in the public service, we’re not seeing any improvement in public services. In fact, quite the opposite. So we’ve seen a 40% increase in the size of the Health Department meanwhile bulk billing has gone from 88% to 77%*. Failure after failure from a government that is focused on itself. It’s focused on its union official mates, and it’s not focused on hardworking Australians who are trying to ahead.

Now this is a line straight out of the DOGE playbook. The children currently running the US public service cuts department have said very similar things – that they don’t understand how banks can manage people’s money with relatively small staffs compared to say, the Treasury.

Comparing the public service – which looks after the population – with the private industry, which looks after slivers of sections of the population – no bank or business services the entire population, or even an entire demographic of the population – is patently ridiculous and designed to confuse you.

Public service cuts only benefit the private sector.

*And for goodness sake this is absolutely ridiculous – the public service does not control bulk billing! It implements government policy! So linking bulk billing rates – which is under the control of the government – to the size of the public service is insultingly stupid.

The announcement hasn’t been officially made as yet, but everyone knows what the LNP is going to do when it comes to Brisbane Olympic’s sites. And who is going to be rail roaded.

The parliament will sit at 12 today. There will be a question time as usual and all the rest of the bits and bobs that go with a parliamentary day. The lock up begins around 1ish where journalists are locked in with the budget documents and a treasury official who has taken their phones and makes sure there is no sneaky internet access (shout out to the news organisations IT departments who have had to create intranet systems just for today to link bureaus with their newsrooms so things can still get subbed and produced and what not without breaking the no internet rules) and then once the Treasurer gets to his feet on the floor of the parliament (around 7ish) then the budget coverage goes live.

The lock up is an old tradition that was introduced by the Chiefley government in the 1940s so journalists working for the morning papers could have the info in advance. Then it became about ‘market sensitivity’ with governments not wanting to announce the budget until after the markets closed. But in this era, all of that is outdated. Most of the budget figures are known (or at least approximated) ahead of time, because analysts have their own models which can predict what Treasury is going to say. And the markets are 24 hours now, so there is no impact on that.

The lock up is one of the only ways the government can preserve its ability to control the narrative, at least for a very short period of time. So it is completely outdated and serves no purpose any longer – other than to give the government of the day control over how the information comes out. So no one is going to give that up.

Well it seems some of the blog readers already know what this budget is going to include – and more importantly, what it won’t

Grog’s budget preview: double standards on debt

Greg Jericho
Chief economist

Ahead of tonight’s budget you can pretty much pre-write the lines that we are going to see from conservative media outlets and the opposition. It will be able about debt, deficits and “spending out of control”.

So a couple things – first our debt levels remain very low compared to the rest of the OECD. Over the past 50 years we have had a deficit 33 times – so two-thirds of the time. A budget surplus is an abnormality. You really need something like a mining boom or a boom in resource prices after a global pandemic to have the type of conditions that justify a surplus. The economy is just limping along at the moment, households are not spending much. A budget deficit is the right thing at the moment as it means the government is helping keep things chugging along rather than trying to slow everything.

But also remember, there is a fair bit of double standards when it comes to reporting the budgets. IN the March 2022 budget Josh Frydenberg went big on sugar-hits trying to spend his way to an election victory. Did The Australian and other conservative media organisations smash them for debt and deficit? Well… no. Instead The Australian ran with the headline of “The Cost of Winning” And Dennis Shanahan suggested glowingly that “Josh Frydenberg has done everything he can in this budget to give the Coalition the best chance it has of winning the next election.”

Sigh. The problem with the ‘can’t reject you for having pets’ thing is that of course landlords can reject you for having pets – they just find another reason. In NSW’s case, they’ll find reasons why the property ‘isn’t suitable’.

Renters need actual protections. Long term leases. Rent freezes. The ability to treat their property like a home and not someone’s investments. Long term security.

The housing affordability crisis is not going to be solved anytime soon because governments don’t want to solve it. And so, in the mean time, governments need to look at making rentals a feasible long term option for people. We’re locking a generation out of home ownership. The least we can do is created a rental situation which gives people a home for life if they want it, with pricing security.

NSW is finally giving renters the smallest approximation of rights, AAP reports:

Millions of renters will soon be spared the frustration of a no-grounds eviction under long-awaited changes developed with property investors in mind.

Exactly two years after Labor swept to power in NSW, partly on a pledge to bolster renters’ rights, Premier Chris Minns announced major rental changes would kick in on May 19.

The most significant shift will force landlords to provide reasons for kicking tenants out and provide longer notice.

“We’ve listened to both sides, we didn’t just rush in with the law,” Premier Chris Minns told 2GB.

He said he understood a lot of people had invested their life savings into property but stressed a need to address the flight of young people from Sydney each year.

The harbour city’s housing market is among the least affordable in the world, with flow-on effects for much of the NSW’s 2.3 million renters.

“Primarily, (young people) move to other states where housing is cheaper,” Mr Minns said.

The premier, however, suggested landlords could continue to keep pets out of their properties “if they did not want the pet”, despite changes to boost pet ownership from May 19.

Under the changes, landlords have three weeks to refuse a tenants’ pet application and must state a specific reason, such as the property being unsuitable.

“You can’t put it (no pets) on the application form,” Mr Minns said.

The changes follow the passage of rental reforms in October, including the immediate end of background check charges and multiple rent increases in a year.

Stronger privacy protections for renters and the introduction of a portable rental bond scheme will be introduced later in 2025, the government says.

No-grounds evictions for both periodic and fixed-term tenancies have been banned in the ACT and South Australia while landlords in Victoria, Queensland and Tasmania need reasons to end periodic tenancies.

Greens move to try and delay environmental wrecking law amendements

It’s safe to say that the Greens are p*ssed at the government’s attempts to rush through environmental law changes that will make it easier for industries like the salmon industry to bypass environmental laws and limit the ability of third party civil society groups (yes, like the Australia Institute) from using its research and expert opinion to assist communities challenging nature-destroying projects.

Sarah Hanson-Young said there is no need to ram the legislation through the parliament and it needs to be “scrutinised properly”.

“Murky legal questions about the environmental consequences must be answered before the Senate rushes this legislation through,” she said.

“The Greens will move to send the Government’s legislation to inquiry. While made with a specific industry in mind – one that poisons our waterways and drives ancient wildlife to extinction – it is broad, and likely to have far reaching consequences beyond the rotten salmon industry.

“Rushing these laws through under the cover of the Federal Budget, without proper scrutiny or consideration has the potential to impact many other cases.

“Environment laws are supposed to protect the environment, not green-light destruction and extinction. At its best, this proposed legislation sidelines science and sends our wildlife to extinction, and at worst it drastically undermines legal protections and has far reaching consequences for our community and planet. An inquiry is the least that is needed.”

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