GST increase good for pensioners

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Research released this week by the Grattan Institute shows that an extension of the GST to cover a broader range of goods, or an increase in the GST rate, would be beneficial to those receiving government payments including the Age Pension.

The modelling shows that extending the GST to cover a broader range of goods would raise $17 billion per annum, while increasing the GST rate to 15 per cent would generate $27 billion per annum in revenue. Both changes, on face value, hurt low-income households disproportionately.

The solution to this, proposed by the Grattan Institute, is to spend roughly 30 per cent of the raised revenue on increasing the base rate of all welfare payments including pensioners, family benefits and Newstart by five per cent. The modelling also ensures that most households earning up to $100,000 are compensated for at least 75 per cent of the cost of the higher GST.

This would see an increase in the GST to 15 per cent, raising $11 billion for the Turnbull Government after increased payments and tax tradeoffs for poorer households are taken into account.

“People in the bottom 20 per cent would actually be in a better position than they are today,” said Grattan Institute Chief Executive John Daley. “They would have more money to spend and after accounting for the GST, they would be able to buy more with the income they have than they can today.”

Read more from www.abc.net.au
Read more from www.smh.com.au
Read more from www.grattan.edu.au

What do you think? Do you believe the modelling? If you were to trust the modelling, would the suggested changes to the GST have your approval?

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Starting out as a week of work experience in 2005 while studying his Bachelor of Business at Swinburne University, Drew has never left his post and has been with the company ever since, working on the websites digital needs. Drew has a passion for all things technology which is only rivalled for his love of all things sport (watching, not playing).
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220 Comments

Total Comments: 220
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    Once again self funded retirees get shafted – no government payments means no recompense for GST changes and no benefit from changes to tax rates for lower income earners. Would have been better off not scrimping and saving for a comfortable retirement and just become a burden on the deficit for the next 20 years!!

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      lower income earners would benefit from increased family tax benefits,whatever rate they are when the gst rises,which it must!

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      Yes ParraPete. Screw those who were responsible and planned, worked, saved and invest – but tell Australians that they need to work, save and invest to fix our problems! Doesn’t make much sense, does it?

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      Self-funded retirees MUST write to politicians NOW to protest this unfairness and point out that recent taper rate changes combined with falling investment returns mean that many will be ground into poverty by GST changes if they are not also recompensed fairly.

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      Hang on………..here we go again.
      The government is in debt and there are plans to raise $27 billion with a GST on basic commodities like food which WILL AFFECT THE POOR quite disproportionately. Its intention.
      Can somebody explain HOW a government in debt can hand out $1200 a month on top of current base rates? Somebody has to pay.
      This is a scam! Likely that this dishonest and deceptive government is playing the shell game: give ’em cash and increase taxes to pay for it.
      The end game is that the poor are going to GET LESS. Never any different from right wing governments. And if people believe that the Grattan Institute is ‘independent’ then all I can say is look who appointed its members in the past 2 years and find out where it gets funding from. Unless I miss my guess I’d suggest both are from the current government. Sounds to me like corruption at work.

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      Mick, what’s this $1200 you are rabbitting on about?? There is no mention of any $1200 in the article, and no-one has ever suggested anything like that.

      The article says that Pensioners et al, might get a rise of 5% to cover the increase in GST by 5%, ie, cancel each other out. At that rate I would get an extra $35 a fortnight over my current part pension payment. Nothing like $1200.

      Try checking your facts before mouthing off about things you don’t understand.

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      “Could you imagine the Government popping $1200 dollars in your bank account each month? Well, the Finnish Government is proposing just that, in a move that would scrap all social benefits. It’s not so far removed from the proposal by the Grattan Institute, which would see all those on welfare payments receive an extra five percent to offset the increase in GST.”

      Ditto!

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      Forget about Finland, it’s not relevant to Australia.

      It’s never going to happen here because we simply cannot afford it. End of discussion.

      Stop dragging irrelevant rubbish into the discussion, and address the information set out in the article.

      If you are not happy with the current government – and neither am I, then stand for parliament AND FIX IT. Sniping from the sidelines does nothing to solve any problems we pensioners face.

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      All those of pension age should be entitled to a basic State Pension and a health card regardless of income or assets. Self funded retirees are an asset to Australia as they have not only paid a larger share of income tax during their working lives, most would have had Private Health Insurance but are less reliant on Government services in retirement.

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      All those of pension age should be entitled to a basic State Pension and a health card regardless of income or assets. Self funded retirees are an asset to Australia as they have not only paid a larger share of income tax during their working lives, most would have had Private Health Insurance but are less reliant on Government services in retirement.

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      I agree with you niemakawa but the rich DO NOT NEED CONCESSIONS because they will have a good retirement either way.
      When you permit wealthy Australians to launder their money through the superannuation system as currently happens then you create class warfare. The man in the street views such behaviour as little more than the rich raping taxpayers. It is!

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    This looks good except for the self funded retirees. We have already lost significantly with change to the asset cut offs. This would add further loss as there does not seem to be a way of compensating SFR.

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      Write to politicians NOW protesting this unfairness and pointing the impact.

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      Self funded retirees will have to claim this. Have you ever tried claiming anything from the government? If you can get through their required paperwork no mean feat you may get a few pennies thrown your way. Better to just not pay it in the first place.

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      Bonny how do you just not pay GST. As a SFR I paid Carbon Tax but never claimed the rebate because of the difficulty you suggest. Not sure how you avoid GST short of setting up a LLC which would mean starting a business of some type. If you have another way I’d love to hear about it.

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    By what process of twisted logic does anyone, let alone the Grattan Institute, come to the conclusion that by increasing a pensioners cash in hand by 5% while at the same time increasing the cost of the goods the same pensioner has to buy by 15% gives the pensioner more money to spend. Since when has Grattan played the semantics game? Oh that’s right, when it became a Sales Rep for the Liberal government!!

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      How do prices increase by 15%, bartpcb? The GST increase proposed is 5%. I agree, of course, that the overall impact is likely to be much greater than 5% and when inflationary pressures are taken into account, we’ll all be worse off over time. It’s obvious! The government can’t GET more unless the populace get LESS.

      Worst hit, though, will be self-funded retirees – particularly those affected by the recent UNFAIR taper rate change, which saw them losing up to $14,000 a year on top of the massive loss they’ve sustained through investment rate falls, and leaves many couples with incomes of less than $25,000 per year. Don’t suppose ACCOSS or the Greens will stand up for the victims of the unfair changes they lobbied for? Oh, that’s right. They only hurt ”millionaires”. What BS!

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      Rainey: there is currently no tax on most foods. Don’t know about you but most people spend a fair bit of their income on food.

      bartpcb: I think you’ll find that the Grattan Institute is just another arm of the Liberal Party.
      This government just keeps on coming at poor and average Australians. Never changes. Anybody with double digit intelligence would understand that the above article is talking nonsense because the net position will be that everybody other than wealthy citizens will get less. As with everything coming from this government the rich are to be rewarded and the rest of us are to pay our way into slavery. It is what it is.

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      here here, another report weighted in favor of the government, we would not have heard about it otherwise, and there is an old saying never as for a report if you are no confident of the outcome, what vested interest does the gratten institute have??. One thing I have leaned in my old age is that when the government says it is good for yuo run as fast as possible, they are only interested in “The Trought”, if they wanted to save money how about government for once tightening the belt and getting rid of government levels that are not out of date, that will never happen, put a politican out of work, what a novel idea

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      Rainey – the government could get more money by stopping handouts to already wealthy, the superannuation rorts, diesel fuel rebates to miners ( happy for farmers to continue getting it), bringing back the carbon tax which was proven to be more effective than the current joke, and forcing companies and churches to pay the tax they should. PAYE workers are the ones paying for this country and keep getting slugged. Why does anyone on $250,000 need help with Childcare – honestly. The wealthy of this nation are its leaners. And just wait for the rorts under innovation policy. More free handouts to their mates. The govt is a crock, and a lying one at that.

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      And lets not forget about the $75 billion a year lost because multinationals are permitted to launder their Australian income. Something you or I would not be allowed to do. But this is what happens in reality and I for one demand that the ELECTION FUNDING BOOKS ARE OPENED to see if this government is committing fraud on a national scale by selling absolution from our tax system in exchange for election funding.

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      @mick, I agree with you about multinationals but I am at a loss as to how to overcome the problem. They buy their goods from Japan etc. through a tax haven such as the Republic of Ireland for, say, $10Aud, sell the item to Australia for $100Aud which is then sold in Australia to consumers for $101Aud. Profit of $90 in ROI is tax free, profit of $1 in Australia is taxable, less the costs of sales, so they are avoiding tax, not evading it.
      Can we ask the multinational to restructure their business? Can we stop them trading in Australia? Of course not. If anyone out there has a solution, I will be glad to hear it.

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      Mick and Everyone Else: Go to the website of the Gratton Institute to the “About Us” section and you will see how it was formed. It was formed in 2008 (one year after Labor’s Kevin Rudd was elected).
      There is more than what I wish to say here, but in 2008 it was formed in response to a widespread view in government and business that Australia needed a non-partisan think tank providing independent, rigorous and practical solutions to Australia’s most pressing problems.
      Mick – see my other comments in my post below.

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      Have a look at the Board of the Grattan Institute. They don’t get more right wing than some of these people. That pretty well rules out independence. I’d be thinking that this is the reason why this government keeps calling on ‘opinion’ from this group of people.
      I’m sure the Labor government which set up Grattan did not intend it to operate this way. I also remember that Labor under Rudd gave equal numbers of overseas ambassadorships to BOTH sides of politics. Since coming to office this government has to my knowledge only given its side of politics such positions.
      Sorry Mitzy, but it should come as no surprise that Grattan is another right wing tool. When you stack the Board with your cronies you always get what you want.

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      Yes mick, the Grattan Institute prime movers in setting up were the well known people of the right Bracks and Brumby. Excuse the sarcasm.

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      I spent half an hour looking into the background of the current Board. Yeah right sceptic!

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      Rainey, GST is NOT on bread, milk, eggs, raw vegies, fruit, fresh meat, bottled water. We pay GST for ‘ready’ meals, pizza, snack foods, all drinks other than water and milk, all food from take aways, restaurants, etc.

      The previous governments, when introducing the GST made a promise to not tax the above GST-free goods.

      If we buy the above ‘fresh’ foods and cook for ourselves, then we won’t have to pay out any more.

      VAT in the UK is 20%, New Zealand is 15%, Canada is 15%, so we in Australia are fairly fortunate that it has been 10% for over 15 years.

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    not only were what are now deemed self funded retirees shafted throughout their working life by taxation now they will be again disadvantaged by this proposal.. wasn’t worth it but who’d have known the spin the govt gave it at the time..
    in my opinion we should abolish all taxation and in mean all not keep some and lose some like the original gst and make our economy gst income only based .. that way all pay all taxes

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    What a load of LNP-supporting rubbish!
    1: The Gratten Institute exists to justify what the LNP wants.
    2: Do the maths! Us oldies are well versed in maths – we had to do it at school. We can work it out!
    3: It has become increasingly clear to me that this site has an LNP flavour. Whether they think they are playing to an LNP-biassed audience, given our age, or maybe just yet another LNP news outlet?

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    The word “would” is used throughout this article, this alludes to the scam, er, I mean scheme, being simply a proposal. If you one moment you think anything will be approved and put into effect to benefit the Aged Pensioners’ financial “plight” you are sorely naive. The only think this, or any other government, is interested in is enacting legislation which will benefit them and their greedy lifestyles. They get the mine, we get the shaft.

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      The solution is VOTE THIS CREW OUT!

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      yes but, all the ‘crews’ screw; us as it happens.
      wish they’d screw themselves.
      Sorry I’m turning to vulgarity now, but just about fed up.

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      The problem is that ,as has happened throughout the Western World, the people have given away their rights, to Governments. In exchange for a “just” society we now have dictators in charge.

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      Yes. And guess who ‘owns’ many of our leaders and MPs? It certainly for the most part is not society by and large.

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      Polly, “all the crews ‘screw’.”! That’s the best line I have read in YLC for a long time!!!!

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      mick your answer to everything is get Labor back in. 🙁

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      Frank, how laborious that would be.

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      i think that it would be a labour of love!

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      Frank: my answer to Liberal Party deceit is VOTE FOR AN INDEPENDENT…but not one whose preference goes to the current government.

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      mick, I’m sure you would have a valid reason for feeling as strongly as you do about the LNP. I hope that Australia doesn’t get too religious about politics. It’s good fun to have a little banter, but one shouldn’t take it too serious. I never was much interested in politics until the Union/ALP made life almost unbearable for me. Then I made it my business to try to understand why. I still don’t know. I guess it’s like some of those religious wars that have been going on for centuries. Some of us think we understand but how many of us can really justify the continuity of “us against them.”

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      Banter is fun. Agreed. But there is right and wrong and morals. This is where we are at loggerheads. Whilst I may defend Labor from the unfair and dishonest posts which appear I HAVE NO LOVE OF THE BRAND and I do not vote for either side. But I have said that before. Many times.
      As I have frequently said to you…stay with the facts and the truth and do not gild the lily and we will get on. Post troll comments and it’s on.
      Don’t laugh…but I am a very peaceful sort of guy. Just hate corruption in all its forms….
      o matter who or what side of politics it comes from. You could do worse Frank.

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      So then you are happy that the TURC is uncovering plenty of corruption in unions? That’s good mick, at least we can agree on something. 🙂

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      Frank, Frank, Frank……….. The TURC was set up to smear Shorten in precisely the same way a Royal Commission was set up to knife Rudd and Gillard. A well worn path. We all need to see these for what they are: expensive political strategies to gain votes………and the bill sent to taxpayers.
      TURC only got a few low level scalps. Well done but not worth the huge cost to all of us. The one thing that will/is coming out of all of this is that Labor is going to have to clean up the problems which exist in SOME unions. A welcome outcome.
      If you want to unearth true corruption I’d suggest you start with the financial/contractual arrangements between the Liberal Party and big business. We are talking amounts of money which defy belief which deliver policy outcomes in exchange for election funding.
      WHERE ARE THE REAL JOURNALISTS???

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      Mick

      ” We are talking amounts of money which defy belief which deliver policy outcomes in exchange for election funding.
      WHERE ARE THE REAL JOURNALISTS???”

      You have displayed, ad nauseum, how well informed you are on the nefarious dealings of the LNP. Does not your sound knowledge base extend to the type of journalists who would relish your input? If it helps, I could probably furnish some names in the Fairfax stable, or perhaps the Guardian who would absolutely welcome access to your “dirty deeds diary”.

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    This is the Gratton Institute’s thoughts process not the government’s. Probably people relying on the aged pension and no other income support could be no better off and in the same boat as self-funded retirees or worse.
    The Gratton Institute indicates the best way would be to BROADEN the GST to cover fresh food, health and education which is currently not taxed, but if the government found this too difficult then raising the GST to by 5% to 15% would be the second best option?
    Would single pensioners on the current rate of $867 per fortnight receive an additional 5% on that amount or would they receive the increase on the BASE RATE of the pension?
    We all know how “very well we faired” when we received compensation for the carbon price on our electricity accounts and how we would be better off when it was rescinded!
    You can guarantee there are some hidden factors here somewhere, there always is.
    When did a proposal like this ever benefit the “real” taxpayers of this nation or those on pensions and fixed incomes? This will benefit the high income earners more than anyone. As far as I see it, 10% GST when it was introduced in the Howard era was to stay at 10% permanently as each year with rising incomes etc. etc. that 10% increases. Whatever it raked in years ago, it is certainly raking in more today. What is happening is it is not being managed diligently, and governments of whatever persuasion just can’t budget it properly.

    No, leave it as it is and target the “tax avoiders”, safe tax havens, etc. etc. The bottom end is sick to death of being targeted, no wonder the low income earners can’t rise from the ashes. The “majority” of them toil away to keep their heads above water and the moment there is an economic downturn they are the first to lose jobs and then they get condemned for being bludgers on welfare. The more change there is, the more it all stays the same.

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      Please explain who appoints members to this so called ‘institute’ and who funds it???? The current government? Apparently so from what I have read.

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      mick: All I was indicating was that this publication from the Gratton Institute is their thinking and not the current government’s. The government is gathering (as is always the case regardless of who rules) thoughts from various sources.
      If we are not to become over cynical and bitter about governments in general, we have to assume that the wording on the website of the Gratton Institute is genuinely what they are about. Namely they state: We are independent, rigorous and provide practical solutions to Australia’s most pressing problems.

      Gratton Institute Governance Structure:

      An independent body governed by a Board of Directors that provides strategic direction. Directors are appointed by a council of members whose advice is sought but who do not otherwise influence the direction or publications of the Institute. Gratton Institute directors come from leaders in business, academia, government and the law.

      The members of the board are:

      Allan Myers AO QC (Chairman)
      Queens’ Counsel; barrister since 1975
      Professor Glyn av AC
      Vice-Chancellor, University of Melbourne
      Geraldine Doogue
      Journalist and Broadcaster
      Chris Eccles
      Secretary, Department of Premier & Cabinet (Victoria)
      Professor John Funder AO
      Snr. Fellow, Prince Henry’s Institute of Medical Research at Monash Medical Centre
      The Hon. David Kemp, Former Minister for Education, Training & Youth Affairs and for Environment and Heritage
      Mr Andrew Mackenzie BHP Billiton Chief Executive Officer
      Mr Peter Scanlon, Chairman, Taverners Group and the Scanlon Foundation
      Lucy Turnbull AO
      Chair of Prima Biomed Limited and Deputy Chair of the Council of Australian Governments’ City Expert Advisory Panel
      Dr Ian West, Previously Secretary of the Department of Prime Minister and Cabinet.

      There is a full list of members who have made donations to assist the Institute to function and provide this type of paper to the general public and/or governments to digest. Other sections on their website indicate who does the work for payment and who does unpaid work. They ask for donations and suggest $50 to be a member for every 12 months you care to do so. Many of the members donate a lot more.

      Their programs are:
      Productivity Growth
      Budget Policy
      Health
      Energy
      School Education
      Higher Education
      Transport & Cities
      Australian Perspectives

      As you can see the board members are well versed in the areas of their expertise.

      The rest of my submission was basically in disagreeance with the report.

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      P.S. The second listed should read:

      Professor Glyn Davis AC

      I have a habit of typing faster than my keyboard wants to transfer my thoughts.

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      Good information Mitzy. I had a bit of a fish and the list below hardly looks real ‘independent’ to me. Sounds like a whole pile of people who have right wing affiliations with Malcolm Turnbull’s wife Lucy there to keep an eye on proceedings and proably drive the agenda. I wonder what that might be.

      1. Myers – businessman
      2. Patricia Cross – director, banking, top 10 ASX companies
      3. Glyn Davis – education
      4. Geraldine Doogue – reporter
      5. John Funder – medical research
      6. David Kemp – ex Liberal Party MP
      7. ANdrew Mackenzie – ex CEO of BHP
      8. Peter Scanlon – successful investor, on BRW rich list
      9. Andrew Tongue – public service
      10.Lucy Turnbull – wife of PM directing traffic?
      11.James Watt – secretary to Abbott government

      I hardly think that the Grattan Institute can claim to be be independent.

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      A very good mix of experience there mick! Better than a team of union bosses?

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      Mick: Lucy Turnbull joined the Board of the Gratton Institute on 17 December 2012 and her particular passion it said was for how Australian cities are planned, managed and governed. I guess this stems from her stint as Sydney’s First Female Lord Mayor. When I was reading extracts from various sections of the Institute’s website I noted that the original funds to start it up came from the Federal
      government and the Victorian government in the form of an endowment in equal proportions and to keep it honest(?) BHP Billiton also funded. The funds were in the form of an endowment which were invested and the Institute commenced its beginnings as an independent think tank from the income of the investment plus a lot of other donations from all walks of life.
      I do recall in its early beginnings with Michelle Gratton it was known as a left-wing set-up I guess because it was formed in the Kevin Rudd era but long prior to that it was Steve Bracks (Vic Polly) and Peter Costello (Lib Polly) who started discussions on it as far back as 2005.
      It would be nice to think we do have some “independent” think tanks! There are quite a few of them around stated to be “independent” but maybe at times we can pocket that word and render it to whatever way we think.

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      mick: I wouldn’t want to go through all of the board of the Institute, especially this late in the day, but Allen Myers is a Barrister; Academic; Businessman; Landowner; Philanthropist. Have a look at his profile and his philanthropy. To classify him just as a businessman seems a bit unfair. I would hope people think of him as a worthy participant on this think tank. Mick, I didn’t see the name of Patricia Cross on the page showing the members of the Board of Governance Structure?

      Frank: I guess from the time of its inception there has been many participants within the Gratton Institute from all walks of life and industry, maybe even union bosses.

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      I think you are painting a rosy picture Mitzy. If I saw these people all in one room then I have no doubt whose interests would be served. There are only a couple whose interests are not big business orientated.

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      Mitzy, give up, mick is right, he is always right about everything!

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      Never say I am right Peterrj. Just point out of I have the facts wrong….and then point me to your facts. Pretty basic. Really.

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      OK mick, I’ll take up the challenge but you won’t like the result!!!!!

      mick, your not right, you are never never right, so there!!!!

      The basis for the proof of this assertion is none other than yourself and that’s a pretty good authority (in your own mind) ….. “Never say I am right Peterrj”.

      Did I mention that you won’t like my answer??? LOL mick, LOL!!!

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    Govt needs to stop focusing on personal taxes and start taxing foreign corporations operating in Australia and rorting our tax system. Govt also needs to GROW profitable
    revenue-generating govt businesses – to replace the revenue they lost by selling off our profitable utilities like Airports, Roads, Banks, Railways & Ferries. ComCare is a perfect example of profitable govt utility that is being held back from expanding and making more money for taxpayers.

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    Govt needs to stop focusing on personal taxes and start taxing foreign corporations operating in Australia and rorting our tax system. Govt also needs to GROW profitable
    revenue-generating govt businesses – to replace the revenue they lost by selling off our profitable utilities like Airports, Roads, Banks, Railways & Ferries. ComCare is a perfect example of profitable govt utility that is being held back from expanding and making more money for taxpayers.

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    The Grattan Institute is merely a right-wing organisation that believes taxes need to keep on increasing on average workers and low-income people – while company taxes need to be reduced to bugger-all – in line with all right-wing thinking.

    I’ve got a simpler plan. Instead of continually increasing taxes and placing ever-higher tax burdens on average working people and retired folk – let’s make Govts reduce their profligate spending to the level of income they currently get!

    Every tax move by any Govt is always about increasing their take, so they can add more layers of bureaucracy, more legislation, more petty regulations, and bigger troughs for their snouts.

    I can recall when GST was introduced, it was going to be a fairer and simpler system.
    The exact opposite is now the case. As compared to the old Sales Tax Act, the GST laws and regulations are now at 3 times the level of the Sales Tax Act complexity.

    The Sales Tax laws took up a couple of thousand pages, the GST laws are now reputed to occupy close on 6 thousand pages. There are pages and pages dedicated to pathetic, hair-splitting, individual GST divisions. This alone must cost us a fortune in administration.

    A fairer tax system would be a simple 1% tax on all transactions – including foreign currency dealings by banks, which contributes absolutely nothing to Australia’s economic wealth, but which make hundreds of millions in fat profits for banks.

    Banks, along with other rat-cunning corporate entities, never pay a fraction of the tax paid by people on wages or retirees – because they utilise thousands of crafty accountant-lawyers to manipulate the multitude of tax laws so they pay only a pittance in tax.

    A simple flat tax on transactions require no GST laws, no hair-splitting over what is taxed and what is not, and no way to avoid that tax via dubious profit-shifting schemes dreamed up by cunning lawyers.

    The Govt would get adequate income, bureaucracy would be minimised, and you would only pay tax in relation to the amount of money you handled.

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      Glad to have some clarification as to who ‘owns’ the Grattan Institute and in whose favour it works. The real question is WHY does this government keep coming after the poor and leave the rorts and tax avoidance behaviour of the rich unattended to?

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      here here, I agree wholeheartedly.

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      Agreed, Aaron! This is what Pauline Hanson talked about and by the response she received from the media and government you can see that the chance of this happening is nil. Sad, but for the moment it’s a fact.

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      The big end of town and its government are powerful allies who protect their own interests at all costs. And that includes the future of our country. This is why financial interests in politics and the rich need to be severed. Until that happens nothing will change.

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      And the Gratton Institute was formed in 2008 (in the Rudd era) in response to a widespread view in government and business that Australia needed a non-partisan think tank providing independent, rigorous and practical solutions to Australia’s most pressing problems. Go to the Gratton website and read the “About Us” and other sections.

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      Aaron … I will echo all that you have sent … when are you running.
      You’ve got my vote

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      Mitzy: the point is not when it was formed. The point is WHO currently controls it. When you look at the Board that is a no brainer.

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      Aaron, of all the radical ideas expressed in these posting found in YLC yours is probably the most outrageous by a country mile.

      I will repeat your YLC heresy: “Let’s make Govts reduce their profligate spending to the level of income they currently get!”

      Wow, by that do you mean that a Govt is NOT to spend more than it’s total income???

      That would mean a drastic reduction in welfare payments and that includes the Aged Pension!

      I can’t see any Polly (no not you Polly) adopting this radical financial proposition! No, we will keep on spending beyond our financial means as a nation and be in party mode until the Grimm Financial Reaper arrives and then, but only then, will those left look back and lament that your suggestion was not adopted by our political parties!!!! Of course mick would disagree!

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      Peterrj – I am personally not against some deficit spending. Deficits are necessary – the same as businesses need overdrafts for working capital – for periods when the economy needs stimulation, or for when major infrastructure projects are being undertaken, that add to the nations wealth and efficiency.
      Where the problems arise, is when large deficits are seen as a permanent feature of the financial landscape, and politicians continue to spend like there’s no tomorrow, running ever-bigger deficits.
      We have precisely the same problem with Shire councils. My suburban council is relatively debt free, and is reluctant to fund expensive projects with dubious benefits. As a result, we enjoy low rates and modest rate increases.
      The adjoining Shire council spends like a politician on a pork-barreling election tour – and the ratepayers of that Shire have to fund a huge deficit with high rates, and rates increases that are regularly above the average rate increase.

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      Gentlemen: take out WASTE and POLITICAL REPAYMENTS FOR FAVOURS as well as ILL THOUGHT OUT POLICIES and you save humongous sums. Then COLLECT TAXES from those you have the means to avoid them with profit shifting, tax shelters. trusts and superannuation rorts and you have a solution.
      The problem is that both sides are bad in government, are not responsible to taxpayers and think they are God. Oh yes….the current lot are rotten to the core and do not give a tinkers for average citizens. Wait for the tax breaks for the rich. Coming!

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      Our interest bill alone on government debt is $14b pa. We need to find that and some more to pay down the debt, without stifling economic growth. The budget is in such a mess and any attempt at repair is being sabotaged. This government was handed a budget in chaos. The extent of the mess was exemplified by outgoing Labor thinking the deficit was $18b, but treasury figures revealed the deficit was $48b.
      The massive borrowing and spending to get us in this position is clearly not adding revenue and therefor should be regarded as waste, but that’s another unhelpful line of discussion.
      The question is what to do ?

      Shorten has said given the opportunity Labor will borrow their way out of debt and deficit.

      Some suggest we should tax the haves more and give it to the have nots. Others suggest that only high income earners should be taxed more on top of the budget repair tax they have already been burdened with. There’s a call for a tax increase on those saving for their retirement with Superannuation. Increased taxes on Business? Crackdown on tax avoiders? Reduction in spending, including welfare spending. A GST increase? A rearrangement of our tax system?
      Something tells me that we are at a watershed moment in our history.
      We can at least take some comfort knowing that the big issues are being discussed seriously by COAG.
      I see the outcome as being one of 3 results.
      1. A small tweak.
      2. A moderate tweak.
      3. A major reform. Not only of our tax system but including (and not limited to) Budget formulation reform.
      I will let others speculate on the speed bumps to progress?

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      Still the blame game Frank. If Treasury says that the deficit was far higher than expected then WHY DID THEY NOT SAY SO AT THE TIME? Of course the question begs if this government has cooked the books and instructed Treasury to release dodgy figures as well. So let’s shelve the one sided blame game.
      I do note you fail to mention the humongous amounts of money the current government has wasted and misspent as well. Some things never change.

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      Aaron, “Where the problems arise, is when large deficits are seen as a permanent feature of the financial landscape, and politicians continue to spend like there’s no tomorrow, running ever-bigger deficits.”

      It may be obvious to some but can you indicate if we are in his deficit situation now or are we yet to reach that situation?

      What is your prediction when, if we haven’t already, achieved this deficit state?

      Finally, how does one try and avoid the deficit state you speak of???

      Yes, I get your point about the benefits of ‘some’ deficits.

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      Don’t forget the HR Nichols Society either.
      It is simply amazing how the wealthy rigorously maintain that most workers are overpaid, under taxed and underworked, while they are the very opposite.
      Joe Hockey is a classic example. We need to be lifters, not leaners, he told us. We should wait until 70 to retire on a pittance which the government can’t afford, then he retires at 50, gets a dream job in the US, and will struggle to survive on around half a million a year.
      Then there is the current head of Australia Post, who, in 2014 was paid – I didn’t say earned – $4.8 million a year for running a business that is dysfunctional, reducing service and raising prices so that its demise is inevitable, which might be the objective, to prepare the way for more privatization.
      The logical question of how the head of Australia Post gets around ten times the salary of the Prime Minister is consistently avoided, for obvious reasons.
      And the CEO of Australia is small fry compared with the CEOs of banks.
      All of which is a severe warning about privatization, so loved by Liberal governments. Had the Commonwealth Bank remained in government ownership, the government would have retained the ability to control the rorts and ripoffs for which the banking sector has become notorious. The competition could have been fully aware that, for example, when official interest rates fell, the Commonwealth would pass them on in full, so they would fall into line or go out of business.

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      maxchugg, is this the Aust Post person you refer to??? “Fahour is the federal government’s best-paid employee. In the year to June 2013, his remuneration was almost $4.8 million, compared to the prime minister’s $507,000. In 2014, he pocketed $4.6 million, but it could have been much more: he passed up the opportunity to take home an incentive payment, instead asking the Australia Post board to donate $2.85 million on his behalf to the Islamic Museum of Australia, an institution founded by his brother. In the latest financial year, when Australia Post lost money for the first time in more than three decades and Fahour announced that close to 2000 jobs would be axed, he undertook to share the pain by forgoing another bonus of more than $2 million.”

      Sorry, what is you point exactly???? This chap has ‘denied himself’ considerable income payments???

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