Sunday, February 14, 2016

The Left never learn

It's a basic principle of taxation law that you levy a tax not on all income but on what is left after costs of earning that income are taken into account.  The Labor party can't get that into their thick heads.  "Negative Gearing" simply refers to the fact that some investors think long term and are willing to accept that the rent from properties they let out will not cover all  their costs immediately. They take a loss.  The Labor party wants to stop that because investors can claim that loss against other income.  If Labor does stop it, rents will obviously shoot up as long-term investors are driven out by the increase in their losses.

And here's the crazy bit.  The ALP did once before legislate against negative gearing -- under Paul Keating.  The results were so disastrous that they reversed course in not much more than a year.  They even gave back tax that they had previously levied.

Their present proposals are some improvement on the past in that they intend to preserve negative gearing for new  builds.  They assume that investors will divert all their money into new builds.  But new builds are a more risky proposition so that is in fact likely to mean that many investors will sit on their hands until rents rise. There is such a thing as a risk premium and it is renters who will pay it

And in the end what is the point?  If investors flocked to new builds, they would still be using negative gearing -- meaning that no new tax would be collected -- which frustrates the whole point of the exercise

The Opposition Leader has unveiled a major new policy restricting the tax breaks given to investment property owners.

Bill Shorten has used the New South Wales Labor conference to put forward the proposal to make negative gearing only available on newly constructed homes from July next year.

Mr Shorten says Australia's tax system is like a leaky bucket and limiting access to negative gearing can help fix it.

Shadow Minister for Immigration Richard Marles said on Sky News the decision is a hard but fair one.

'This policy is going to put new home buyers on an equal footing in the housing market and help housing affordability,' Marles said on Sky News' Pyne and Marles program.

Capital gains tax concessions would also be cut from 50 per cent to 25 per cent, also with no change to the rules applying to existing assets.

And the family home, along with personal superannuation, would be 100 per cent capital gains tax free.

'Taken together, these decisions will save $32.1 billion (over 10 years) and help put fairness back into the housing market,' Mr Shorten says.

Analysis by the McKell Institute shows the negative gearing changes could create up to 25,000 new construction jobs annually and add $4.5 billion to economic growth.

Costs for renters would also drop.

Mr Shorten says fixing the 'leaky bucket' is necessary to grow the economy, create jobs and improve the sustainability of the budget.

'The holes are costing our country money and subsidising people and firms who don't need government handouts,' he said.

'Every dollar in revenue lost through a loophole is a dollar that can't be invested in our future - in our schools, universities and TAFEs.'

Negative gearing occurs when the cost of owning a rental property outweighs the income it generates each year.

This creates a taxable loss, which can normally be offset against other income, such as a salary or wage, to provide tax savings.

The housing industry has previously argued restricting access to negative gearing would reduce investment in housing, make it more unaffordable and put pressure on rents.

But studies by welfare groups and unions have pointed to economic benefits.


Kevvy backtracks

When he was looking for votes from Australians he denied that Australians were racist.  Now that he is out of politics, he reverts to the old Leftist standby of calling any non-Leftist racist.  It is such a standby that it should be totally ignored.  Many minorities -- Italians, Greeks,Japanese, Chinese, Indians, Jews etc -- do very well in Australia so what racism there is is obviously minor.  A few jerks can be ignored

Former Prime Minister Kevin Rudd says claims that the booing of ex-Sydney Swans star Adam Goodes had nothing to do with his Aboriginality, are "100 per cent bullshit".

Former prime minister Kevin Rudd says it is "100 per cent bullshit" that the booing of ex-Sydney Swans star Adam Goodes had nothing to do with his Aboriginality, in a speech that called on Australians to name and shame racism.

Speaking on the eighth anniversary of his apology to the stolen generations, Mr Rudd said that he was perhaps naive when he said five years ago that he did not believe that racism was at work in Australia.

"Perhaps [I was] just wishing that the better angels of our nature had begun to prevail in a newly reconciled Australia," he said.  "Or perhaps I was just plain wrong."

But at a breakfast gathering of Indigenous and political leaders at the NSW Parliament on Friday, Mr Rudd cited examples of what an Indigenous friend had recently described as the "low, steady hum of racism" in Australia.

These included stories of a black, but not Indigenous, Australian who left a job because "he just couldn't put up with it any more, being called a 'monkey' by one of his co-workers", and an elderly Aboriginal couple who were refused service in a country cafe.
Adam Goodes' quiet goodbye was typical of the type of person he is. "Adam said that's enough," coach John Longmire said.

Adam Goodes has been a vocal critic of racism in Australia. Photo: Getty Images

"To me this story sounded more like one from the Birmingham, Alabama, of the 1960s rather than regional Australia half a century later," he said.

Mr Rudd said that, when he spoke out last year about the treatment of Goodes, "People screamed back that it wasn't because Adam was Aboriginal. It was just that they disliked his behaviour as a footballer.

"I'm not exactly a connoisseur of the finer points of the game," Mr Rudd continued. "But I think the claim that this was to do with Adam Goodes as a sportsman and not to do with his Aboriginal identity, I think that claim is 100 per cent bullshit."

Mr Rudd said there was another side to Australia, as experienced by many in the community, that is "more confronting than we white folks are ready for".

"I don't believe this racism represents the mainstream of our society," he said. "But it would be wrong to conclude that we don't have a problem."

Even if it is expressed by a small minority, racist words "still carry a great weight, because they are powered by the force of history".

"It's like a cancer that eats away at the fabric of our society - the fabric that binds us together as a wider Australian family," he said.

"The next time any of us see or hear racist behaviour, don't be silent. Call it out for what it is. Name it. Shame it. For racism in any form has no place in the Australia of the 21st century."


Tasmania’s Burning Peatlands Caused by global warming?

No.  There was no statistically significant terrestrial global warming for over 18 years.  And even El Nino pushed the average terrestrial global temperature to a 2015 rise of just over one tenth of a degree Celsius

As the climate warms, the hoary peatlands that blanket Tasmania’s west are drying out, and burning up. The cool moist conditions they rely on are disappearing but the peatlands are exacting a small revenge on the species responsible.

While fires have typically burned across peatlands with little effect, Professor David Bowman said that as they dry, the centuries-old organic soils beneath are starting to smoulder.

In turn, public health experts say the smouldering peatlands are letting off nasty smoke, exacerbating the already serious threats posed by bushfires.

According to Prof. Bowman, there’s little doubt that human-induced climate change is to blame, and the problem will only grow as temperatures rise.

“A lot of people haven’t caught up to how fast climate change is in comparison to the background ecological change,” Prof. Bowman said. “What is happening with a warming climate is ecological change is just speeding up, and there’s going to be collateral.”

“There is damage, and I think these fires are part of that. There have been big fires in the past…but I suspect the trend we’re seeing now, of really big fires, and high frequency big fires, often lit by lightning storms, is signalling something different.”

It’s unclear how bad the damage is at this stage, but if the organic soils under the peatlands combust, they take centuries to regenerate. During that time, peatland ecosystems also becomes more fire-prone, lessening the peat’s chances of regeneration.

Prof. Bowman predicts peat soils will likely be relegated to localised patches along creek lines, and on lower slopes by the end of this century. Outside of these refugia, he expects large tracts of Tasmania’s western wilderness, much of it World Heritage Listed, will be replaced by “scrublands on gravelly ridges”.

“I actually think at a broader scale – if you believe the climate models, and data – it’s pretty simple analysis,” Prof. Bowman said.

“That is, that peatlands require a certain climate; the Tasmanian peatlands are right on the margin; and if you warm the world, the peatlands that exist in Tasmania will … be replaced by a different sort of bush that will be more flammable and has a different sort of hydrology.”

And out of the ashes of Tasmania’s peatlands, a new threat is rising.

“The odd bushfire, you know, every so often, is typical basically anywhere in Australia,” said Dr Fay Johnston, a Menzies Institute researcher at the University of Tasmania. “But here we’ve got vegetation and soil burning that doesn’t normally burn. It’s more than just smoke from a passing vegetation fire, and that can be bad enough.”

“The mixture is more toxic, particularly if you’re close to it, and the sheer load of particles, because it’s incomplete [and]inefficient combustion, is much greater,” Dr Johnston said.

“The smoke mixture has a higher load of toxic ingredients, including suspended particles and products of incomplete combustion – hydrocarbons, volatile organic acids, a whole suite of things – that in their own right are highly irritating.”

“With peat fires, you tend to have a bigger exposure and you tend to have an exposure that goes on for longer,” she said.

On Friday, when authorities issued their latest stakeholder update, there were still over 70 fires – 30 of them uncontrolled – still burning across Tasmania. Smoke has reached as far as Melbourne, and Dr Johnston said that it’s likely around half of Tasmania has been exposed to the damaging haze.

“Everybody in Tasmania, more or less, would’ve got some smoke, but it was the people who live up in the north west who really got affected. It was quite bad for a good week, and it’s fluctuating on and off in some cases since then,” she said.


3.6m households pay no net tax after churn

A higher threshold before tax is levied plus a reduction of  allowances would be more rational and less wasteful

The government is working on ways to untangle the tax-and-transfer system with a focus on the 3.6 million households who are net beneficiaries of government payments.

The one-third of working households receiving more in government benefits than they pay in tax — many of them families — will be targeted by the federal government in a bid to make the system fairer, cut spending and rein in waste.

Scott Morrison, Social Services Minister Christian Porter and their departments are working on ways to untangle the tax-and-transfer system with a focus on the 3.6 million households who are net beneficiaries of government payments.

Mr Porter told The Weekend Australian: “It is very costly to take large sums in tax and give back almost the same or more in benefits.”

He said his department and Treasury were working on identifying the points on the welfare and tax scales where money was wasted.

The federal government cycles more than one-quarter of the hundreds of billions of dollars it raises in tax revenue through its bureaucracy before giving it back to people, sometimes the same taxpayers, in benefits. Government ministers have cited the statistic that 40 per cent of all households and 30 per cent of working households did not pay net tax.

Exclusive government modelling shows how this looks in the real world.

A couple with two children aged four and six and a single income of $50,000 receive $15,421 in family tax benefits, $7000 more than they pay in income tax. The modelling does not include rebates such as those for childcare (a maximum of $7500 a year) or for private health insurance.

The Treasurer said migration of tax benefits to the welfare system was “a big problem”.

“We actually have an earnings problem in this country,” Mr Morrison told The Weekend Aus­tralian. “People are not earning enough. The country needs to earn more. And the tax burden on the earners in this economy is something that is a very high economic goal that we have to ­address. Fairness is a two-way street. You’ve got to look at the fairness to those who receive the benefits, but it’s got to be fair on those who are paying for it.”

The Treasurer’s comments come in a week when the government shied away from “big bang” tax reform and began the hunt for savings from other areas of government spending, such as retirement incomes, negative gearing and welfare.

Modelling by the Australian National University Centre for Social Research and Methods using 2013-14 ABS Survey of Income and Housing data paints a picture of these households, setting them squarely in the territory of “Howard’s battlers” who swept the conservative prime minister to victory in 1996.

There are 3.6 million households that are net beneficiaries of the tax and transfer system out of 8.8 million and among the 1.9 million working age households, 608,509 of these are couples with dependent children.

The matriarchs or patriarchs of these households are most often aged between 30 and 44, they have two young children and 47 per cent of them are renters.

Renters have a median net worth of $57,000 but those with a mortgage have a median home value of $400,000 and a median net worth of $329,000.

This is middle Australia and the stigma of government intervention in their lives hangs heavy.

ANU Centre for Social Research and Methods research fellow Matthew Taylor said: “People get a bit excited about the lifters and leaners rhetoric but I would suggest, in as far as the objective of the system is lifetime income smoothing, the percentage of net taxpayers is to some extent a ­prisoner of demography.”

If society wanted families to have children, this was part of the deal, he said.

Mr Porter said any search for savings in this area was not done “in any ideological sense”.

“We are starting to identify individual instances, people who are receiving quite similar benefits to the amount they are paying in tax,” he said. “Some call it the leaky bucket syndrome and it involves a whole range of bureaucratic administration systems and full time public servants.”

Mr Porter said family tax benefits were designed to be a tax credit as opposed to a payment. Technology then got in the way but that intent could be resurrected.

“It is not inconceivable that at some future point of time, particularly with the advent of the (Australian Taxation Office program) single touch payroll that you could find more effective ways to have these welfare benefits,” he said.

“Yes, there are a large number of people that are net beneficiaries but at the other end of the spectrum there are other people who are not and this is part of a fairly well-targeted welfare system.

“That’s good system design. But in the middle there are a group of people who pay considerable tax and receive considerable benefits. That’s poor design.”

Both Mr Morrison and Mr Porter have sounded the alarm about “doing nothing” to reform spending or revenue streams and Treasury data now shows bracket creep in personal income tax will cut 0.35 per cent of GDP and the average rate paid will hit 24.4 per cent this year.

Deputy prime minister-elect Barnaby Joyce said the battle was now to ensure children were not “chained to a future of paying back people”, not that this would spur middle Australia to action.

Social researcher David ­Chalke said: “You could try and make that argument to them but they (the families) are already under pressure, the pips are already squeaking. You could ask them to pull their belts in a bit ­further and they’d say no, go and get it off the rich. Whatever the right or the wrong of the matter, it would make it very easy for the Bill Shortens and Dave Olivers of this world to pull out a scare ­campaign.”

The government’s welfare reviewer Patrick McClure, whose recommendations continue to be implemented under the Turnbull government, said family tax benefits were “quite an anomaly” because they were introduced during a time of economic growth and plenty.

“The problem we now have is that there are two systems, the taxation system and the income support system, and they do not talk to each other,” he said.

“My work was to review the welfare system and part of that was simplifying the payments from 20 to five.

“That is now going to be a project for a new or second-term government.”


Europe’s open doors are a civilisation death wish

Australians should feel unashamed about our immigration policies and instead fight the growth of identity politics and the undermining of free speech.

That’s the message of provoc­ative Canadian commentator Mark Steyn, who tomorrow begins an Australian speaking tour sponsored by the Institute of Public ­Affairs.

Free speech is at the heart of Steyn’s message. He is surprised that the controversial section 18c of our Racial Discrimination Act is still standing when his own country successfully repealed the equivalent parts of its Human Rights Act in 2013.

“Free peoples are losing the habit of free speech,” he says. “They’re taught, not really just at university but in fact from kindergarten, that there is a correct view of certain subjects and that incorrect views are distressing. The last two generations raised in the Western world, they don’t do that thing, the apocryphal Voltaire line, ‘I disagree with what you say but I’ll fight to the death for you to.’ They’ll fight to the death for you not to be allowed to say it.”

The consequences can be disturbing. “People can actually lose the spirit of liberty and once you’ve lost that there are not a lot of easy paths back,” he cautions.

Steyn says the initial reluctance of politicians and much of the media to acknowledge, let alone discuss frankly, events in ­Cologne on New Year’s Eve or the growing problem of sexual assault in Sweden did nothing to preserve social cohesion but instead widened a democratic deficit between governments and the governed over the tide of asylum-seekers sweeping across Europe.

“Free speech is like being a little bit pregnant,” he says. “You can’t be a little bit free speech.”

He talks of meeting people fleeing the Balkans as a journalist covering the wars that accompanied the disintegration of Yugoslavia. “In Europe the whole migrant thing is basically open mockery of the whole idea of refugees,” he says.

Steyn says EU leaders need to speak frankly about the forces now pulling people to the continent and how they are different.

He points to Africa. “People now have cell phones,” Steyn says. They can see what’s going on in the world. Even as recently as the 1980s their glimpse of life in the West came from re-runs of Dallas.

“It’s a different world now. They can see in real time their cousin who got on a boat from Libya and wound up in Italy and walked over to Sweden. They’re seeing in real time the kind of life their cousin is living. What percentage of North Africa has to decide ‘We’d quite like to move to Europe’ for there to be no ­Europe?”

As a result, Steyn sees nothing wrong with Australia’s asylum-seeker policies. “Australia does what every country used to do until the 1960s. It reserves the right to pick and choose who it admits to within its borders.” He adds: “In effect, everyone in Australia is Donald Trump.”

But Steyn points to the different recent experiences of asylum-seeker flows of Europe and Australia. “Europe is basically as near to Africa as Australia is to ­Indonesia,” he says, describing the EU’s approach as “the equivalent of Australia telling everyone in ­Indonesia, ‘See you in Darwin on Tuesday’.”

Steyn is blunt on the potential consequences of the uncontrolled flows of people. “If you lose control of your border you don’t have a country,” he says. In this environment, he is particularly concerned about the impact of identity politics and ­diversity policies that play on differences. He points to his experiences in the Balkans. “Once people start to think of tribal identities, you end up with tribal politics,” he warns. “It doesn’t matter if the tribe is Bosnians or Croats or whether its transgender and lesbians versus straight white males.”

Steyn jokes about “the Stanley Gibbons stamp collection approach to diversity” but says it is a trap that can cause ­divisions in wealthy, comfortable and largely homogenous societies, be they in Europe or our own.

“I raise my kids in New Hampshire which is 99.99999 per cent white,” he says. “I think there’s rumoured to be three black guys somewhere in the southern part of the state and two Hispanics. That’s it for New Hampshire.

“It gets kind of boring and people think wouldn’t it be nice to have bit of this and a bit of that. We live here and we’ve got all these people called Smith and Jones and all the rest of it. It would be much more interesting if we can have a bit more diversity. So look. There’s that nice gay couple who have moved into No 28 Victoria Gardens. And — ooh, aren’t we lucky now? There’s a nice fire-breathing imam who has moved into No 30.

“They can all meet. The fire-breathing imam can make conversation with the nice gay couple over the garden fence as they do on a Sunday afternoon.”

Then the joking ends. “The situation they’re now realising in Europe is that when you’re so boundlessly tolerant that you tolerate the avowedly intolerant then you basically have turned that whole kind of Stanley Gibbons diversity thing into a civilisational death wish,” Steyn says.

He warns against embracing the self-loathing that comes with the increasingly common use of concepts such as privilege and entitlement to delineate societal goodies and baddies — witting or not. “The minute you start using these things like privilege, what you’re doing is incentivising the most reductive kind of identity group politics,” Steyn says.

Here, he specifically references 18c and “what groups you can claim to be a member of” so before the law “what matters is not that you are a citizen like any other” but which “groups you have a purchase on”.

Then Steyn the joker takes over, riffing off the old story about Cromwell’s portrait painter and the wart to illustrate the folly of the feelings of guilt that rack the bien-pensants of the West.

“Nowhere is perfect,” he says, “but if you have basically a heroic national narrative as Australia does, there’s something psychologically unhealthy in obsessing on the warts to the exclusion of all else. What’s happening now is you say, well, we haven’t got enough warts.” Warming to his theme, he casts about for new sources of shame. “What a pity we haven’t got Hispanics,” he says. “That would give us a whole new wart, a whole great new oozing pustule sac in the middle of our forehead we could all feel bad about.

“That’s the craziness here. It’s Cromwell to the nth degree. ‘Don’t paint me warts and all. Just paint my warts and if I don’t have enough warts, add a few to my face. The more warts the better. That’s what we want. We want more warts!’ ”


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