Australia stuck in reverse on energy, IR and tax: Productivity Commission chair Gary Banks

A very refreshing dose of cold logic

Inaugural Productivity Commission chair Gary Banks says Australia is going backwards on energy, industrial relations, taxation and government spending, with the public losing confidence in democracy and the nation facing new sovereign risk problems.

Professor Banks, the chair of the Productivity Commission ­between 1998 and 2013, said the nation was losing the ability to implement policies to properly “cope with change, to be competitive and support economic growth”.

In an interview with The Australian ahead of the release of a review into Australia’s productivity performance, Professor Banks said the nation had written off its comparative advantage in energy, failed to pursue lowest cost emissions cuts and electricity was ­becoming an unreliable luxury.

His intervention coincided with a pre-budget submission from BHP saying the government’s industrial relations agenda would harm productivity and any move to increase taxes in the resources sector would lead to “reduced investment, fewer jobs and ... lower living standards for ­Australians”.

Professor Banks said “the monumental bungling of the so-called ­energy transition” had seen ­multiple governments contrive to “maximise the cost to the nation of reducing emissions” while ­evidence-based policy had been abandoned in favour of “simple-minded belief”.

“We are in a situation where it’s become impossible to openly discuss the best way forward,” he said.

“Any attempt to use evidence or logic immediately brands you as a ‘denier’. In the Ukraine, power stations are destroyed by Russian missiles. In Australia, we blow them up ourselves.

“And we do this without having a way to replace the critical 24/7 service they provide ... As if that’s not bad enough, our governments are making it hard for gas to step into the breech – and is dismissing nuclear out of hand. Talk about daft.”

Professor Banks said decisions being taken by Labor were exacerbating the energy crisis, with a “U-turn” on workplace regulations saddling the nation with higher labour costs on top of the inflation of power bills caused by the “subsidised displacement of fossil fuels”.

“Historically, this country’s low-energy costs partly offset the high self-imposed burdens of our rigid labour market. That’s no longer the case. In fact we’ve brought about the opposite situation,” he said. “On the one hand, we have been busily eliminating our comparative advantage in ­energy, while on the other we are reviving our traditional disadvantage with respect to labour.”

Ahead of the release by Jim Chalmers of the Productivity Commission’s 1000-page, five-yearly review expected later this month, Professor Banks launched a withering assessment of the expansion in government, likened the NDIS to a “fiscal sinkhole” and lamented increased spending in education and health despite declining student attainment and a deterioration in key health performance indicators.

“The government position seems to be that most public spending is untouchable, even at the political cost of breaking its election promises on taxation,” he said. “While many private sector firms are under the pump, the public sector is flourishing. Employee numbers and salaries went up spectacularly during Covid.

“It would be great to mark this as a plus for the economy but government services tend to have low measured productivity and many involve waste – either through poor design or rorting. This has not improved with extra funding.

“While education spending has gone up a lot, student attainment has gone down, at least by OECD standards. Health spending has continued its upward trajectory, but indicators of performance continue to ­languish. Then there’s the fiscal sinkhole called the NDIS, a painful lesson about the unintended consequences of policy on the run.”

Professor Banks also took aim at a tax system geared more towards redistribution than growth, the return of subsidies for favoured industries that had been “greatly ramped up under the current government” and infrastructure policy being used for “short-term politics rather than long-term economic benefit”.

The combination of policy failures had seen Australia enter a “new phase in our democracy in which electorates can no longer trust what a political party says it will do or not do in office”.

“This erodes public trust in government and in democracy itself, as recent survey results illustrate. Moreover, when companies lose confidence in the rules, their propensity to invest, particularly in long-lived projects, is obviously impaired,” he said. “I never thought the sovereign risk issues prevalent in certain Third World or socialist countries would one day afflict my own.”

The Treasurer used an essay in The Monthly earlier this year to flag an overhaul of the Productivity Commission to “renew and revitalise” the economic body and ensure it focused on ­“prosperity and progress more broadly”.

In February, he also flagged the release of the Productivity Commission’s five-yearly review by the end of March, revealing it contained nine volumes and more than 70 recommendations.

“The government won’t pick up and run with every single recommendation from the Productivity Commission, but I think there will be areas of common ground,” Dr Chalmers said. "I hink there will be opportunities to align our economic plan with some of the directions put forward by the PC.”

Professor Banks urged Dr Chalmers to lead a national debate on the findings as “(Paul) Keating and (Peter) Costello did so effectively in the past” but was sceptical of the chances of major reform. He suspected only a few recommendations would be embraced.

The two policy areas of which Professor Banks was most critical were energy and industrial relations, with government legislation expanding access to multi- ­employer bargaining being singled out as a major mistake.

“Now we have another flurry of IR legislation designed to further boost union power, under the pretext of ‘getting wages moving’ and ‘job security’. Most of these so-called reforms will only succeed in further undermining the market ‘dynamism’ that Treasury sees as paramount to raising productivity growth,” he said.

“In the fashion of the times, the legislation that got rushed through parliament was called ‘secure jobs, higher wages’. I thought at the time that a more accurate title would have been ‘secure unions, fewer jobs’ And this has further to run.”

Professor Banks said the “truth that is no longer spoken out loud” was that Work Choices “actually made economic sense” but that its overturning by Kevin Rudd had resulted in every Coalition leader since John Howard being “gun-shy” about IR reform.

On climate and energy policy, Professor Banks said the 1990s Industry Commission had determined that “as a tiny contributor to a global phenomenon, Australia should only act in concert with other countries”.

“Without action by the big emitters like China and America, nothing could be gained,” he said. “Secondly, in order to minimise damage to the economy, we should make use of market-based instruments like taxes and tradable permits. That’s because in principle these enable emissions to be reduced where the costs of doing it are lowest.

“These and other findings went over pretty well with both sides of politics at the time, as I recall. So the policy outlook seemed hopeful ... How did we get to a situation in which electricity will not only become a luxury but an unreliable one?”

His comments come amid a political contest over the passage of the government’s safeguards mechanism aimed at slashing the emissions of big emitters by nearly 5 per cent a year out to 2030.

https://www.theaustralian.com.au/nation/politics/australia-stuck-in-reverse-on-energy-ir-and-tax-productivity-commission-chair-gary-banks/news-story/72781db5eb8c40de7ab6f9429cdd0be0

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Pauline Hanson calls out Anthony Albanese as migration to Australia is set to soar past 300,000 despite the nation face a housing crisis

Where will they all live?

Pauline Hanson has called out Anthony Albanese over the estimated 300,000 migrants set to arrive in Australia this year as the country battles a severe housing crisis.

The One Nation senator took to social media to lambast the prime minster on immigration as she shared an image of a series of newspaper stories that illustrated Queensland's crippling rental crisis on Monday.

'Anthony Albanese's broken immigration election promise means Australia faces an influx of 300,000+ foreign arrivals this year alone!' she wrote.

'Meanwhile, many Aussie families are struggling to find a house to rent or buy and those that do are paying a huge price!'

She claimed it was 'more lies, more broken promises, and more pain for Aussies'.

Senator Hanson told Daily Mail Australia: 'The Albanese government stated it would increase immigration from 160,000 to 195,000 per year (not including refugees), primarily to address skills and labour shortages in Australia.' 'However, more than 300,000 are coming in. That is more than a 50% increase.

'Most Australians do not favour high immigration levels and One Nation wants a national plebiscite to be held on the question so the major parties can be unequivocally shown this and put in place immigration policies which reflect what the electorate wants, rather than what big retailers want.'

Mr Albanese had in fact agreed before last year's election to increase permanent migration from 160,000 to 195,000 places and to speed up visa processing for foreign workers.

Treasurer Jim Chalmers conceded back in January that Treasury had 'underestimated' immigration numbers. He explained that the higher figure was likely due to severe labour shortages and the return of international students. 'We've got serious skills and labour shortages that are acting as a handbrake,' he said.

'It's a reasonable assumption the number may be higher than the 235,000 printed in the Budget.'

Senator Hanson suggested that the miscalculation was a significant oversight by Treasury. 'The Treasurer is right on board with the big retailers and other big companies, and is ignoring the electorate - most of us simply do not want a big Australia,' she said.

'The underestimate to which he refers shows that immigration is out of control under Labor and they cannot be trusted.'

To remedy the housing crisis, One Nation has called for a ban on foreign ownership of all residential property, both new and established, and give foreign owners 12 months to 'get out of the market'.

Both New Zealand and Canada have already implemented similar measures to ban or heavily restrict foreign ownership.

'This would significantly increase the supply of housing for Australians to buy,' Senator Hanson said.

'Many foreigners who buy Australian residential properties come from countries which do not allow Australians to buy property there.'

The party wants immigration to be reduced to 'sustainable levels' to lower the demand for housing in Australia.

A 2018 housing affordability study by the Grattan Institute estimated that up to 550 new dwellings were needed in Australia for every 1,000 new immigrants.

One Nation has also called for planning reform at both the state and territory level, reducing or eliminating stamp duty and red tape at the local government level to fix the housing crisis.

The party says the government needs to train up a skilled home-grown workforce to fill labour shortages rather than outsourcing work.

'There are more than 920,000 Australians currently receiving unemployment benefits, and while many may be unemployable for a variety of reasons that cannot possibly be the case for all of them and probably isn’t the case for most of them,' she added.

The migration figures come just over a year after Mr Albanese refused to back the Morrison government's push to take on 160,000 new migrants when he was opposition leader.

https://www.dailymail.co.uk/news/article-11824633/Pauline-Hanson-slams-Anthony-Albanese-migration-set-soar-past-300-000-amidst-housing-crisis.html

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Labor makes dramatic coal policy backflip that's sure to infuriate the party's green left

NSW Labor leader Chris Minns has risked a serious rift within his party by flagging the possibility of buying back Australia's largest coal-fired power station in a bid to shore up the state's energy supply and bring down electricity bills.

The Australian Energy Market Operator last week warned the east coast could face rolling blackouts with renewable energy generation and gas unlikely to keep up with demand in the next few years.

Despite the impending threat of the lights going out, coupled with spiralling retail energy costs, there has been great reluctance from governments to pour money into the fossil fuel industry - fearing backlash from environmentally-conscious voters.

But Mr Minns appears to be positioning Labor for a major backflip in energy policy ahead of the March 25 election.

The Opposition leader said a government he leads may look to take control of the Eraring power station in Lake Macquarie, which is scheduled to close in 2025, seven years earlier than previously planned.

'I'm not going to let the power run out in NSW, and I'm not going to rule out (buying Eraring),' he told told 2GB's Ben Fordham. 'It might be a negotiation between the government and a private company and I acknowledge that before the election, I'm putting that out there.'

Mr Minns said Eraring provides 25 per cent of NSW's electricity needs. 'If it's taken offline, and there's not the firming power in place, we could have major shortages,' he said.

When its owner Origin Energy made the announcement last year that it would close in 2025, NSW Energy Minister Matt Kean said he was disappointed by the decision.

He promised the state would build what he described as the 'biggest battery in the southern hemisphere' to make up for the power production that would be lost. But, having sold the plant in 2013, the Coalition then tried to buy it back in 2021 for almost five times the selling price.

'This power station was sold for $50million, Matt Kean tried to buy it back for $240million,' Mr Minns said. 'When you sell off critical infrastructure that the state needs, it undermines industry, the economy and the budget position in the long run.'

The Labor leader's comments came after Mr Kean said the Coalition, if reelected, could intervene to keep Eraring open past 2025 to ease shortfalls and rising prices.

But as Labor flipped to a more pro-coal view of power supply, the Liberals flipped the other way and Mr Kean walked away from what he had said hours earlier.

Premier Dominic Perrottet, whose Liberal Party is facing strong challenges from pro-environment Teal candidates in several seats, said intervening to extend Eraring's lifespan was 'not part of our plans'.

'We have an energy roadmap that's delivering $32billion of private sector investment to ensure we have a long term reliable and clean energy future. That's our plan,' he said.

The Premier added that he and Mr Kean were 'on completely the same page' about the power station's future.

Mr Minns told Fordham that the Australian Energy Market Operator - the national regulator - 'released a report last week indicating that we do need to worry about shortfalls in supply in the energy markets over the next 24 months'.

He said one of the reasons Labor plans to set up a NSW Energy Security Corporation is because 'we're worried about exactly these things'.

'When the sun isn’t shining and the wind isn’t blowing we need to make sure we’ve got dispatchable power for the people of NSW,' Mr Minns said.

'At the moment that's not going to happen because Matt Kean has not done the work to make sure there's energy security within the network. 'I can't rule out further action in relation to Eraring.

The Coalition sold off all five NSW coal-fired power plants since it won power in 2011, while the previous Labor NSW government sold off energy suppliers, but Mr Minns has ruled out any further privatisation if Labor wins power.

In February, he said 'Privatisation does not work. It has been a disaster for NSW and under Labor it stops.'

If Labor bought Eraring back, it would be the opposite of privatisation, it would mean the state taking back control of a previously privatised asset.

If the buyback was about almost anything other than a coal-fired power station it would get the backing of Labor's left and the Greens.

But it does concern fossil fuels - and Mr Minns will have calculated that however many votes the switch loses to the Greens and minor parties the decision will come back in spades in the seats Labor needs to win in Western Sydney.

https://www.dailymail.co.uk/news/article-11825145/NSW-election-Labors-Chris-Minns-backflips-energy-policy-plans-buy-Eraring-power-station.html

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Anthony Albanese is accused of breaking ANOTHER election promise with two big tax changes

Anthony Albanese has been accused of breaking yet another election promise as his government pushes new franking credit tax laws that will affect Australian shareholders.

The Prime Minister has already copped political heat over his contentious new superannuation tax policy and now he's facing a new political battle over franking credits - a policy that arguably cost Labor the 2019 election.

The government introduced a bill last month that seeks to restrict the ability of companies to distribute franking credits to shareholders as part of a share buyback or capital raising.

Debate on the bill is resuming on Tuesday, with shadow treasurer Angus Taylor accusing Labor of breaking yet another election promise.

Franking credits are tax credits that prevent shareholders from being taxed twice. The scheme gives tax credits to shareholders on their dividends, taking into account how a corporation they have invested in has already paid the 30 per cent company tax.

Mr Albanese had previously ruled out major changes to both superannuation and franking credits.

But Labor's proposals would affected those aged over 75 and superannuation funds.

WHAT ARE FRANKING CREDITS?

Franking credits are tax credits that stop 'double taxation'.

Companies have already paid tax on their profits when they hand them out to shareholders as dividends.

Dividends, which are typically funded by profits, are then distributed to shareholders 'fully franked', with a 'franking credit' applying.

At tax time, shareholders get the value of the franking credit as a tax refund.

That means they don't pay tax on profits, because a company has already paid tax. This stops double taxation.

One major change the government is making would stop dividends from capital raisings being eligible for franking credits.

They would also give off-market share buy-backs the same treatment as on-market buy-backs.

On-market buybacks are when a company buys its shares through an exchange, such as the ASX, whereas off-market buybacks are when a company will offer to buy shares back directly from the shareholder.

The changes set to be announced on Tuesday would result in almost $600million in budget savings over the next five years.

Australians aged over 75, Australian super funds and companies, and charities have been found to benefit the most from franking credits, according to data released by the government last week.

Mr Taylor criticised the changes, arguing they would hurt those who lived off their dividends during a cost of living crisis. 'The Prime Minister and the Treasurer went to the election promising Australians that they 'wouldn't touch' franking credits and yet in 10 months they've added two tax grabs on Australian shareholders,' he said.

'This is just another tax on super. Another tax on Australians' retirement savings. And another broken promise on tax. 'Whether it is franking credits or superannuation, Labor can't control its spending and so it's going after the hard-earned dollars of Australians to pay for its pet projects.

'You can't trust Labor to keep promises and you can't trust Labor to run the economy.'

Bill Shorten brought a policy changing franking credit laws to the 2019 federal election, and later admitted that the plan contributed to his loss.

The Prime Minister promised weeks before the May 2022 election there would no changes to superannuation.

But late last month, he announced his Labor government would stop Australians with more than $3million in super from being able to make contributions and pay a concessional rate of just 15 per cent, from July 1, 2025.

https://www.dailymail.co.uk/news/article-11827759/Anthony-Albaneses-government-comes-fire-franking-credit-tweaks.html

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http://dissectleft.blogspot.com (DISSECTING LEFTISM -- daily)

http://antigreen.blogspot.com (GREENIE WATCH)

http://pcwatch.blogspot.com (POLITICAL CORRECTNESS WATCH)

http://edwatch.blogspot.com (EDUCATION WATCH)

http://snorphty.blogspot.com/ (TONGUE-TIED)

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