Can’t get a break
I WROTE these words almost a year ago about the reductions to penalty rates that had just been approved:
Employer organisations involved in hospitality are celebrating as they can see the whole wedge not just the thin end. I have written before — not one new job will be created with the reduction of penalty rates. For this to happen you would have to suspend rational thinking and assume that currently businesses operate and exist when short staffed. They are open and presumably making money at the current rates and if they could expand their profits by employing an extra staff member they would do so. Measured by the number of businesses who have been making healthy profits over the last decade both large and small enterprises are doing well, very well. Interestingly, the last decade has also seen the lowest wage rises in over 70 years so it would seem to me that wages have not stopped any employer from doing anything. And now those wages are being reduced again. Employers get a free kick and the workers get a kick in the head. Work longer for the opportunity to earn what you earned last year is now your option — gee, we’re lucky, aren’t we?
Well, I really want to use pretty much the same words or at least general thoughts about the Turnbull Government’s lemming-like headlong plunge to get the rate of corporate tax reduced.
And isn’t it interesting that exactly the same arguments are being used.
With penalty rates the only real cut-through was that it would create more jobs, which was obviously as much rubbish then as it is now. So too with cutting the corporate tax impost down to a ‘more competitive’ 25 per cent.
Mr Turnbull argues that tax cuts for business will stimulate investment and job creation, boosting economic growth that will flow through to wages growth as the economy strengthens. And in what can only been seen as a surprise move — readers, please feel free to insert your own ‘Haha, you’re kidding!’ or an even stronger expletive of disbelief — leading chief executives have come out in support of the Prime Minister and that they plan to reinvest, create new jobs and lift wages. Australia will become the new Utopia of the OECD.
If you are even tempted to believe this programmed, rehearsed and well-worn cant from the free enterprise, free trade, open border faux believers then just consider the real facts. Trickle-down economics are a fraud and have been discredited wherever you look.
The theory is that if you give tax breaks to the already rich, including highly profitable multinationals, then they will make even more money and create more jobs and that eventually this will trickle downstream to the peasants and everyone will benefit. To at least 70 per cent of the community, who have seen hours and rates of pay either stagnate or fall, they see trickle-down economics as yet another mechanism to make the wealthy wealthier and the poor poorer.
Of course, the same discussion is going on in the US for cutting corporate tax rate to 20 per cent. Hear this from AT&T’s chief executive, Randall Stephenson: “The arithmetic for us is simple. If Congress were to cut the 35 per cent tax on corporate profits to 20 per cent I know exactly what AT&T would do — we’d invest more [in the US]. Every $1 billion in tax savings would create 7000 well-paying jobs”.
This from a man whose company has paid a tax rate average of just 8 per cent in the last decade when making a healthy profit each year. So you would think that lots and lots of jobs were created, wouldn’t you? Of course not, AT&T over the same period reduced its workforce by 80,000, choosing to spend its ill-gotten savings of taxpayers’ money to buy its own shares, which is a completely different story.
This story will be repeated here as well, with almost no benefit being accrued by local workers, as hardly any large company actually pays the current tax rate anyway.
Despite the business community talking up increased wages, jobs etc, a leaked internal survey of CEOs revealed what they would do with the extra money saved from reduced taxes.
1. Return funds to shareholders; 2. More investment;
3. Increase the wages of their existing workforce; and 4. Increase employment. More than 80 per cent went with the first two options, while only around 16-17 per cent chose options three and four. Enough said.