THIS is clearly an election Budget. There are no spending cuts — since Tuesday night we’ve heard hardly a bleat of complaint — and big and getting bigger tax cuts are promised. But an election, when? When the normal electoral clock runs out some time in the second half of next year or early, and perhaps very early, like this September?
There’s been a lot of speculation that it’s the latter: a combination of “strike while the (Budget) iron is hot” and “just don’t push your luck”; who knows what (most likely to be bad) might turn up.
However, the central feature of the Budget — those tax cuts — argues against an early election, and indeed most specifically for one in September not this year but next.
Because the way the tax cuts are being given — at least, that is, the upfront ones as opposed to the mañana ones, promised some time after the next two elections — is that no money actually makes its way into taxpayers’ pockets through the entire course of the next financial year.
It all comes in a lump sum — getting $500 or so dollars in one hit as opposed to a $10-aweek dribble is far more likely to get someone’s attention and maybe also their vote — right about smack in the middle of September next year.
The money comes to voters — sorry, taxpayers — in a tax refund for the 2018-19 year, after, of course, they have put in their tax returns.
The politics aside, there is a very good reason for this — it turns on what was the single greatest act of fiscal vandalism by Labor and its treasurer Wayne Swan.
But first, the politics. There are three stages and they all centre on polls, starting tomorrow morning with the Newspoll in our sister newspaper The Australian.
Malcolm Turnbull will presumably be watching it with great personal interest. He’s already passed his predecessor’s “30 negative polls in a row”, currently sitting at
This is one of the best-run companies on the ASX — a market leader and a strong brand. Its shares are flying, although four-wheel drive sales have fallen for the first time since early 2017. 31 negs. The last neg though was very interesting — at 49-51 on the TPP (two-party preferred).
This is because the accepted wisdom “inside the beltway” — in Canberra, among the politicians, media and assorted hangers-on — is that a government going into an election at 49 per cent TPP is heading for victory: the socalled “advantage of incumbency”.
As I’ve been trying to explain for over a year, the national TPP is secondary to the special circumstance in Queensland where Pauline Hanson is going to get 15-20 per cent of the vote.
Unless the government formally gets her preferences — something the Prime Minister thinks is beneath him — it will lose up to a dozen seats and almost certainly the election.
Now if it did, it would probably take out the PM’s most potent challenger, the “new Tony Abbott”, Peter Dutton.
But while that might be a great comfort for a by-then ex-PM, it wouldn’t be great for the Liberal Party or, quite frankly, the country, given the promises that Opposition Leader Bill Shorten recommitted to on Thursday.
Queensland and Hanson aside, if tomorrow’s postBudget Newspoll comes in at 49-51 again, an early election comes very firmly into focus.
If it comes Ramsay is trading at appealing valuations relative to historic levels. Its recent equally owned joint venture with Ascension is a positive one. in better, the early election becomes favourite. If it came in at, say, 52-48, the PM could very likely move to turn next month’s “mini-election” of five by-elections into a full-on general. Although, that would take some sorting out.
If instead, it went in the other direction, suggesting that at best the last 49-51 was a rogue positive for the PM and/ or the Budget had not been well received (or Shorten’s bigger tax cuts had been persuasive), we’d be on the way to late 2019.
They would give the government at least the opportunity of trying to find a Plan B in the 2019 Budget.
Ahead of that would be next month’s “mini-election”.
By-elections are not generally good for a government — there’s too much opportunity for a protest vote. But these ones are obviously unique and there are a couple of seats the government could actually win. The outcomes would play into future Newspolls to determine the timing of the election. A sustained run of 49-51s could trigger an election; any sign of it going sustainably to 50-50 or better would all but guarantee an election.
Now to the cuts. Then worst thing (fiscally) that Labor did was to raise the taxfree threshold from $6000 to $19,000.
It seemed like a good idea at the time — given a big tax cut to low-income earners.
But it fundamentally corrupted the tax scales.
Because everyone got that cut and everyone would get any future (normal) cuts.
Even someone on an (taxable) income of, say, $7 million, has that $19,000 tax-free threshold.
To get around that — to ensure that his tax cut only went to low and middleincome earners — Treasurer Scott Morrison is doing it with a tax rebate. So, not one cent of the $15 million handed back goes to higher income earners.
It would have with a “normal” tax cut. ASX is a quality monopolistic asset but it is trading at a stretched valuation. Expenses are expected to rise and earnings per share are growing by single digits. Aurizon lacks operations flexibility. There could be further delays or a negative decision on the Queensland Intermodal site. Better opportunities exist elsewhere.
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