Super Tax numbers sleight of hand exposed and 'worse for jobs'

Tuesday, 06 July 2010 07:58

The Government has been caught out adjusting the numbers to make its new tax look better and Treasury Secretary Ken Henry can't vouch for quality of Treasury estimates. What he can say is the new tax is worse for jobs than the old tax.

(Source AFR 6/7/10)

The Australian Financial Review, the Sydney Morning Herald and The Australian all report Ken Henry's admission that the new MRRT used different assumptions and forecasts than the RSPT. According to the SMH, under questioning by a Parliamentary Committee Henry confirmed  "that the government's estimate of the amount to be raised by its new tax had been bolstered by upward revisions to predicted coal and iron ore prices."

Either the previous tax take was being vastly underestimated - and therefore the negative impacts understated - or this replacement tax grab is being inflated for political effect. Two weeks ago the Government didn't want you to know how much this was really going to hurt, and now - because Julia Gillard is pandering to the class war crowd that Swan and Rudd incited - they are trying to pretend they can cut the tax provisions in half but get virtually the same take.

Either way the Australian public are being taken for a ride by a Government that has become synonymous with spin.

There is nothing wrong with Treasury updating forecasts - provided it is disclosed. There is everything wrong with a spin-prone Government trying to dupe the punters once again by pretending last Friday they had come to a negotiated agreement where everybody won and the tax take was still 90% of the original forecast.

The Australian says the Government surrendered three times the revenue it claimed last Friday because the new tax is based on revised assumptions. As Comeon pointed out on 5/7/10 at least one report suggested the original take might have been up to $20 billion over two years, 75% more than the Government was admitting.

As Henry has now admitted, the numbers aren't comparing apples with apples, they are a pea and thimble trick that exposes the Government, yet again, as one where spin supplants substance. It's a rare thing when you can unite both the Greens and the Coalition - both of whom are claiming the numbers are dodgy, which today's admissions appear to corroborate.

Ken Henry's relative silence on the terms of the MRRT betrays his lack of support for the new regime.  Two weeks ago he couldn't wait to lead the Government cheer squad. Now he is playing the dutiful public servant.

What he did tell a tell a Parliamentary committee should worry the entire community. The Sydney Morning Herald reports that "Dr Henry said it would certainly raise less over time than the original plan but he was not prepared to say how much less because he did not regard the Treasury's estimates ''as having sufficient quality''.

His admission on jobs is equally startling: "Asked whether the impact on jobs and investment would now be worse than under the original proposal, Dr Henry replied: ''You mean in aggregate? We think that is the case; we agree with you on that.''

The AFR also reports that Wayne Swan is spending more, not less, in breach of his own self imposed Budget rules. The upshot being that the structural deficit is not being addressed and that the process is more about finding a solution for electoral gain rather than sound economic management.

This is looking less like tax reform and more like a tax swindle every day. It is time for the Government to admit that it not only got the PRST wrong, but its ad hoc, politically charged process needs to be scrapped and started again.

As ComeOn has said, it is not how you calculate a tax that hurts - its the actual multi-billion slug that costs the economy and jobs.  Right now Australians haven't been told what the true costs of this tax is or was and the deal with three big miners excluded the interests of a raft of Australian small and medium sized juniors.The tax is wrong and the process is worse. This is not a recipe for confidence.

No matter how you spin this, it is a cost to jobs and investment in the order of $10 bn plus at a time working families need Australia's economy to be strong in the face of more world uncertainty.

ComeOn Editor