tag:blogger.com,1999:blog-24338064.post6114489059794223575..comments2024-02-11T19:28:27.997+11:00Comments on Personal Reflections: Saturday Morning Musings - Australia's economic consensusJim Belshawhttp://www.blogger.com/profile/10075614280789984767noreply@blogger.comBlogger35125tag:blogger.com,1999:blog-24338064.post-44159203104899775652013-06-14T19:56:41.017+10:002013-06-14T19:56:41.017+10:00I thought that I answered the first question, kvd,...I thought that I answered the first question, kvd, but my focus was more on the politics. The effects on the lower income earners of widening the base to include basic food would be more significant. But it may be that the biggest impact would be middle class - school fees!<br /><br />On the second, the reason I asked the question was covered in your answer. How about the rentier class? Is that unearned income? <br /><br />The difficulty with defining income other than in the hands of recipients as opposed to definition based on source are the value overlays. Jim Belshawhttps://www.blogger.com/profile/10075614280789984767noreply@blogger.comtag:blogger.com,1999:blog-24338064.post-53440711116503797192013-06-14T19:10:26.720+10:002013-06-14T19:10:26.720+10:00Thank you Jim. My question was poorly put, but I&#...Thank you Jim. My question was poorly put, but I'll leave it.<br /><br />As to 'income', I think of it as 'recompense'; my basic view is that income is a 'second step' <i>after or as a result of</i> the provision of some form of value, be that goods or effort or service or licence.<br /><br />We each come at terms from different viewpoints. That is as simple as I can phrase mine, and I would not expect that it reflects your own.<br /><br />kvdAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-24338064.post-42596049705367940402013-06-14T17:32:15.019+10:002013-06-14T17:32:15.019+10:00Increasing the rate is easier than broadening the ...Increasing the rate is easier than broadening the base, kvd, especially if the increase is relatively small.<br /><br />On the last point, define income for me! Jim Belshawhttps://www.blogger.com/profile/10075614280789984767noreply@blogger.comtag:blogger.com,1999:blog-24338064.post-79175327311999858112013-06-13T22:54:56.363+10:002013-06-13T22:54:56.363+10:00Hi Jim
Thoughtful and to the point comments, only...Hi Jim<br /><br />Thoughtful and to the point comments, only some of which I agree with. But nice to see a more impersonal view.<br /><br />The more I think about it the more I have come to think that the rate could be changed much more easily than the base. I believe the effects on the lower income bands would be much worse from a change in base than a (deep breath, simple) change in rate. I'd be interested in your thought on that simple proposition?<br /><br />Social welfare is not 'income'. This may be just a disagreement between us on terminology, but I regard this as significant in the wider sense of how such payments are perceived, and equally importantly, received. I accept I may be very much in the minority with this view - and am quite comfortable with that.<br /><br />kvd<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-24338064.post-4567364309688840422013-06-13T22:07:24.673+10:002013-06-13T22:07:24.673+10:00First a general point. I actually support an incre...First a general point. I actually support an increase in and a widening of the GST.<br /><br />Next. kvd, greater Sydney as defined in those stats includes Sydney, the Illawarra, the central coast and Newcastle and the lower Hunter, so a big slab of the NSW population. You also get some considerable variations in the numbers across the whole area.<br /><br />Social welfare is income to those receiving it, if classified as a transfer payment.<br /><br />My concern is the analysis of the distributional affects. If compensation is paid to the lowest income earners, then that balances. However, that could be messy. If you just compensate those on welfare,then you further disadvantage those on lower incomes not on welfare. <br /><br />If GST is broadened, then you also have to avoid other cost effects. For example, if school fees go up, so may government subsidies to education. Ditto health. <br /><br />I think that I will probably leave this thread now! It really requires a more detailed analysis. Jim Belshawhttps://www.blogger.com/profile/10075614280789984767noreply@blogger.comtag:blogger.com,1999:blog-24338064.post-21382092352250079432013-06-13T21:13:09.997+10:002013-06-13T21:13:09.997+10:00Evan:
You think the middle should be the concern...Evan:<br /><br /><i> You think the middle should be the concern.</i><br /><br />I think 'the middle' is of far more economic significance than either end of the Bell Curve, in terms of public policy. <br /><br />And as for 'the poor' I employ two of them - paid over award, for six hours a day - but they never work more than four and a half hours. And I also know that every time I give them a pay rise the NSW government ups their rent one fourth of same. <br /><br />One has been sick for a fortnight. Although she's a casual (paid well over award) I have made sure she had her (public housing) rent paid, and contributed to her other ongoing expenses.<br /><br />So forgive me if I find your comments offensive. The rest of your rant I leave you to make sense of - because I cannot relate it to the point of Jim's post.<br /><br />Sorry Jim.<br /><br />kvdAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-24338064.post-11908976716891505552013-06-13T20:18:43.814+10:002013-06-13T20:18:43.814+10:00If you believe it is civilised for people to be de...If you believe it is civilised for people to be deprived of support by government department you are entitled to your opinion.<br /><br />It is pretty clear from your comments that you have no care for the poor.<br /><br />Funny - you accuse me of doing what you do. You think the middle should be the concern.Evanhttps://www.blogger.com/profile/13355215688351759230noreply@blogger.comtag:blogger.com,1999:blog-24338064.post-935680110071941772013-06-13T20:15:58.179+10:002013-06-13T20:15:58.179+10:00Evan:
You can be breached and lose your income
Y...Evan:<br /><br /><i>You can be breached and lose your income</i><br /><br />You need to disabuse yourself of this concept that social services, in any form, is 'income'. I don't work for you.<br /><br /><i>If you don't care about the poor that is up to you.</i><br /><br />If you interpret my comments in that way we don't have much more to talk about.<br /><br /><i>I would like the poor to have their own concerns central.</i><br /><br />Can't argue with that. Good for you, to place self interest front and centre in Jim's 'public policy' discussion. Would expect nothing less of myself.<br /><br />kvdAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-24338064.post-91051816861003495502013-06-13T19:57:05.131+10:002013-06-13T19:57:05.131+10:00kvd,
Moving to lower employment areas: Because ren...kvd,<br />Moving to lower employment areas: Because rents are cheaper in lower employment areas. This is (just one) poverty trap.<br /><br />Centrelink penalises you. You can be breached and lose your income for moving to an area of lower employment.<br /><br />If you don't care about the poor that is up to you. I would like the poor to have their own concerns central.Evanhttps://www.blogger.com/profile/13355215688351759230noreply@blogger.comtag:blogger.com,1999:blog-24338064.post-13549818851970749132013-06-13T19:45:51.893+10:002013-06-13T19:45:51.893+10:00Evan:
Those of us who are poor are a good deall l...Evan:<br /><br /><i>Those of us who are poor are a good deall less confident.</i><br /><br />: your worries are not evidenced by past significant movements in revenue laws. But it's good to keep shouting. Squeaky wheel, and all that.<br /><br /><i>One complication is that those on the dole aren't allowed to move to lower employment areas.</i><br /><br />Seriously?<br />a) why would you ever wish to move to 'lower employment areas'?<br />b) who is it that doesn't 'allow you to move' anywhere in Aus? That's news to me.<br /><br /><i>I could say more but not politely</i><br /><br />Evan, why not just say what you wish, as I try to do? Polite is good, but honesty is better...<br /><br />Anon above put a plain case. But I don't think that case is indicative of where the 'meat' of any change (in any changed taxation laws) is either particularly relevant, or necessarily requiring of particular consideration.<br /><br />Seriously Evan, I do get that 'the poor' are poor. But to place their needs central? Not for mine.<br /><br />With respect.<br /><br />kvdAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-24338064.post-49661469301964607412013-06-13T17:37:02.916+10:002013-06-13T17:37:02.916+10:00kvd, you might be confident the poor will be taken...kvd, you might be confident the poor will be taken care of.<br /><br />Those of us who are poor are a good deall less confident. If you wish to look at rents in the capitals or major regionals and compare it with the rate of the dole I think you will find reason for this lack of confidence. One complication is that those on the dole aren't allowed to move to lower employment areas. (And the rate that Centrelink taxes extra income is unconscionable - I could say more but not politely.)Evanhttps://www.blogger.com/profile/13355215688351759230noreply@blogger.comtag:blogger.com,1999:blog-24338064.post-75522502195941564942013-06-13T17:13:46.226+10:002013-06-13T17:13:46.226+10:00Not sure where this leaves the discussion, Jim. Yo...Not sure where this leaves the discussion, Jim. Your quoted 'median rent' is for the most expensive rental market in Australia, let alone greater NSW. I do not think it is appropriate to base any discussion about either increasing or widening the GST regime upon the rental statistics of Sydney.<br /><br />There seems to be a disconnect between what you tag as 'Public Policy' (which in this context is Australia-wide, not just limited to the unemployed of Sydney) and the 'down on the ground' effects of any change.<br /><br />Somewhere buried back in the comments I made the point that an increase from 10 to 15% was politically unthinkable, and also that I had no doubt that the less fortunate would be taken care of. Those points seem to have been lost.<br /><br />Simply, I find it easy to work out that someone on $400 per week cannot possibly be hit with more than $36 of GST - which assumes all expenditure is taxed - and if such an implausible rise as that to 15% actually happened, then the extra impost cannot mathematically exceed $18. That said, I fully accept the such a figure would cause enormous distress to, for instance, Anon above - <i>if there were no compensating measure</i>.<br /><br />But the thing is, a more likely scenario is that which you mentioned yourself: a rise of maybe 1 or 2%. That gets us back to worrying about an Australian policy change costing what? <br /><br />My answer is, not very much, and no doubt any such change would provide for the 'regressive' effect upon the unemployed, pensioned, or otherwise welfared.<br /><br />This I stress is not to in any way discount the struggles under which such citizens operate; more to suggest that 'public policy' per se should probably start from a more realistic consideration of the costs attaching to so-called 'average households' - however you wish to define those.<br /><br />And the news is that even allowing for my exaggerated 50% increase in GST, the end costs per week boil down to not very much at all for those households, when you get right down to it.<br /><br />Regressive on not, I like taxes which are transparent, and right up front, in your face - to which citizens can react immediately. I mentioned superannuation earlier. That is a classic example of a 'good' government initiative which has resulted in profoundly unfair outcomes, the effects of which are never immediate - hence popular tinkering for whatever government is in power.<br /><br />That leaves the alternative possibility unexplored: no increased taxes; reduced, or at least, more efficient 'government'. Personally I'd place very little faith in that option.<br /><br />kvdAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-24338064.post-17166540176798648932013-06-12T22:31:35.099+10:002013-06-12T22:31:35.099+10:00That is indeed where the devil is!That is indeed where the devil is!Evanhttps://www.blogger.com/profile/13355215688351759230noreply@blogger.comtag:blogger.com,1999:blog-24338064.post-49148284110550051232013-06-12T22:19:44.779+10:002013-06-12T22:19:44.779+10:00Comment continued.
The Cogill post cited by kvd ...Comment continued. <br /><br />The Cogill post cited by kvd provides some useful data on incomes. It suggests, among other things, that median incomes are lower than people realise. On one measure, the median Australian taxable income for all workers was $48 864 in 2010-2011. Now as the article shows, you can calculate this in various ways depending, among other things, on household type.<br /><br />Rent data for NSW is provided Housing NSW figures. In the March quarter, median rent for all dwellings in Greater Sydney was $460 - http://www.housing.nsw.gov.au/NR/rdonlyres/CFB52861-F88E-4961-9F2E-A874A3E9C0CC/0/RSReport103.pdf. The median rent for a one bedroom flat was %420. These rents vary across Sydney, but you can see why a significant proportion of low income earners in the private rental market display rental stress. <br /><br />As kvd notes, GST is not presently paid on certain things. I was the one who raised the question of a widening of the GST base. <br /><br />The impact of a GST increase depends on your income. For someone on a very low income, an increase in GST on electricity alone may have a significant impact, especially when combined with other price increases. <br /><br />My point is, that when you come to consider the distributional effects of these changes, you have to examine the detail. Jim Belshawhttps://www.blogger.com/profile/10075614280789984767noreply@blogger.comtag:blogger.com,1999:blog-24338064.post-67436028741466742302013-06-12T21:52:54.862+10:002013-06-12T21:52:54.862+10:00Thank you latest anon.
I thought that this comme...Thank you latest anon. <br /><br />I thought that this comment stream had gone a little off track, so I let it alone for the moment. <br /><br />kvd, the reason I thought that that Cargill piece was interesting because of the stats. <br /><br />Just trying to disentangle things a little. <br /><br />The standard definition of rental stress is households paying more than 3o per cent of gross income in rent - http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/1370.0~2010~Chapter~Housing%20glossary%20(5.4.8)<br /><br />According to that same ABS publication, the proportion of low income renter households in rental stress has remained fairly constant over the past 10 years (36% in both 1997-98 and 2007-08). The proportion of low income private renter households in rental stress declined from 55% in 1997-98 to 44% in 2007-08. Over the same period the proportion of low income public renter households in rental stress increased from 5% to 17%.<br /><br />The standard social housing theoretical income rental percentage is 25%. In fact, its higher than that because of the way rent is calculated and can exceed 30%. Tenants in public housing do not get rental assistance, those in community housing do. However, rents are set so as to attract and extract maximum CRA. A significant part of the social housing system depends upon this for its viability, so when the Henry Tax review recommended better targeting of CRA they actually threatened the limited viability of the social housing. That's a different issue, but one I am conscious of. <br /><br />More in next comment. Jim Belshawhttps://www.blogger.com/profile/10075614280789984767noreply@blogger.comtag:blogger.com,1999:blog-24338064.post-4502563097253235372013-06-12T17:54:22.549+10:002013-06-12T17:54:22.549+10:00I am actually on the dole. I get $300pw plus a lit...I am actually on the dole. I get $300pw plus a little extra if I'm in W4D. <br /><br />For very modest rural housing I pay 41% of my income in rent. By the time I buy 14 days food and pay my bills, I'm down to coins each fortnight, I can save nothing. <br /><br />I am utterly unable to buy new clothes, go to the city, or have a social life on this income.<br /><br />Now... I don't smoke, drink, or put fuel in a car at all, so you can imagine many are right on the brink as it is.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-24338064.post-47818857015799706622013-06-11T17:06:32.143+10:002013-06-11T17:06:32.143+10:00'mythical' as in, if your income after tax...'mythical' as in, if your income after tax was $90k, and you were a couple, with two kids, then you would be more well off than 50% of the population; and less well off than the other 50%<br /><br />If you are a single adult, $43000 is said to be the equivalent.<br /><br />Not sure how to 'equivalise' a cup of bad coffee between a unit of four, back to a single economic unit? Maybe take two sips, then throw the rest away - as excessive consumption?<br /><br />Funny thing about my comments, and reactions thereto: <br /><br />I stated that an increase from 10 to 15% was politically unthinkable; I proposed no 'broadening' of the base; I suggested that the vulnerable would probably be taken care of. <br /><br />The only reason that economists refer to gst as a "regressive" tax is that "flat" doesn't have sufficient gravitas to justify (paid) investigation.<br /><br />kvdAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-24338064.post-38807043033942816972013-06-10T21:52:07.191+10:002013-06-10T21:52:07.191+10:00As you say 'mythical'As you say 'mythical'Evanhttps://www.blogger.com/profile/13355215688351759230noreply@blogger.comtag:blogger.com,1999:blog-24338064.post-40972282227746645712013-06-10T21:44:19.370+10:002013-06-10T21:44:19.370+10:00Two adults, two kids, after tax income of $90,000 ...Two adults, two kids, after tax income of $90,000 means you are some sort of "average" family unit. Assume one third attracted gst. Therefore gst you paid was roughly $3,000 per annum (allow me to say one tenth, not eleventh)<br /><br />So if gst went from 10 to 15% - which would cause rioting in the streets, but bear with me...<br /><br />That mythical "average" household would be up for an extra $1500 per year.<br /><br />$30 per week<br /><br />$4 per day<br /><br />1 cup of polystyrene coffee; half a sandwich.<br /><br />kvd<br />(tent hire is available, and with rent assistance)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-24338064.post-30800185502389294172013-06-10T21:08:08.245+10:002013-06-10T21:08:08.245+10:00It's not my mythical tent person kvd it's ...It's not my mythical tent person kvd it's yours. I didn't mention them.Evanhttps://www.blogger.com/profile/13355215688351759230noreply@blogger.comtag:blogger.com,1999:blog-24338064.post-88545760326789916212013-06-10T21:00:19.698+10:002013-06-10T21:00:19.698+10:00Evan, unless you live in a tent on the beach, behi...Evan, unless you live in a tent on the beach, behind the bushes, just about <i>everybody</i> pays about 25% of their income for accommodation - in one way or another. (That's exactly why it is set at 25% - thank your government statisticians for that) But this of course assumes you are willing and able to pay your way.<br /><br />And I'd just politely suggest that the whole joint doesn't (and most certainly shouldn't) work on the basis of your mythical tent-person.<br /><br />kvdAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-24338064.post-12935394436359361402013-06-10T20:49:42.599+10:002013-06-10T20:49:42.599+10:00Housing Pathways (what used to be housing commissi...Housing Pathways (what used to be housing commission) costs about 25% of income - and I don't think you get rent assistance for it either!Evanhttps://www.blogger.com/profile/13355215688351759230noreply@blogger.comtag:blogger.com,1999:blog-24338064.post-54946245360516481632013-06-10T20:44:01.420+10:002013-06-10T20:44:01.420+10:00Geez Jim
You thought that link I gave you was ...Geez Jim<br /><br />You thought that link I gave you was 'fascinating'? I thought it talked about the 'average Australian household' - so I figured to be fair to all concerned I'd work on $500 per week, not Evan's less than average single recipient.<br /><br />And then you say - "as a consequence of broadening the gst base" - when I <b>specifically said</b> "let's say roughly a third attracts gst". <i>i.e. I did not even get into the murky area (which I believe should happen) of widening the gst base.</i><br /><br />Spare me the costless angst. We are spending more than we tax; gst is an effective way of raising revenue. That is, of course, if you are not seriously suggesting that government will somehow become more efficient?<br /><br />Pull the other one; and pay your (relative) 60 cents extra a day.<br /><br />kvdAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-24338064.post-68477620428139351622013-06-10T20:31:26.452+10:002013-06-10T20:31:26.452+10:00kvd, I am going to take Evan's side.
The bas...kvd, I am going to take Evan's side. <br /><br />The base dole is $248 per week. Now if you are getting rent assistance, the maximum is a bit over $61 if you are living on your own. So that's pretty close to Evan's c $300 per week. <br /><br />Now if as a consequence of a broadening of the GST, your food and rent cost go up by 10%, you starve more so. <br /><br />Unless you are lucky enough to live in social housing, and the waiting lists grown and grow, you are stuffed. <br /><br /> Jim Belshawhttps://www.blogger.com/profile/10075614280789984767noreply@blogger.comtag:blogger.com,1999:blog-24338064.post-1722197622058511312013-06-10T20:16:34.790+10:002013-06-10T20:16:34.790+10:00I dislike indirect taxes that fall disproportionat...I dislike indirect taxes that fall disproportionately on the poor.Evanhttps://www.blogger.com/profile/13355215688351759230noreply@blogger.com