The Abbott Government

drsmith said:

It's all relative and then there's the senate.

Wayne Swan's surpluses were delivered according to him. The surplus years were here were they not ??

And Bill shorten, he just wants to revive a carbon tax and spend.

As for the reform process, the tax white paper and federation review are on their way. I know you're keen to see it and I'd suggest the white paper will see greater light of day than Labor's Henry Review.

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I think the senate is far more conducive for Abbott to get things done than what Gillard had to put up with.

As for this Govt having the ticker for genuine tax reform, I wait in hope, but so far nothing they've attempted, bar the fuel excise increase, makes me think they have any intention to make the taxation system fairer and more efficient.

The fight against the MRRT and car FBT pretty much shows where their efforts are in regards to tax, and its pandering to the rentier classes. They weren't even willing to mount the argument that with the removal of the carbon tax that the associated welfare increases and tax cuts could be taken back to help fund the revenue loss.

sydboy007 said:

I think the senate is far more conducive for Abbott to get things done than what Gillard had to put up with.

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Rubbish.

Have you been doing too many nights again ?

Labor and its green partners in government had a majority in the senate as you well remember.

The problem is, as Syd has said, Labor had a falling tax revenue.

They tried to stem the bleed by the introduction of the MRRT and the carbon tax, and increased spending on the social platform.

History shows the MRRT was add hock and poorly implemented, and the carbon tax became an added cost to faltering industry.

Labor were in a perfect position, to gradually introduce the tax changes and reforms required, as the debt and defecit blew out.

I doubt they weren't aware of the options, but chose to ignore them.

Now the coalition, is blamed if they introduce taxes and aren't allowed to cut spending. While Labor sit in the background with a silly grin on their faces.

Even though I am struggling with accepting the non agressive approach, adopted by the coalition, I'm less enamoured with labor.

It kind of comes across to me that labor $hat in the nest, but won't let anyone clean it up.
If labor are going to perform well at the next election, they are going to have to improve their profile, Palmer and Lambie are more relevant.

sptrawler said:

The problem is, as Syd has said, Labor had a falling tax revenue.

They tried to stem the bleed by the introduction of the MRRT and the carbon tax, and increased spending on the social platform.

History shows the MRRT was add hock and poorly implemented, and the carbon tax became an added cost to faltering industry.

Labor were in a perfect position, to gradually introduce the tax changes and reforms required, as the debt and defecit blew out.

I doubt they weren't aware of the options, but chose to ignore them.

Now the coalition, is blamed if they introduce taxes and aren't allowed to cut spending. While Labor sit in the background with a silly grin on their faces.

Even though I am struggling with accepting the non agressive approach, adopted by the coalition, I'm less enamoured with labor.

It kind of comes across to me that labor $hat in the nest, but won't let anyone clean it up.
If labor are going to perform well at the next election, they are going to have to improve their profile, Palmer and Lambie are more relevant.

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Do you mean the first MRRT or the revised one? The first one would have been very effective but Tony and the miners put a stop to that with the campaign they ran against it. Or do you believe it overstretched too far and would discourage investment. Personally I don't think it would have, we have the minerals, it's not like they can just take their business to China for cheap labor. Of course they can look at other options like volatile Africa but the risks are far greater as MRRT aside Australia offers a stable platform for miners.

I think the public is prepared for cuts and increased taxes but there are 2 things they want. Fairness and honesty. This government has failed both those tests with this budget.

drsmith said:

Rubbish.

Have you been doing too many nights again ?

Labor and its green partners in government had a majority in the senate as you well remember.

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The Greens were the lessor of two evils to Labor, but still a negative to their stated goals.

overhang said:

Do you mean the first MRRT or the revised one? The first one would have been very effective but Tony and the miners put a stop to that with the campaign they ran against it. Or do you believe it overstretched too far and would discourage investment. Personally I don't think it would have, we have the minerals, it's not like they can just take their business to China for cheap labor. Of course they can look at other options like volatile Africa but the risks are far greater as MRRT aside Australia offers a stable platform for miners..

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I don't believe a tax should be introduced, to facilitating taking extra taxes, from a sector that has a rapid increase in profits. If it was well thought out it would have encapsulated the banks and Telstra.
The up front exploration costs and development costs in mining are huge, the funding risk is immense.
Take a look at Fortesque Metals, 4 years ago sunshine and lollipops, today struggling to break even.
They are using their profits to pay down debt.
Tax reform can't be about, you've made plenty of money, we'll just tax the crap out of you. Most company failures are due to tax obligations.
That just encourages tax evasion or under investment.

overhang said:

I think the public is prepared for cuts and increased taxes but there are 2 things they want. Fairness and honesty. This government has failed both those tests with this budget.

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As has been shown, the public isn't prepared for 'cuts' and any suggestion of increased taxes brings a national meltdown.lol

In this budget they said they were only addressing spending cuts.
They were awaiting the outcome of the 'tax white paper' before deciding on tax increases.
Which would be taken to the next election.

Don't understand your "failed both tests" statement.

But have heard it parroted over and over.

It's a bit like the outrage, when the government sugested indexing pensons to c.p.i, rather than the average wage.
Next there will be an uproar because the pension should go down, in line with average wages, when c.p.i has gone up.lol

So who is being honest?

sptrawler said:

I don't believe a tax should be introduced, to facilitating taking extra taxes, from a sector that has a rapid increase in profits. If it was well thought out it would have encapsulated the banks and Telstra.
The up front exploration costs and development costs in mining are huge, the funding risk is immense.
Take a look at Fortesque Metals, 4 years ago sunshine and lollipops, today struggling to break even.
They are using their profits to pay down debt.
Tax reform can't be about, you've made plenty of money, we'll just tax the crap out of you. Most company failures are due to tax obligations.
That just encourages tax evasion or under investment.

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You seem to have misunderstood the part where they are only taxed on their profits and they still were able to offset their profits against deprecation which were accelerated for the first 5 years. Exploration is expensive and most miners don't make it but that's why they receive subsidies

A new report finds exploration by coal and energy companies is subsidised by Australian taxpayers by as much as $US3.5 billion ($4 billion) every year in the form of direct spending and tax breaks.

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http://www.abc.net.au/news/2014-11-...-receive-4-billion-dollar-in-subsidie/5881814

In 2001 miners were paying approx 40% of their profits in royalties, they were still mining that stuff out of the ground given that royalty rate, but by 2009 they were paying less than 20%. View attachment 60268

I completely reject your statement that most company's fail due to tax obligations, once again they pay tax on profits, if they're paying tax it means there on the right path to success. Company's fail due to a failed business model for varying reason, competitiveness, productivity, over capitalising but tax rates really aren't high up on the reasons they fail.

As has been shown, the public isn't prepared for 'cuts' and any suggestion of increased taxes brings a national meltdown.lol

In this budget they said they were only addressing spending cuts.
They were awaiting the outcome of the 'tax white paper' before deciding on tax increases.
Which would be taken to the next election.




So who is being honest?

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I don't think that has been shown at all. Do you think the public voted in Abbott expecting $900 cheques in the mail? I think the the coalition being voted in indicates that Australians are aware that we can't keep spending on borrowed money and now need to start paying that back. But they want it to be fair and not a class war that Abbott seems to have waged.

I do hope you're right and they take some sensible tax reform to the next election, in fact I hope both parties target this as a policy platform for the next election.

overhang said:

You seem to have misunderstood the part where they are only taxed on their profits and they still were able to offset their profits against deprecation which were accelerated for the first 5 years. Exploration is expensive and most miners don't make it but that's why they receive subsidies http://www.abc.net.au/news/2014-11-...-receive-4-billion-dollar-in-subsidie/5881814.

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You seem to have missunderstood the part where commodity prices can swing massively from year to year. Just because they make a killing when prices are $200/t, doesn't mean they won't go broke next year if it is $60/t. Some carry huge debts, that need paying back.
I said if you are going to introduce a super profits tax, make it sensible and fair, then companies like Telstra and the Banks will pay also. Add hock back of a napkin taxes, will have to be changed add infinitum.

overhang said:

I completely reject your statement that most company's fail due to tax obligations, once again they pay tax on profits, if they're paying tax it means there on the right path to success. Company's fail due to a failed business model for varying reason, competitiveness, productivity, over capitalising but tax rates really aren't high up on the reasons they fail. .

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I think you will find payroll tax, superannuation gaurantee and pre paying tax, contributes quite a lot financial strain on SME. One of the accountant based guys may have figures.

overhang said:

I don't think that has been shown at all. Do you think the public voted in Abbott expecting $900 cheques in the mail? I think the the coalition being voted in indicates that Australians are aware that we can't keep spending on borrowed money and now need to start paying that back. But they want it to be fair and not a class war that Abbott seems to have waged.

I do hope you're right and they take some sensible tax reform to the next election, in fact I hope both parties target this as a policy platform for the next election.

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sptrawler said:

I said if you are going to introduce a super profits tax, make it sensible and fair, then companies like Telstra and the Banks will pay also. Add hock back of a napkin taxes, will have to be changed add infinitum.

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Interesting that companies pay a flat tax rate while individuals have bracketed tax rates.

Any justifications of this from anyone ?

sptrawler said:

You seem to have missunderstood the part where commodity prices can swing massively from year to year. Just because they make a killing when prices are $200/t, doesn't mean they won't go broke next year if it is $60/t. Some carry huge debts, that need paying back.
I said if you are going to introduce a super profits tax, make it sensible and fair, then companies like Telstra and the Banks will pay also. Add hock back of a napkin taxes, will have to be changed add infinitum.

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That's a fair point, would it be fairer if the royalties were tied to a % of the commodity price rather than a set figure? I disagree with other companies though, the argument for a mining tax is that these company's are mining something that is owned by Australians and is a finite resource, their business would not exist without these resources. The same cannot be said for banks and Telstra, they will operate long after the minerals run out (hopefully).

I think you will find payroll tax, superannuation gaurantee and pre paying tax, contributes quite a lot financial strain on SME. One of the accountant based guys may have figures.

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Sorry I thought you were referring to company tax rates. Yes our wage conditions do put a huge strain on businesses which would be ok in a closed market but in an open world economy where we're trying to compete it certainly puts some businesses at a disadvantage.

sptrawler said:

I don't believe a tax should be introduced, to facilitating taking extra taxes, from a sector that has a rapid increase in profits. If it was well thought out it would have encapsulated the banks and Telstra.
The up front exploration costs and development costs in mining are huge, the funding risk is immense.
Take a look at Fortesque Metals, 4 years ago sunshine and lollipops, today struggling to break even.
They are using their profits to pay down debt.
Tax reform can't be about, you've made plenty of money, we'll just tax the crap out of you. Most company failures are due to tax obligations.
That just encourages tax evasion or under investment.

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The original MRRT would have probably made a lot of the currently uneconomic mining investment, and possibly some of the LNG investment as well, not quite such a hot proposition a few years back.

You've highlighted FMG and they basically have beefed up with an extra 100M tonnes capacity. BHP and RIO have added something like 300M tonnes. All the smaller players like GBG / ARI / BCI / AGO may not have wasted the effort.

Vale has just dropped their cost by $5 a tonne with the increased use of their valemax ships. FMG is toast because every $ in costs they cut just keeps them in their spot as the marginal producer. If Roy Hill comes online with their sub $60 cost structure that really is the last nail into the FMG coffin - they'd be luck to have an all in breakeven cost of $70, especially when you consider the massive discount they're providing for their lower quality ore.

Another advantage of the MRRT would have been the reduction in pressure on the AUD. We could have followed the examples of Chile or Norway and siphoned the funds in a SWF and invested overseas to further help reduce the pressure on the AUD. Ideally this should have been done during the Howard years, but by 2007 budget revenue was some $80B higher due to the ToT increase and negative savings rate, so we have something like $33B given back in tax cuts and $40B in extra spending. True economic management would have saved a few hundred billion from the boom for a rainy day.

The difference been super profits from banks / telstra and the resource companies is once you dig up the resource and use it, there's no more revenue to be received. The original MRRT would have also seen the Government been like a co investor and the current gloomy conditions would have seen the Govt them helping on the revenue side. Also, if demand outstrips supple of reosurces and the price triples, quadruples, shouldn't the owners of the resource ie Australia citizens, receive a greater share of the profits? The increase in profits for the resource companies was pretty much due to the massive increase in demand from China. You can't really compare that to a company that increases it's profits due to being more efficient or expanding market share.

Most companies do not fail due to tax. They fail due to poor management in one form or another. Was it tax that caused RIO to buy Alcan and set itself up with so much debt it nearly collapsed? Was it tax that made a bunch of companies decide to try and build 3 separate LNG trains at the same time on curtis island, some of them forward sell gas that they didn't have yet, then sounding shocked when costs blew out? Was it tax that encouraged RIO / BHP / FMG to go on their massive expansion plans that will depress the iron ore market for a couple of decades. Was it tax that lead to CBA / macquaire to give free reign to their financial planners to literally fleece their customers?

sptrawler said:

I think you will find payroll tax, superannuation gaurantee and pre paying tax, contributes quite a lot financial strain on SME. One of the accountant based guys may have figures.

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If a company is not factoring all the costs associated with being in business, then they should get out now.

Certainly payroll tax would be one I'd like to see a broader gst / land tax kill off, along with stamp duty.

Andrew Robb three Free trade agreements in 12 months.

What did the the lazy Labor Party do during their 6 years?

They sat on their hands and did nothing.


http://blogs.news.com.au/heraldsun/...|heading|homepage|homepage&itmt=1415841884295

noco said:

Andrew Robb three Free trade agreements in 12 months.

What did the the lazy Labor Party do during their 6 years?

They sat on their hands and did nothing.


http://blogs.news.com.au/heraldsun/...|heading|homepage|homepage&itmt=1415841884295

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Baloney. Negotiations on these agreements have been going on for years. The reason they were signed now is because the Libs have most likely signed away billions of $$$ of our economy to please a few cattle producers and the National Party.

Tisme said:

The Greens were the lessor of two evils to Labor, but still a negative to their stated goals.

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Labor sold their souls to the Greens in 2010 for office.

They didn't see that as an evil in relation to that goal.

noco said:

Andrew Robb three Free trade agreements in 12 months.

What did the the lazy Labor Party do during their 6 years?

They sat on their hands and did nothing.


http://blogs.news.com.au/heraldsun/...|heading|homepage|homepage&itmt=1415841884295

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That's rather naive of you noco. Labor clearly didn't sit on their hands and do nothing but rather weren't willing to agree on terms that they must have deemed not in the country's best interests. They could have had the agreement finalised within a day if they wanted to at the expense of our economy. The bigger question is what have the coalition agreed to that Labor weren't willing to. It's possible they may have been able to shuffle things around and achieve a better deal but we will never really know I guess.

sydboy007 said:

The original MRRT would have probably made a lot of the currently uneconomic mining investment, and possibly some of the LNG investment as well, not quite such a hot proposition a few years back.

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With that IIRC, financial markets were sceptical as to whether the government would honour the tax losses. Given the way the government attempted to introduce the tax in the first place, that's perhaps not surprising.

The discussion on both versions of the tax from the time are in the following thread.

https://www.aussiestockforums.com/forums/showthread.php?t=19464&highlight=mining+tax

SirRumpole said:

Baloney. Negotiations on these agreements have been going on for years. The reason they were signed now is because the Libs have most likely signed away billions of $$$ of our economy to please a few cattle producers and the National Party.

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Yes they were started prior to 2007 by the LNP and then put in the too hard basket by those lazy Labor people.

The Labor party did not have the courage or the expertise to tackle FTA.

noco said:

Yes they were started prior to 2007 by the LNP and then put in the too hard basket by those lazy Labor people.

The Labor party did not have the courage or the expertise to tackle FTA.

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The FTA that Howard started with the US has resulted in a doubling of our trade deficit with the US.

Thanks Johnny.

No wonder Labor decided to proceed carefully with other FTA's.

drsmith said:

Labor sold their souls to the Greens in 2010 for office.

They didn't see that as an evil in relation to that goal.

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I think if you use the negotiations as a yardstick of soul selling, the Liberals were way ahead in that endeavour. I do have a good memory of Tony almost selling the Menzies silver to get into power.