Finance Finance News Michael Pascoe: Tax lurks stay, but job losses are coming soon

Michael Pascoe: Tax lurks stay, but job losses are coming soon

Unfortunately there are more job losses on the way, writes Michael Pascoe. Photo: The New Daily
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There’s no point getting too excited one way or the other about the latest payroll statistics.

They are a valiant attempt by the Australian Bureau of Statistics to provide timely information about what’s happening to the workforce.

But they don’t change what this way cometh.

Tuesday’s figures point to small businesses reacting quickly to the downgrading of the JobKeeper program at the end of last month – with payroll numbers dropping 2.7 per cent in firms with fewer than 20 employees over the fortnight to October 3.

The same set of statistics showed the finance sector was one of only two industries not to lose jobs over the most recent fortnight – yet there’s a rumour that a wave of pink slips will wash up there next month.

Victoria (hopefully) opening up much more next month and Queensland (hopefully) relaxing its borders will help restore some jobs, but you’d be fooling yourself to think the “normal” we’ll return to will be normal.

Payroll jobs by employment size. Graphic: ABS

As the federal government’s key financial support is withdrawn and replaced by ideological faith in the stimulatory power of tax cuts, neither the government nor the Reserve Bank pretends the unemployment rate will do anything other than rise towards 9 per cent.

The ABS payroll figures, trying to be up to date, are a bit ropy and subject to substantial revision. Nonetheless, applying the filter of common sense helps indicate what might be credible.

It makes sense that small businesses would feel the winding back of JobKeeper most, as the October 3 snapshot shows.

On the other hand, it does not make sense to believe normal “normal” will be quickly achieved by a tax cut for those on six-figure salaries.

Nor will it be achieved with a temporary tax offset for most workers, pulling-forward some tax deductions for business and a grab-bag of minor grants and infrastructure projects spread over four years.

Last week Peter Costello provided the picture of a former Liberal Treasurer arguing income tax rates for those at the top should be lower.

Some things never change.

File photo of workers rallying
The worst is yet to come with the unemployment crisis. Photo: Getty

At least Mr Costello wasn’t using the “trickle down economics” line presently promoted by the government as the way to cure the Australian economy.

Mr Costello was even funnier, arguing that tax rates should be lower so people on the top rate wouldn’t be tempted to avoid tax.

No, seriously, that was his proposition at a Tax Institute conference, as reported by one of the newspapers owned by the company he chairs.

Coming from the Treasurer who made superannuation the most attractive tax haven for wealthy Australians in the world, that was more than a little rich, never mind turning franking credits into cash for those who don’t pay tax.

“Australia’s longest-serving treasurer said he wanted a lower uniform rate on company tax and lower personal income tax for the top end of town,” reported the Sydney Morning Herald.

Mr Costello thinks the top personal tax rate being higher than the corporate tax rate encourages people to “corporatise” for tax minimisation purposes.

It’s a minor matter the serious money at the top end is earned as capital gains, not wages, and is already taxed at less than the company tax rate.

The reality is that people with the ability to minimise tax will minimise tax however low the tax rate.

I don’t think Mr Costello mentioned reforming the family trust lurk as necessary reform, or the novated lease rort, or negative gearing – it’s only tax rates that are a problem.

Whatever the excuse, the Liberal Party’s base, the lobby groups with the most sway over it, its most important donors, and its media company partners are dedicated to paying less tax.

For the umpteenth time, one of John Kenneth Galbraith’s great quotes applies:

The modern conservative is engaged in one of man’s oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.”

Which is fine for such people to go in search of – except that the dedication to “trickle down” will ensure that the ABS payroll statistics will continue to represent tragic stories for years to come.

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