Archive for the 'Tax & spend' Category

Political parties are protecting themselves from the voters

My contribution to the CIS weekly email looks briefly at another aspect of the Queensland campaign finance reforms:

An expensive new public funding scheme will further benefit Labor. Under the system for previous elections, parties were paid according to the number of votes they received. For Queensland Labor, which apart from a brief post-floods boost, has been hovering around a 30% primary vote since mid-2010, pay-per-vote could be very costly. The new system will pay on a sliding scale according to how much parties spend. Regardless of their support, political parties can receive up to $5.3 million in public funding on a $1.8 million campaign investment of their own.

A party that contests all seats can spend $7.1 million. Provided they get at least 4% of the vote, for the first 10% of spending they get 100% reimbursement. For the next 80%, they get 75% reimbursement. And for the last 10% of the cap, they get 50% reimbursement.

Obviously this is much better for the ALP than getting paid per vote. But as the LNP pointed out in parliamentary debate, it is even better for Greens. I have not checked their sums, but in the parliamentary debate LNP members were claiming this could translate into $38 per Green vote, up from $1.64 under the previous pay-per-vote system.

Campaign finance reform is designed to insulate political parties from the political effects of their beliefs and actions – contrary to the previous system that made them accountable for their beliefs and actions.

HELPless taxpayers ripped off

About a year ago, I called the ATO. Unlike most people who call the ATO, I was hoping I could pay them some money – albeit not because I wanted to give the ATO revenue, but in order to make a political point about the absurdities of the HELP loan scheme.

This is the interaction between the bonus for repaying ‘early’ (to be cut from 10% to 5% as a result of the Budget) and the arrangements for FEE-HELP applying to students who enrol through Open Universities Australia (as I had) and postgraduates. Undergraduates taking out FEE-HELP loans have to pay a 25% debt surcharge/loan fee, but OUA and postgraduate students do not.

The incentive that creates, of course, is to take out a FEE-HELP loan whether you need it or not and then repay ‘early’ and get the bonus. For people like me, rather than this being a bonus for repaying early, it is a discount for paying late. Read the rest of this entry »

More HELP reform – reduced discount for repaying early

Last week’s budget leak about cutting the discount for paying student contributions upfront was only part of the HELP reform story. They are also going to cut the ‘bonus’ for repaying early from 10% to 5%. (For example, if you pay the ATO $1,000, they will now wipe $1,100 from your HELP debt, but only $1,050 if this reform passes).

This is a broader change than the upfront initial payment discount, as the early repayment bonus applies across all the HELP schemes. It will partially deal with an absurdity that I plan to exploit, of people taking out FEE-HELP loans and then repaying ‘early’, effectively reducing the cost of the course at taxpayer expense.

The bonus was last cut in 2005, and it did push voluntary repayments down:


Source: Higher Education Report 2009 Read the rest of this entry »

The start of a tax and spend turnaround?

The 2010 Australian Election Study is now available at the Australian Social Science Data Archive, so we can see the latest results in a long series of similarly-worded questions on tax and spend.


Question: If the government had a choice between reducing taxes or spending more on social services, which do you think it should do?

For the first time since 2001, more people say they want reduced taxes than more spending on social services. However the proportion of respondents wanting less tax is up only 3 percentage points. The main thing that has happened is a move from clear support for more spending on social services to a ‘depends’ option.

There are problems with this question. It omits the status quo, which is always popular if presented. It doesn’t make completely clear the options it is presenting, reducing taxes AND reducing social services (at least compared to what they might otherwise be) or spending more on social services AND paying higher taxes (at least compared to what they might otherwise be). But I think the consistent question lets us track broad sentiment over time. Maybe here there are some small signs of some changing views on this issue.

False tax and spend choices

Essential Research today kicked off the annual round of pre-budget tax and spend polls, but with some pretty bad questions. Take the question below on the goal of returning to surplus by 2012-13, which according to this poll most people think should be abandoned:

But how about if the question had been phrased:

Q. Do you think it is more important for the Government to return the budget to surplus by 2012/13 as planned ā€“ which may mean cutting services and raising taxes ā€“ OR should they delay the return to surplus and go deeper and deeper into debt, with more government spending each year diverted to paying interest?

Tax and spend questions need to spell out the full implications of choices for the results to be meaningful. The failure to explain the real alternatives also renders pointless a question on increased spending.

Selling a carbon tax to an unconvinced public

Today Julia Gillard took important further steps on the way to a carbon price.

The IPA also put out another Galaxy Poll on climate science. It’s almost exactly the same as their poll from last year, suggesting that the substantial inroads the sceptics had made have stabilised.

However a comparison with an Essential Research poll from last December suggests that attitudes are still fluid. An option in Galaxy reading ‘There is conflicting evidence and Iā€™m not sure what the truth is’ takes numbers from both both camps.

So it looks like about a third of the population are manmade climate change true believers, with another 10% leaning that way. We’ve debated this recently, but I think things are looking bad for Julia Gillard on this one.

Flood levy, pollster 3

A third pollster, Nielsen, has now joined Newspoll and Essential Research in asking voters about the flood levy. Annoyingly – but in line with typical poor Fairfax broadsheet practice on these things – we are not told the actual question.

However the result is that 52% of voters support the levy, and 44% oppose it.

Corrected Nielsen flood levy pie chart


That’s quite similar to Newspoll’s 55%/41%.

Of more concern to the government will be the 46% in favour/ 44% against result on a carbon price. This is the issue that is most likely to be fatal for the Gillard government.

Does the public have a majority view on the flood levy?

As Rajat Sood points out, the second poll on the flood levy has come out with an opposite majority conclusion to the first poll.

I’ve summarised the differences here:

Read the rest of this entry »

Assorted links and comments

The first poll on the flood levy finds opinion heavily polarised on partisan lines, but overall against, 53% disapproving to 39% approving.

A different question on the same poll finds that 64% of respondents believe that universities would be better run by the public sector and 20% believe universities would be better run by the private sector. This dichotomy does not include the public-private hybrid nature of Australian universities as an option.

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In the context of the fascinating events in Egypt, Tyler Cowen reminds us of an outstanding book on public opinion, Timur Kuran’s Private Truths, Public Lies. In authoritarian regimes people conceal their true political views, but new dynamics can take over in which more and more people are emboldened to express their opinions. With no real support, in these circumstances regimes can crumble quickly when they lose the will to kill.

An interesting post on the signalling dynamics of cutting communications.

——- Read the rest of this entry »

Will uni finances be washed away by the floods?

We should of course be a little sceptical when Julia Gillard talks about cutbacks. But if cuts need to be made, who will take a hit?

Step forward, Australia’s vice-chancellors. Higher education has long been near the top of the list when money needs to be saved. And in recent times, higher education spending has been out of control. As I noted last year, massive over-enrolments have forced multiple large upward revisions of federal spending on higher education. Postponing the decision to ‘fully fund’ these places (unis receive only student contributions if they exceed their funding agreements by more than 10%), promised for 2012, could produce nine figure savings.

If this does happen, it will confirm my view that there have been some reckless decisions to take so many students. And there is little sign in this month’s offers figures that there has been any attempt to bring numbers under control. In NSW and the ACT, where much of the 2010 over-enrolment is concentrated, offers are up 2.6% on last year (acceptances may be higher or lower, so we can’t directly infer commencing student numbers from this figure). In Victoria, offers are up 1.1%.

The 2011 intake will ‘replace’ (in terms of total student load) smaller commencing cohorts from 2008 and preceding years who have now completed, so total over-enrolments are likely to be well-up on 2010.

Unless unis really do have very low marginal costs, cutbacks could mean that the ‘irrational exuberance’ of 2010 and 2011 enrolments leaves some universities with students they cannot afford.