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Where are the Greens going?

March 17th, 2018

I haven’t had time to do a proper economic analysis of Labor’s proposals on dividend imputation credits. But you don’t need an economic analysis to see that making an overt appeal to conservative voters on the issue, as Richard di Natale has just done, is a very bad move if the Greens party wants to present itself as a left alternative to Labor.

Perhaps this is poor judgement in the heat of a by-election campaign, the significance of which seems to me to be greatly over-rated by all.

Alternatively, perhaps it indicates that di Natale is taking the Greens in a different direction. The obvious choices are

(i) A soft liberal centrist party in the mould of the Australian Democrats under Don Chipp
(ii) A serious push to displace Labor as the main alternative to the LNP

I don’t think there’s a real constituency for (i) and, to the extent that there is, it’s very different from the existing Greens support base.

I also don’t think (ii) has any chance of success. But, if it does, it will involve a lot of the kind of grubby compromises that are inevitably entailed in an attempt to put together an electoral majority. Labor’s shuffles on Adani and refugees are obvious examples, which have driven a lot of people to support the Greens. But now it looks as if the boot may be on the other foot.

A lower profile, but similar, example came up with the Senate inquiry into SA Tafe, which was a stunt by education minister Simon Birmingham intended to embarrass Labor ahead of today’s state election. It backfired both procedurally (because the Labor majority on the committee refused to take its ostensible purpose seriously) and in policy terms, since the submissions (including mine) focused on the disastrous state of vocational education in Australia generally. Despite this, the Greens joined the LNP in a minority report which tried to defend the whole sorry process.

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  1. Garry Claridge
    March 17th, 2018 at 14:32 | #1

    Perhaps progressive dividend imputation credits is the truly just method?

  2. March 17th, 2018 at 15:58 | #2

    It’s just politics as usual. Precisely what any other political party would have done and precisely what they have to do to succeed in our system. Can’t see the point of analysing it differently.

    I watched the 2 minute video on the page you linked to on the by-election and all the pollies were saying identikit pollie things. Ged had a good feeling about the campaign. Her colleague Brendan O’Connor said that Ged was the ideal candidate.

    The Greens candidate said her things and Richard Di Natale talked about “sending a strong message to Canberra”.

    All these people would like to be doing their jobs differently. But if they did they’d lose votes and then be replaced.

  3. Fran Barlow
    March 17th, 2018 at 16:16 | #3

    I’d broadly agree with your analysis, but I’d add that if this becomes a pattern of conduct then the unity of the party will be seriously tested. There were deep misgivings in NSW both about the idea of having a leader and it being DiNatale. Traditionally, it had been a collective enterprise informed by the guidance of state branches to whom MPs were accountable (through PLCs).

    Most of us haven’t elected to give up our time merely to wave a flag and glad-hand celebrities. We see ourselves as principled and committed to a more just world.

    As I understand the dividend imputation credits idea — it was essentially a way of ensuring that ‘double taxation on shareholder income’ (i.e tax paid on behalf of equity holders would not have to be paid again when those equity holders received an income distribution).

    This system seemed a little unfair on those paying an EMRT less than the corporate tax rate, since had they a choice, those on margins under 30% would elected to get an unfranked dividend, declare it in income and pay at their margins.

    If people are really bothered by low income households losing dividends (putting aside that some are structured to have low income) then why not refund the difference between what they would have paid in tax had the dividend been received unfranked and declared in the person’s tax return and franked and credited as tax free income. If the person is under the tax threshold even with the dividend you could then give them it all. If the dividend is large, then the rebate will be tiny.

    Do I have this right?

  4. Moz of Yarramulla
    March 17th, 2018 at 17:32 | #4

    @Fran Barlow
    Fran, as I understand it your idea is exactly how it works now. The problem comes from super earnings being tax-free, so the taxable income of a lot of rich people is zero. They own a big pile of shares which pay dividends, there’s company tax paid on that income so they get franking credits, but the income they get is untaxed so the franking credits are refunded as “excess tax paid”.

    That’s why the suggestion that super income be taxed has been made. Even a flat 15% to match all the other taxes on super would be better than what we have now. I can’t remember where I read it (The Conversation?) but it was explained as Howard and Costello surfing the wave of tax income they suffered from and looking for ways to give it away to Liberal supporters. Breaking the capital gains tax and introducing super rorts were two of the ways they did that. Now we’re stuck with “you can’t change the rules after I’ve invested millions based on them”.

    Actually, we can and we do. Unless those people are claiming to have been born and reached retirement under the rules they’re talking about, they have seen the rules change before and should expect them to change again. Introducing progressive taxation on super income would be perfectly reasonable IMO … and something The Green should have suggested.

  5. John Quiggin
    March 17th, 2018 at 17:48 | #5

    “Precisely what any other political party would have done”

    That’s kind of the point, isn’t it? Much of the appeal of the Greens is that they don’t behave like the other parties.

  6. totaram
    March 17th, 2018 at 17:51 | #6

    I have been suspicious of Di Natale’s thinking for quite a while and this just nails it. The man is quite happy to cosy up to the Liberals no matter what the issue, and in return gets almost nothing.
    I can’t understand how this makes sense to anyone else in the Greens.

  7. March 17th, 2018 at 19:16 | #7

    @John Quiggin
    Well they do and they always have. You might predicate your own comments on the hope that they’ll be different. I guess it’s a good thing to hope. But it’s a bit like hoping that in a market merchants will converge towards the just price rather than what the market will bear.

    Of course each of the parties has some schtick about how they’re different. But they’re subject to the same laws of degraded communication enforced by our media culture and by the fact that this way of representing the people – by election – necessarily involves the parties competing for the voters’ vote.

    If that sounds good in theory, we can all see the practice whereby each party competes to misrepresent the others – the very opposite of the circumstances necessary for people with different views to communicate them, have them understood and arrive at some modus vivendi with others thereby.

  8. Stuart Johnson
    March 18th, 2018 at 01:22 | #8

    @totaram
    While I think Prof Quiggin’s point here is fair, I question the general idea of Di Natale as somehow being close to the Liberals.
    For a start every time anyone counts the Greens under Di Natale vote against the Liberals more than anybody else in parliament.
    Of course, this might not be a good measure, but the specific cases usually raised are worth considering.
    There was abolition of group voting tickets, which was advocated by most election experts, and even by Labor at one point. Of course it is what Labor did in NSW long ago, but also did in SA since the Federal election. Getting rid of GVTs was not just Di Natale policy, Bob Brown had tried it a number of times (and Lee Rhiannon pushed for it in NSW right back in the 1990’s). It was a long term Greens policy and given the chance of supporting any Government to implement it they obviously should have. It was Labor’s opposition which was entirely opportunistic.
    There were also changes to pensions, which wound back changes made by John Howard to give bigger pensions to wealthier people. The Greens made a deal to increase pensions for poorer people (i.e. people on part pensions at the lower end got moved up to full pensions) as part of this. Once again it is not clear why Labor would oppose it (presumably they did not support it when Howard brought in the changes).
    In both cases why should the Greens get anything in exchange? They were voting for things that they already wanted, they weren’t trading something bad in the hope of gaining something else.

    Is there any other basis to this whole Di Natale – Liberal deals idea? The Liberals are in Government and set the legislative agenda. The Greens should of course consider legislation on its merits, and if it is in agreement with their principles they should vote for it, or try to have it amended to something they agree with. What else should they do?

  9. rog
    March 18th, 2018 at 04:41 | #9

    “Dr Di Natale urged right-leaning voters in Batman to send Opposition Leader Bill Shorten a message about the tax plan by preferencing the Greens ahead of Labor.”

    Message received.

  10. Newtownian
    March 18th, 2018 at 08:59 | #10

    Great to see you raise this topic John.

    Who knows how many Greens will read your post. But hopefully they will start to realize that economic systems do matter and they cant just adopt positions opportunistically or based on childhood prejudices as seems the case at the moment. And this is the core issue they need to deal with in a non left non right philosophy based manner.

    Arguably this currwent lack of coherency accounts for the disputes between the Trotskyite wing and the likes of Di Natale.

    The only problem is that to date there is no coherent bread and butter green practical operational economics that they can use to distinguish themselves from either left or right that passes the laugh test.

    There is conventional environmental economics (your strand) which is still deeply infected with growthism v. ecological economics of Herman Daly and further into Deep Ecology which seems at present to add up to a hair shirt. aka no choice at all but lots of opportunity for splitting depending on whether they want to follow the Holy Gourd or the Holy Shoe.

    There is hopefully a needles eye where humanity and the planet can work mutually and efficiently – and inlcude 50% rewilding – but how to get there and sustain it long term? There are a lot of good ideas and elements out there – PV, recycling etc. but there is still no coherent zero material growth (quality and intellectual property diversity are probably a different matter) that still puts bread and butter on the table globally and equitably – and allows for the fact that human society will continue to evolve in unforseeable ways (the deep flaw in the socialist project – funnily touched on in “Young Marx” in his encounter with Charles Darwin in the British Museum.

  11. Fran Barlow
    March 18th, 2018 at 09:15 | #11

    John Quiggin :
    “Precisely what any other political party would have done”
    That’s kind of the point, isn’t it? Much of the appeal of the Greens is that they don’t behave like the other parties.

    Very much so PrQ. If the day ever comes when I am moved to defend my party by saying ‘Well at least we’re not as bad/better than Labor” I’d like someone who takes ethics seriously to put a boot into my rear end and recommend I shut up about politics.

    Nobody in my experience joins the Greens because it’s not as bad as Labor. Nobody joins because they figure that one day they will get a job out of it or become a minor celebrity. We join because we want to craft a just and rational world and because we have the resilience to cope with being in a monority on such questions. We demand that our party not merely be *better than Lsbor* but also *different* — inclusive, member-driven, on the side of the marginalised, rational, honest and forthright and principled. If we didn’t think those things non-negotiable, there would be no point to being membets. Both the major parties offer better and more certain career paths, and really, if you’re smart, ambitious and indifferent to ethics you can probably succeed more quickly yet away from politics.

    We have in our party institutional constraints on corrupt conduct but the biggest constraint is that incipiently corrupt folk don’t see us as viable. Hanging out with folk who have ethics is never going to be worth their time.

    As disappointed as I am in RDN’s conduct — particularly over the last 12 months — I take solace in the knowledge that he is not our party even if he’s its parliamentary leader. The Australian Greens is a federation of state parties, which is in turn a federation of local parties. Their parliamentary members are ultimately answerable to state branches and even local branches, rather thsn each other.

    There will need to be a reckoning post-Batman and I certainly hope it is throrough so that we get to the bottom of at least those things we can control that went awry and allowed a centre-right candidate to defeat a centre-left candidate in a seat dominated by left-liberals. Yes, the far right rallied around Labor, but that was always going to happen. We need to get our house in order disn there if we are to serve the vision of the growing number of people who want a just and rational world.

  12. Ikonoclast
    March 18th, 2018 at 09:17 | #12

    The politics won’t change until the material base has changed sufficiently. The material base in society is changing in the direction of ever greater inequality. Its material base in nature is changing in the direction of ever greater unsustainability. When these changes generate a series of crises unresolvable under the current system, then and only then will fundamental and revolutionary changes occur.

    The point is to be prepared for that juncture. A Green Party should be preparing and organizing for this, both theoretically and practically. Clearly, the Australian Greens are not doing these things. They are just another petty bourgeoise party of political dilettantes stuck in the present with no forward vision.

    The Australian Greens are not a revolutionary party in any sense. The point of a revolutionary party standing candidates in a bourgeois election is not to win power in the bourgeois system. The point is to “count numbers” in favour of revolutionary change. You can’t count numbers with false and opportunistic policy.

  13. Ikonoclast
    March 18th, 2018 at 09:37 | #13

    “We live in capitalism, its power seems inescapable – but then, so did the divine right of kings. Any human power can be resisted and changed by human beings.” – Ursula K Le Guin

  14. Ernestine Gross
    March 18th, 2018 at 09:55 | #14

    The original dividend imputation system, which the current Labor party wishes to reintroduce, ensured that dividends are taxed only once at the personal (marginal) income tax rate. That is, the progressive structure of income tax rates was carried over. This system does NOT imply that low income earners lose dividends.

    In light of Fran’s comment as well as many comments in the smh and some opinion papers in the smh by journalists suggests to me that the Greens, like many commentators, don’t understand the original dividend imputation system. (I read only one issue of The Australian; no relevant content other than messaging fantasies IMHO.)

    People on low taxable income, due to low incomes rather than ‘smart’ tax minimisation strategies, lose very little cash from the the proposed reintroduction of the original dividend imputation scheme – something in the range of one or two dinners for two in an expensive restaurant, depending on which shares they own and how much dividends the issuing companies pay in a particular year.

    Furthermore, the discussions so far ignore the implications for complex corporate structures, such as multinationals but also exclusively domestic corporations. These corporations also have shares that pay fully or partially franked dividends in their short term financial asset accounts and, depending on which part of the structure has been assigned these assets, cash refunds flow to the entity.

    IMHO, the series of tax policy changes since the Costello-Howard government, which are tax expenditures, have flattened the progressive income tax structure at best and have inverted it at worst. In addition they started with income tax rate cuts at the wrong end. The period of the acute crisis of the GFC was not the time of undoing this because the consequences were totally unpredictable and, with due respect, Ms Gillard has convinced me she doesn’t understand accounting and tax accounting in particular. No brownie points for reaching the conclusion that business as usual is totally inconsistent with the objective of reducing the government deficit without transforming the Australian society into a type of extreme wealth, income, and living standard divide.

  15. totaram
    March 18th, 2018 at 10:27 | #15

    @Stuart Johnson
    The examples given by you are indeed the only ones where voting with the Liberals was fine. There were others though which were not so. The lifting of the “debt ceiling” is one I recall (even though the idea of the ceiling is nonsense in my view).

  16. Fran Barlow
    March 18th, 2018 at 10:28 | #16

    @Ernestine Gross

    Ernestine

    I know that we’ve had our arguments in the past, and I have no interest in revisiting them.

    If you could simply sketch the actual structure of the transfers pre- and post- the Howard amendments so that I understand them accurately I’d be grateful. No sarcasm — I really thought I had grasped it, but if I am misding something, I’d genuinely like clarity.

    Thanks in advance.

  17. Fran Barlow
    March 18th, 2018 at 10:28 | #17

    Oops *missing something* — gosh an edit function would be good here.

  18. Fran Barlow
    March 18th, 2018 at 12:22 | #18

    @Moz of Yarramulla

    I have long thought that the retirement incomes policy along with income support has been an absolute mess and also, regressive in its transfers. We have spoken hereof UBI and similar before, but candidly, I believe we need in the long run to put all income support under one rights-based (rather than asset or needs-based) agenda. Plainly, we’d need some transitional arrangements but getting rid of Compulsory Super and returning those transfers to contributors would be one important feature.

    I attribute the advent of Compulsory Super to the intersection of the rise of neoliberalism in the 1980s, the structural decline of unions and the lurch towards ‘Swedish Social Democracy’ which at a minimum winked at the view that member-controlled super funds could take the place of socialist planning. You don’t hear that argument put much these days!

    We need urgently to assert the idea that everyone — whether they choose to ‘work’ or not — is entitled to a dignified existence. Without that, choice, and therefore freedom in any meaningful sense, is a sham — or worse, an exercise in misdirection. Brutalising people into going through the motions of work and of drawing self-worth from some possibly anti-social activity is madness and in any event non-maintainable.

    Let there be a UBI at around 40% of AFTOWE, and a tax system which effectively rubs out the benefit at the top end of income earners by making them choose their preferred tax paradigm.

    If people want to use super as a vehicle for saving or investing, let them do so from after tax earnings and let the earnings each year from those investments be taxed in the normal progressive way, with full CGT where that applies.

  19. Stuart Johnson
    March 18th, 2018 at 12:58 | #19

    @totaram
    I agree with you that a debt ceiling is nonsense, so once again I’m not sure why the Greens voting to remove it is a problem or suggests that somehow Di Natale is close to the Liberals. Once again it was not a “deal” in the sense of “we’ll give up something to get something in return”, it was voting for something they agree with – there was no point in the debt ceiling, but it might actually be harmful in restricting Government spending when it is actually required.

  20. Nick
    March 18th, 2018 at 13:00 | #20

    Congrats to Ged Kearney. A much better representative in parliament and the ALP caucus than we had previously. Preselecting a candidate with a strong health background was always a good move – there’s about 12 hospitals within a 10 min commute from Batman.

    And yes, disappointing politics from Di Natale. I don’t agree with Nicholas that ‘this is what any party has to do’. I think it was a blunder, and “poor judgement in the heat of a by-election campaign”. How many ‘ageing conservatives’ were they going to win over exactly? There’s something about doctors who become politicians…

    But anyway, it was a good day. The whole area was out and about – lots of other festivities and school events on – and all seemed in good moods whatever the result. That’s the best thing about an electorate with a <10% conservative vote 😉

    If down the track Labor has a chance to stop Adani and doesn’t, and it goes ahead, I think it’s fair to say a lot of people across the country will never vote for them again. So hopefully Labor also knows where it’s future lies.

  21. rog
    March 18th, 2018 at 13:33 | #21

    The easiest way, and I think this will be the way as hinted by Andrew Leigh, is to means test SMSF members. He suggests $2.5M per account, which will be politically palatable and show up the LNPs weakness in this area.

  22. paul walter
    March 18th, 2018 at 14:04 | #22

    Richard Di Natale has burnt up an awful lot of goodwill since his elevation to the leadership, with his tabloid, anti critiquing style.

  23. March 18th, 2018 at 14:17 | #23

    @rog
    Yes, even simpler, but perhaps not as tightly targeted which, when I heard about the policy I assumed would occur as a matter of course, would be to cap access to franking credits at some amount.

  24. Svante
    March 18th, 2018 at 17:08 | #24

    @Garry Claridge

    Yes, that’s possibly the fairest course as it would progressively reduce the income tax return benefit and that would affect Billie ‘n Bowen’s own franking tax credit options by reducing the cash they have in their and their fellow ALP share owning apparatchiks’ pockets at the end of the day. If they wish to clean out my dividend imputation cash back pocket they should also suffer a reduction in the cash put back into their pockets at tax time! As a share owner why should I have to pay company tax on income from those companies but ALP apparatchiks on hefty salaries and perks do not?

    To qualify for a full aged pension one must come under the asset test threshold, a threshold that the Greens actually raised. (For those better off, such as part pension qualifying applicants, the progressive reduction in pension payments above the minimum asset threshold steepened.) For aged pensions Centrelink deems income earned on assets up to $50200 at 1.75%. Above that it’s 3.25% Any earnings above $168 per fortnight reduce pension payment by fifty cents in the dollar. The pressure is to have just the right amount of deemed asset income from the smallest amount of invested capital. Direct investment eliminates the inevitable fees associated with super. The ASX blue chip stocks have dividend payment averages of around 4% over the last few years, just above Centrelink’s arbitrarily high deeming amount. A franking credit cash back of the 30% company tax paid might even effectively raise the dividend yield to around 5%!

    Billie and Bowen want to return to Keating’s original plan, they say. They have cherry picked Howard’s later fair change for Australian resident share owners, but chose to overlook that Keating’s main reason was to drive up resident Australian share ownership and investment in Australia. The dividend returns of comparative blue chip American shares over the last several years have outperformed Australian shares by several per cent and climbing and likewise the American dollar. If Billie and Bowen ever look like regressing to tax less wealthy people but not themselves then I know where my investments used to generate a little pocket money will have to be going, ie Wall St, after certain adjustments via consumption spending on overseas travel and home upgrades.

  25. Svante
    March 18th, 2018 at 17:35 | #25

    @Nick

    “But anyway, it was a good day.”

    Got to question that, a slight margin increase, and only a 75% turnout. Kearney won’t be there long enough to get comfortable, so they will pop her next in the Senate home for all good time serving comrade apparatchiks.

  26. Svante
    March 18th, 2018 at 17:37 | #26

    @rog

    The sooner Leigh replaces Bowen the better their prospects will be.

  27. Fran Barlow
    March 18th, 2018 at 22:18 | #27

    @Nicholas Gruen

    One simple option might be to cap 100% cash rebate at 1.5% of AAFTOWE (roughly $1200 and phase out rebates geometrically to zero by 3.5% (around $2800)

    Anyone above that is wealthy.

  28. rog
    March 19th, 2018 at 05:45 | #28

    @Fran Barlow What exactly is AAFTOWE?

  29. Smith
    March 19th, 2018 at 06:41 | #29

    What we’ve seen over the past couple of weeks is a movement back to the major parties. The Greens, Xenophon, Lambie and Bernardi have all flamed out. Voting for one of the two parties that can form the government might be back in fashion.

  30. Ikonoclast
    March 19th, 2018 at 07:08 | #30

    If flip-flopping between the two capitalist parties is the best the public can come up with at this late stage… then well may nature save the unicellular animals because nothing will save the multicellular ones.

  31. Fran Barlow
    March 19th, 2018 at 07:10 | #31

    @rog

    Average Annualised Fulltime Ordinary Weekly Earnings

  32. Fran Barlow
    March 19th, 2018 at 07:17 | #32

    @Smith

    I don’t see the Greens as ‘flaming out”. Kearney was a much better fit for Batman than Feeney — a better salesperson for RW policies than Feeney, plainly and for reasons than are obvious the flow of preferences from the far right strongly favoured Labor. They know that we are a far bigger threat to their interest in the culture wars.

    Equally, the allegations of bullying and branch-stacking didn’t help. These will be re-examined now and if there is malfeasance, then let those responsible/involved be shown the door, along with those who for whatever reason failed to act the first time. I suspect that they will prove unfounded but let’s see.

  33. Smith
    March 19th, 2018 at 08:01 | #33

    @Fran Barlow

    Of course it was a flame out. The Greens thought they had it in the bag. Only a few months ago in the same area they won a state seat from Labor with a swing to them of 878%.

    Whether or not the allegations against now six time loser Bhathal are correct is immaterial. They were leaked by her enemies in the party with the intent of damaging her. As is traditional in parties of the far left, the Greens hate many things but most of all they hate each other.

  34. Fran Barlow
    March 19th, 2018 at 08:39 | #34

    @Smith

    I can assure you, as something ne who was across the chatter inside the party, The Greens in Darebin did not think they ‘had it in the bag’ — especially when the ALP chose Kearney as their spruiker. We knew they would porkbarrell — it is the governing parties’ heavy artillery and they have the connections to make it plausible — but the smear campaign took us by surprise.

    FTR, we don’t hate each other and slthough like most folk there are people we prefer to work with than others, not to speak of differences over priorities and approaches, for the most part, discussion and controversy is handled respectfully at party events.

    You may infer that like many in NSW, I am not impressed by RDN but that doesn’t mean we hate him here. He appeared in Granville before the last general election and we showed up en masse and gave him a warm welcome. Whatever our differences, every fellow Green deserves respect, because they have chosen the hard road — the road less travelled — over the easy one.

    Finally, despite my membership, The Greens are neither now nor ever were a party of the far left. As someone who was on the far left for roughly three decades I would know. The Greens are best described as a party of left-liberal populism. You won’t find any appeals in our documents for solidarity with the struggle against imperialism, or for socialism even in its most anodyne iterations, or references to the ruling class or paradigmatic critiques of capitalism. There isn’t even a focus on winning over the working class.

    Instead, the party pitches for inclusion, social justice, equitable dealing, peace amongst nations and a focus on protecting the environment. That’s why the right in Batman periodically calledus ‘tree tories’ and leftist blogger Elizabeth Humphries, not entirely without cause, described us as ‘neoliberals on bikes’. That hurt, because while it was too sweeping it was arguable.

    As is often the case, perceptions of how left we are say more about the person describing us than us. Your description puts you on the hard right, with folk like Mark Latham and Alan Jones and Andrew Bolt. If these are not your cultural peers, you might want to reflect on what makes us, in your view, ‘far left’.

  35. Fran Barlow
    March 19th, 2018 at 08:40 | #35

    Ugh

    I can assure you, as *someone* who was across the chatter inside the party, The Greens in …

    Damn you autocorrect ..

  36. Smith
    March 19th, 2018 at 08:58 | #36

    @Fran Barlow

    I accept that the Greens are a mixed bag but there are certainly far left elements within, at the top and throughout. Lee Rhiannon is far left. You are far left. (Not that there is anything wrong with that. Some of my best friends etc). A year or so ago a group in the NSW Greens issued a manifesto of sorts calling for the Greens to end capitalism (or at least have policies that would help end capitalism). If that isn’t far left, what is?

    Of course there are also neoliberals on bikes, Birkenstock neoliberals, whatever insults people want to throw around. Di Natale seems to be an old fashioned social democrat, of the kind that used to make up most of the Labor Party Left, when the Labor Party had a Left.

    Latham, Bolt etc by the way don’t call the Greens far left. They call the Greens extreme left. That is hyperbole. There are no Maoists in the Greens that I know of, though they might be hiding in the branches, biding their time, on their own metaphorical long march.

  37. Smith
    March 19th, 2018 at 09:28 | #37

    RDN is now threatening a purge of the plotters and the leakers. This should be entertaining, and with the imminent release of Armando Iannucci’s The Death of Stalin we can compare and contrast. Life imitates art imitates life.

  38. Fran Barlow
    March 19th, 2018 at 09:40 | #38

    @Smith

    Stipulated: The Greens include people who support socialism in some form or another. I am one such. Yet the party itself, judged by its policies, political activities and usages is not a socialist party. It’s a liberal populist party. Far left parties, and again I reference my own history here — interview prospective members, pair them with a person who does contacts and require them to be in their company while on party work so that they can assess theur commitment to the cause. They are looking for *cadre* — rather than simple members — people who can be soldiers in the battle to create a party with the discipline needed to lead the workers in struggle against the capitalist class. If you don’t measure up, you will be dropped — either to ‘disciplined sympathiser’ or ‘contact’ or told not to contact them at all. They insist — and I will quote here: we have a monopoly of your public politics. Bear in mind at all times that you speak for us. Your personal opinions are valued at internal party events but not otherwise.

    Nothing like that kind of vetting and didcipline attaches to being a Green, because nothing of the far left paradigm applies. I don’t advocate or endorse such a thing anywhere now and certainly not within The Greens. I have never heard of anyone else doing so either. We are not a party of the international proletarian revolution.

    In terms of the composition of our party most of the older members are ex-ALP, some ex-CPA or SPA and many have a trade union or environmental activist background. The younger folk (under 30s) tend to have come to us via community activism and/or student politics. Many of them identify with ‘socialism’ in a rather unformed way. Some have been members of Socialist Alliance or readers of Green Left Weekly.

    None of this makes us a far left party. What we do or don’t do defines who we are, just as it defines the governing parties.

  39. Ernestine Gross
    March 19th, 2018 at 10:03 | #39

    @Fran Barlow

    Regarding your: “ low income households losing dividends (putting aside that some are structured to have low income)”

    Low income households losing dividends under the proposed policy was a concern raised by many smh commentators. This concern is unfounded.

    In reply to your specific question, I’ll illustrate the difference between losing dividends and losing cash refunds of imputation credits for low income households, defining a ‘household’ as consisting of one person to simplify the arithmetic. For ease of reference I refer to the current system as the Costello system and the original system as the Keating system. Given the information available to me, the proposed policy is identical to the Keating system for low wage income individuals. Wage incomes are the relevant one because you exclude tax minimisation structures.
    Case 1: Wage income $18600 p.a., portfolio of shares paying fully franked dividends of $4200 p.a. The corporate tax rate = 30% and the lowest marginal tax rate is 15%.

    Costello system:
    Income from wages $18600 (tax free amount for income tax purposes)
    Fully franked dividends $ 6000 ( grossing up of dividends received: $4200/.7)
    Taxable income before imputation $24600
    Minus franking credits -$1800
    Taxable income $22800
    Minus Tax payable (22800-18600)*.15 $ 630
    After tax income $22170

    No change under the Keating system.

    Note the tax payable is equal to $4200*.15. This is not a loss of dividends. The tax payable corresponds to the case where the wage income would have been $4200 higher. If one were to remove this tax amounts would amount to valuing income from financial assets different from income from wages such that wage income is being taxed higher.

    Case 2. Identical to Case 1, except that the income from wages is $14400. Repeating the above steps, both the Costello and the Keating system have identical solutions. The taxable income is $18600 and tax payable is zero. There are no dividends forgone and the imputation credit is fully utilised.

    Case 3. Obviously, one has to find a ‘low income number’ that is less than $14400 to illustrate the cash refund foregone, keeping all other parameter values constant. Say we pick $14000 wage income p.a.

    Substituting $14000 for $18600 in the calculation for Case 1 the taxable income is $18200, which is less than the tax free amount of $18600.

    The difference between the tax free amount and the taxable income amount, namely $400, is the imputation credit that is foregone under the proposed Keating system. It is refunded by the ATO (the so-called dividend imputation cash refund) under the Costello system.

    This little illustration opens up other solutions for low income wage earners. For example, if the tax free amount were to be raised by $400 for all people under an income tax review, then the imputation credit foregone would no longer be foregone. Considering the effect of inflation (tax creep), a raising of the tax free amount would seem a reasonable thing to do that benefits the lower and middle income people most.

    It seems to be obvious from the illustration, the proposed scheme is not going to reduce the federal budget deficit significantly or allow significant welfare expenditure increases by eliminating the so-called dividend imputation cash refund from ‘low wage income households’. Similarly, the living standard of low wage income households is not significantly worsened by the policy proposal.

    Consider self-managed superfunds of retired people who receive say $60000 in fully franked dividends and then work out the so-called dividend imputation cash refund and the problem regarding growing budget deficits as well as growing income and wealth inequality will become apparent, considering the tax rate for retired people.

    It may well be that the said public comments on the effect of the policy proposal on low income households may be no more than a bit of sloppiness in terminology. However, the effect on perceptions as to what this policy proposal is about can be huge.

  40. Smith
    March 19th, 2018 at 10:11 | #40

    @Ernestine Gross

    You seem to be conflating how people are politically active with what causes they are active about. If you define far left politics to be doing politics like the Sparts, well sure, the Greens are not that.

  41. Fran Barlow
    March 19th, 2018 at 10:17 | #41

    Thanks Ernestine.

    That account makes a good deal more sense than anything else I have read on the proposal.

    If I understand you correctly, a person who was able to show zero income could, under the Costello system, receive as much as 18,600 in rebate. Also, could one who was on negative income — someone for example with tax losses exceeding incone, claim more under the Costello system?

    Thanks once again for your efforts. 🙂

  42. Smith
    March 19th, 2018 at 10:21 | #42

    @Ernestine Gross

    Your example is wrong in at least four ways. The tax free threshold is $18200 not $18600. The tax rate for income above $18600 is 19% not 15%. You have forgotten the Medicare levy of 2%. The company tax rate (except for small companies) is 27.5% not 30%.

  43. Fran Barlow
    March 19th, 2018 at 10:31 | #43

    @Smith

    I suspect you’ve addressed this to the wrong person. Ernestine has not been a party to this exchange.

    Substantively, I find the term ‘extreme’ to be more trouble than it’s worth when discussing politics or culture. ‘Extreme left’ is not a thing, so much as a sentiment. Few regard themselves as extremists, and since relative politics is subjective, one should steer clear, IMO.

    Far left like far right is of course still relative but doesn’t carry the same baggage. It seems to me that the frontier between the far left and the soft left turns on how one sees questions of class power, the manifestation of class power in agencies the state, the relationships between the producer classes of various states, their capacity to collaborate and act as classes *for* themselves rather than *in* themselves and the timelines, processes and vehicles one sees as likely to lead to the rule of working people and their allies.

    On some of these measures I am on the far left, but on most I am not. Really, I’m probably best described these days as a left social democrat — an appellation that probably applies to around, in my estimation, possibly 50% of those in NSW Greens — though most would be a lot more conservative than I am.

  44. Garry Claridge
    March 19th, 2018 at 11:42 | #44

    @Smith
    Not sure how you can declare “…have all flamed out.” when in Queensland, at the recent State election, we now have our first elected Greens State Member. And, the Batman vote increased!!!

  45. John Passant
    March 19th, 2018 at 11:47 | #45

    @Smith
    Thank you. When I read Ernestine say the tax free threshold was $18,600, I just knew there would be other problems. There are.

  46. Ernestine Gross
    March 19th, 2018 at 13:12 | #46

    @Smith

    @ 40: Over time Fran deduced correctly that my comments are not that of a troll (as originally assumed) but are based in my area of education and work experience, namely economics and finance, and they involve primarily technical aspects but not politics, particularly not party politics. And I deduced from Fran’s writing that her sphere of interest is almost disconnected from mine. There are no more arguments between us. There is mutual respect, I’d say.

    @ 42: Analytical work is not your preferred modus operandi, it seems to me. My illustration might be wrong if Fran had asked me a different question.

    Your approach reminds me of a conversation I had with a trained accountant.

    I asked: Accountants use the colour red to represent negative profits numbers, which they call a loss, and they use black for positive profit numbers, what colour do accountants use to represent the number zero in a P&L statement? Answer: This doesn’t happen in practice.

    (Moral of the story: The colour coding is presumably convenient for many people but it is neither complete – and therefore theoretically unsatisfactory – nor essential in understanding financial accounting.)

  47. Ernestine Gross
    March 19th, 2018 at 13:38 | #47

    @John Passant

    Interesting how you reach conclusions. Otherwise see my reply to Smith.

  48. Ernestine Gross
    March 19th, 2018 at 14:02 | #48

    @Fran Barlow

    Pleasure.

    Smith’s alternative numbers are totally irrelevant to understand the distinction between the 2 system. I assume you have figured this out anyway.

    As to your follow up question, if we want to adhere to the case of comparing taxation of wage income with taxation of dividend income under the two alternative dividend imputation systems, then there must be a strictly positive wage income amount and therefore the amount of cash refund of imputed company tax would be smaller.

    IMO, comparing taxation of wage income with taxation of dividend income is important – consider the empirical findings of Thomas Piketty and many others.

    Other questions arise when considering low wage incomes that attract the theoretically maximum cash refund of imputed dividends. While one cannot exclude the possibility of some individuals who happen to have a relatively small portfolio of shares that pay fully franked dividends wanting to work only a few hours per year to extract the theoretically maximum cash refund under the Costello system, one also cannot exclude the possibility that those on very low wage incomes get other social benefits – unemployment benefit, family support or whatever. So, one needs detailed information from the ATO or the Treasury to form an opinion on the quantities of ‘tax leakages’ (an alternative expression for tax expenditure or tax loophole) that would be affected by the Costello system.

    As soon as one goes beyond the low wage income earners and asks questions about self-managed superfunds and complex corporate structures, it becomes almost impossible to even illustrate the difference in the two alternative dividend imputation systems, irrespective of the petty points as per Smith. But this is the area where the big tax leakages are to be found and I say this with great confidence, even though I don’t have the empirical details.

    It may be useful to get the empirical details from the relevant authorities before proposing any modifications to the proposed reintroduction of the Keating system of dividend imputation.

  49. Smith
    March 20th, 2018 at 08:06 | #49

    A former Greens official, Grahame Bowland, has taken to Facebook to denounced Richard Di Natale’s purge of the plotters and the leakers in the Batman Greens who sabotaged their campaign.

    Bowland has called his denouncement the “nuclear option”. This is probably not the best metaphor for a Green to use.

  50. derrida derider
    March 20th, 2018 at 10:34 | #50

    On the refundability of franking credits it’s important to understand that when it was introduced in 2000 it was intended to help, and did help, POOR retirees but not rich ones. What turned it from a cheap and fair measure into an expensive rort for the rich was the 2009 changes to superannuation, which meant rich retirees no longer paid tax and hence could get the refund. It would be much better to get rid of the main rort – the 2009 changes – rather than a subsidiary rort that followed from it. Do that and franking credit refundability reverts to its original purpose.

    But Shorten is brave, not suicidal, so that’s off the table.

  51. Smith
    March 20th, 2018 at 12:49 | #51

    @derrida derider

    Yes and no. Before the 2006 (not 2009) changes there was still cash back on excess franking credits, just not as much.

    The great irony of the government’s plan to cut the corporate tax rate is that this will reduce franking credits for everybody including reducing the cash back for domestic shareholders who pay zero or little tax. It is assuming to see ministers attack the Labor policy on dividend imputation when at the same time they are saying the Labor Party must support corporate tax cuts which will have the same effect on the same people, at least directionally. ( Of course it is always possible that ministers don’t understand the implications of their policy.)

  52. John Quiggin
    March 20th, 2018 at 12:50 | #52

    @derrida derider

    Yes, that point seems finally to be coming through.

  53. Fran Barlow
    March 21st, 2018 at 07:36 | #53

    @Smith

    The great irony of the government’s plan to cut the corporate tax rate is that this will reduce franking credits for everybody including reducing the cash back for domestic shareholders who pay zero or little tax.”

    Yes, but presumably they will have full compensation because the gross dividend will be commensurately larger.

  54. Fran Barlow
    March 21st, 2018 at 07:45 | #54

    @Smith

    A former Greens official, Grahame Bowland, has taken to Facebook to denounced Richard Di Natale’s purge of the plotters and the leakers in the Batman Greens who sabotaged their campaign.

    Even though I am unhappy, as many in NSW Greens are, with having a parliamentary party leader and with it being DiNatale, I have no particular problem with tossing out those who deliberately subverted our election campaign UNLESS (and this is important) their complaints of malfeasance (branchstacking, bullying) are demonstrably legitimate.

    I was listening to a now ex-Green from Darebin branch on Monday who was interviewed on the matter, and she strongly affirmed that the claims were unfounded and implausible on the face of it. She’s only one person of course but no credible organisation will tolerate within it those who deliberately subvert its mission.

    Some years ago. The Australian declared that it was determined to destroy our party. These folk have gone to the Murdoch Press attempting to destroy our candidate. There could scarcely be a clearer prima facie case for expulsion than that.

  55. Smith
    March 21st, 2018 at 08:53 | #55

    @Fran Barlow

    Yes, but presumably they will have full compensation because the gross dividend will be commensurately larger.

    This depends on the companies’ dividend policies. They might keep the tax cut in the company and invest it. This could work out well for the shareholders, eventually.

    Or it could work out badly.

  56. Smith
    March 21st, 2018 at 09:06 | #56

    @Fran Barlow

    These folk have gone to the Murdoch Press attempting to destroy our candidate

    But the Greens are all nicey nice collegial, unlike the major parties.

  57. Fran Barlow
    March 21st, 2018 at 10:04 | #57

    @Smith

    We are. “Collegial” (in places where collegiality is relevant) implies respectful dealing, personal integrity, and commitment to the mission of the organisation for which you work. When people join The Greens, it is expected that this is how we will deal with each other even when we sharply disagree.

    It may well be that more relevant and reliable information will emerge which could cause me to change my mind, but at this very early stage it does seem as if Alex Bhathal’s detractors — frustrated at their failure to have the branch behave as they preferred, decided to sabotage the campaign by resort to the resources of the party’s enemies.

    If that’s what they did and without adequate ethical cause, then expulsion is the right course, even in a thoroughly inclusive, respectful and collegial party. No party can function effectively if its members don’t at a minimum, agree to accept with equanimity if not act in concert for things the party considers important.

    I would agree that it was unwise for RDN to fulminate about this in public, but that’s a separate matter.

  58. Smith
    March 21st, 2018 at 10:34 | #58

    @Fran Barlow

    Well, as you say, the party does have some ex-CPA and ex-SPA. Sabotage, betrayals, accusations, expulsions – it must seem like the good old days to them.

  59. Fran Barlow
    March 21st, 2018 at 10:44 | #59

    @Smith

    Well, as you say, the party does have some ex-CPA and ex-SPA. Sabotage, betrayals, accusations, expulsions – it must seem like the good old days to them.

    Richard Di Natale has never been in any of those. AIUI, in or about 1992 — when The Australian Greens was formed, he was voting Liberal.

    It may be a coincidence, but those of leftist background tend in my experience to be amongst the most robust enemies of Stalinist conduct. We know how that goes.

  60. EconoManOz
    March 21st, 2018 at 10:46 | #60

    @Smith Changes were in 2006 (announced) or 2007 (took effect) under Howard/Costello, not 2009. Previously, changes would have helped low to middle income self-funded retirees as you say.

    @Ernestine Gross There are substantive problems beyond your ‘minor’ ‘irrelevant’ incorrect numbers. Franking credits don’t subtract from taxable income in the way you describe. As a result, your conclusion that there is ‘no change under the Keating system’ is wrong in all three cases, as are several of your other conclusions. (Which is not to say I oppose the policy or think the SMH framing is fair/balanced.)

    @Smith Mostly correct, but the company rate is 30% for large companies, and is/will be 27.5% for ‘small to medium’ companies. Totally fair to use 30% rate as bulk of FCs will be from such companies (and the computation is easier!).

  61. Ernestine Gross
    March 21st, 2018 at 17:22 | #61

    @EconoManOz

    You have totally missed to read or understand the question by Fran to which I provided an answer.

    You write: “As a result, your conclusion that there is ‘no change under the Keating system’ is wrong in all three cases.”

    This is not my conclusion nor have I written by mistake what you wrongly and ascribe to me.

    Go back to step one and come back only if you actually have something to say that isn’t a falsehood.

    Incidentally, I don’t care if you oppose the policy proposal or not.

  62. Hugo
    March 21st, 2018 at 17:24 | #62

    I was an active in the Darebin Greens branch in the early 2000s but I let my membership lapse and took out an ALP membership a couple years back. I can only recall one active Greens member in my Branch who was ever a member of any socialist party and I do not recall anyone ever talking about socialism.

    I recall plenty of bickering in the Branch about all the usual things, such as folk volunteering to do something then not doing it, boring meetings and of course the personality based squabbles that happen in all groups.

    As to the Left – Right distinction, my view is that, generally speaking, Left parties seek a more equitable distribution of wealth, status and power whereas Right parties oppose same.

    Clearly Ged Kearney is on the Left of politics because she favours a more equitable distribution of power between capital and labour, men and women and a fairer distribution of wealth/income through the welfare system.

    In classifying Kearney as centre-right, Fran Barlow is mirroring the Modus Operandi of those partisans on the right, who classify Malcolm Turnbull as centre-left (I see this all the time on right wing blogs). That may be OK for partisan polemic but it is not a serious or meaningful analysis.

    As to s-cialism, its *praxis* has always concentrated power in the hands of the few and occasioned tyranny for the many. At least for the present, it does not offer a way forward. I would like to hope that the failure of socialism is because it has been deployed before the appropriate ripening of productive forces. I hold out hope that technological advancement will in the not to distant future make socialism workable and indeed superior to capitalism. We’ll see.

  63. Fran Barlow
    March 21st, 2018 at 21:26 | #63

    @Hugo

    I didn’t classify Kearney as “centre right”. Feeney, like Shorten, is centre right. Personally, Kearney seems to be left of centre. I said she was a better advocate for RW policies — which is the best description of the current ALP consensus.

    I agree with you that the jurisdictions that are usually identified historically as ‘socialist’ did come well before the productive forces permitted anything that could supprt inclysive governance leave aside socialism. A better descriptor would be communitarian autarky or similar. For the moment, we are indeed stuck with variants of capitalism because inclusive societies — and socialism if it is to emerge — must be built through the conscious and collaborative agency of working folk and their allies. It’s as much a political challenge as a technological one. Labor is a centre-right party because it asserts that this js all there can be, and is framed purely around a customer service model of adaptation to what already exists and js committed to protecting existing privilege.

    I hope that clarifies.

  64. Fran Barlow
    March 21st, 2018 at 22:02 | #64

    @Hugo

    I was an active in the Darebin Greens branch in the early 2000s […] I recall plenty of bickering in the Branch about all the usual things, such as folk volunteering to do something then not doing it, boring meetings and of course the personality based squabbles that happen in all groups.

    It has been regularly pointed out that Batman had at this time been the safest ALP seat in the country. We Greens are, by definition, inter alia radical optimists but unless you are also enormously resiliant doing greens activism in such a setting is testing. Feeling powerless, irrelevant and at risk of abuse tests all but the most resilient, so your description of branch meetings at the time doesn’t sound odd.

    That Alex Bhathal contested every election, campsigning hard with whoever would support her from 2001, attests to her resilience. That this is now a marginal seat and the branch is now in good measure down to folk like her, and those who have supported her from those early days. I have never met her, and perhaps she and I would not be on the same page but knowing what it’s like to do that, I respect her and those around her. It was this as much as my party solidarity that moved my disappointment at the result and my disgust at those who sandbagged the campaign.

    I don’t know the branch, and perhaps they don’t talk much of socialism — it is Victoria not NSW. We are a centre left party even in Victoria though.

  65. EconoManOz
    March 22nd, 2018 at 08:33 | #65

    @Ernestine Gross I’ve read the back context:Fran asked for an explanation of the ‘the actual structure of the transfers pre- and post- the Howard amendments’. The distinction you’re drawing is either elusive or not relevant in my opinion

    You specifically say the following in #39:
    In relation to Case 1, and relative to Costello system: “No change under the Keating system”. That is wrong. If I’m misinterpreting that that is a conclusion, frankly, I’m not sure you can blame me.
    In relation to Case 2: “both the Costello and the Keating system have identical solutions.” Wrong. Same as above.

    In the following, step 4 (Minus franking credits -$1800) is wrong under both systems

    Case 1: Wage income $18600 p.a., portfolio of shares paying fully franked dividends of $4200 p.a. The corporate tax rate = 30% and the lowest marginal tax rate is 15%.
    Costello system:
    Income from wages $18600 (tax free amount for income tax purposes)
    Fully franked dividends$ 6000 ( grossing up of dividends received: $4200/.7)
    Taxable income before imputation$24600
    Minus franking credits-$1800
    Taxable income $22800
    Minus Tax payable (22800-18600)*.15 $ 630
    After tax income $22170
    No change under the Keating system.

    Finally, your explanation (#39) contained numerous “falsehoods” (basic tax errors), which you brushed off as irrelevant – yet you seem particularly keen to focus on other’s. Please point out any specific falsehood you are accusing me of. (Re: using the word ‘conclusion’, see above.)

  66. Ernestine Gross
    March 22nd, 2018 at 11:56 | #66

    @EconoManOz

    1. Fran’s question @16, which you have quoted, follows from my post @14. In my post @39, I made precise how I interpret her question @16 (this was necessary to make the task manageable in a blog post).
    2. You, like Smith, criticise my parameter values (Smith was even wrong on the corporate tax rate). Your criticism would be valid if someone would have asked me to use the current exact parameter values or if I would use my calculations for the purpose of making projections as to the total tax revenue for the government involved. But this is not the case. Hence I could have chosen from a large set of parameter values without affecting the conclusion as to what is the critical difference between ‘losing dividends’ versus ‘losing imputation credits’ and the difference between the tax paid on wage income and tax paid on income from dividends (a point often ignored in discussions).
    3. You assert that my calculation in Case 1 is wrong but you don’t say why.
    4. You assert that my calculation in Case 2 is wrong but you don’t say why.
    5. You now ignore my Case 3 (which shows the difference in the systems), while in your post @60, you wrote: “As a result, your conclusion that there is ‘no change under the Keating system’ is wrong in all three cases.” This is false.

    I trust this clarifies matters for you.

  67. EconoManOz
    March 22nd, 2018 at 13:11 | #67

    @Ernestine Gross

    1. Thanks. Yes, I followed that. I interpret Fran as asking how the two systems differ in terms of ‘transfers’ – which to me would cover tax payable and any tax refunds. Is your interpretation different?

    2. Personally, I think that when someone is asking how a system works, such as tax technical issues, reasonable accuracy generally helps with the illustration. You might have a different view – which is fine, transparent assumptions/parameters is sufficient – but me stating my opinion isn’t a ‘falsehood’. (My comment #60 also noted that re Smith and rates, and endorsed your chosen company tax rate.)

    3 & 4. I told you why/where your calculations were wrong, which affects all 3 cases. Step 4 – subtracting franking credits from taxable income (before then calculating tax payable) – is wrong. In fact, everything after Step 2 is wrong. (Taxable income ‘with’ imputation is $24,600)

    5. Case 3 is also wrong, for the same core reason, and also extremely confusing (confused?). It incorrectly shows a difference in the systems (there is a difference, but not how you calculate it). My phrasing was loose, so apologies for that.

  68. Ernestine Gross
    March 22nd, 2018 at 20:22 | #68

    @EconoManOz

    1. I did exactly that for the specific case where wage income is the only income beside dividends.

    I wrote: “The difference between the tax free amount and the taxable income amount, namely $400, is the imputation credit that is foregone under the proposed Keating system. It is refunded by the ATO (the so-called dividend imputation cash refund) under the Costello system.”

    2. You forgot the question I answered. It is different from what you write. Yes, you did correct Smith on the current corporate tax rate on a post somewhere. You seem to have forgotten exactly what I identified as a falsehood. See my item 5 above and below.

    3&4. You mean your habit of writing down something is different from mine. There is no unique way of writing down and labeling the logical steps in an analysis of two systems. The conclusion regarding the problem is unchanged.

    5. I accept your apology.

    I do believe the matter is settled now. I don’t regret the exchange because readers and commenters on blog posts have different educational or practical backgrounds and words often get in the way.

  69. EconoManOz
    March 22nd, 2018 at 21:47 | #69

    @Ernestine Gross
    1. I can’t tell what point you are trying to make, or if you are making a point of substance.
    2. IMO you are playing pedantic word games here, and/or being intentionally obtuse.
    3&4. My point is not logical order of steps. You are making a fundamental error on how franking credits work (the tax steps are in fact crucial and germane) and hence reaching an incorrect outcome. In all 3 of your cases, the financial outcome for the taxpayer is different under the two systems.

    A gratuitous observation: You might be interested to know that your posts come across as an odd mix of defensive, abrasive and patronising – the last being particularly amusing since you make key errors (and refuse to acknowledge them).

  70. Hugo
    March 23rd, 2018 at 10:32 | #70

    Fran said “Labor is a centre-right party because it asserts that this js all there can be, and is framed purely around a customer service model of adaptation to what already exists and js committed to protecting existing privilege.”

    I think the reality is a little more nuanced than this. Many ALP members, such as myself, as well as many of the parliamentary members, would like to nudge Australia much further to the Left. However we have a frustatingly conservative electorate and much of the working class (my old man included) believes what it reads in the Murdoch rags.

    You say the ALP is “committed to protecting existing privilege”. Shorten’s planned tax changes that would remove some of the privilege from wealthy self-funded retirees shows your claim is untrue. The kickback from the Murdoch Empire also shows just how hard it is to take on privilege in this country.

    Also note the ALP’s mooted changes to the Fair Work Act 2009 aimed at increasing the power of labour relative to capital.

  71. Ernestine Gross
    March 23rd, 2018 at 11:03 | #71

    @EconoManOz

    You repeat your assertion that I have made ‘fundamental errors’ and my conclusions are wrong.

    Not convincing, EconoManOz.

    You have failed to provide your solution to the original question and the stated assumptions about low wage income (excluding tax minimisation strategies), amount of fully franked dividends, tax free amount, corporate tax rate and minimum income tax rate. Your task is to show the difference between two dividend imputation systems, one labelled Keating (original) and the other one Costello (since about 2000) for ease of reference.

  72. EconoManOz
    March 23rd, 2018 at 12:20 | #72

    @Ernestine Gross

    Since you almost acknowledged you might have been wrong, challenge accepted. Corrected example for ‘Case 1’ below (using your tax parameters for ease of comparison). You could apply the same correction to the other cases if you want.

    Under the Costello system:
    Income from wages: $18600 (tax free amount for income tax purposes)
    Fully franked dividends: $ 4,200 cash (with imputed franking credits of $1800)
    Taxable income before imputation: $22800
    Taxable income with imputation: $24600

    Tax payable (24600-18600)*.15 $ 900
    Value of franking credits $ (1800)
    Net tax payable/(refund) $ (900)

    After tax income (or cash outcome): $23,700

    Under the Keating system – all the same except until:
    Tax payable (24600-18600)*.15 $ 900
    Value of franking credit $ (1800)
    Net tax payable/(refund) $ 0

    After tax income (or cash outcome): $22,800

    Difference: $900 (funnily enough, the same as the ‘refund’ under Costello system).

    Note: This is obviously a simplified example, ignoring other income, deductions, offsets, medicare levy.

  73. Ernestine Gross
    March 23rd, 2018 at 16:58 | #73

    @EconoManOz

    Well, finally I guessed the right approach to elicit why you did not agree with my illustrative answer to the original question by Fran. I wanted clarification because you accepted my argument about the parameter values. Hence there must be something else – what is it?

    I thank you for your reply.

    The difference in ‘cash outcomes’ turns on how taxable income is calculated. (Aha, the term ‘imputation’!)

  74. Fran Barlow
    March 24th, 2018 at 08:06 | #74
  75. Ikonoclast
    March 24th, 2018 at 09:20 | #75

    Why not use sortition? You have advocated it before. It seems to me that the Greens should endorse candidates by sortition from eligible, competent and willing members of the branch. This would help move matters away from personal ambition and personal dynasties. People who are mainly self-ambitious will not be attracted to such a party and that would be a good thing.

  76. Fran Barlow
    March 24th, 2018 at 15:55 | #76

    @Ikonoclast

    It’s a reasonable idea but I doubt in this case it would have made a difference. The disaffected minority were not going to accept any result that didn’t suit them.

    In the case of the 2018 ballot for the preselection there was no other candidate and the 19 who said ‘seek other candidate’ clearly had no ody specific in mind. Sortition coulldn’t fix that.

    In almost every seat in the country, there is one obvious candidate but occasionally either nobody wants to do it, or none of those who might are qualified (see s44 on this — many of us are public servants) but otherwise it’s all very amicable, in part because you’re certain you won’t win and you are doing the party branch a favour by waving the flag.

    Batman was an exception because there was a good chance the candidate would win — especially if it was Alex because everyone knew her or at least of her — she’d campaigned there for nearly two decades — most of the time when there really was no prospect of winning.

    That earns you respect within the branch and beyond. Most people you meet in The Greens are decent folk, largely because there is no reason to be a Green except to stand up for principle, but sadly, as this episode shows, we are not entirely free of folk who are self-seeking and vindictive. Thst is one of the problems of success I suppose. If you become relevant, you are going to attract more of the wrong kind of people. We are going to have to think harder on how we manage to protect our integrity as we grow.

  77. March 24th, 2018 at 16:51 | #77

    @Ikonoclast
    Thanks for the suggestion @Ikonoclast

    What about this mechanism?

    https://www.themandarin.com.au/83008-leadership-without-careerism-possible/

  78. rog
    March 24th, 2018 at 18:56 | #78

    @derrida derider Couple or more of points;

    it was generally understood that if the retiree put enough away they could live off their ‘nest egg’ and not be a burden on the govt (that was the BIG argument for super)

    it was also understood that when the people retire their pension was not regarded as income and was therefore tax free,

    company tax is tax prepaid on behalf of its shareholders. The principle behind imputation was to adjust any tax owed by the taxpayer to the correct amount.

    If the shareholder is a superfund in accumulation mode there is a tax on contributions but not on earnings so there is no need to prepay tax.

    If the shareholder is a superfund in pension mode there is not tax on earnings so there is no need to prepay tax.

    Similarly if the member of a superfund is retired and on a pension their is no tax obligation.

    The system became distorted when, for a time, there was no limit on the size of non concessional contribution to SMSFs. Massive transfers were made from trust to SMSFs.

  79. Ikonoclast
    March 25th, 2018 at 10:59 | #79

    @Fran Barlow

    I take your points. The pragmatic reality is that Greens and Socialists will never gain much traction until capitalism commences the process of extensive collapse which ineluctably follows from its unsustainable nature. A wave cannot be caught until it has nearly crested.

    The point is to be ready for the wave front of the collapse. Being ready means having a strategic plan ready. The current important work is the theoretical work necessary to develop a strategic plan to survive and manage the collapse in a green and socialist manner.

    I think left intellectuals can give themselves the permission to be theoretical rather than involved in praxis at this point. It is still the time to think and develop plans. It is not yet the time to act.

    The dynamics of appeals to the masses for action will change greatly as the collapse manifests. The current situation in the West is of majority incredulity or complacency (about the criticality of the sustainability issue) plus a few who intellectually understand it but still do not viscerally feel any of its effects. The eventual situation will be one where the masses viscerally feel the pain and mortally dangerous nature of the collapse crisis every day. There’s a world of difference between these two modes of existence. Cries for change and willingness to act will be quite transformed at that point.

  80. Smith
    March 25th, 2018 at 13:43 | #80

    @Ikonoclast

    You need to read some Marx. He said that capitalism would collapse because the profit rate would fall. Well, the profit rate ain’t falling. If anything the tendency is for the profit rate to go up. It certainly has been for 30 years.

    Dream on, Iko. Capitalism is not going anywhere, not in your or my lifetime, or for a long time after that. Feudalism lasted 700 years. Capitalism in comparison is in the prime of life.

  81. Shane From Melbourne
    March 25th, 2018 at 21:45 | #81

    @Smith
    Demographics say that with a rapidly declining pool of consumers (those aged 25 to 55) and a rapidly increasing pool of dependents (the aged over 65) on a global scale, Capitalism has a problem……..

  82. Ikonoclast
    March 26th, 2018 at 09:35 | #82

    @Smith

    Crisis theory is a complicated arena. Crude Marxism takes TRPF (Tendency of the Rate of Profit to Fall) as a universal “Law” applicable at all stages of capitalism and in all geographic locales. Marx was anything but a crude thinker. His paragraphs commonly called “The Fragment on Machines” from The Grundrisse can be read as a prediction that the labor theory of value itself would eventually be obsoleted by automation. Thus, whilst the Labour Theory of Value was substantially valid (a reasonable approximation) for the era of crude industrial capitalism, it would cease to be so in an era of complete automation. However, even at the present time, we are a long way from a global economy of complete automation so TRPF and its counter-tendencies still apply to some considerable extent. See “Internal contradictions of capital accumulation” on Wikipedia.

    What tends to be forgotten by some is that capitalism has external contradictions as well as internal contradictions. Marx and Engels did not forget these contradictions and referred to the “metabolic rift” between man and nature. These external contradictions can be summarised now by the phrase “environmental unsustainability”. Capitalism could conceivably solve its internal contradictions by further progress to completely automated production. Human labour would only be minimally necessary for production. Human intellectual labour, at the highest end of scientific and technical research, would likely remain necessary for further scientific and technical progress. Voluntary human labor would go into social, cultural, recreational, craft and artistic endeavours. This would be a vision of a kind of socialist utopia IF ownership of automatic production and its products was evenly distributed.

    However, capitalism’s external contradictions with the environment are now seriously manifesting themselves well before progress to the above hypothetical socialist utopia could be realised. We are in the situation where the internal and external contradictions and limitations of capitalism will play out via complex interactions. Smooth progress to a socialist utopia or to a capitalist utopia, if either could be possible, can now be seen to be impossible to achieve in practice from this point. It was still possible, in theory, at some point in the past before excessive damage had been done to the environment and before excessive investment in the wrong technologies had been made. Now, it is not possible except perhaps after a quasi-managed hard-landing of the crash of capitalism (the crash being inevitable now) followed by a long period of socialist reconstruction at a much lower level of global population and with much constrained resources and technological options.

  83. Smith
    March 26th, 2018 at 10:23 | #83

    @Ikonoclast

    You sound just like one of those fire and brimstone eternal damnation preachers. Your theology is just like their’s, with its promise of punishment for sins, except you are promising Hell on Earth. How times change. The old comms used to preach Heaven on Earth. That, for all its illusions, was a doctrine of hope.

    You need to lighten up. She’ll be right, mate.

  84. paul walter
    March 29th, 2018 at 23:11 | #84

    Ikonoclast gets it. there is whole dumpster load of stuff provided from one contributor that is way too close to McCarthyism to raise anything contempt from this observer.

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