The Wrap with Richard Denniss
While everyone knows inequality has been rising in Australia, our recent report ‘Inequality on Steroids’ revealed some alarming figures that shocked even me: since 2009, 93% of our economic growth has flowed to the top 10% of income earners.
I was always suspicious about claims the benefits of economic growth would trickle down, but what our paper shows is that the benefits of growth are being hoovered up.
Rising inequality doesn’t just ‘happen’, it reflects the full range of choices we as a nation have made. We chose to suppress unemployment benefits, the minimum wage and public sector wages, and we chose to cut taxes for high incomes, tax capital gains at half the rate we tax wage income, and to spend $50 billion per year on tax concessions for superannuation. Causing inequality isn’t cheap.
With the Federal Budget approaching, the Australia Institute will be releasing even more research to highlight the enormous cost, and even greater inequity, of Scott Morrison’s legacy Stage 3 tax cuts. These tax cuts, which were dreamed up before Covid, before our soaring energy prices, and before the biggest ever fall in real wages, are due to kick in in July next year — six years after they were first announced.
While the total cost of the Stage 3 tax cuts make even the cost of AUKUS look cheap, the conservative voices that drone endlessly about the need for ‘fiscal responsibility’ remain strategically silent. I can assure you that here at the Australia Institute, we won’t tire of reminding people that over the next ten years, about half of the $254 billion cost of the Stage 3 tax cuts will flow to those earning over $180,000 per year.
While enormous increases in inequality occurred during the previous government, and the Stage 3 tax cuts were legislated by the previous Federal Government, it is up to the current Government to decide whether it wants to reverse this trend, or continue to drive our economy and society in the direction left by the Coalition.
Slashing tax concessions for super, ditching subsidies for fossil fuels, and abandoning or amending the Stage 3 tax cuts can all make a huge difference to our economy and society. Or not. Democracy is about choices and while our research highlights the benefits of choosing progressive tax reform, there is nothing inevitable about those choices being made. We here at the Australia Institute will be doing our bit to highlight the benefits of genuine tax reform. Hopefully you can help amplify it by sharing our research with your friends, or chipping in to help support our research program.
— Richard Denniss, Executive Director of the Australia Institute
The Big Stories
The gap between the haves and the have-nots is growing fast in Australia
Inequality has been soaring in Australia over the last decade, with new data revealing the bottom 90% of Australians receive just 7% of economic growth per person since 2009, while the top 10% of income earners reap 93% of the benefits. This data signals a major shift in wealth distribution – previously the bottom 90% received around 90% of the benefits — as recently as the 1960s.
Inequality on Steroids: The Distribution of Economic Growth in Australia shows how stagnating wages, insecure work, soaring profits and an unfair tax system have combined to create an inequality nightmare and worsened the cost of living crisis.
To add insult to injury, the introduction of the Stage 3 tax cuts threatens to widen the economic divide between the richest and the rest.
About half of the Stage 3 tax cuts will go to people earning more than $180,000 per year, while people earning $45,000 or less will get nothing.
“Australians have a strong sense of fairness, and they know when they’re being ripped off or missing out on their fair share. And right now, Australians know they are missing out,” said Matt Grudnoff, Senior Economist at the Australia Institute.
Read the report, or watch Richard Denniss explain the findings on ABC News.
Scrap the Stage 3 Tax Cuts
The Stage 3 tax cuts will cost the budget around a quarter of a trillion dollars and will benefit billionaires the most, while battlers get slugged.
By cutting taxes for the high-income earners, this extreme tax plan will make Australia’s tax system permanently less fair.
Join our petition and add your name to scrap the Stage 3 tax cuts
The juice is worth the squeeze: reforming the Petroleum Resource Rent Tax
Australians are missing out on the benefits of the mining and exporting of our natural resources. As profits soared from the war in Ukraine – to the tune of $40 billion – consumers in Australia were seeing little return in the form of tax or royalties paid by the fossil fuel giants that extract and export them.
Our report from October highlighted this massive missed opportunity, asking why Australia wasn’t taxing gas exports at a higher rate, and instead was losing revenue on natural resources that should have been returned to the Australian public.
The PRRT is forecast to raise $2.6bn in 2022-23, $2.45bn in 2023-24 and then just $2.1bn in 2024-25 and $2.0bn in 2025-26.
That would mean in 2025-26 PRRT revenue would be worth just 0.08% of GDP – around half the level that was raised from the PRRT during the early to mid 2000s. Unfortunately, the PRRT is so poorly structured that gas companies are able to avoid having to pay any of the tax through write-downs and profit shifting.
Reforming the PRRT isn’t a pipe dream, and we only need to look to Norway to see how it could be done.
Norway and Australia are both relatively small, developed countries whose economies are dominated by natural resource extraction, and whose oil and gas industries have generated similar amounts of revenue. But the difference is all in the tax.
Australians are missing out on revenue that could be used to fund vital services and benefits, and taxing exports is one way to reclaim the profits.
See more in Norway shows how Australia can get a fair return from oil and gas.
Australia in the slow lane for electric bus transition
In the 2019-20 period road vehicles contributed 85% of transport carbon emissions in Australia, making transport a major player in the fight for net-zero. Electric buses are an economically viable and environmentally sustainable solution. As well as carbon emissions, they reduce noise pollution, air pollution and road congestion, and cut down significantly on fuel and maintenance costs, while providing manufacturing job opportunities.
So why aren’t we seeing them on our roads?
It’s a matter that could be easily solved by State governments if they strengthened their targets and finance for electrification – but targets are lacking.
Our new report found that while there was strong support amongst the public for an electric bus transition, states were either falling behind in their 2023 targets, as the case for NSW, Victoria and QLD, or had none at all, as in South Australia, Tasmania and the Northern Territory.
While all Australian states and territories are committed to achieving net zero emissions by 2050 or sooner, no state is currently on track to electrify its own bus fleet by that time. The lack of commitment to, and progress towards, the electrification of public bus fleets demonstrates state governments’ lack of commitment to taking the actions necessary to turn their net zero rhetoric into reality.
What the safeguard means for the climate wars | Richard Denniss in The Saturday Paper
Executive Director Richard Denniss was in The Saturday Paper discussing the long, rocky road to the safeguard mechanism we have today, and what this legislation will mean for Australia’s future in the climate wars.
For those who haven’t caught up on their reading, here is an excerpt:
“Tackling climate change isn’t as difficult as the fossil fuel industry wants to make out. The simplest way to reduce emissions is to phase out the fossil fuel industry. Yet while the science and economics of tackling climate change are pretty simple – for clarity: stop subsidising and building things that increase emissions and start building more things that reduce them – the politics of confronting the fossil fuel industry remain as hard as ever. The Greens’ amendments to Labor’s climate policy show it is possible to slow the fossil fuel industry down but, with the two major parties still supporting fossil fuel expansion, it’s not at all clear if or when Australia will ever win its war with the fossil fuel industry”.
— Richard Denniss
The takeaway: The climate wars are far from over. They will not be over until the fossil fuel industry stops waging them.
Angus Taylor is Wrong About Stage 3 Tax Cuts | Spin Bin
On the latest episode of Spin Bin, Richard Denniss and Matt Grudnoff decode some of Shadow Treasurer Angus Taylor’s questionable claims about superannuation, the Stage 3 tax cuts, and bracket creep. Watch here.
Spin Bin unpacks the tactics, strategies and spin in politics to help you understand what’s going on. View previous episodes here
“The Voice is not about special privileges, it’s about recognising that Indigenous Australian’s are our brothers and sisters and that we have left them behind in our shared national project.”
— Julian Leeser, former Shadow Attorney General and Shadow Minister for Indigenous Australians
Julian Leeser made these comments during his resignation from the Liberal party, after he was unable to come to a resolution with his colleagues regarding the Voice.
That’s the lid on Liddell
Australia’s oldest coal-fired power station, AGL-owned Liddell, will close at the end of this month, after more than 50 years of operation. First opened in 1971, the coal fired power station was once a powerhouse on the NSW energy grid but over time, (and over the course of multiple required re-starts) age and technological improvements meant it was no longer feasible to keep the station open. Despite concerns members of the National party (see below), the shutdown of the Liddell operation will not translate to an energy shortage.
The closing of the coal station does mean a 17% drop in the company’s emissions, a sizeable reduction from AGL, Australia’s largest carbon polluter. AGL plans to build a renewable solar-hydro energy hub, including a large-scale battery in place of the power station.
The news of the closure of the Liddell power station prompted David Littleproud, leader of the Federal Nationals, to respond with concern, suggesting the closure should be delayed to prevent supply problems, and that perhaps Australia should have an urgent conversation about building nuclear energy.
His concern echoes that of Nationals senator Matt Canavan last month, who suggested we shouldn’t blow up the power station, and that “we need to keep Liddell around in case of a rainy day”.
Reminder: coal fired power stations are the most inefficient and expensive forms of power and the sooner we transition the better off we will be.
Sign the petition to scrap Stage 3 tax cuts
The Stage 3 tax cuts will cost the budget around a quarter of a trillion dollars and will benefit billionaires the most, while battlers get slugged. By cutting taxes for the high-income earners, this extreme tax plan will make Australia’s tax system permanently less fair.
Add your name >> Scrap Stage 3 Tax Cuts
Join Our Team!
Climate & Energy Postdoctoral Research Fellow: As a Postdoctoral Research Fellow, you will use the skills and knowledge gained in your PhD to work on Australia Institute climate and energy research projects. Using the foundational skills attained through your PhD, you will learn how to extend your research past academia and create impact by enhancing your skills to communicate and disseminate your research to policymakers, key stakeholders, and the general public.
Learn more and apply. Deadline for applications is 23 April 2023.
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Download the Position Description and apply via Seek or Ethical Jobs. Applications close 9am AEST 1 May 2023.
Politics in the Pub | The Housing Crisis
Join Greg Jericho from the Australia Institute, Maiy Azize from Everybody’s Home and Joel Dignam from Better Renting for a discussion about our current housing crisis and what can be done.
6:30pm AEST, Wednesday 19 April. Free, registration essential.
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