Tuesday, March 31, 2015

Media's tax misrepresentation scare

I really get annoyed at the way the media so often misrepresents income tax, running scary headlines and going on to suggest we're inevitably going to be worse off.

Example today in Sydney Morning Herald, tellingly by-lined by Political Reporter, not economics reporter.

The heading is Average earners to pay more.

The scares continue: The average Australian worker will find themselves bumped into the second-highest income tax bracket in just over a year's time.

The nasty news is set out in the 200-page tax discussion paper, Re:think, released by the Abbott government on Monday. And it is, in large part, thanks to "bracket creep" - where wage earners inadvertently pay higher tax due to wage inflation.

With average annual wages hovering at $75,000 as of 2013/14, the average Australian worker currently sits within the third-highest tax bracket...But according to the paper, by 2016/17, the average full-time employee will find themselves bumped into the second-highest tax bracket, earning about $80,000 and having to pay the tax office $17,547 plus 37 cents for every dollar over $80,000.

Bumped up, nasty news, bracket creep, it's all in there. Disguise the facts so they don't get in the way of a good scare story.

Fortunately later in the story some common sense creeps in: Australia Institute senior economist Matt Grudnoff says it would be "silly" to assume that they would be no change in tax arrangements over the coming decade. 

"There would be no time ever in our history where [the government] hasn't shifted the tax brackets for ten years," he said.

"It's not based in any kind of reality."

Mr Grudnoff said the Treasury report's finding appeared designed to scare people, "rather than make any sort of informed, interesting point". 

There's the deliberately misleading...wage earners inadvertently pay higher tax due to wage inflation. Wage inflation is jargon for higher wages. If it was honest it would say that as people earn more money they will pay more tax. No scare story there though. 

At the end of the scare nonsense is a chart of actual tax rates, which shows what we all should know. As we move through the various thresholds, we pay a higher rate of tax on money above that threshold, not on all the money.

So taking the para about average wage moving up from $75,000 to $80,000pa, the worker will earn a gross $5,000 more, pay $1,025 more tax and end up $3,375 better off.

And, as Mr Grudnoff pointed out, the brackets are sure to be moved up anyway.

The problem is all too often not the way things are, it's the way they're misleadingly reported.

Monday, March 30, 2015

The family home myth

We have an obsession with property.

Constant chatter and media stories about the high cost of our housing, its unaffordability - especially for first home buyers.  The xenophobic and inaccurate complaint that it's all the fault of foreign, usually Chinese, investors. The probability of a bursting housing bubble. And 'the family home'.

With stupidly low interest rates combined with tax concessions for property investors there's bound to be high pricing.

But added to the mix is the fact that 'the family home' is in fact an increasingly rare thing, almost to the point of extinction now.

We actually treat 'the family home' as nothing more than a commodity to buy and sell to make a profit.

Example again this weekend. In addition to the properties for sale by private treaty, in Sydney there were 1,128 auctioned. Something approaching a thousand is a perfectly normal weekend.

Australia wide there are around 11 million residential dwellings, and about 600,000 are transferred every year. So the equivalent of the entire continent's housing stock changes hands every seventeen years. That's extraordinary turnover of 'then family home'.

Unless that changes - which it won't - even sensible interest rates won't have the effect we need. So we've brought the problems upon ourselves.

Saturday, March 28, 2015

Killer tree

I love gum trees...if they're not in the wrong place. And the wrong place, as I've said on several occassions, is looming threateningly over our houses.

Bits fall out of gum trees throughout the year. Whole branches die off and without warning crash to the ground.

If they're over a house, a road, power lines, people, there's a disaster waiting to happen.

We had a near miss last night. A huge old gum tree two houses along the road decided to shed a huge branch.  It brought down the power line and crashed into the road, fortunately it was 2am and there was no traffic.

SES came out and cut it up, the electricity company brought a crane and re-connected the power lines and it was all tidied up in a few hours.

But, boy, with the amount of wood that came down it could have been a whole lot worse.

Murphy's Law

Good management is not only making sure the right thing is done but is just as importantly about stopping wrong things from happening.

In fact in my experience it's more about stoppinjg the wrong things from happening, human nature being what it is.

Surely we're all aware of Murphy's Law - if something can go wrong, it will go wrong. You have to anticipate that and put measures in place to prevent or mitigate it.

Airline management, and regulators, have, amazingly failed all travellers as witnessed by the catastrophe with Germanwings.

There are now reports of the mental illness of the co-pilot who murdered 149 people as he killed himself.  Inevitably there's plenty of comment about mental health issues, screening of people in responsible positions, psychological testing.

Of course that has to be done, but more importantly the blindingly obvious should have been done by all airlines and all regulators. NEVER should there be less than two people in an aircraft cockpit.

So blindingly obvious and so very simple to do.

I had always assumed it happened as a matter of course. I hadn't thought of a rogue pilot (although I seem to remember a Japanese pilot doing much the same thing some years ago) but simply because of illness. A pilot could faint, have a heart attack, an asthma attack or whatever.

That airlines around the world, and regulators, have not had this simple procedure in place since cockpit doors were barricaded beggars belief.

No-one, of course, will be called to account.

Friday, March 27, 2015

Total stupidity prevails again

The Germanwings air crash has shown once again that common sense isn't common at all.

I assumed that there always had to be a minimum of two people in the cockpit, especially after the introduction of locked cockpit doors following 9/11.

It's so bloody obvious that it's necessary. Not only to avoid a maniac pilot deliberately crashing the plane but in case of ill health - a heart attack for example.

If there are only two flight crew and one of them needs to leave the cockpit, a senior cabin crew member should obviously go into the cockpit.

The airlines need to answer the question of why this isn't standard procedure. And they need to fix the problem immediately.

Wednesday, March 25, 2015


Biased Bronwyn Bishop.

Her blatant contempt for the impartiality required of the role of Speaker is breathtaking.

Her behaviour is bringing even more disrepute to our parliament than the current crop of politicians have contributed.

It's not just the so obvious bias in favour of her own party, with five government members dismissed to, so far, 319 opposition members. It's the fact that opposition members are dismissed while government members are not, for exactly the same 'offence'.

It's the fact she has declared perfectly valid and legitimate questions to be out of order so that ministers don't have to answer them.

It's the even worse fact that she interrupts to answer questions put to ministers. That is not the Speaker's role and she has absolutely no right to do it.

She's an absolute disgrace, has brought the position into disrepute and does it all with a satisfied smirk on her face.