The new poor my arse

Tony Abbott:

The next Coalition government will build on the Howard legacy of reducing personal income taxes for everyone and especially delivering a fair go for middle income families with children.

As I said in my maiden speech and have been repeating ever since, middle income families with children are Australia’s new poor.

Mate, Australia’s middle income families with children live in horrible monstrosities like this one out in the west of Sydney.

They’re not poor, Tony. They’re middle income families in one of the wealthiest nations on earth.

Here is a picture of the neighbourhood of Australia’s new poor. Funnily enough, they’re Australia’s old poor too. They never went away, you know.

How a carbon tax needn’t break household banks

There’ll be, no doubt, lots of wailing and gnashing of teeth about how the awesome, large and novel carbon tax will send Aussie battlers broke. But it needn’t be that way. Let’s assume that the government will provide tax relief to low-middle income households (because that’s what they reckon they’ll do). Here are two scenarios to help make my point.

Both of the following households earn median income ($66,820 according to the ABS, 2007-08). Today, they spend money on goods and services in the same way as most Australians. Hypothetically, their carbon-intensity spending breakdown might look like:

  • 15% household income ($10,023) on high carbon-intensity items (eg. coal-fired electricity, petroleum, etc.)
  • 85% household income ($56,797) on medium-low-no carbon-intensity items (eg. food, clothes, mortgage, water, council rates, trips to the movies, bags of potting mix, whatever you like).

Let’s imagine that high carbon-intensity items increase in price by 10%, and that medium-low carbon-intensity items  increase in price by 1% (on average – some would increase by more, many wouldn’t increase at all). If this family’s spending mix remained the same, then they’d be spending $1002 more on high-intensity products and $567 more on medium-low intensity products.

Let’s also imagine that the government provides tax breaks to average families to the value of $1,350. This might be because the government has made the reasonable assumption that the average Australian’s spending on high-intensity items would decrease somewhat due to the price signal.

Household A are average consumers. They don’t think too hard about where they spend their money. Some products on their supermarket shelf become more expensive and they consequently buy them less frequently. Petrol increases in price a bit, so the family make a little bit more of an effort to catch public transport or walk. All up, they change their spending mix to be 12.5% on high carbon-intensity items and 87.5% on med-low-no carbon-intensity items. They’ve expended minimal effort on this, and are around $50 worse off per year.

Household B are savvy, informed consumers. They seek out discounts, they aggressively change their spending behaviour to get the most bang for their buck. They also care a bit about the climate, providing more of an incentive to buy low intensity stuff. When high intensity items become more expensive, these guys avoid them like the plague. They get rid of one of their two cars, using carshare, public transport, bikes and legs as a substitute. They put in solar hot water to cut their electricity bill. They manage to cut their spend on high intensity items from 15% to 5% of their income. That represents a change from $10,020 to $3,341 and they consequently spend $63,476 on med-low-no intensity products. In total, they are spending $969 more per year due to the tax, but the $1,350 rebate leaves them around $380 a year *better off*.

The numbers are made up, but the principle is about right. The message is – if there’s a carbon tax and households are compensated, by aggressively curbing spend on high intensity products, some households will actually manage to come out in front.

(Image from http://www.mikejs.com/)

Noddy

Edit: Replaced Noddy with the full raw footage from Channel 7. Really, really strange viewing.

Tony Abbott says “shit happens” in a totally reasonable situation, without malice and without being dismissive. There is no story. Mark Riley confronts Abbott about this on television. Abbott is literally shaking with rage, and still may bust some faces later. Okay, now there’s a story!

Heh. Ooooooooohhhh cranky Abbott!

Boats versus planes

Here, a few things to keep in perspective next time someone starts banging on about queue jumpers and boat people:

Asylum applications in Australia correlate strongly with global asylum application numbers

A particularly enraged Possum put together a post clearly showing the statistical relationship between global asylum application numbers, and those applications received in Australia. Even a quick glance at this graph will illustrate the point:

It’s misguided to suggest that Australian policy toward those seeking asylum has a significant effect on the number of asylum seekers in Australia. Later in the year, Possum also analysed the numbers behind push vs pull factors. Unsurprisingly, he found push factors overwhelmed pull factors.

Greater numbers of asylum seekers arrive by plane than arrive by boat

The Sunday Telegraph reported last year that some 30 times as many asylum seekers arrived through Australia’s airports in 2008 than arrived by boat. It also reported that those who arrived by boat were more likely to be assessed as genuine refugees. In a blog post on the Daily Telegraph’s website, Malcolm Farr gave some hard numbers: 2008 saw some 4750 applications for asylum in Australia. Of those, just 179 applicants arrived by boat.

2010 is quite unusual in terms of high boat arrival numbers. Even still, we could guess that about the same number again who arrive by boat, will arrive by plane.

Asylum seekers make up a small proportion of our annual immigration intake

A media release from Unicef reports that in 2007-2008 there were 90,308 permanent additions under Australia’s migration program and a total of 149,400 settler arrivals. During this same period, 6,587 of these were granted for humanitarian reasons. Just 25 of these arrived by boat.

2008-2009 saw 1033 asylum applicants arrive by boat. The total settler arrivals during this time were 158,021. That’s well under 1%.

The Department of Immigration & Citizenship indicates a planned 168,700 places in the 2009-2010 migration program and a further 13,750 humanitarian places. Thus far this year, the Sydney Morning Herald reported on the 16th of June that 2,791 asylum applicants had arrived by boat. Thus far in the 2009-10 period, there have been around 5,500 arrivals by boat. Let’s assume that may mean around 6,000 arrivals by boat the end of this year. Certainly a high number in terms of historical arrivals of asylum seekers by boat, but here’s a picture to put that in perspective:

That’s 6000 possible arrivals by boat in 2010, in contrast to a total immigration program intake of 182,450, or just 3.29%. Or 5,500 boat arrivals in the 2009-10 period, a proportion of just over 3%. Not all of this year’s arrivals will be found to be genuine. In a year with record arrivals of asylum applicants, less than 3% of our total migration intake will consist of asylum seekers who have arrived by boat.

Most people have no idea what proportion of our annual immigration intake are asylum seekers

I’m with Grog on this one when he says:

“I refuse to believe that the majority of Australians think the way they do because they believe refugees will bring crime and murder and will change Australia into some Asian ghetto”

I have to think that community attitudes are shaped by a lack of understanding.

Possum broke down some polling taken on people’s understanding of the number of asylum seekers as a proportion of our migration intake. It’s a great post and you should read it – he showed that 38% of Australian voters are way, way off on asylum seeker numbers. Another 30% simply don’t know at all. Just 33% of voters could give an answer that was vaguely in the right ballpark.

As with climate change, I just wish people would go and seek out the facts instead of just repeating talking points they’ve heard.

Won’t happen though, will it.

Oh dear, another climate change post

I had a bit of a vehement chat with a few people at work yesterday about climate change. You see, a colleague of mine was saying that “of course the climate is changing, it changes all the time! We only just had the little ice age. The change has certainly got nothing to do with us though, and what a great big waste of money all this business is. “

Another added: “besides, it’s all based on dubious modelling anyway, there’s no actual evidence that any of this is happening. We don’t have reliable temperature records and the satellites have only been up for the last 30 years or so. What about all that time before modern temperature recording?

Al Gore got it all wrong, and there’s been a cooling trend for the past 20 years. Europe and the US have just had some of the coldest winters on record!”

Meanwhile as you can see above, Arctic sea ice is at record lows this year. 2010 looks set to be one of the hottest years on record. As of the end of May, the previous 12 months to May 2009 are the hottest globally in the past 130 years. 2009 ends Australia’s hottest decade on record. Very few scientists with credentials still disagree with the notion of anthropogenic climate change. At least one of those remaining appears to have been caught cooking the books.

It’s time to ignore the popular debate, it’s chock full of misinformation. Look at the fundamentals. Go back to the basics, and read about climate. I’m so sick of strong opinions backed by nothing but talking points!

Trickle-down ore-anomics

Imagine if income tax worked like this. First, there’s a flat rate of tax based on how many hours you spend at work. It doesn’t matter how much your earn, you’ll pay this tax just for having “productive hours”. Next, on any income you make beyond the flat “hours tax”, you pay a flat rate of 30%.

Now, let’s imagine you’re in a job paying somewhat less than the average wage, but somewhat higher than the median wage. You make, let’s say, $45,000 per year gross. The flat tax that you pay for the privilege of turning up to work to be productive is $9,900. Once that’s subtracted from your gross income, you pay a 30% tax on the remainder. That’s a total of $20,430 in tax, an effective marginal tax rate of 45.4%. You bring home just $472.50 after tax every week.

But under this system, your neighbour next door (let’s call him Clive Palmer) is in a really nice high paying job. He earns $126,000 each year and is well into the high percentiles of earning in Australia. Just like you, Clive pays $9900 for the productive opportunity of turning up to work. On the remainder of his income, like you he pays a 30% flat tax. In total, Clive pays $44,730 in tax and comes home with $1562.88 in his pocket after tax each week – an effective marginal tax rate of 35.5%.

To me, this system looks very lopsided. It’s not hard to see that if your income were much lower, it’d hardly be worth working at all – you might as well go on the dole. And for some reason, the more you make, the lower the proportion of your income that you contribute as tax. It’d be a bad way of encouraging people to get into the job market and it wouldn’t fairly recoup tax revenue from those who earnt a lot of money.

I didn’t pull these figures out of thin air. You might want to take a look at this chart. It contrasts the current taxation situation on mining projects with that which would occur were the RSPT to be in place:

Today, the mechanism I described above is used to tax mining companies in Australia. If the mining project you embark on isn’t terribly profitable, you pay quite a high percentage of your income as tax. On the flipside, if the market is going gangbusters and your profits are high, you pay a declining proportion as tax.

When disgusting snorting billionaire mining magnates get on the television and cry poor, I can understand. Nobody likes to see their potential wealth decreased, even if you’re already filthy stinking rich. What I can’t understand, is why the Australian public are being conned into supporting the status quo, when what appears to be a much fairer alternative is on the table.

Take a look at that chart again. Unless you’re Clive’s personal yacht builder, do you really think his wealth will trickle down to you?