I wouldn’t mind more emission-based tariffs (or deductions in tariffs), thus promoting more responsible use of petrol. I’m not crazy about the country promoting further consumption, though the trade back of reducing our reliance on oil I can certainly endorse.

I’m more than happy to argue for a cut in welfare payments. We have a policy of granfathering the aged pension anyway, so that wouldn’t be cut.

However, the advantage of 30/30 is that it removed disincentives to work present in the current welfare system.

Currently if you are on the dole, and someone offers you 1 day’s work a week, you’d be silly to accept it, because all of the money you earned would simply be taken out of your next dole cheque, and you would have done a day’s work for effectively nothing.

With the LDP 30/30 plan, you get to keep 70c of every dollar you earn, which means there will be a much bigger incentive for people to take casual work when it is available.

I definitely agree that the 30-30 scheme needs to be looked at in detail before it is implemented. I’m sure we’ll spend a lot of time with the treasury department, centrelink and other public servants working out the finer details if we ever win government.

The fact is, however, we are unlikely to win government any time soon. 30-30 is an ideological plan with plenty of holes in it. The question isn’t “Is 30-30 perfect to be implemented right now?” The question is “Is 30-30 the right direction to be moving in?”

I’d answer that with a resounding “yes”. Even if the LDP gains the balance of power in the Senate, we won’t be in a position to implement 30-30. But what we will be able to do it hopefully move tax debate and the tax policy of the government more towards a 30-30 type system. By lobbying the government to do things like increase the tax-free threshold (instead of just increasing LITO) we’d be moving towards a 30-30 type model.

I agree that 30-30 is far from perfect. Every year that passes, the costing of 30-30 will become more and more outdated. There are some things it doesn’t even take into account- or only touches the surface of. But is 30-30 the right direction for tax policy to move towards in Australia? I think so.

The aged would be eligible for the low income subsidy along with everyone else. Those that prefer to continue working will not be confronted by disincentives from the taxation system.

For those of pension age with no income apart from the low income subsidy, the low income subsidy will be topped up to the current pension level. However, in recognition of the introduction of compulsory superannuation in 1992 and of the increasing health and physical capability of older Australians, eligibility for this would be raised over time. For those born prior to 1945 there would be no change in the eligibility age. For each year of birth after 1945 the pension eligibility age would rise by one year. Thus, for example, somebody born in 1950 would be eligible for the top up when they turn 70.

For any individuals that suffer hardship, the LDP would support tailored assistance delivered by private charities and state governments in preference to blanket policies delivered by the Commonwealth.

The idea isn’t to match current assistance rates for the unemployed, by the way.

Regarding the costings, you’ll need to get in touch with John Humphreys. They’re his costings as far as I know.

It’s also worth noting that we really don’t expect to receive much support at all initially because our views are so new to the political arena. All we are looking to do is bring new ideas to Australian politics.

I read the John Humphreys when it came out so I have just re-read it refresh my memory.

Its out of date. The current single rate for Newstart is over $11,000. So the person with no income will be over $2000 worse off. Pensioners get nearly $14,000 a year now , they will be $5000 worse off. Do you really think a proposal thats going to chop grandma’s pension by a third will get much support?

Also that $15, billion saving you mentioned only occurs if theres no benefits for people with kids, add that $6000 tax free extra and the benefits rapidly shrink.

I think that tax policy needs an update.

ta

Ralph

As I said, the LDP’s policy is not as yet to index the rates. Based on 2005 figures Reform 30/30 provides a $40bn tax cut per year. It is obvious that we are serious about being the only true low tax party, and to this end I believe we will have a view to index the rates in the future, but this is not something that has been worked out yet. For further information about this if you are interested, feel free to contact John Humphreys directly (he wrote the tax and welfare policies).

Reform 30/30 and the NIT also saves $15bn dollars on welfare per year, and the way it scales will definitely result in greater workforce participation, not less. This current government still hasn’t done a great deal about high EMTRs, which remain one of the greatest disincentives for people to move from welfare onto work. 30/30 removes this by creating a system in which no one receiving welfare payments pays income tax, and no one paying income tax receives welfare (unlike the current system). I do actually agree with you that a minute number of people will be happy to not work and collect $173 per week from the government, but the number will be so small that it is negligible. We would still be saving $15bn over the current system, and if you think that Howard’s work testing has abolished dole bludgers, you’d be seriously mistaken. It’s simply not the case.

Regards,
-Dan

Well, you say that the threshold will be indexed to inflation, the LDP doesn’t. In fact flat tax or no flat tax any government can index the the current thresholds and stop bracket creep but they don’t. Its far too good a tax earner. Instead they move the thresholds up when they like it to maximise political gain, thats what this government been doing with their tax cuts. Theres no reason to believe the LDP will change this.

I worked for 23 years in DSS/Centrelink, if you think the $9000 sit down money will not be a subsidy to the indolent
you are fooling yourself. The imposition of a work test has been one of the great policy improvements of this government. If administration cost are an issue then privitize Centrelink. In fact privitize all government administration.

ta

Ralph

You’re right to say that the system is “progressive”, but I am only referring to the fact that there is one “marginal rate” above the TFT.

Creep within brackets (or “bracket” as the case is with 30/30) can partially be solved by indexing the rates. I’d imagine our view would be to index the TFT and marginal rate to inflation, but it is a substantial tax cut to start with, so we won’t get ahead of ourselves just yet. Obviously we are only trying to stop inflation based bracket creep, with a real wages increase naturally comes an increase in the average percentage of income paid as tax, and I don’t think anyone disputes that.

The NIT will not require a work test, and this will greatly reduce Centrelink compliance costs. It’s also worth noting that $9000 is slightly less than what is received now, but Reform 30/30 would greatly increase work incentives. Coupled with the abolition of the minimum wage and the huge amount of jobs that would create, we don’t expect many people to be staying out of work just to get $9000 a year from the Government.

Regarding the family benefits, please see this section of policy from the LDP welfare page:

“The existing Family Tax Benefits part-A and part-B as well as the Child Care Tax Rebate and Baby Bonus would be replaced. However the LDP tax policy would recognise the additional cost of raising children with an increased tax free threshold of $6,000 per child for the nominated parent (usually the primary income earner) and a corresponding increase in the low income subsidy for families.”

Of particular note is the fact that if the tax-free threshold is increased in this case, NIT payments are also increased for eligible individuals (obviously people not eligible for NIT payments get to keep more of their own money tax-free to help assist with the costs of raising a child/children).

Hope this answered your questions.

Regards,
-Dan