The ABC's economic correspondent Emma Alberici wrote a piece for the ABC website on the proposed corporate tax cuts. After the article was attacked by the government it was taken down. (If you want to read the article you can find it here: https://johnmenadue.com/emma-alberici-theres-no-case-for-a-corporate-tax-cut-when-one-in-five-of-australias-top-companies-dont-pay-it/. Whether we agree or disagree with Emma is neither here nor there. What should be of concern is if the government takes the view that the Public Broadcaster should be the de facto mouth piece for the government. Irrespective of which government is in power the ABC will be accused of either left or right wing bias - and perhaps that is the best indicator that it is doing its job.

We all know what the ABC's role should be: it's clearly spelled out in its charter. The problem is that ABC management and staff ignore that charter, and use it as their very own vehicle for Left-wing bigotry and discrimination against people who pay them. There is no such thing as “...  the view that the Public Broadcaster should be the de facto mouth piece for the government. Irrespective of which government is in power....”, because no government Minister has ever attempted to discipline the ABC, including the current government which the ABC is so averse to.

The so-called senior economics correspondent certainly made a complete fool of herself and demonstrated her ignorance of taxation matters. And, surprisingly, the ABC's Media Watch made no attempt to cover up for her, and management has actually admitted their editorial failure.

BAYGON,
The role of a public broadcaster should start with informing the public, and should extend as far as the public want it to extend. But it certainly shouldn't be a propaganda mouthpiece for the government of the day.

_____________________________________________________________________________________

ttbn,
Media Watch made the point that the charter's requirements for separating analysis and opinion are too restrictive. And having read Emma Alberici's piece at http://johnmenadue.com/emma-alberici-theres-no-case-for-a-corporate-tax-cut-when-one-in-five-of-australias-top-companies-dont-pay-it/ I'm inclined to agree. Try reading the article rather than just the headline, and you'll find it dispels far more ignorance than it displays!

anyone who watched that vulgar Indigeneous woman given 10 times more opportunity than others to spew her hatred on q&a on Monday night will see the role of the abc very sick. NO doubt she would of resisted the 2 year old girl being raped by her family being 'stolen' from her family at Tennant Creek. The billion dollar plus abc is an enemy of Australia and decency.

runner,

I never watch Q&A, but I heard an audio of her rant on the radio. The woman was out of control and insulting, not only to white Australians, but to the people she claims to be be connected with - most of whom quietly make their way in life without making total idiots of themselves like she did.

ttbn

yes ttbn her hypocrisy reached new levels even for the abc. The sad part is that the regressives not only clap or but encourage her. Tony Jones totally gutless to stop her racist rant while limited anyone with decency and commonsense to a few seconds.

So it's objectional and a rant only if you don't agree with it but if it's misdirection and disinformation spoken quietly by a corporate representative or anybody else with an agenda then it's OK.

There are plenty of ranters in the (so-called) free-to-air media but it only seems to be the ABC that gets called out.

Is censoring Alberici when her statements have been widely agreed with by other prominent economists an example of left-wing bias or toeing the government line?

Aidan,

I think the problem with the article is that while it appear superficially detailed and correct, it has holes that you could drive a bus through, and seems to be mainly focused around labor's talking points. This is not entirely surprising considering that Emma is an economic lightweight, and left leaning. That the ABC felt the need to withdraw the article and apologize for its breaching the ABC code shows how bad it was.

The main flaws are that EA failed to recognize that taxes are paid on profit and not income, and that even headline profits NBIT do not take into account interest paid, depreciation on assets, and losses carried forward from previous years which are genuine deductions recognized in nearly every country.

Thus the effect of these deductions is the actual final taxable profit is highly reduced and in some cases zero, and there are no taxes to be paid on zero income.

Secondly nearly every major economic center is in firm agreement that reducing corporate taxes increases investment which eventually leads to higher wages. What is not always clear is that whether the increased taxes paid on the new investments and higher wages compensates from the taxes lost.

@shadow minister "Secondly nearly every major economic center is in firm agreement that reducing corporate taxes increases investment which eventually leads to higher wages"

Two things Firstly it is false. Read Piketty's Capital or Stiglitz, or Sen - two Nobel Laureates who disagree.
Secondly even it were true you need to show that there are facts that back up this assertion. What tends to happen is that when the higher wages do not eventuate the claim is made that the tax reductions have not been large enough.
A critique is not a matter of saying that things are not right as they are. It is a matter of pointing out on what kinds of assumptions, what kinds of familiar, unchallenged, unconsidered modes of thought the practices that we accept rest.

Shadow,
>The main flaws are that EA failed to recognize that taxes are paid on profit and not income,
I'm generally puzzled as to how anyone reading that article could reach that conclusion. Did you read it properly?

>and that even headline profits NBIT do not take into account interest paid, depreciation on assets, and losses carried forward from previous years which are genuine deductions recognized in nearly every country.

Then why did she say "Adding to this debate is the issue of average and effective tax rates. Effective tax rates are said to drive investment decisions and take account of what companies actually pay once deductions, depreciation and other tax minimisation strategies are considered"?

>Thus the effect of these deductions is the actual final taxable profit is highly reduced and in some cases zero, and there are no taxes to be paid on zero income.
Hence the section following the (admittedly slightly misleading) heading "Tax rates don’t matter if you’re not paying tax"

Importantly she made the point that "According to a report published last year by the US Congressional Budget Office, Australia’s effective tax rate, at 10.4 per cent, is among the lowest in the world."

>Secondly nearly every major economic center is in firm agreement that reducing corporate taxes increases investment which eventually leads to higher wages.

If all other things were equal, that would be true. But all other things are not equal. You could just as easily say cutting interest rates increases investment which eventually leads to higher wages.

Corporate tax cuts are one way of growing the economy, but they have an enormous opportunity cost. Wouldn't it be better to concentrate on more efficient ways of growing the economy first?

Baygon,
I used the word "nearly" and citing two avowedly socialist economists does not challenge my statement in any way.

Wages growth is driven by competition for labour, which is driven by low unemployment which is driven by investment. The high wages growth under Howard was driven by record external investment in Aus, which as a % has halved.

The decision to invest is driven by market opportunities, the cost of labor, power etc and tax rates. Presently Aus has the highest tax rates, the highest cost of labour, the highest power prices etc which is why in spite of the global economy improving, investors are going elsewhere.

Aidan,

The article's headline is:

"EMMA ALBERICI. There’s no case for a corporate tax cut when one in five of Australia’s top companies don’t pay it."

This is straight out of Labor's talking points, as it implies that 20% of companies are cheating on their taxes by not paying tax on their profits, when in reality their taxable profit is zero.

As for the "effective" tax rates that she quotes, this is a theoretical initial tax paid after costs write down on equipment etc, and not an actual tax rate on profits and in the context that EA used it is highly misleading.

Australia allows a rate of depreciation of assets that is faster than most other countries, which means that the initial tax paid is lower, but as the total depreciation is the same for all, over an extended period the same tax write offs occur in all countries and so the net taxable profit is the same over the medium term. I.e. In Aus one can write off 20% over 5 years or in another country one writes off 10% over 10 years, but the write off is eventually the same.

Finally, cutting interest rates does improve investment, employment and wages, which is why the RBA did exactly that in the downturn.

Shadow,
Whinging about the headline again? I refer you to my previous comment:
Try reading the article rather than just the headline, and you'll find it dispels far more ignorance than it displays!

AIUI it is common journalistic practice for the headlines to be written by the editors rather than the authors.

>As for the "effective" tax rates that she quotes, this is a theoretical initial tax paid after costs write down on equipment etc, and not an actual tax rate on profits and in the context that EA used it is highly misleading.

Highly misleading? So you're saying corporate investment decisions ignore the cost writedowns on equipment etc, and merely focus on the tax on profits? That's a counterintuitive claim - do you have any evidence for it? Or any explanation of why that would be?

>Finally, cutting interest rates does improve investment, employment and wages, which is why the RBA did exactly that in the downturn.

Finally you're beginning to understand. Next question: can you see how government spending also has that effect?

Aidan,

Don't be a supercilious pratt. One my degrees is first class degree in economics, and from your reply it's obvious you have no such qualifications.

Clearly you haven't read the article because the assertion is repeated in the article:"It’s also disingenuous to talk about a 30 per cent rate when so few companies pay anything like that thanks to tax legislation that allows them to avoid paying corporate tax. Exclusive analysis released by ABC today reveals one in five of Australia’s top companies has paid zero tax for the past three years." To avoid looking like a twit do your homework.

Secondly, clearly you are struggling to grasp the concept wrt depreciation, so here's a simplified example:

A plant spends $100m upgrading its facilities, and as a result is now making $20m profit a year before depreciation.

If the depreciation is over 5 years, the plant will write off $20m p.a. and thus make no taxable profit for 5 years but pay $6m thereafter.

If it writes off the plant over 10yrs it will write off $10m p.a. and thus pay $3m p.a. on the $10m taxable profit for 10 years, and $6m p.a. after that.

The net result of tax paid and depreciation over 10yrs in each case is the same, but the effective tax rate initially on the first model is 0% and on the second is 15%.

Case 1 is slightly more attractive than case 2 to long term investors.

Government spending reduces unemployment, but generally discourages external investment.

I can't agree with SM that government spending reduces unemployment. It certainly reduces wealth, as it is less efficient than private spending, but in terms of unemployment no more effective than anything else.

When I read the Alberici piece I immediately tweeted the link because it was so incompetent. Her understanding of accounting standards is non-existent. Also her understanding of the nature of company tax is woeful - it is basically a withholding tax. Companies are not like people, they are aggregations of people ultimately. So when they get a tax break it isn't as though they saunter off the Big Companies Club and squander it on caviar. It has to get used as investment or to pay higher dividends or wages.

If it is invested, and there is a positive rate of return, then the government will ultimately benefit from higher revenues a bit further down the track. If it is paid as dividends, then investors will pay the tax. If it is paid as salaries, then employees will pay the tax. Both investors and employees will frequently pay a higher rate of tax than the company.

Further, most of our retirement incomes are tied up with how well the corporate sector travels through superannuation. Taxing companies more highly will make them less productive, and reduce the living standards of retirees. When Labor introduced the Prices and Incomes Accord, part of the function of compulsory super was to align the interests of unions with business in a way they never had been before. But the current Labor movement's leaders seem to have forgotten that the ticket to higher wages isn't strikes, but a better functioning economy.

There is a good reason for putting the ABC under scrutiny for its journalism - it is supposed to be impartial and to set standards. In this case it appears to have failed on both counts.

In my original post I made the point whether or not one agrees or disagrees with the article is not the issue. The issue I was raising is that governments generally seem to be of the view that the role of the ABC is to be a mouth piece for the government of the day. Graham and SM have argued that the article is riddled with errors. That may well be the case. However, her view that tax cuts do not increase wages or indeed increase employment is by no means controversial - indeed Graham says as much in his post. The government view is that corporate tax cuts inevitably- equal more jobs and higher wages - that may be the theory but it is by no means necessarily the case.

Fair cop Baygon. I never implied her view wasn't controversial - it is. Her piece was incompetent. Whether or not you agree with the conclusion she came to is irrelevant.

Here is another interesting take on her piece, this time from Chris Mitchell https://www.theaustralian.com.au/business/media/opinion/alberici-affair-shows-abc-needs-expert-economics-analysis/news-story/c794b4b445a8a1c4ff96568599cc1b43

I actually think there is a good case for treating companies like trusts and only taxing the income in the hands of investors etc. That would turbocharge investment, and ultimately national income. We also need to limit government revenue to around 20% of GDP. That would help to increase national income too.

Another good piece on Emma, this time from Nick Cater. https://www.theaustralian.com.au/opinion/columnists/nick-cater/like-the-abc-employing-her-emma-alberici-has-lost-authority/news-story/4794f38ac8d9481c5418e72f137a0ad3

Graham - those last two posts only serve to underline the importance of funding for the ABC. If we look at the mainstream media generally we find that it is bereft of quality specialist journalists - this is especially true in areas like climate and environmental science, economics, education and health.
It is obvious that the mainstream media is relying on fewer and fewer journalists to cover more and more complex issues and hence it is little wonder that the public is ill-informed.
I suspect that very few policies of either the left or right of politics will stand up to scrutiny by well informed specialist journalists.

If you're worried about that Baygon then the ABC ought to move Alberici to a job she can do and recruit someone, probably from outside the ABC, because they don't appear to have an economic specialists worth talking about, to do the job.

And I dispute your hypothesis that "very few policies of either the left or right of politics will stand up to scrutiny by well informed specialist journalists".

We're talking about a policy here that does withstand scrutiny, and which Bill Shorten agreed with some years ago, but he has now changed his mind for what an only be political expediency.