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The Forum > General Discussion > What is the role of a public broadcaster?

What is the role of a public broadcaster?

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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.
Posted by Shadow Minister, Friday, 23 February 2018 9:53:11 AM
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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.
Posted by GrahamY, Sunday, 25 February 2018 8:05:53 PM
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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.
Posted by BAYGON, Sunday, 25 February 2018 9:17:42 PM
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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.
Posted by GrahamY, Monday, 26 February 2018 4:17:08 PM
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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
Posted by GrahamY, Tuesday, 27 February 2018 8:03:15 AM
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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.
Posted by BAYGON, Tuesday, 27 February 2018 8:29:26 AM
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