Talking Politics

[DavidSSS]

General, I understand that there are people out there on high incomes who are having trouble making ends meet, but the issue is that they are not typical, people on incomes around $200K are a very small group. Remembering that average weekly earnings are skewed up (there is a hard limit to how much lower than the average you can earn, as the lowest possible income is zero, but no limit to how much more than the average you can earn) the average income for a full time worker in 2022 was $98K and the median was $79K. The 96th percentile in 2022 started at $178K, so anyone earning more than $180K is in the top 4% of income earners, $200K does not cut in until you are part way through the 97th percentile, so we're talking about the top 2.5% of earners. These people earn over double the average income, if they are struggling then imagine what those on average or the 50% who earn less than the median are experiencing.

We all have our own situations. I have never been a high income earner, I have generally earned around the average, and I am being made redundant. Just lucky to have good super so I reckon I can retire early.

The situation with interest rates is actually a bit beside the point. If interest rates were 10% and house prices had risen at the same rate as inflation since, say, 1990, then there would be far fewer problems. The insanity of house prices is the biggest issue. There is a lot of blame to go around, but when I see middle class people borrow 15 to 20 times their combined yearly gross income to buy a house then I know the situation is a mess. I'll add that we own a house worth a ridiculous amount of money and its value makes no difference to us, I would have no issue with our house being worth half of what it is worth today, the trouble with that is that it penalises those who bought recently so it is a vexed issue. Those buying a house have the choice of paying an outrageous amount for a house (buyers are price takers) or continue to pay outrageous amounts in rent - it really is no choice so we know why people mortgage themselves to the hilt to buy a house, the idea being that eventually you pay the mortgage off and no longer have to pay for housing.

I cannot agree that those in the top 4-5% of income earners should not be classified as rich. If not them, then who?

We do need tax reform, but the issue is that with the dominance of neo-liberal economic idiocy the usual reform suggested is to increase consumption taxes. Consumption taxes are regressive, they tax lower income people at a higher proportion of their income than higher income people. I support a progressive tax system. I would add another tax bracket at maybe $400K and make it at least 50%. All the talk of high tax brackets somehow stifling the economy flies in the face of reality. Can anyone really tell me that the US economy tanked in the 1950s? Remember, that was when their highest tax rate was 91%, yes 91%, you read that correctly. Plus, as Pikkety showed, it did actually have an impact reducing inequality. Unfortunately the post WWII period was the exception, the rule is that inequality is more like the Gilded Age and it is returning to those levels. Wealth inequality is far worse than income inequality yet wealth is untaxed and income from wealth gets concessional tax (capital gains tax is reduced, for example, if you own equities for more than 12 months, plus there is negative gearing). We need tax reform, just not the tax reform the clueless economists keep recommending.

DS

 

[mrposhman]

Not sure where it started Scoop but I hope we break the cycle. Sticking with election promises for the period of a government in a changing environment can and will lead to really bad decisions.
I don’t know about you but I would prefer a government who adapted to changing conditions than one who slavishly follows something because it was taken to an election.
Both major parties are guilty of playing the game and imo it needs to stop especially where it relates to economic policy which is dynamic not static

Totally agree Sin. The whole "broken promises" argument of keeping promises even when they are not the right thing for the country is indicative of a change in the way politics is run these days. Politicians are almost always focused now on what gets them re-elected rather than what is right. I remember watching those Jon Oliver documentaries (but obviously done with a comedic undertone) of comparing gun control in the US and what Australia did in the 90's following the Port Arthur massacre. I can't remember the pollies name (I think he was a QLD MP) and he was asked why he voted for the gun control legislation and he answered something like "because it was the right thing to do for the nation", Jon Oliver jokingingly asked if he wanted to re-record it with a better answer, as he'd just cut from an interview with a Republican who when asked "whats the most important thing to do as a pollie" and his answer was "to be re-elected".

Its a shame that Australian politics seems to have descended into the same *smile* that American politics has been made up of for much longer. Gone are any pollies that really want to make a difference, and in are those who largely want to line their pockets (see Trump as the extreme example).

Personally from an economic position, I probably swing more to the right side of politics and with regard to my income level, I'm largely unchanged / on the borderline where I am worse off after the adjustment to the Stage 3 tax cuts (but still much better off than I am today with the current taxation levels). I'm personally not outraged and feel that this decision is better for the country. The last thing that the country (and ultimately from a selfish POV) needs is for an economic crisis created from spiralling inflation. It has been spoken about that real wage growth is required, so either the economy can afford growth (btw I didn't get a pay rise or incentives in 2023 and unlikely to in 2024) or it finds growth in disposable income in a different way. The better thing for the economy is to push that disposable income growth through all income groupings, because as we know, those in lower income brackets spend more of their disposable income on economic drivers, rather than how the top income bracket spend, which can be more overseas spending (growing other economies over our own) or also in areas of the economy that don't necessarily drive as much economic growth, ie. things like electronics etc which have lower profit margins in the country and are essentially import / export businesses.

 

[mrposhman]

To me nearly all the above post indicate once again Labor is a financial flop led by rag & bones man Albanese & Jimmy "Abacus" Chalmers . I think they attended the Paul Keating Economics College.

Like everything else you comment on, its clear you have no understanding of economics and how the economy is driven.

Maybe instead of reading the Daily Mail, watching Sky News etc, maybe pick up a textbook.

 

[Sintiger]

Totally agree Sin. The whole "broken promises" argument of keeping promises even when they are not the right thing for the country is indicative of a change in the way politics is run these days. Politicians are almost always focused now on what gets them re-elected rather than what is right. I remember watching those Jon Oliver documentaries (but obviously done with a comedic undertone) of comparing gun control in the US and what Australia did in the 90's following the Port Arthur massacre. I can't remember the pollies name (I think he was a QLD MP) and he was asked why he voted for the gun control legislation and he answered something like "because it was the right thing to do for the nation", Jon Oliver jokingingly asked if he wanted to re-record it with a better answer, as he'd just cut from an interview with a Republican who when asked "whats the most important thing to do as a pollie" and his answer was "to be re-elected".

Its a shame that Australian politics seems to have descended into the same *smile* that American politics has been made up of for much longer. Gone are any pollies that really want to make a difference, and in are those who largely want to line their pockets (see Trump as the extreme example).

Personally from an economic position, I probably swing more to the right side of politics and with regard to my income level, I'm largely unchanged / on the borderline where I am worse off after the adjustment to the Stage 3 tax cuts (but still much better off than I am today with the current taxation levels). I'm personally not outraged and feel that this decision is better for the country. The last thing that the country (and ultimately from a selfish POV) needs is for an economic crisis created from spiralling inflation. It has been spoken about that real wage growth is required, so either the economy can afford growth (btw I didn't get a pay rise or incentives in 2023 and unlikely to in 2024) or it finds growth in disposable income in a different way. The better thing for the economy is to push that disposable income growth through all income groupings, because as we know, those in lower income brackets spend more of their disposable income on economic drivers, rather than how the top income bracket spend, which can be more overseas spending (growing other economies over our own) or also in areas of the economy that don't necessarily drive as much economic growth, ie. things like electronics etc which have lower profit margins in the country and are essentially import / export businesses.

I agree with pretty much all of this but the only thing I would say is there are politicians who want to make a difference, certainly when they start.
The problem is that the system grinds them down and they end up being compromised by it.
I have spoken to and met John Pesutto a few times, mainly when he wasn’t in parliament. I can tell you that what he said then and what he is saying and doing now are not the same things. It’s such a shame.

 

[K3]

I agree with pretty much all of this but the only thing I would say is there are politicians who want to make a difference, certainly when they start.
The problem is that the system grinds them down and they end up being compromised by it.
I have spoken to and met John Pesutto a few times, mainly when he wasn’t in parliament. I can tell you that what he said then and what he is saying and doing now are not the same things. It’s such a shame.

Do you think it is the system grinding them down, or more that they have found that if they chance what they say, they can make a shed load more money; make more on the side while in politics, and then land in a very cruisy, well-paying job the week after they leave it?

 

[Sintiger]

Do you think it is the system grinding them down, or more that they have found that if they chance what they say, they can make a shed load more money; make more on the side while in politics, and then land in a very cruisy, well-paying job the week after they leave it?

Honestly for most of them it’s the system grinding them down imo. Not just the politics itself but the party system which actively discourages having opinions that differ from the party line.

 

[Baloo]

Honestly for most of them it’s the system grinding them down imo. Not just the politics itself but the party system which actively discourages having opinions that differ from the party line.

Turnball is a good example of that. Had high hopes for him but even as leader, he wasn't able to fight the factions and needed to toe the line. For someone that is supposedly tech savvy, his crippling of the NBN is something that he should never be forgiven for.

 

[Brodders17]

Honestly for most of them it’s the system grinding them down imo. Not just the politics itself but the party system which actively discourages having opinions that differ from the party line.

Yeah, i reckon many pollies get into politics for the right reasons- or at least the right reasons are part of the motivation.
some keep trying to do the right thing. some find it to hard, knowing the right thing and the election winning thing are not always the same, and for some their ego takes over. and probably for some it is just to hard, but they cant admit it.

 

[IanG]

Totally agree Sin. The whole "broken promises" argument of keeping promises even when they are not the right thing for the country is indicative of a change in the way politics is run these days. Politicians are almost always focused now on what gets them re-elected rather than what is right.

A big part of this is because the media are not reporting on these issues honestly and actually holding politicians to account for what they say.

 

[K3]

Yeah, i reckon many pollies get into politics for the right reasons- or at least the right reasons are part of the motivation.
some keep trying to do the right thing. some find it to hard, knowing the right thing and the election winning thing are not always the same, and for some their ego takes over. and probably for some it is just to hard, but they cant admit it.

nevermind...

 

[RoarEmotion]

General, I understand that there are people out there on high incomes who are having trouble making ends meet, but the issue is that they are not typical, people on incomes around $200K are a very small group. Remembering that average weekly earnings are skewed up (there is a hard limit to how much lower than the average you can earn, as the lowest possible income is zero, but no limit to how much more than the average you can earn) the average income for a full time worker in 2022 was $98K and the median was $79K. The 96th percentile in 2022 started at $178K, so anyone earning more than $180K is in the top 4% of income earners, $200K does not cut in until you are part way through the 97th percentile, so we're talking about the top 2.5% of earners. These people earn over double the average income, if they are struggling then imagine what those on average or the 50% who earn less than the median are experiencing.

We all have our own situations. I have never been a high income earner, I have generally earned around the average, and I am being made redundant. Just lucky to have good super so I reckon I can retire early.

The situation with interest rates is actually a bit beside the point. If interest rates were 10% and house prices had risen at the same rate as inflation since, say, 1990, then there would be far fewer problems. The insanity of house prices is the biggest issue. There is a lot of blame to go around, but when I see middle class people borrow 15 to 20 times their combined yearly gross income to buy a house then I know the situation is a mess. I'll add that we own a house worth a ridiculous amount of money and its value makes no difference to us, I would have no issue with our house being worth half of what it is worth today, the trouble with that is that it penalises those who bought recently so it is a vexed issue. Those buying a house have the choice of paying an outrageous amount for a house (buyers are price takers) or continue to pay outrageous amounts in rent - it really is no choice so we know why people mortgage themselves to the hilt to buy a house, the idea being that eventually you pay the mortgage off and no longer have to pay for housing.

I cannot agree that those in the top 4-5% of income earners should not be classified as rich. If not them, then who?

We do need tax reform, but the issue is that with the dominance of neo-liberal economic idiocy the usual reform suggested is to increase consumption taxes. Consumption taxes are regressive, they tax lower income people at a higher proportion of their income than higher income people. I support a progressive tax system. I would add another tax bracket at maybe $400K and make it at least 50%. All the talk of high tax brackets somehow stifling the economy flies in the face of reality. Can anyone really tell me that the US economy tanked in the 1950s? Remember, that was when their highest tax rate was 91%, yes 91%, you read that correctly. Plus, as Pikkety showed, it did actually have an impact reducing inequality. Unfortunately the post WWII period was the exception, the rule is that inequality is more like the Gilded Age and it is returning to those levels. Wealth inequality is far worse than income inequality yet wealth is untaxed and income from wealth gets concessional tax (capital gains tax is reduced, for example, if you own equities for more than 12 months, plus there is negative gearing). We need tax reform, just not the tax reform the clueless economists keep recommending.

DS

Well put. I’ve been lucky enough (and worked hard to take some advantage of the opportunities that have presented) to have a fair bit of my career in the top 2.5% (offset a lot of going through a separation with someone who earned in the low 10% so got a fair slice and still paying child support / education etc. )

I’ve generally only worked with people in this pay band and I’ll I would say is that most don’t get that they are in that top 2.5% and just consider themselves average earners. The privilege is just taken for granted. But they are just as prone to the same financial missteps as anyone. Keeping up with the joneses doesn’t make sense. In my mind tax cuts going to these folks doesn’t make sense - they just need to adjust their lifestyles to a tiny bit less.

The cost of housing makes any new entrant even in that top group and without house money suspect to hitting severe financial difficulties when the financial winds change - and potentially could hit even harder - but I don’t see how why we should be looking to socialise the cost of anyone’s housing investment decisions.

 

[Sintiger]

A big part of this is because the media are not reporting on these issues honestly and actually holding politicians to account for what they say.

Yes but also over reporting things and making them more important than they are.
There are a massive number of things that happen in government and the public sector that just tick along and work well. We never hear about those things.
One issue or problem and we are calling for resignations. Every now and again it is justified, many times it is not

 

[tigerman]

So what is Dutton going to do, break an election promise and support Labor's new tax cuts, or say no to millions of low paid Australians who will now receive a tax cut, those who were going to get zilch from the Liberals stage 3 tax cuts.

I'm going to really enjoy watching this play out.

 

[Baloo]

but I don’t see how why we should be looking to socialise the cost of anyone’s housing investment decisions.

The government should allow the housing market to sort itself out without the constant benefits, assistance, tax breaks that are handed out to property investors. Or give those same benefits to all types of investing.

 

[spook]

The sad bit about this politics, is that again, people are treating this as a divide. Us against them.
I can tell you right now, if you read widely enough, there's people who'd have benefitted from those
stage 3 cuts are doing it very tough. There's welfare agencies who are seeing people on very high wages
needing support to buy food, as their mortgages and other cost of living increases have put them close
to bankruptcy.
The previous government(s) complexed humped the pooch with the economy. You read about the middle
class disappearing in America, it's happening in Australia. And with the RW Media playing folks off in some
stupid class war, they're fooling the vast majority of people that those living on $200k are wealthy and living
large.

I prefer to avoid the RW media muck. This "paper" is a bit more balanced, although you need to watch for their
own biases (they are owned by Superannuation companies).

https://www.thenewdaily.com.au/finance/2024/01/25/alan-kohler-tax-rates-rich

View attachment 21721

If you're a big wage earner with a massive mortgage you can't afford, you should sell your *smile* house. We're long overdue for a correction in our ridiculously overpriced housing market.

 

[DavidSSS]

People tend to expand their spending to suit their income, but it is certainly true that a lot of people in well paid jobs have no idea of what most people earn. Some people seem to find it surprising that there are jobs that pay less than $100K.

We are long overdue for a housing price correction. We bought our house 30 years ago, they had started going up but not by that much. It kept increasing in value and year after year I thought it couldn't last. 30 years later, it is still going up. Absolutely ridiculous. Difficult to see prices dropping any time soon, but it would be good if at least the prices stopped rising.

DS

 

[larabee]

If you're a big wage earner with a massive mortgage you can't afford, you should sell your *smile* house. We're long overdue for a correction in our ridiculously overpriced housing market.

Exactly. If there are people earning $200k a year lining up at the foodbank, they’ve got more problems than govt handouts will fix.

They would have a great many more options of getting out of debt than, say, a single mother working two jobs who is living in a car because she can’t afford to rent has.

And they’re still getting $4.5k tax relief! Forgive me if I don’t feel sorry for them

 

[The_General]

If you're a big wage earner with a massive mortgage you can't afford, you should sell your *smile* house. We're long overdue for a correction in our ridiculously overpriced housing market.

Just think about how insensitive you sound. You're showing what type of person you are. I hope you never face any misfortune.

 

[MD Jazz]

Yeah, Howard was good at what he did. Morrison was bad at what he did.
They both had bad priorities and policies, and both were dishonest.

A dishonest politician?

Name me some honest ones.

My favourite was probably

I don't see folks in that group "blaming" anyone (except maybe the reserve bank). We need to get past this type of BS narrative.

I can tell you right now, my own personal circumstances (I am no where near that 5% you mention), but my mortgage repayments have increased 45% since I took the loan out. I borrowed significantly under what the banks were offering me, and had my 20% deposit. I remember the days of 17% interest rates, so was conservative in my choices, but do you think I could see that increase coming? I spoke to a very close friend at a bank and he'd advised they were checking people's ability to repay at 3% above what they were lending at, so I used that intel as a minimum benchmark to ensure I'd be OK. I did various budgets and models of different financial changes to our lives (eg risk of being redundant and having to take a pay cut to stay employed) to make sure I was on top of how much risk we could undertake. Whilst my head is above water, a couple more interest rate rises things are going to get very, very, very interesting. I may be joining those 200k folks in line for food supplies.

How many people out there do you think had the ability (or capability) to plan like that, even in that upper bracket? How many people saw Rona coming, and what it would do to the cost of living afterwards? A 1 in 100 year event. If you think those factors haven't hurt Australians of all classes, wage brackets and lifestyles, then I don't know what to say to you. Your approach shows a lack of depth of thought, and your own level of privilege. Maybe step down off your high horse and show folks some compassion. We're all Australians.

If you budgeted to afford 3% above market rate you would be able to afford 5.5% rates.

You can always sell the asset. Anyone crying poor on 200K is someone who cannot manage money. There are ultiple ways to reduce your outgoings at that level of income.

And 2 income families on 440K plus sannot be serious to be looking for sympathy about cost of living pressures.

 

[spook]

Just think about how insensitive you sound. You're showing what type of person you are. I hope you never face any misfortune.

What a garbage comment.