Company tax cuts: whose opinion matters?

It would appear that something like 80% of the electorate supports tax cuts for business, so Malcolm Turnbull is probably on the electoral winner with this idea and he’s going to make the most of it.

The Prime Minister and Treasurer went out to spruik the benefits of the company tax cuts but the niggardly press only wanted to know if there was any modelling to suggest there would be any benefit.


Frustrated with this pedantic emphasis on evidence – and Labor’s similar calls for modelling – Scott Morrison told reporters to go to the pub instead.

Sure enough, all blokes in the pub were of the opinion that it: couldn’t do any harm/will be a no-brainer for the economy/will create jobs et cetera.

The economists at the Grattan Institute are less certain,

The Turnbull government’s $24 billion company tax cut will boost the economy by less than 0.2 per cent when fully implemented, according to a preliminary analysis by the Grattan Institute.

Indeed, I find it difficult to understand the causal hypothesis that connects tax cuts for multinational business with overseas shareholders extracting profits from Australia to local job creation by then I probably haven’t been listening carefully enough.

The argument that tax cuts for small to medium-sized businesses that are running profitably will create extra employment is also difficult to understand.  The tax cuts will certainly produce more money for the people that own the businesses  in the form of profits. They may spend those profits in other businesses which may increase their employment. But it is very much a trickle-down effect.

Turnbull and Morrison are quite happy the tax cuts passed this particular “pub test.” After all, it is the blokes in the pub who vote. It doesn’t matter if they know nothing about economics.

And it doesn’t matter what people in the Grattan Institute say. They only have one vote each.

What does matter is Will will if the Grattan Institute is right, then the company tax cuts will be very bad for the economy.

So this little incident raises quite an important issue.

Namely, what is the role of the expert and informed opinion in the development of public policy?   Should politicians be under any obligation to heed the advice of well-trained experts or is it simply a matter of what a group of blokes in the pub think.

The issue came up in the pub during the ABC Four Corners program on Pauline Hanson.

All the blokes in the pub in outback Queensland were saying that they were going to vote for Hanson for no particular reason except they didn’t like the other lot (however “the other lot” might be defined).

Hanson and her henchman Senator Martin (77 votes) Roberts are the worst possible manifestation (in Australia) of the problem of politicians ignoring expert advice and established scientific opinion (climate change, vaccination).


The problem with people like Hanson and Roberts is that a huge amount of time and energy is spent trying to change their minds ( pretty much impossible).


 Prof Brian Cox was a famous example on QandA

They also do immense damage in a democracy where small numbers of elected representatives who are wilfully ignorant can exert disproportionate and destructive  influence.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s