Who Cares About The Australian Budget?
How Fast Can You Register an ABN?
Wednesday, 13th May 2015 – London, United Kingdom
By Sam Volkering
• How fast can you register an ABN?
• The key to everything
In today’s Money Morning…the most boring 30 minutes since the last budget announcement…buying votes wherever they can…why bond markets are the key to everything…and more…
It’s fair to say I haven’t had the most exciting morning.
I don’t classify 30 minutes listening to Joe Hockey as all that exciting. In fact, I’d ask for it back if I could. Nonetheless, it’s important for me in my role as your Editor to understand what it all means.
At 10:25am (UK time) I plugged in my headphones and jumped onto the ABC Radio website. Joe Hockey’s brassy tones then scratched my eardrums for the next half hour.
I would have preferred to watch it. But every major Australian TV station geo-blocks their video streams. That means no watching legally from overseas.
I could have put on SKY News, BBC News, Bloomberg, RT or Al-Jazeera. But then I would have missed the Budget completely. None of them gave it any more than passing comment (if that).
You can look at their websites. Here’s a list of stories that got preference over the Aussie budget.
• Greece dodges yet another bullet,
• Another earthquake in Nepal,
• Picasso painting sets a new auction record,
• Verizon buys AOL for $4.4 billion, and
• Kevin Pietersen cast out from England’s cricket side permanently.
In other words, the rest of the world didn’t give a stuff about Hockey’s budget. But not according to Hockey.
‘The world has expressed its growing confidence in Australia’s economic future. I too share that optimism.’
Does he care to mention who said that to him? Name your sources Hockey! Perhaps we’ll just collect his metadata to find out.
His statement of importance got some laughs. But there was more comical genius to follow.
Hockey proclaimed, ‘We have helped to bring down the cost of living — Australians today are paying less for their electricity and less on their mortgages.’
You could hear the audible chortles coming from the opposition.
As you might have seen from Money Morning on Saturday, there’s nothing ‘down’ about the cost of living in Australia. But I guess Hockey thinks Australian’s don’t eat, travel or see other human beings, ever. All they do is pay the mortgage and turn the lights on and off.
And as for paying less on their mortgages?! He’s kidding right? The only reason mortgages are less is because of endless rates cuts. This is a forced hand as the RBA feverishly try to resuscitate a flatlined Australian economy.
That’s nothing to be proud of Mr. Hockey.
Hockey drops the ‘C-bomb’
The Budget yesterday was simply a vote grab. The latest two-party preferred opinion poll from The Australian has Labour 52%, Coalition 48%.
Furthermore, 56% of people are dissatisfied with the way Abbott is performing as PM. Another 7% are uncommitted (sounds like a dating show). And 37% are satisfied.
To win the next election the Coalition needs to swing those swing voters.
And now there are more swing voters than ever before. That’s scarily typical of the current global environment.
Just last week here in the UK there were seven prominent parties vying for leadership. Due to the monumental ineptitude of Labour, the Conservatives jagged themselves a majority. But as many people expressed, how do you pick from a bunch of bad eggs?
But back to the Aussie budget. As I said, this was a vote grab budget. Lots of grandeur with little substance. It was to appeal to the little guy. The business owner fighting for existence against evil corporations.
That’s why Hockey put so much emphasis on small business. In particular a tax cut and instant new deduction rules.
Now generally the ATO, ABS, etc. classify ‘small business’ as those with turnover under $2 million. And that’s exactly the target audience the Coalition want to get onside.
The ABS highlight there’s over 2.1 million active businesses in Australia. That includes small and large.
They continue to say, ‘Most businesses actively trading in Australia in June 2014 were unincorporated businesses owned and operated by the household sector.’
Of the total 2.1 million businesses that do exist in Australia, the ABS estimates that 61% had no employees. 27% had one to four employees, 10% 5–19, 2% 20–199 and 1% over 200.
It’s pretty fair to say the 61% makes up a fair chunk of Hockey and Abbott’s target audience with this budget.
It’s a large audience. And when Hockey dropped the C-bomb, ‘cuts’, small business owners began to get a little excited down in the trouser region.
Then he dropped another bomb. The D-bomb. Deductions.
You see, on top of the 1.5% tax cut for small business, any purchase up to $20,000 will now be instantly deductible.
That’s right. If you run a small business with less than $2 million in turnover you’re in luck. Anything you purchase up to $20,000 in value for the business is now deductible.
You can literally hear the opinion polls swing…
The Cheshire Cat is pretty happy with himself
I had a friend at a budget night event yesterday. I was in front of the computer with a coffee. He was at a table full of wine and business leaders. During the budget speech we were sending each other Viber messages.
After Hockey dropped the d-bomb my mate said, ‘I’m on a table full of big business owners. They’re about to split their businesses into 100 small businesses. How fast do you reckon you can register an ABN?’
He might have been half joking. He might have been half right. He might have been completely telling the truth.
This was clearly a budget for the Aussie battler. It was about ‘fairness’, ‘having a go’ and ‘small business’. But don’t think for one instant big business won’t figure out how to make it work for them too.
This was a pretty light budget really. They only mentioned superannuation once. Literally, once. Adding there’d be no new taxes on superannuation under a Coalition government.
Of course that doesn’t mean they won’t bring back old taxes. Or even make current taxes less favourable to retirees. My Publisher and fellow Money Morning Editor Kris Sayce has a crystal clear picture of how this will play out. He’s even outlined three steps to protect you from the coming super grab.
And then Hockey moved on to something he was very proud of. I could hear it in his voice. You could hear his internal Cheshire Cat grinning from ear to ear.
Hockey appealed to a sense of fairness. A ‘level playing field’.
He painted a picture of greedy, foreign multinationals who come to our shores and rape and pillage our economy. The government has targeted 30 of them. Get the lynch mobs ready. It’s a genuine old-fashioned witch hunt.
That might be a little strong. But that’s the sentiment he was going for.
Perhaps most interesting about these big 30 multinationals is that Hockey thinks he can chase them down.
Remember the last Budget? Remember the aggressive public sector job cuts?
Remember where the ATO shed 3,000 jobs with another 1,700 to go by 2018? Yep, well that’s the same ATO up against these multinational tax avoiders.
How on earth does the ATO stand a chance? They don’t.
And while they divert their resources to just 30 companies, millions of small businesses will get away with continued avoidance of the tax system.
But multinationals don’t vote. Small business owners do.
Editor, Money Morning