THE Gonski backflip brings to $16.5 billion the cumulative damage to the budget bottom line from discretionary decisions taken by the government in the three months since its election.
Looking at that sentence you might start getting concerned.
Spending is going in the wrong direction to be sure, but the devil is in the detail.
The additional $1.2bn in education spending follows the $8.8bn cash injection to the Reserve Bank, the decision to defer the $5.2bn in public spending cuts and abandoning a series of tax increases at a cost of $1.3bn.
That last bit caught my eye – abandoning a series of tax increases, like that is a bad thing. That is a combination of ideas so silly they can’t be implemented (tax on super over $100,000), minimum equity holdings designed to limit profit-shifting (doomed to failure) and then a tax on education and work expenses. This is what we read (emphasis added):
The clearest sign of the government bowing to lobby groups was its decision to remove Labor’s $2000 cap on the self-education expenses that could be claimed as a tax deduction. … A decision to place a limit on the public subsidy to private professional development is exactly the kind of saving one would expect a commission of audit to come up with.
The deductibility of expenditure incurred in the production of taxable income is not a subsidy. If the Commission of Audit starts recommending rubbish like this we’ll know its been a complete waste of time.