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Don't tax students, tax the entitled

Date

Adam Spencer

Foreign Minister Julie Bishop , attacked by students at the University of Sydney earlier this month.

Foreign Minister Julie Bishop , attacked by students at the University of Sydney earlier this month.

I often (only half) joke that my Arts degree was the best nine and half years of my life.

From what I recall it cost me about $2000, a couple of Hawke government administrative fees and half of the first year of HECS.

Education Minister Christopher Pyne and Treasurer Joe Hockey, along with myself, are part of the last generation of post-Whitlam university students to pay virtually nothing for our university education.

That's right, by a fluke of timing we all effectively missed out on paying HECS, the university tuition scheme lauded around the world for its fairness and equity. Nothing up front and repaying a reasonable part of your degree costs through a levy of 4 to 8 per cent extra on your tax, commencing when you reach a certain income (currently $50,000).

The government proposes a raft of changes that will most likely massively increase the debts students incur.

The hypocrisy of Pyne, Hockey and Tony Abbott demanding that university students "pay their fair share" is breathtaking.

Let's assume there is a budgetary crisis – a position disputed as passionately by some as it is promulgated by others – and that this is not just a vigorously wielded, government slashing, ideological scalpel. The question arises where should the cuts come.

And the answer is screamingly obvious. We don't need new taxes, we just need to apply the ones that currently exist more fairly and close some massive loopholes.

When it comes to forgoing potential government revenue by offering some people tax concessions Australia leads the OECD. In fact, we blow most other countries out of the water. Estimates suggest we give back about 8 per cent of our GDP, well over $120 billion, and that the vast bulk of OECD countries concede less than half of this portion.

And who does it benefit? Me – and others like me – who are investing extra income we made courtesy of our free university education.

It's the likes of Pyne and myself, who, come July 1, if we can find a handy $50,000 down the back of the couch can plough it into our superannuation at a tax rate of 15 per cent when as income it would have been taxed at double or triple that amount.

It's Hockey and me who are most likely to own an investment property or two that we can negatively gear to our advantage.

Surely winding back these arrangements is a fairer way to "lift not lean" than increasing the debts of students who already pay an appropriate amount for their degrees which will benefit them, but also all of us. Our scientists, doctors, engineers, teachers, our Treasurer and Education Minister, and all but two prime ministers since 1950, have all had the benefit of an Australian university education.

The government has appointed not one, but two working groups to advise on the proposed changes. I sincerely hope they advocate a substantial paring back of the changes. It's only fair.

Adam Spencer is the University of Sydney's maths and science ambassador.

110 comments so far

  • What Adam said.

    Commenter
    Mike
    Location
    Sydney
    Date and time
    May 29, 2014, 4:06PM
    • This is typical of LNP thinking. They only know those with law, engineering, medical,commerce, or dental degrees who are earning heaps (generalizsation I know). However Fred Blogs who does an arts/teaching/science degree do NOT earn big bikkies. And yes there are exceptions to everything. However it really shows that Pyne/Abbott/Hockey are totally out of touch with reality. I know builders/tilers/plumbers etc that are earning a Motza. All in private business have access to tax exemtions/relief etc that Fred Bloggs on a salary does not. The time has come to tax properly those on high incomes or onevn low icomes but truly reflect the money they make! The fact that Apple/ Google have paid stuff all tax in this country means the tax system is wrong. Add to that that Twiggy Forrest has paid stuff all tax yet he is a billionaire means that the tax system is wrong somewhere! Pensioners have built this country to what it is now yet they are being asked to pay more (% of income) than Twiggy Forrest or Gina! Is this the contry we want or what our forefathers worked and fought (in some cases for?) Try putting all this to a referendum!

      Commenter
      Pollyho
      Date and time
      May 29, 2014, 8:07PM
    • yeah Adam is right. don't cut things that affect me, don't increase taxes that affect me, $billion a month in interest repayments is no big deal. someone has to pay for all the stuff we get. someone earning $250k in total and putting $50k in super is still paying $15k tax on the $50k and about $65k on the remaining salary. surely he/she should have to pay more so that I don't have to.

      Commenter
      interested observer
      Location
      sydney
      Date and time
      May 29, 2014, 11:01PM
    • Yep.

      Commenter
      J
      Date and time
      May 29, 2014, 11:18PM
    • Yes, what Adam said is in the right direction.

      IMO, this budget together with the vast majority of budgets from both sides of the duopoly, could have been contrived by your average suburban chartered accountant. It's glaringly obvious, that the principal objective of both parties, more so the Liberals, is to get government spending back in the black - at any cost. It's the tool they use to win votes.

      Via their spin doctors, they convince the general public that a balanced budget is the be all and end all of quality leadership and management. ie, if a government can produce a balanced budget, then they must be the 'ant's pants', so to speak. Again, IMO, this is totally wrong and is simply treating us like infants. The huge problem here, is that governments are not addressing the real issues. Budgets, particularly one's that are very controversial, like this one, are simply a smother, or diversion, to keep our minds off the real issues. We all know the issues, they've been spoken about for the past 40 years, but they are not being addressed.

      To maintain our very fortunate living standards, Australia cannot rely on a finite mining industry or rely on being a service based consumption driven economy. We also cannot rely on a continual strategy of inflating assets, working the printing presses and perpetual increases in population. The only way to maintain and increase the wealth of a nation is to educate, innovate and manufacture. And to achieve this, there must be a plan. A detailed plan to deal with the short, medium and long term issues.

      Liberal and Labor parties, where are your short, medium and long term plans for our children and their children?

      Commenter
      kanga
      Date and time
      May 30, 2014, 9:23AM
    • Exactly, Adam!

      Pyne, Vanstone and the other deregulation apologists want us to believe that people who didn't go to university (and are therefore, we are told, earning less) are subsidising the educational joy-ride of today's students, who will go on to earn big bikkies off the sweat of other people's labour. But that just amounts to admitting that the tax system isn't working.

      If non-graduates earn less, they pay less tax and so rightly contribute less, including to things like higher ed (although they also benefit from it, eg from having access to well-trained doctors, nurses, teachers, engineers, social-workers etc.)

      A degree is not necessarily an automatic path to wealth. Some non-graduates make a lot of money (Prof. Clive Palmer and Gina Rinehart both went to uni but didn't finish; James Packer didn't go at all). Some graduates (teachers, nurses, social workers) make modest incomes.

      Of course plenty of graduates make higher incomes (surgeons, merchant bankers, partners in law firms), and if the tax system is working properly they contribute at a higher rate.

      Rather than applying a fees band-aid that will scare off low-income students--especially those who might take time out of the paid workforce and now will watch their interest repayments make their degrees even more expensive--we should fix the tax loopholes so the lifting really is "shared"--all the way up.

      Commenter
      Marion Maddox
      Date and time
      May 30, 2014, 12:32PM
    • the students doing the 'useless' arts degrees have nothing to fear, their degrees are worthless, they'll neveer repay a cent of it..

      Commenter
      sg
      Location
      melb
      Date and time
      May 30, 2014, 12:37PM
    • 15% of $50,000 is $7500, interested observer. Interestingly, the $15,000 you quoted is almost exactly the tax CUT anyone who can afford to syphon $50000 into super in one year receives. But you're right, terrible idea to remove those juicy tax breaks Howard put in during his mining boom splurge...

      Commenter
      RichardM
      Date and time
      May 30, 2014, 2:58PM
    • This is interesting - and what to think.
      An article in The Australian - 'The single mum on $55,000 in pensions, benefits, study aid'. David Crowe 'Trends with benefits'.
      Comments include:
      "JOE Hockey has condemned a “crippling” welfare culture that weighs down the federal budget, and warned that government benefits will not be treated as a right when the nation faces a $50 billion deficit."
      It goes on..
      "The Treasurer told The Australian some benefits had soared to the point where it required tax revenue from three average workers to keep payments flowing to a single welfare recipient."
      And..
      "Predicting new burdens on taxpayers unless the payments were curbed, he urged Australians to accept there was no longer an “endless supply of money” to support government benefits. “The suggestion somehow that payments from government are a right is not correct — and governments themselves have been guilty of creating that culture over many years."
      And..
      "The warnings are based on government analysis that reveals some single parents are receiving $55,000 a year in tax-free benefits, including a pension, family tax benefits and study assistance.
      The calculations show that three workers on average salaries would pay about $17,000 in tax each to cover the sole parent’s benefits.
      Hitting back at claims his budget was unfair, the Treasurer countered the idea that taxes should be raised to match more than $7bn in welfare cuts so that every group carried the same share of the budget burden."
      And..
      “When I increase revenue I’m taking money out of people’s pockets — and they’ve earned that money,” he said. “Whereas when you freeze the increase in the amount the government is paying, we’re saying ‘we’re just not giving you more than what you’re getting’. That is exactly what I’m trying to do.”

      Commenter
      Howe Synnott
      Location
      Sydney
      Date and time
      May 30, 2014, 4:30PM
    • The problem of course is that the majority of Australians are Willfully Ignorant Bogans.

      Remember the outrage that was generated when Kev tried to bring in the Original Mining Tax....?

      The one that was actually going to generate significant revenue from the sale of OUR RESOURCES.

      Hoards of Ignorant Aussies were whipped into an outraged frenzy because Kev was asking our Mining Billionaires and Faceless International Corporations to give us a slightly bigger slice of the Mining Pie.....Our Mining Pie.

      Whats more he was proposing to share it among the Australian People.

      Outrageous!

      Kev was suitably knifed by Julia who instantly cut a behind closed doors deal with the Billionaires that THEY were happy with.

      She sold us out.

      The Bogans were placated...even whilst they were shafted.....

      Tony must have sat back in his big chair and thought "God these guys are stupid!"

      His contempt for the intelligence of the Australian people since then has shown no bounds.

      But with the latest Budget it seems that the Bogan Masses have finally woken up to him.

      We can only hope!

      Commenter
      vote with $$$
      Date and time
      May 30, 2014, 7:18PM

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