The federal government’s plan to cut 20% off Hecs/Help has been met with some ludicrous claims about fairness that has to make you wonder if people have only just discovered the tax system is designed by governments that make choices about who benefits.
On Friday the latest corporate tax transparency figures were released and showed that, for example, Qantas paid no tax in 2022-23. Not a shock – it didn’t pay any in 2021-22, or 2020-21, or 2019-20. It did pay tax in 2018-19 so I guess it’s all good. And sure, we all know air travel had it brutally hard during the pandemic, but just how long will those losses be carried over to avoid having a taxable income?
And what about AGL Energy, which paid no tax this year or last year? Pretty sure gas did OK in the past couple years.
Fairness in the tax system is always a funny thing, and even more funny is when suddenly people decide to care about it.
The day after the company tax figures were released, the government announced it would be cutting 20% off of people’s Hecs/Help debt. We quickly heard from very serious people annoyed that this was just going to shift the tax burden on to those who don’t go to university.
It’s a bizarre argument.
Higher education is a public good. A better educated workforce is more productive, makes Australia a more attractive destination to invest and delivers a healthier society.
This and the proposed changes to the repayment schedules to ensure those earning just above the minimum wage don’t have to repay their debt is the very thing a government should be choosing to do with our tax revenue.
Similarly, I have never been to Tafe, but hearing that the government is to offer 100,000 fee-free places at Tafe did not have me (or to be honest any of the culture warriors and permanently outraged conservative economists) wondering why those who don’t go to Tafe were being expected to pay for this.
People always try to complicate these type of arguments: they talk of tax burden, middle-class welfare and the like. Instead, we really should break it down to a pretty simple arrangement: governments should subsidise things that are good and tax things that are bad. The issue really is that we don’t subsidise education enough and that the proposed 20% cut in Hecs won’t by itself do much good.
As my colleague at the Australia Institute Jack Thrower has noted, since 2006 the average Hecs-Help debt for people in their 20s has more than doubled.
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In 2006 the average Hecs/Help debt for people in their 20s was $12,557; by 2022-23 it was up to $30,763 – some $11,128 more than if it had just risen in line with inflation.
This is what is often forgotten by those who think your dad’s Hecs is today’s Hecs/Help. Long gone is the $1,800 flat fee.
Governments make choices about who to benefit and how to arrange the tax burden. One of the more obtuse arguments has been that this will force other individuals who did not go to university to pay more tax as though there are no other ways the government can fund changes to Hecs/Help or even fee-free Tafe.
As I noted earlier this year, all gas companies – like non-company tax paying AGL – pay less each year in the petroleum resources rent tax than do students paying Hecs.
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If you want to be angry about the share of the tax burden, maybe ponder that.
Or maybe be angry that a third ($17.7bn) of superannuation tax discounts went to those in the richest 10% who then say they are “self-funded retirees”.
Or what about the $7.2bn estimated to go to this year to richest 10% in the form of a capital gains tax discounts on property investments and negative gearing?
Or the $7.5bn the government subsidises private health insurance for spurious reasoning that has never passed muster.
Finally, we have “a shift in tax burden” that goes to younger people rather than older, wealthier people or companies and the cries of unfairness resound around the commentariat.
This policy is not perfect – it does nothing to undo the hikes in the cost of university done by the Morrison government, and it weirdly is being set up as an election pledge rather than something the government could do right now.
But let’s stop the unfairness angle. Governments should subsidise things that are good and which benefit society – and tax things that are bad and make society, the economy and the planet worse.
• Greg Jericho is a Guardian columnist and policy director at the Centre for Future Work
