What does $900 cost?

The Tax Bonus payments are hitting bank accounts and mailboxes.  Some of them are making their way into the shopping malls; an inordinate proportion into the pokies; and the bulk of them, it seems, into debt reduction or that very old-fashioned thing, saving.  What about yours? 

The idea was that these payments would stimulate the economy.  The idea was tried in the   United States last year, where it was found that clearly $600 per taxpayer was not enough.  So we have tried it with $900 – even as the IMF, of all organisations, have come out and said that it won’t work.  Most people, it seems, agree with this summation.  And if that is what people think, then it won’t work.  Enough stimulation already.

See, the funny thing about $900 is that it’s not enough to do any real good to anyone, but it is well and truly enough to do real harm to everyone.  Consider what $900 has cost you.

There is all the time that the back-room planners put into coming up with the idea. We paid for the time they put in to come up with this clanger.  Then came the parliamentary debate: politicians’ talk doesn’t come cheap – although, as it has been pointed out before, we should be glad we don’t get all the government we pay for.  Then there was the High Court challenge; the public relations costs to convince us all it was a good idea, truly; and the cost of implementing it.  Here we spare a thought for our friends at the ATO.  They can make no comment.  Their task is simple: make it happen. So they have the programming costs; countless staff hours; printing and mailing costs; friendly telephone operators to take perplexed and harassing phone calls.  Oh yes, and tax agents’ costs. Did we mention that?  Let me…

We are told it is going to happen.  So we have to work out what it will mean for our clients. Prepare for the inevitable questions. Provide the information. Try to inform everyone ahead of time that they can make our lives so much easier by contacting the Tax Office and getting their payments sent to them direct (fail). Take the phone calls.  Then receive the mail – floods of it. Deal with it. Forward it. Identify the direct bank payments. Pass them on. And so on – you get the picture.  This has been a big exercise.  A simple mind like mine would have said “why not just stick a $900 credit on next year’s notice of assessment and be done with it?”.  But that is too simple for a bureaucrat’s bent.  Make it complex.  Keep them working. Stimulate the economy, you see. 

The $900 Tax Bonus comes with a mighty big price tag before it even hits our bank accounts.  Someone with an eye to detail should crunch the numbers on this.  

And that is just the beginning.  Because the crazy thing is, it has to be paid back, with no discount for the afore-mentioned costs.  Some day, some how, it will be paid back.  Like a student debt, it will not go away.  Rather, it will grow. The interest bill is already ticking.  Whether it is paid back in the honourable way, by acknowledging the debt and paying up; or in the dishonourable way, by inflating the currency so that our lenders are left holding worthless IOU’s: someone has to pay.  The trick for the authorities is to stick it to someone who doesn’t suspect what is going on.  The trouble is, when they do cotton on, they will be very grumpy.  The next generation, and the lenders who made this largesse possible, will not be impressed.

And that is not all. The worst thing is the loss of freedom this involves.  We old cynics can see through the scheme; but young people are being corrupted into thinking that “government has the answer”.  Got a problem? – don’t worry, there is a government bailout there somewhere for you. Trust us with your future. And so $900 becomes the price of seduction, as the State ratchets up its claim on your future. This is philosophical opportunism on a grand scale.

That is why it is an encouraging thing to see that for the most part, people are not taking the bait. Let this economic malaise play itself out, the sooner the better, so that we can recover more quickly. 

Next move?  Stimulus, mark 3, come next month’s Federal budget.  Hold your nerve, taxpayers.