Part 1
Over the centuries, governments have only excelled at two things. Killing (mainly by declaring wars) and stealing (mainly by taxation and redistribution).
In Part 1 (Killing) we draw attention to the unintended consequences of a misguided Fringe Benefit Tax introduced into Australia on 1st July 1986.
It was obviously introduced as a way of raising money to cover the unfunded liabilities of the over-generous superannuation and pensions schemes for politicians and public servants.
Surprisingly, it did not result in a vast expected cash flow as this industry, instead, modified their operations.
The unintended consequences were that employers promptly ceased providing housing and cars and in the case of the mining industry immediately stopped building homes and facilities in regional Australia. One example was Pancontinental Mining Ltd who, at the time of the Fringe Benefits Tax introduction, simply put their 30 Kalgoorlie homes on the market for sale because they ‘refused to pay an FBT fine’ just for providing homes to their employees.
Instead of living in local homes, provided by such companies, the employees of such companies, Fly-In Fly-Out (FIFO) – mainly from capital cities.
Currently now, in 2019, there is a mounting public concern that this FIFO operation is virtually killing employees as suicides and mental health issues are seen, by some, to be a bi-product of FIFO.
I’m not debating this issue, other than to suggest that if they wish to blame FIFO for this problem, people should attack the cause, that being the absurd Fringe Benefits Tax.
A research document on ‘The unintended consequences of the Fringe Benefits Tax on regional Australia’ by Mannkal scholar, Patrick Leclezio, 8th April 2019 is here.
Note: Part II, on Taxation will follow next month.
8 Comments
You are very right here, Ron. Nationalisation by stealth, government trying to make out they ‘care’ when that’s not their job, their role in society.
Add FIFO to all the extra stress on people and families that arise from their insistence; the sheer scale of family and community breakdown, and see what happens:
“Right now, there are around 50,000 children in state care in Australia. Of these, 60% will end up being long-term welfare dependent. 30% will experience homelessness. Around 46% of the boys will spend time in prison, and 15% of the girls will spend time as sex workers. 25% will go on to work menial jobs for the rest of their lives.” Anastasia Glushko, The Guardian, Wed 17 April 2019.
Thanks for drawing attention to the unintended consequences of government intervention. Hopefully this will slow the rush for yet more government intervention with yet more unintended consequences to cure past government intervention’s unintended consequences.
Slightly digression, but might I suggest the following wording:
Over the centuries, governments have only excelled at two things. Killing (mainly by abortion i.e ~ 80,000 per annum in Australia) ………..
Good work Mannkal. I remember when FBT was brought in, it was essentially an anti-avoidance tax…but it did have unintended consequences to a number of industries, not the least being the restaurant business….but guess what…it did not solve the tax avoidance issue…
Typical aim, ready, fire approach that caused problems but solved nothing.
Perhaps your author could have included the Annual amount raised-is in the low category of 5 billion dollars a year which is minuscule in relation to the total tax? If so, the damage it causes far exceeds the revenue it raises and no one takes responsibility for reviewing its effectiveness.
The article is totally accurate.
I worked in NWWA during these times …. the large mining coys provided fully functional towns for their workforce
… FBT … deemed these “benefits” were “liable” to 150% FBT
… the coys handed them over to the state
… the taxpayer coughed up, then … “benefits diminished
… families demanded to return to “civilisation”
…. and FIFI began
… which of course was now a coy “expense”; fully deductable .
.. as was the families they destroyed !!!
It’s more like “Fire, Ready, aim” Thanks for this analysis Ron. So many legislative decisions are made by people with the least understanding and likely whatever some friendly NGO was pushing.
Thanks For joining the dots Ron. This makes a lot of sense. Keep up the good work.