Comment: Gotcha mentality - not trivia - reveals media, politicians lack economic nous

Chris Bowen isn't the first politician to stumble over a fact or figure, and he won't be the last. Don't be fooled - it's economic management, not "embarrassing gaffes" that count.

This week while being interviewed on the Sky News program Jones + Richo, the Shadow Treasurer Chris Bowen got the tax rate for the lowest tax bracket wrong. It was Bowen himself admitted, not a great moment for him.

The gaffe (if we must call it that) began when Jones switched from a discussion on superannuation to suddenly asking about the levels of taxation. Bowen clearly had forgotten the threshold and hedged by talking about the low income tax offset, at which point Jones said the threshold was $18,200. Bowen then suggested that the lowest tax rate was 15%, when it is 17% (15% is the rate at which superannuation is taxed).

Not surprisingly, his answer was jumped on by sections of the media. You can pretty much guarantee that next week Joe Hockey will get a Dorothy Dixer asking him something about income tax rates and why is it important to be aware of the different rates.

Of course, given Joe Hockey has repeatedly described the petrol excise as a progressive tax and also tried to argue that the top tax payer pay nearly 50% of their income in tax, he might be best to let this through to the keeper.

Indeed, so too should the media.

Bowen’s failure to remember the tax rates, similar to Julie Bishop when shadow treasurer failing to remember the cash rate, says very little about his ability as a Treasurer.

I write on taxation quite regularly and I always have to look up the rates and thresholds just to be sure. Even now, when the issue is foremost in my mind, I have to admit I can’t remember all the rates.

If it actually does matter that the Treasurer is able to answer such questions then we really should start each Treasurer’s debate during election campaigns with a trivia contest.

Just the thought of such a thing reveals how pointless it would be.

Getting figures wrong is damaging if you are doing so in the process of arguing your policy – it’s fatal if they are wrong in your policy. But getting them wrong in a random quiz? Join the queue.

The ability to remember figures is actually a tough one – I was recently in an interview on ABC radio talking about interest rates and I had a blank on what level the cash rate fell to during the GFC. A trivial matter perhaps, but the type of thing that can look like a gaffe were I a politician. 

This belief that such things are important derives, as most things with Treasurers do, from Paul Keating. He was a man who was able to pull figures seemingly at will from the recesses of his brain. He was able to convince the media – and therefore us that he was the man whom we could trust at the wheel of the economy.

Peter Costello effectively tried to clone himself into a Liberal version of Keating and he also was able to persuade voters he had the details at his fingertips – and that this was important.  

As a result ministers generally are schooled on bits of economic trivia, and they also will carry around with them little cards with figures on them to brush up just prior to speaking or going on air.

It’s all a show, really.

The last thing we should want is Hockey and Bowen or Abbott and Shorten being asked at each press conference a bit of trivia in the hope of catching them out – because that’s really what it is all about, right?

Jones wasn’t asking Bowen the question to make any policy point, but just out of hope – as occurred – Bowen would get a number wrong.

The sad truth is that when journalists ask simplistic questions about the economy and tax system such as “what is the interest rate” it generally betrays they have a simplistic understanding of the economy or tax system.

Take Jones’ question about the tax free threshold.

Yes, it is $18,200 – it was increased from $6,000 as part of the compensation from the carbon tax. But that doesn’t mean once you earn over that amount you will be paying tax.

The low income tax offset offers a $445 refund up till you earn $37,000. This means that the effective tax free threshold is actually $20,542 (a figure so forgettable, you’ll forget it the moment you stop reading this sentence).

Yet even that isn’t the final answer. The point at which you start paying more tax to the government than you receive from them in welfare payments varies greatly depending on your circumstance.

The “real net tax free threshold” is the point at which your tax liability exceeds the amount of  government cash benefits you receive. The 2013-14 budget papers showed that for a person earning the average wage, the real net tax free threshold was $23,359, but for a sole parent earning 67% of the average wage, the threshold was $60,818.

It’s quite complicated once you start looking into it.

Should Bowen have known the answer? Yes, I guess. It’s not that hard to remember $18,200 (even though I know I’d probably get one of the thresholds wrong were I to be quizzed in an interview).

I even know some journalists who actually think it is the Treasurer’s job to know such things off hand. Mostly this position is justified by their believing Treasurer must be like Keating. And they have a point – part of the job is acting in the show – the must appear like they know what they’re doing.

But, personally I’d prefer their policies to display that. 

Greg Jericho is an economics and politics blogger and writes for The Guardian and The Drum.

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