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Beware the revival of Hockey’s 2014 budget

If the Coalition wins a double dissolution election in July and gains a joint sitting of the lower house and the senate, all the elements of that disastrous 2014 budget will be passed into law and inflicted onto the Australian economy.

The 2014 budget, in all its negative splendour, will be passed after all. There will be a Medicare co-payment, the retirement age will be lifted to 70. Families, senior citizens, education, health, universities, the unemployed, low income earners, pensioners and people with disabilities, will all suffer.

Is there anyone left? Yes, the well-off; the top end of town. They will all benefit.

But it gets worse. It means even more money will be withheld from circulation, causing small business, in particular, to feel the impact of less spending in an already nervous economic environment.

Doubtless, such a move would then give treasurer, Scott Morrison the opportunity to introduce reductions in company tax (for the handful that actually pay it) and possibly even personal income tax cuts.

imagesMorrison et al, claim that cuts to company tax (for the handful that actually pay it), will stimulate productive activity thereby creating jobs. Rubbish! Productive activity comes from stimulating demand, not supply.

Personal income tax cuts introduced by way of an increase in the tax threshold for those earning $80,000 or more, would pave the way for more spending by the private sector, but without any guarantee that such money would be spent, or find its way into the broader economy.

It might quite easily be funnelled into superannuation, negative gearing or capital gains, none of which would help an economy currently crawling along at tortoise pace.

But don’t waste your time telling Scott Morrison that. His mind is made up. Company tax cuts and measures to alleviate bracket creep in the higher income brackets are all he can visualise right now. He is that short-sighted.

And so we have a clear choice. It is not so much what Labor will do if they are elected, but what we know the Coalition will do in a joint sitting of parliament, after they have been returned.

Such is the obsession this government has with returning the budget to surplus. A move so foolish, so fiscally unsound, it will drive the economy into recession.

imagesYVWBAFQKEconomics professor Bill Mitchell says, “Running surpluses (to reduce public debt and reduce the “national interest bill”) does not increase “the capacity” of a currency-issuing government to invest in public infrastructure. Budget surpluses take net spending out of the economy and therefore reduce spending growth.

They are only justified if the external sector is driving growth and the private domestic sector is saving overall at its desired level and there are first-class public services and infrastructure being provided.

In those instances, surpluses might be required to keep the economy within its inflation ceiling. Otherwise, they will reduce growth.”

None of the circumstances that would justify returning to surplus exist at the moment. Our external sector (export trade) is in decline. Our monthly trade deficits are huge by normal circumstances. The private sector has accumulated massive debt and our infrastructure (NBN, fast rail, etc.), is, by world standards, second rate, or non-existent.

aa5Treasurer Scott Morrison is out of his depth. Malcolm Turnbull is a captive of the hard right conservative element in the government. He is being bullied into submission. He is weak.

The message the electorate needs to hear, is that if the Coalition is returned, the majority will suffer economically. That is not an opinion, it is a fact-in-waiting.

A Coalition victory in July and the subsequent revival of the 2014 budget measures will ensure that happens.

33 comments

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  1. Matters Not

    The 2014 budget, in all its negative splendour, will be passed after all. There will be a Medicare co-payment, the retirement age will be lifted to 70. Families, senior citizens, education, health, universities, the unemployed, low income earners, pensioners and people with disabilities, will all suffer.

    Not sure about that. My understanding is that only the Bills rejected twice can be voted on in a joint sitting.

    Wiki:

    If, following the election, the new Parliament is still unable to pass the bill, it may be considered by a joint sitting of the House of Representatives and the Senate, and must achieve an absolute majority of the total number of members and senators in order to pass. The only example of this occurring was the Joint Sitting of the Australian Parliament of 1974 under the Whitlam Labor government, at which six deadlocked bills were passed.

    If the Senate rejects the two Bills currently before it, there will be only three Bills that will qualify for a joint sitting.

    That may well be true MN. But were they to gain control of the senate it would be a slam dunk.

  2. Michelle Petrat

    100% correct. That the old budget hasn’t been condemned to the scrap heap, should be a warning to all. I still fail to see how middle and lower income earners vote against their best interest and the country. But that is what it looks like if you believe the polls. (I personally think they are rigged but that is my opinion). The weak, spineless Turnbull is a hollow shell without ideas. How the MSM have glorified his “BOLD” move to call a DD is beyond understanding. The guy is gutless, spineless (but not spinless) and without any ideas for Australia as a country. He is waffle and meaningless slogans, stolen from others ideas. When he spoke to Leigh Sales (not with Leigh Sales!) he went on how bad Labors ideas are, not his detailed vision for Australia. I could go on and on but I think I feel sick right now. KLAUS

  3. John Hermann

    Bertrand Russell once said that the stupid are cocksure, while the wise are uncertain. It was ever thus.

    I am also reminded of a quote from Nobel-laureate Richard Feynman: “I would rather have questions that can’t be answered than answers which can’t be questioned”. This statement has an obvious application to economic policy, which – in almost every country – is infested with neoliberal group-think.

    Incidentally it is not only Scott Morrison who is out of his depth. The reality is that much of the opposition, in addition to the entire government, are out of their depth on a range of economic issues. The basic reasons being that that they have little or no understanding of how the monetary system operates, and are captives of the propaganda generated by powerful vested interests. In particular, the neoliberal spin disseminated by financial and bank economists.

  4. Neil Hogan

    Yes, but if they control both houses after a DD election they can do anything they like & they will…well they will try anyway!!

  5. gee

    it’s not so much about being “out of their depths” but more about being willfully ignorant about the monetary system. every politician that tries to tell you that a sovereign currency issuing government is like a household should be hounded out of parliament for abject stupidity.

    And every person that falls for it needs to be pointed towards google and told “educate yourself you ignorant f*ck”

  6. Matters Not

    Neil Hogan. There’s a big ‘if’ in your statement. I think it’s unlikely that they (LNP) will control both houses. It’s likely that, with a double dissolution when the quota is halved, there will be the odd independent or two who will be elected in the Senate. Back to square one?

  7. Möbius Ecko

    Indeed Matters Not, the Greens and Xenophon supported the voting changes because they believe it will advantage them. Xenophon’s little independent party expects to pick up extra votes.

    Also thinking the Libs will get control of the upper house assumes the preferences that would have flowed to the micros will now go to the Libs. There’s a chance that might not happen.

  8. Kaye Lee

    At the moment. the composition of a joint sitting would be 123 Coalition and 103 not – the bills would be passed. If, however, the Coalition were to lose ten seats overall in the election – HoR and Senate – it would be a dead heat. Any more than ten and they won’t have the numbers at a joint sitting unless others side with them.

    The Coalition have six Senators in NSW, QLD and WA and five in SA. Hopefully at a DD, those numbers will be trimmed down, particularly after this disastrous government performance with their blatant bias towards business at the expense of society.

  9. Aortic

    Turnbull said upon attaining the position that Abbott was not articulatiing clearly his economic strategy for the country. Since then we have had endless “innovation” “technology” ” transitioning” ” jobs and growth” ” continuity and change” and the most ethereal of all ” productivity.” Waffling from a Prime Minister with no more of an economic grasp or vision than his predecessor, or indeed any of his front bench. If there is another global financial crisis as some pundits predict I guess we will have to look to the Deputy PM who proudly proclaims he is an accountant. My only misgiving with Barnaby is when he was appointed opposition Finance spokesperson by Tony Abbott he got his net debt mixed up with hair net and his billions with his Brazilians. Scary times indeed.

  10. Jaquix

    I think they will produce a very beige budget in 2016, one they think will offend nobody and improve their election chances, but which they would ignore if they were re-elected. They have form; they ignored virtually all their 2013 election promises.

  11. John

    “It is mainly anti-labor austerity advocates who urge balancing the budget, and even to run surpluses to pay down the national debt. The effect must be austerity.

    A false parallel is drawn with private saving. Of course individuals should get out of debt by saving what they can. But governments are different. Governments create money and spend it into the economy by running budget deficits. The paper currency in your pocket is technically a government debt. It appears on the liabilities side of the public balance sheet.

    .. what passes for today’s mainstream trade theory is basically an argument for reducing wages and fighting a class war against labor.”

    Michael Hudson http://www.counterpunch.org/2016/03/23/junk-economics-and-the-parasites-of-global-finance/

  12. Möbius Ecko

    “It is mainly anti-labor austerity advocates who urge balancing the budget, and even to run surpluses to pay down the national debt.”

    Omnipoll begs to differ. In a poll that found that on 3% of voters favoured company tax cuts it also found that equally the majority of Coalition and Labor voters thought that repairing the budget and getting it back to surplus was a high priority for the government.

    Murdoch’s job done.

  13. Kaye Lee

    They are busy reannouncing things that Labor budgeted for, and partially restoring funding to a couple of things they previously slashed funding from and we are supposed to be grateful. My local member is claiming credit, not only for things that Labor announced, but also things the state and local governments have fought for and funded. But there she is, smiling next to the plaque…or at the local railway station handing out Easter eggs that we no doubt paid for. All accompanied by photos on her facebook page. Policy discussion is rigorously avoided – needless to say she banned me long ago.

  14. Kyran

    Putting the ‘political’ aside for a minute, it is the ‘private’ debt that concerns me most at the moment. Back in the late 80’s and early 90’s, we had a recession because we had to. The Reserve Bank cash rates were at 18%, the bank’s were relying on drive by valuations (by their branch managers) to justify loans that were, at best, dubious. The result was a serious downturn, reflected by the cash rate at the end of 1990 being 12%.
    The bank’s, at the time, used a book keeping trick. If you don’t call in a bad debt, it remains on your books as an asset at full face value. They did the same thing at the time of the GFC. That went well.
    This morning, articles started appearing announcing ANZ had increased their bad debt provisions by $100mil, having previously increased their bad debt provisions some months ago. Westpac is implicated, as is NAB. They have kept their bad debt provisions very low and used the increased solvency rates required by APRA as a justification. According to various press items, this has allowed them to declare ‘profits’ at increasingly obscene levels, based on the premise that all of the money they are owed will be repaid. Whilst the cause of the most recent declarations is the ‘commodity price crash’, I can’t help but wonder how this could possibly occur when the cash rate is 2%.
    Given the level of incompetence of this government, they would see a tsunami wave and decide to go surfing (which I wouldn’t mind). I suspect Bernard Keane, may be right, one more time. My hope is that this rooster comes home to roost, before the next election. All of the indicators are ‘sooner rather than later’, in my opinion. Thank you Mr Kelly, take care

  15. susan

    Turnbull is out of his depth in everything to do with being PM. How stupid is it that he goads ISIS to test Australia’s great Border Force? If the LNP are returned to government, there’ll be a different issue to march against every day for three years.

  16. Kaye Lee

    COAG coming up next week and the Premiers have NO idea what’s going on…..

    “With Abbott, you didn’t like it, but at least you knew what he was doing,” one state representative said.
    “With this bunch, it’s a different answer depending on who you talk to. It’s chaos.”

  17. Wayne Turner

    Yeap.All true.

    Only the MEGA RICH or MEGA STUPID will vote for this lot.Sadly,we know there are alot of and more of the MEGA STUPID in this country.

    Plus,if this happens.Expect a return of a GST broadening and/or increase.Work Choices 2,etc,etc,etc….

    Tony Turnbull and this mob are just LIARS,and puppets for their BIG BUSINESS BRIBERS.

    WAKE UP AUSTRALIA!

  18. z

    most likely the GST Hike will be back after election, because tax whole nation with it much easier than tax top end of the town.
    tax people with living cost plus GST to fund business tax cut was a original intention which backed down only because the election pressure

  19. Kaye Lee

    Who would take their investment advice from the Coalition.

    As they tell us coal and oil are our future, ANZ is preparing to write off $100 million because of bad debts from coal and oil with other banks also sounding nervous.

    As they tell us we need more investment in housing, Australian banks are the most exposed in the world to housing debt.

  20. diannaart

    Excellent article, John K

  21. Terry2

    just on the Medicare co-payment that we had assumed had been rejected by the Senate and was not law, that may be correct, in part.

    You may also be aware that the government froze Medicare refunds until 2018, this has meant that many GP’s have imposed their own charge for bulk-billing and, of course, if you are not bulk billed you are already paying roughly 50% as co-payment : the Medicare refund on a $75 standard consultation is $37.05. so you are out of pocket $37.95.

    This government are committed to causing as much damage to the Medicare system as they can.

  22. Kaye Lee

    Who in their right mind would fund Adani?

    Mind you, George Christensen is still rooting for them.

  23. Möbius Ecko

    “Who would take their investment advice from the Coalition.”

    Remember their sterling investment advice to universities?

  24. Gangey1959

    If the ABCC legislation is NOT passed by the Seanate, does the GG have to do what Kerr did in 1975 and dissolve Parliament. It is not as if supply has been withheld as was the case then?
    I don’t know or understand, but there are people on here who do.
    To coin a phrase, “Please explain”

    Gangey, the short answer is, no. But Bacchus has it pretty well covered.

  25. Bacchus

    Gangey1959 – 1975 was a bit different in that it was the leader of the opposition who was requesting the GG to dissolve the parliament. In the normal course of events, the GG has to take the advice of his prime minister on board before deciding to grant a double dissolution of the parliament. He needs to have good reason, backed up by legal opinion, NOT to follow that advice.

    A prime minister can ask the GG to dissolve the parliament to resolve a deadlock between the HoR & the senate – the argument goes, “we can’t get our bills through the upper house as they’re obstructing our legislative program – we need to invoke the provisions of a double dissolution election to resolve the deadlock.”

    These people may be able to explain it in more detail than I can… http://australianpolitics.com/parliament/deadlocks/double-dissolutions

  26. Wally

    Would be very interesting to see how Turnbull and the LNP handle the revolt that is destined to happen if they win the next election.

    Just saying if these dickwits actually achieve their goal because so many aussies vote for politics the way they support a footy team (bred to be a ??? supporter) what will they follow when their work mates, friends and their peers hit the streets opposing the right wing, righteous neo liberal capitalist pigs???

    Like all movements before they will take the side that is in their best interests,

    I say to Howard (the instigator), Abbott (the bully) and Turnbull (man full of bull), bring it on!

    Lets see if you can live in the dark waddling around knee deep in the shit.

  27. Pingback: Beware the revival of Hockey’s 2014 budget | THE VIEW FROM MY GARDEN

  28. townsvilleblog

    On the Senate ballot paper I will be beginning below the line marking the LNP in places 11 and 12, the Independent Glenn Lazarus and Kerrod Walters at numbers 1 and 2, the ALP at 3 and 4 and the Greens at 5 and 6 and then fill in the rest by preference, I don’t want to see the expected LNP majority in the Senate.

  29. nurses1968

    townsvilleblog
    I too have been playing around using 2013 candidates
    Mine would be {based on that}
    Socialist Alliance 1&2
    Wikileaks 3&4
    Pirate Party Australia 5&6
    Labor 7 to 12 .
    I don’t expect any of my top 6 choices to win so my preferences will go on to Labor, then exhaust.
    I have convinced many workmates to do the same

  30. laramelia

    townsvilleblog, I don’t understand why you’d give the LNP any spot at all. Leave them out

  31. Michael

    ISIS goad = Tampa & children overboard ????

    Scraping below the bottom of the barrel = desperation ???

  32. Rais

    The Joint Sitting would be able to resolve the deadlocked Bill, not other matters. Polls at the moment suggest that the new House of Reps would have a much smaller Coalition majority. The state of the new Senate is not predictable but one almost certain result is that neither major party will be even close to a majority. Any Bills submitted to it, including the matter to be resolved in the Joint Sitting, would have to be negotiated through a new crop of crossbench Senators, something the Coalition has proven remarkably poor at in recent years. A couple of the current micro party Senators may get back with the reduced quotas of a full Senate election and they would be unlikely to look kindly on any extreme measures from a reelected but weakened Coalition. Even Xenophon with two or three new Xenophon Team Senators behind him might drive some hard bargains. Xenophon might even have one or two new members in the Reps, as might the Greens.

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