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Joe Hockey, if you want to save some money here’s a thought . . .

Is Joe Hockey giving me the thumbs up? (image by dailytelegraph.com.au)

Is Joe Hockey giving me the thumbs up? (image by dailytelegraph.com.au)

Joe Hockey went into the 2013 election complaining about Australia’s level of debt.

The country isn’t short of excellent economists who have some practical ideas on how it could be managed but Joe Hockey isn’t listening. He wants to do things his way and as Kaye Lee in this guest post shows, it might be an idea to take note of what the experts have to say as they’ve found lots of easy money for him.

My mother always told me that criticism should be constructive and that “if you aren’t part of the solution you are part of the problem”. I know this government feels we have a debt and deficit crisis and a budget emergency so, in the interest of making some helpful suggestions, I decided to share with you some thoughts I have had.

If I was benevolent despot I would . . .

Leave the fixed price on carbon until 2015, as was originally suggested. After all, as Steven Koukoulas points out, carbon pricing has had almost no impact on the macro-economy and inflation remains very low. Add to that the fact that emissions are falling and renewable energy generation is growing.

According to PEFO (Pre-Election Economic and Fiscal Outlook), with a fixed carbon price of $24.20/t of CO2 emissions, projected revenue for 2013-14 is $6.475 billion. If we left the fixed pricing until 2015, as originally intended, we will receive revenue of approximately $13 billion dollars over those two years.

Joe Hockey could scrap the Direct Action Plan because it won’t work, and save $3.2 billion over the next 4 years plus have a far better chance of meeting our targets.

Keep the Clean Energy Finance Corporation as they are making a profit of up to $200 million a year and are financing clean energy initiatives which will assist us in meeting our Renewable Energy and Emission Reduction targets. They are reducing emissions whilst making us money.

After all, there is no guarantee that electricity prices will go down if we remove the carbon pricing.

Joe Hockey could keep the mining tax. PEFO estimated an income from the MRRT (Minerals Resource Rent Tax) of $5.95 billion over the next 4 years. It is impossible to accurately predict future revenue but, even if it is half what is projected, that is still three billion.

Keep the changes to the FBT (Fringe Benefits Tax) that require claimants to provide proof of their car business use by filling in a log book once every 5 years. This tax concession costs us $1.8 billion dollars and will not change entitlements, only the way they are calculated and claimed, so genuine business use will be unaffected.

Keep the means test on the Private Health Insurance Rebate as that will save us $2.4 billion over three years by removing the concession from those earning over $260,000 a year.

Keep the tax on annual superannuation payments of over $100,000 per year which will raise us a projected $313 million over 4 years. I know the super funds have suggested it would be hard to implement but I am sure a scheme could be worked out with the ATO (Australian Taxation Office) and the funds if they put their minds to it.

Keep the superannuation co-contribution to low income earners. The Productivity Commission has identified the old age pension as a future burden that is becoming unaffordable. As low income earners are the most likely recipients of the old age pension, it is worthwhile encouraging them to invest something towards their retirement.

Keep the current paid parental leave scheme. The Productivity Commission said that replacement wage PPL (Tony Abbott’s Paid Parental Leave scheme) “would have few incremental labour supply benefits” and was too costly.

That would save us $5.2 billion dollars a year, and the proposed increase in company tax can be either scrapped, or used in the childcare area which is much more important in improving productivity and addressing the needs of parents.

Keep the funding for the Alcohol and Other Drugs Council of Australia. Its $1.5 million annual funding seems a pittance to invest considering Aussie youth’s battle with booze and drugs, and that $32 billion a year of taxpayer dollars is spent dealing with alcohol, illicit and prescription drug abuse, and that alcohol related crime occupies 60 per cent of policing resources.

Keep the National Crime Prevention Fund which distributes money confiscated from the proceeds of crime to various charities, communities and local councils. Organisations like the PCYC (Police-Citizens Youth Club) and Father Chris Riley’s Youth Off the Streets do a great deal to help keep young people out of gaol and surely this funding is less than the direct and indirect costs of incarceration.

Keep experienced public servants rather than hiring consultants, implement the recommendations of the reviews that have already been carried out, and get advice from the departments we already have like Finance, Treasury, the PBO (Parliamentary Budget Office), the Productivity Commission and Infrastructure Australia. Reinstate the Climate Council and refund the CSIRO. Considering the 5 person panel for the Commission of Audit costs us $7500 a day for their wages alone, we should save a motza and be far more likely to get actual ‘independent’ advice.

Increase our humanitarian intake. Negotiate to set up refugee processing centres in Malaysia, Indonesia and Sri Lanka. Speed up processing, and fly successful applicants to Australia and assist them to become productive members of our society. Increase foreign aid and combat human rights abuses so less people need to flee their country. This has to be cheaper than using our Navy to patrol for fishing boats, detaining people indefinitely, and transporting people to offshore detention centres which cost a fortune to run.

Tighten up on Parliamentarians’ expense entitlements. According to the Department of Finance, taxpayers forked out approximately $54.5 million in parliamentary expenses from June to December last year. That suggests an annual cost of  over $100 million a year for 234 MPs.

Oh and get back the $8.8 billion present we gave to the RBA (Reserve Bank of Australia), who weren’t expecting it and didn’t need it. Borrowing that money is costing us $300 million a year in interest. Gambling on exchange rates gaining you a profit in time for the next election may be OK if we had spare money, but we don’t, so let’s get our priorities right.

Of course, nearly all of these things could have been achieved by leaving Julia Gillard in charge, but we didn’t.

I have only spoken about the financial side of these decisions. I have left aside any discussion of responsibility, morality, priorities or equity. That would take me volumes. My main aim has been to try and help find some money.

Now may Joe Hockey, could we please have the full Gonski reforms and a proper NBN?

Kaye Lee

 

24 comments

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  1. mikestasse

    I don’t have a problem with any of those suggestions……… BUT, you have to realise that debt ALWAYS grows faster than GDP. Growing debt is an unsolvable problem. IF you want growth, then you have to have debt. It’s that clear cut. The problem with debt is that interest is charged on it. Compound anything ALWAYS catches up with you eventually. It is just a matter of time. So all the above suggestions might work in the short term…… but the problem will not go away.

    The ONLY solution for debt is CANCELLATION.

    http://damnthematrix.wordpress.com/2013/12/05/every-time-history-repeats-itself-the-price-goes-up/

  2. Kareen Carberry

    All common sense and very helpful ideas but alas! politics will determine these matters not what is best for the country.

  3. Bacchus

    Government debt is an optional and unnecessary indulgence. It’s all about corporate welfare – there is no logical reason why deficits must be backed by debt…

  4. lawrencewinder

    What a beaut read. But as KC said “…politics will determine these matters not what is best for the country.”
    Joe “Cereal-Killer” Hockey will run on ideology not common sense.

  5. John Fraser

    So, in essence, what you are saying is keep the policies that Labor put to Australians at the September 2013 election.

    Works for me !

    “Murdoch and Abbott lied to Australians”.

  6. dave the brickie

    What a boofhead Sloppy Joe is.Said the best way to help the car industry is to scrap the carbon tax.G M’s take on it is that would save ……….$45 per car……,half a tank of petrol on a $40,000dollar purchase.His two conservative brain cells must have worked overtime on that one.When are these goons going to realise that you can no longer hide from the interweb.

  7. Matto Graham

    Fund-cut money to line the fat bastards pockets, along with Abbotts, the rest of the Liberals and the likes of Murdoch and Rinehart. At least, that’s what it sounds like to me, that’s what it always sounds like.

  8. M. R.

    Congratulations on coming up with such a well-researched piece. Fair makes yer weep but.

  9. Doug

    Remove all tax concessions from religious owned property, businesses and services. That would wipe out the debt in one year.

  10. mikestasse

    Unfortunately, from reading the comments here, nobody “gets it”. And neither do Hockey and Abbott (Abbott in particular who admitted he has no clue at all about economics)

    Yes I agree Hockey’s a boofhead (he’s way out of his depth as a treasurer), yes I agree “Murdoch and Abbott lied to Australians”, but what almost everyone here fails to understand is that the system is fundamentally BROKEN.

    I don’t worry about government debt at all. Nor do I worry about the deficit. They are all manufactured human constraints.

    The REAL problems are growth and the way money is created as debt to feed it. Until you lot give up the “Labor is the solution” mantra and look at the big picture…….. NOTHING will change, because Labor’s masters are the same as the LNP’s. The Oligarchs.
    http://damnthematrix.wordpress.com/2013/12/05/every-time-history-repeats-itself-the-price-goes-up/

  11. OzFenric

    MikeStasse, fundamentally I agree with you. In all areas of nature – biology, chemistry, populations and evolution, as well as economic growth – there are constraints on the system. Put a couple of bacteria on a petri dish full of sugar and they’ll happily make a few billion babies before they all die, suffocated on their own wastes. Human society is likewise constrained.

    Humanity has so far been able to forestall the collapse through technical innovation and constant change. We move the goalposts and every time we’re getting near a cliff we adjust, sometimes painfully, onto a different level and we can keep growing.

    The constraints in the current system are the availability of energy – energy has a cost in both monetary and socio-environmental terms – and the inequity of money, whereby the few have prodigiously more resources than the many and the poor lack the power to effectively reverse this. In terms of capital, neither the Coalition nor Labor are likely to be the ones to help us transcend the constraint; as you say, both are beholden to the big corporations and the priority-defining power of money. But in terms of energy, humanity is reaching for the next level and I think it likely we’ll achieve it. The question is how much damage we have done, and will do, before we can reach the next plateau. In this area, the Coalition’s approach is clearly the more recidivist and we have justification for saying that Labor is a [potential] solution – not that Labor can fix the problem, but that it contributes to humanity’s efforts to dig itself out of the hole it has created by digging holes.

  12. John Fraser

    <

    @Mikestasse

    Agreed, the ALP "right" has to be bought to heel.

    And there are those in the ALP who are fighting them.

    That's who we should be supporting.

  13. mikestasse

    @OzFenric…. But in terms of energy, humanity is reaching for the next level and I think it likely we’ll achieve it.

    NOT EVEN CLOSE……………..

    The best we can EVER hope for is 10% of the energy consumption we currently have. And industry and commerce cannot be allowed ANY of it.

    Even people in the mining industry know this………. they’re just not telling, wouldn’t want to scare the little kiddies now would we…. But there is one person who has let the cat out of the bag….

    Dr Simon Michaux has a Bach App Sc in Physics and Geology and a PhD in mining engineering. He has worked in the mining industry for 18 years in various capacities. He has worked in industry funded mining research, coal exploration and in the commercial sector in an engineering company as a consultant. Areas of technical interest have been: Geometallurgy; mineral processing in comminution, flotation and leaching; blasting; mining geology; geophysics; feasibility studies; mining investment; and industrial sustainability. This is what he has to say……:

    http://damnthematrix.wordpress.com/2013/08/09/conventional-thinking-is-over/

  14. johnbkelly

    For someone who tried to tell us we had a budget emergency, Joe Hockey’s actions post election are strange indeed. I suspect, as time passes, the deteriorating state of the Australian economy will force some degree of re thinking. If not….????

  15. oldfart

    so you are advising the coalition to just follow the schemes and policies of the previous government and they should be fine.

    Funny that.

  16. Anomander

    None of these suggestions will ever see the light of day because the Libs are not interested in governing for all. They in in government to pay back their wealthy mates for their support and to implement their ideology.

    The issue is debt is the simplest of equations Income vs Expenditure. Over the years successive governments have permitted our income streams to be perpetually eroded by tax concessions, write-offs and hand-outs – predominately to big business, while feeding growth in expenditure. But none have had the guts to tackle the necessary increases in taxation to counteract the loss of income.

  17. diannaart

    How is asking:

    “Now may we please have the full Gonski reforms and a proper NBN?”

    Indiscriminately supporting Labor? Did Kaye Lee suggest anything of the sort?

    No.

    KL provided a pragmatic approach to achieving two solid, well researched policies which would see Australia well equipped into the future with regard to education and communication.

    It is not necessary to object to everything a political party introduces, any more than than it is to agree with an entire ideology.

    For example, there are LNP policies I agree with….. John Howard’s gun laws…. and…. Malcolm Turnbull in support of the Carbon Reduction Scheme in 2009… well until December 2009 when he was replaced by Abbott… must think of something else where the Libs did good…again Malcom Turnbull supported the full NBN until…. sheesh… this is harder than I thought…. will get back to y’all when I can actually present something constructive that the LNP has done for Australia. Won’t be long… bye for now.

  18. Kaye Lee

    oldfart,

    I am not saying that Labor got everything right at all. My views on how to deal with asylum seekers for example are most definitely NOT what Labor was suggesting. What I cannot fathom however is why you would deliberately cost this country money repealing good legislation just because you didn’t come up with the idea. That is called cutting off your nose to spite your face.

  19. Fed up

    Well next Tuesday is the day, we find out how bad Labor was. Listening to Hockey, one would think Labor was still in charge.

    Why not this week, when questions could be asked in the house?

  20. John Armour

    “IF you want growth, then you have to have debt.”

    Not so Mike. This discussion is about Federal Government spending where there is no balancing entry under liabilities, despite appearances. The issuing of bonds has nothing to do with “debt” per se.

    Your comment is valid only in the context of private sector borrowing from the banks.

  21. John Armour

    Anomander,

    I don’t disagree with your feelings about the Liberal Party but while ever you’ve got this picture of federal finances being like those of a fish and chips shop you’re missing the big picture.

    Do you accept that the government is the monopoly issuer of the currency ?

    If so, the next question is why would the government need “revenue” to fund its spending when it can create it by just crediting, say, a contractor’s bank account with a keystroke ?

    The government does not borrow from the private sector to fund its spending. It just looks that way.

    When you understand that the only remaining logical purpose of taxation is to control demand in the economy you may legitimately question why certain operators in the economy get let off from this chore. It’s got nothing to do with revenue gathering.

    The end result may be the same (you get shafted) but having this insight enables you to then look at budget deficits and understand how they put the money straight back in your pocket.

  22. Bacchus

    Ahhhh…John, you’re like a breath of fresh air here. Who opened the macro-economic door? 😀

  23. Roswell

    I have a fair idea who. 😉

  24. Kaye Lee

    Joe, another good suggestion, this one from Christine Milne.

    We should also do something about the diesel fuel rebate for off-road use.

    “Everyday Australians who pay 38c a litre in tax when they fill up at the bowser probably don’t realise that mining giants like Xstrata and Gina Rinehart’s Hancock, which make billions of dollars in profits every year, pay only 6c a litre in tax for the huge quantities of diesel they use. That’s simply not fair.”

    “These costings from Treasury show that, simply by making the mining giants pay the same tax on the fuel they use that you and I do, we could raise $5.1 billion in the next 3 1/2 years.”

    Considering the article linked below it only sounds fair, don’t you think, to have the mining companies contribute something back to help as they send other manufacturers and exporters broke whilst sending their profits largely offshore.

    http://www.whocrashedtheeconomy.com/

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