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MYEFO, a tale of incompetence

What a tale the 2016/17 December MYEFO tells. And it’s not what the Treasurer is saying. Firstly, Scott Morrison is projecting a return to surplus in 2020/21 which is unchanged from the pre-election update.

What he isn’t saying though, is that the likelihood of this actually happening is next to zero. Thankfully, that’s not an issue because a surplus budget is the last thing the Australian economy needs right now, or indeed in four years’ time.

Next, the budget deficit is projected to fall by a paltry $600 million this year to $36.5 billion. That saving comes at the expense of pensioners, the disabled, the Green Army and the unemployed. But again, it probably won’t be realised.

That $600 million saving would otherwise have been spent by the recipients buying food, household items, travel, transport and other demand driven needs. That saving does even more harm to the economy.

Next, net debt is projected to peak at 19% of GDP by 2018/19. Who cares? Our debt is issued in Australian dollars and can always be repaid. We can continue to issue bonds till the cows come home and never run out of money.

We can, however, run out of resources. That’s where growth comes from. That’s what we should be looking at, not the debt. Our unemployed are an unutilised resource who create additional demand and a boost to our productive output. The fewer people working the less demand for goods and services.

Meanwhile real economic growth estimates have been revised down. There’s a contradiction here that seems lost on the Treasurer. Tax receipts are down $3.7 billion since the June pre-election budget. That’s because wages growth is virtually non-existent and with the increase in part-time work, people are working fewer hours.

The contradiction?  The government has fought tooth and nail to prevent wage increases for the lowest paid and is now suffering the consequences of revenue write-downs in tax receipts from low wage growth. Talk about scoring an own goal.

What is of no concern is this constant talk about what the ratings agencies might do. Who cares? The ratings agencies are irrelevant to the success or otherwise of the Australian economy.

The interest rate for our bond issuance is determined by the government, not the ratings agencies. Regardless of any determination by the ratings agencies, our bonds will always attract both local and international support, whatever rate the government sets.

Not that we need to issue bonds in the first place, but that’s another story.

What this MYEFO tells us is that the government and Scott Morrison are incapable of managing our economy in a way that will bring an improvement to the living standards of most Australians.

They are collecting less and spending more but not where it actually leads to anything. Where is the investment in the future? How often have these pretenders been falsely warning us that today’s debt is a burden on future generations?

The reality is the reverse. Today’s lack of infrastructure spending is the burden we leave future generations. It is our grandchildren who will suffer the burden of ageing infrastructure, insufficient hospitals, poor public transport and communications.

With this kind of thinking, our economy is destined to decline further, with or without any international events impacting.

44 comments

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  1. paulwalter

    Quite simple really. Cut defence spending on junk and make the energy sector and the tax dodgers pay their royalties/dues. Maybe shut down Nauru and reform Neg Gearing, for cream on the pie. Am sure many others will add to the list.

  2. Andrew

    Stop subsidising mining companies for the fuel they use while they make huge profits.

  3. David1

    Scrap the contract with the Americans for their overpriced delayed new F35 fighter aircraft before Trump does.He has said “The F-35 program and cost is out of control,” he tweeted.
    “Billions of dollars can and will be saved on military (and other) purchases after January 20th,” referring to the day he becomes president.
    Like the French made subs, the Govt has gone in like a bull in a china shop, blank cheque book in hand with no idea of what final costs will be and what they are getting for billions and billions of tax payers cash
    The know nothing Minister Pyne, who never admits a mistake remains pig headed defiant
    http://www.sbs.com.au/news/article/2016/12/13/pyne-defends-jsf-choice-after-trump-attack

  4. Miriam English

    ♦ Move subsidies from the dying fossil fuel industries to the growing renewable energy industries and invest more in energy efficiency — doing more with less.
    ♦ Start investing in our children, our workers, our scientists and engineers, our intellectual capacity.
    ♦ Look after our rapidly diminishing, unique, and increasingly valuable wildlife.
    ♦ Nationalise public transport again and make it free. There would be big savings in no longer having to pay for policing tickets and running accounting systems. It would encourage people to use cars less, bringing a great drop in demand for fuel, would make every Australian richer, especially those with jobs, and would boost shops and other businesses.
    ♦ Spend more on hospitals and GPs and Medicare. It’s cheaper to prevent medical problems than to fix them afterwards, and cheaper to fix medical problems than to lose valuable workers, and valuable members of families.

    Just a few suggestions…

  5. Möbius Ecko

    Two areas that have been cut are the Green Army and business subsidies to hire the unemployed.

    Anyone not believe this government has completely lost the plot.

  6. MichaelW

    C’mon John, they managed to reduce the budget deficit by six hundred million dollars, credit where credit is due.
    Now, at this rate with a thirty six billion dollar deficit it should only take urm, (maths was never my favorite subject at school) a few years to bring in a surplus, or is that decades, centuries?

  7. jimhaz

    [We can, however, run out of resources. That’s where growth comes from. That’s what we should be looking at, not the debt. Our unemployed are an unutilised resource who create additional demand and a boost to our productive output. The fewer people working the less demand for goods and services.]

    And the best way to resolve that is to cut immigration so that it does not increase the population, only stabilises it.

    We have industry doing the training and they would need to train the unemployed.

  8. jimhaz

    T[wo areas that have been cut are the Green Army and business subsidies to hire the unemployed.
    Anyone not believe this government has completely lost the plot]

    ?

    Neither should have existed in the first place, except the latter in relation to disabled folk.

  9. pierre wilkinson

    It seems to me that Labor provides, Liberals deprive…. except if you are already quite wealthy. When will these fiscal incompetents realise that providing spending money to the less well off boosts the economy more than giving tax breaks to the well off?

  10. Freetasman

    And Morrison said, quote: “despite the deficit and debt legacy which was left to us by the previous government”
    Which party was in charge on the previous government? Please explain.

  11. Kronomex

    Morriscum and Corterminator Dodgy Accounting Corporation. No fudging too big and no clue even bigger.

  12. Terry2

    So, the Green Army is being scrapped : so kids who were on the dole and joined up in the Green Army and did something useful for the environment will now return to the dole.

    Who’s the genius who thought that one up ?

  13. Kyran

    “What this MYEFO tells us is that the government and Scott Morrison are incapable of managing our economy…”
    There were these ‘Monty Python’ sequences, from another era. Whether it be ‘the knight’s of ‘ni” or the ‘Black Knight-it’s only a flesh wound’ sequence. There is one inescapable similarity to MYEFO. Deny the reality, and provide a distraction. A new scary word. ‘Ni’ is so passe.
    However many times these gits may tell you ‘it’s Labor fault’, they cannot escape the reality that ‘the adult’s’ have been in charge for more than three years. They have produced nothing more than excuses as to why their ‘adult’ery’ is little more than adultery. In their mind, notwithstanding the absence of their mind, getting shafted by the big end of town is not only acceptable, it should be condoned and encouraged, as if they were betrothed..
    We have systemic failure’s in our budget. Not just Rudd/Gillard. Howard/Costello are far more likely contenders. But look over there. This bloke will explain ‘wibly-wobbly’. Oops, that was cormann, the very definition of wibly-wobbly.
    Things ain’t looking good. Not since the adulterers got in charge.
    Thank you Mr Kelly. Take care

  14. jimhaz

    One bit of good news about privatisation:

    Government abandons ASIC registry sale

  15. Andreas Bimba

    Labor also has a fiscal policy of balanced federal budgets so in this vital area they are the same as the Conservatives. Labor does however offer less tax cuts for big business, less tax concessions for the wealthy and higher levels of government spending on education, healthcare and social support and so are more socially inclusive and moderately less economically contractionary than the appalling Conservatives.

    The answer however is not balanced federal budgets at a time of mass unemployment and economic contraction but well planned economic stimulus and a Job Guarantee program that ensures full employment. Many of the world’s governments understood this at the time of the Great Depression and there is no valid reason why this cannot be done again.

    This article details how Germany used fiscal stimulus, which had as a major component public works programs, to reduce unemployment from 43.8% of the industrial workforce in 1933 to almost full employment in 1938 without significant inflation or debt being incurred:

    socialdemocracy21stcentury.blogspot.com.au/2011/09/fiscal-stimulus-in-germany-19331936.html?m=1

    A similar story was happening at the same time in New Zealand:

    http://socialdemocracy21stcentury.blogspot.com.au/2011/09/keynesian-stimulus-in-new-zealand.html?m=1

  16. win jeavons

    jimhaz’ 2019 next election?

  17. Darren

    @jimhaz

    re: 9.6% increase in welfare spending in 18/19

    Buying votes prior to the next federal election?

  18. Jennifer Meyer-Smith

    Quite right, John Kelly.

    We need Labor economic voices like Andrew Leigh to come out and call Snotty out for his total ignorance on what is important and what is not.

    Labor leaders must expunge the myth of the need for a return to a surplus by defeating the debt and the deficit.

    Same goes for the Greens. Di Natale and Wish Wilson should be out there refuting the debt and deficit doomsday talk and the need for a surplus.

    This is where The ALLiance would work beneficially for the voices against the LNP ignoramuses, who wouldn’t know how to scratch their own belly buttons.

  19. Darren

    @Andreas Bimba

    That is true (currently) for the Labor Party regarding “balanced budgets”, but that’s mainly due to their right faction dominance. That dominance is fading, so the policy may fade too. It’s a very neoliberal thing, and they could be excused for landing on those policies in times gone by, but more recent experience has demonstrated it to be a failed ideology, and the antithesis of the “fairness” for which all Labor (should) stand.

    I’m not holding my breath, but I am crossing my fingers 🙂

  20. Jennifer Meyer-Smith

    Well done, Kyran.

    Again, you’ve found an appropriate description for the LNP Degenerates by describing them as “the adulterers”.

    Hokey said “the adults are in charge”. We say “the adulterers”.

    That has a special double meaning considering we know they have no clue or even a desire to bring solutions to our economic malaise, while many in the LNP pretend to be upstanding citizens, who would not wish us to suspect their gross, base personalities.

  21. Jennifer Meyer-Smith

    Darren,

    when the neoliberalist, Right faction of Labor fades away, True Labor will return and win back many lost hearts and minds.

    Needs to be quick though, before people lose any remnant respect or interest.

  22. totaram

    It’s simple. According to their own yardsticks these people have failed. However, it should be pointed out that it is their yardsticks which are fraudulent. But alas, that will not happen and once again we are treated to the news from the ABC faithfully regurgitating the neoliberal mantras and discussing how soon the budget can be brought back into surplus! No discussion of why these crooks, who know that the surplus budget is just a ruse for cutting govt. spending on socially necessary items, cannot improve their bottom line by increasing taxes. No discussion of why it is a spending problem only (to cut govt spending on socially necessary programs of course). How these people just get away with it because of wall-to-wall propaganda is just amazing. And the sad part is that the poorly informed, time-poor hardworking people are bamboozled into voting against their own interests time and time again. Will the neo-liberally brainwashed politicians in every party(never mind the coalition, One Nation, Xparty) ever fade away?I doubt it.

    Oh, I forgot. They are not incompetent. They are doing exactly what the ideology dictates. It is written by the IPA and all they have to do is follow it as best as they can. If people ask uncomfortable questions, their job is to make up some suitable spin. That is what they do. Every time.

  23. Freetasman

    The only hope for that is if the left members stop protecting their seats and personal interests. Greed rules Jennifer.
    Perhaps a new generation………..

  24. Kyran

    Ms Meyer-Smith (@6.48), without wishing to ‘pee in your pocket’, I suspect we are in furious agreement, yet again. I gather Scummo is not your favourite person. Fair enough. Can you imagine this poor dolt wandering around the cabinet room? He, the treasurer, insisting his raison d’etre is that a household budget is no different to a national budget?
    Hockeyesque?
    Here’s the thing. After all of his entitlement’s, his privilege’s, he’s not terribly good with money, at a household level. From his Register of Members interests (not a euphemism) in October, he only has one property, his house. According to the same register, it is subject to mortgage, through Commbank. Where his savings are.
    Can you imagine this poor dolt, wandering around the cabinet room? A room filled with the likes of people with property, money and assets?
    From the same register, his superannuation is with MLC and the Morrison Family Trust is listed as ‘dormant’.
    Yep, he’s perfect to run the economy. Dormant and stupid. Isn’t that the way we roll these days?

    Take care.

  25. Jennifer Meyer-Smith

    Freetasman (Freethinker which I like better),

    I know greed is the default for the faint-hearted.

    However, I’ll tell you and the others a little story about how principles can surmount self-interest or even greed.

    I was SOooo desperate for a job in recentish past times that I approached John Roskam of the dreaded IPA for the opportunity of something that would ressemble that!!!

    Roskam, to give him credit, met with me and we had coffee, which is when he asked me a few obvious questions to see about me.

    One such question (for whatever reason I’m damned if I know) was how I felt about Anzac Day. Well, what does any true blood Aussie think about Anzac Day?! I said I cared for the men and women who lost their lives or their quality of life obviously but then I made the gravest of mistakes and said what came naturally, “Make Love, not War”.

    I saw Roskam’s expression change in that instance. I knew what I had done and I knew I couldn’t have done anything else.

    That’s no criticism of Roskam; it’s a credit to me.

    We can all give ourselves credits for doing what we know is right in whatever situation we are in.

    This MYEFO story tonight demands every one of us to demand the best for Australians, even while we are stuck with this debauched LNP Government.

    Even though we don’t really expect the LNP Degenerates to deliver any better for us and our Australia, we must expect the alternative ALLiance Government of Labor/Greens/Progressives/saneIndependents to expect to do those reforms.

  26. Jennifer Meyer-Smith

    Kyran,

    if stupid Snotty only has one house with a CBA mortgage on his pay and employment tenure, then more fool him.

    But then, he is of the Happy Clappy sect and presumably they look after their own and their financial interests.

    So, poor, little Snotty is not so badly off coz there is always somebody with privilege or promise to give him a helping hand that he doesn’t even have to declare to the pecuniary register.

  27. totaram

    Thank you Jennifer M-S for that revealing anecdote about John Roskam. I trust that it is true, because why would you make it up? Well, it does show what sort of person Roskam is. It’s not pretty! I will remember this. To think that he is friends with Bill Shorten! Gives me the creeps!

  28. totaram

    Kyran: Morrison just has to read out his lines which are written by the IPA. Not very hard to do. He gets a good pay for doing that and then, he will retire with a wonderful life-long pension. I’m sure he will be very happy.

  29. Jennifer Meyer-Smith

    Yes totaram,

    it is true.

    While I was in IPA headquarters, I also saw (from a distance) a poster of Gough proudly exhibited.

    THAT confused me.

    But since, I have come to understand that there are elements about Gough’s legacy that those misguided IPA pansies respect.

    Maybe, it is something to do with the hearts and minds stuff that Gough naturally evoked.

    The lesson to be learnt is not to allow the LNP, neoliberalist Labor (or the IPA or any other wankers) to grasp our hearts and minds coz they will crush them.

    Hearts and minds must be preserved for true innovators, reformists, egalitarians and visionaries.

  30. Kyran

    “how principles can surmount self-interest.”
    The IPA have been extolling the virtues of Mr Whitlam for some time now. ‘Be like Gough’ is the mantra they use to plagiarize his passion, whilst defiling the very nature of the movement most popularly defined as ‘It’s Time’.
    roskam is one of those sleepers. He will hunt with the hound’s and run with the fox’s.
    If you met him for coffee, fair play to you. If you weren’t wearing hazmat apparel, good luck to you. With the likes of roskam, there is only one question. Who paid for the coffee?
    As totaram observed, he’s friends with shorten. Somebody will always pay for his coffee. Hearts and minds don’t need preservation. They need encouragement. The IPA/LNP/ACL will never get that. Now the ALP wants to join them.
    Take care

  31. paulwalter

    Totaram, that was a nice one a bit earlier.

  32. Jennifer Meyer-Smith

    Roskam paid and when I say “hearts and minds need preservation”, naturally I mean “encouragement” too. 🙂

  33. paulwalter

    JMS, You could suspect that the IPA would have liked the tariff cuts, which were closer to McMahon’s economics than a protectionist like McEwen (or may Labor rank and file). Sadly, these came at the dawn of the ’73 oil shock and the seventies recession and some rather strange industrial disputes, then unemployment shot up. Then, Fraser got in and cut social security benefits.

  34. paulwalter

    When Roskam says “hearts and minds preserved”, he probably means in alcohol filled specimen jars after surgery.

  35. Miriam English

    paulwalter, ROFL
    Wonderful, hilarious comment.
    Thank you for putting a good laugh into my morning (despite the macabre image).

  36. Jennifer Meyer-Smith

    … except he didn’t say it … 😉

  37. helvityni

    They would have to pay me big to have a coffee with Roskam, or for that matter with anyone else from IPA.

  38. Kaye Lee

    “9.6% increase in welfare spending in 18/19”

    I think this is largely due to the NDIS rollout.

    The thing that really annoys me….

    “defence — the increase in expenses from 2016‑17 to 2019‑20 reflects the funding required to deliver the plans set out in the 2016 Defence White Paper. Defence expenses are projected to grow by 8.3 per cent in real terms (16.1 per cent in nominal terms)”

    And my suggestion for saving money is to legalise voluntary euthenasia.

  39. Möbius Ecko

    But Kaye Lee, Turnbull, Morrison, and Pyne yesterday, stated that all that Defence spending will give us Jobson Grothe. Please tell me you are not you saying that poor Jobson should be starved of billions in public money, most of which will create real jobs overseas? And what of poor Pyne’s seat, surely you cannot take away the billions needed to prop him up and the 2,600 jobs he promised yesterday created by those billions. That’s only costing the tax payer about $19,230,769.23 per job. Most assuredly a bargain.

    Outside of the $50b tax cut to business, defence spending is slated as the second highest order of priority for this government’s plan to energise our economy so Jobson Grothe doesn’t starve.

    On a similar note I heard this furphy cited again yesterday. “Tax cuts to business are essential because they lower the rate of tax avoidance by business.” I didn’t catch who said it, I think it was someone from a business council.

    If we take that to its logical conclusion then if everyone and everything paid no tax, then there would be no rorting at all. That many large business already don’t pay tax means the government is well on the way to eliminating tax rorts. But isn’t it due to tax rorts that companies manage to zero their tax outlays?

  40. Kaye Lee

    Yes I have always found the compliance argument an interesting one. Have a tax rate of 30% and many of them pay nothing. Have a tax rate of 25% and they’ll all say ok we are closing our tax haven accounts and we won’t offshore our profits anymore.

  41. Möbius Ecko

    …and we won’t offshore our profits anymore.

    Which is exactly what Adani is doing from what I read a short time ago. It’s already set up a complex company arrangement with offices in the Caymans and tax havens elsewhere so as to avoid paying any tax in Australia. This is the company the Queensland Labor government is embracing with open arms, eschewing environmental and water regulations for them, and who Turnbull is lending $1b.

    The whole Adani episode has me completely perplexed and constantly shaking my head in disbelief. Why are our governments embracing a company that has an open and easily researched history of rorting, breaking regulations, shocking WH&S record, causing massive environmental damage and of worker exploitation?

  42. Möbius Ecko

    http://www.theaustralian.com.au/national-affairs/defence/shipbuilding-panel-a-recipe-for-disaster-exasc-boss/news-story/87745b9ebdff55cffb161236b26c6de1

    Why does that not surprise me. This government appointing members that aren’t qualified in what they are overseeing. That would go for just about everyone of Turnbull’s ministry as well.

    Read 2600 jobs yesterday. According to this article Turnbull has said it will be 2800. So revising my figure, those jobs are now a bargain to the tax payer at $17,857,142.86 each. You need to add Pyne’s considerable wage and rortsentitlements over a decade to that figure.

  43. Pingback: MYEFO, a tale of incompetence | THE VIEW FROM MY GARDEN

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