Who would have thought? An illegal vessel has made it to the Australian mainland. After all the boasting, the chest beating and bragging by the architects of the most brutal and repressive asylum seeker policy our country has ever implemented, it turns out that on at least one occasion, they have been gamed.

Their politically motivated action against defenceless asylum seekers attempting to find a better life has fallen on its face. Our once impregnable borders, policed so rigidly by the Australian Border Force, have been breached.

“You have to wonder how a boat like this would get so far without being detected,” Port Douglas Marine Rescue president Ross Wood said. Indeed! But should we be surprised? The distance between the southernmost point of Papua New Guinea and the Australian mainland is just 150 kilometres.

How long did it take Australian Border Force management to realise that people smugglers would eventually find a way to make the relative easy crossing?

While details are still sketchy and probably will stay that way if Home Affairs minister Peter Dutton has anything to do with it, perhaps seventeen or more asylum seekers have made it to Australia. How embarrassing! A dozen or so have since been rounded up, but the remainder, now at large, may well be in even greater danger hiding in the mangroves and rainforest regions of the Daintree.

“There is no risk if they don’t go in the water. But if they aren’t familiar with the area, if they go in the water behind the beach where the river is or to stand on the edge of the deep water where it’s murky, there is a risk of a crocodile attack,” said tour operator David White, who has been taking people up the Daintree River for 20 years.

While concern for their safety should be paramount, politically, it is a disaster for the government. No longer can we accept the Coalition mantra, “we’ve stopped the boats.” It’s no longer true, if it ever was. And what do we do with them, now

Manus is closed. Nauru perhaps? Christmas Island? What are our international obligations when asylum seekers land on our shores? Stupid question! No one cares. We can send them anywhere we want. Who will stop us?

Doubtless, people in Far North Queensland will be horrified. They will fear for their safety, lock their windows and doors, keep their children home from school, even barricade their driveways. So they should! Monsters are on the loose, heathens who could murder them in their beds at night.

After the appalling events in Canberra last week, one cannot help but feel some sense of amusement at this latest event. The implications for a government that might, just might, have had one claim to fame in its miserable time in charge, has been destroyed. Now, they have precisely nothing to crow about.

With three prime ministers in five chaotic years, no vision for the nation’s future, no idea what they stand for, internal bitterness and disunity that dwarfs anything we have seen in three generations of politics, they have now had their signature tune blown out of the water.

It’s not a government. It’s a circus.

When I bought my first home back in 1973, Australians were being advised not to pay more than 25% of their net income on their mortgage.

It was sound advice and one, even the banks used, to calculate whether the mortgagee would be able to meet the quarterly repayments. As a further rear guard action, banks would only loan up to 75% of the property valuation.

Back then, your local bank manager actually cared about your future ability to meet your commitments when interest rates were similar to today’s rates, at around 6%. But that is where any similarities, between then and now, end.

Today, homebuyers are paying an average 30% of their mortgage. It is symbolic of changing attitudes that work in favour of the banks, mortgage brokers and property developers. But not the mortgagee. Many mortgagees are paying over 50% of their net income on their repayments.

Today, they are clinging precariously to a tightrope, swaying in the wind. With wages stubbornly static and prices creeping up by stealth, the broader Australian mortgage belt is showing signs of stress.

The Household Financial Comfort survey of 1500 households in June, conducted by ME Bank shows that the average Australian is now eating into their savings to meet their weekly commitments.

“The report revealed housing stress is still prevalent among Australian households. For those with home loans, a broadly unchanged 45% of households reported to be contributing more than 30% of their disposable income towards mortgages during the past six months – a common indicator of financial stress.”

This is a matter of serious concern for the nation as a whole and especially for the Reserve Bank. It is household debt, not national debt, that has the capacity to bring our nation’s economy to its knees.

The report tells us that 10% of households are now spending more than they earn. That means they are either digging in to their savings and/or further increasing household debt (borrowing more).

So, here we are, listening to all this rubbish about jobs and growth, balancing the budget, a future return to surplus and other such meaningless policy directives, while ignoring the one issue that has the potential to undermine the entire economy, literally overnight.

We all saw how quickly the collapse of Lehman Bros set a cat among the pigeons on Wall Street in 2008. We have seen here in Australia how, despite the recent levels of jobs growth, unemployment and underemployment have not moved to any greater or lesser degree.

Our economy has been growing over the past two years on the back of immigration and deficit spending, not balanced budgeting or surpluses. We are now a country of 25 million, up 2 million since 2013. It is that increase that has kept us in growth nationally.

The Household Financial Comfort survey is now telling us that our national growth is masking a serious problem, that of over-extended household debt, a debt that is becoming increasingly harder to manage.

Reserve Bank Governor, Philip Lowe has expressed his concern about the slow pace of wage growth and its impact on economic activity.

Is the government listening? It would appear not. Their approach is to give tax cuts to big business while ignoring rising household debt.

What happens when the savings run out and credit cards have reached their limits? That day isn’t far away. It will require a massive injection of government spending to avoid a catastrophic collapse, one that would have a far more significant impact on the Australian economy than that of the GFC.

It’s one of those hidden dangers that only rears its head when it’s too late. The government is under the illusion that all will be well if we lower the tax rate for big business, because it will create more jobs. What hogwash!

Where are the economists’ warnings? Who is advising this compromised government indebted to its masters at the IPA and ignoring CEO pay binges? Who is warning of an impending mortgage meltdown?

For all those frogs in the saucepan, the temperature is rising.

As a committed advocate of Modern Monetary Theory and one who thinks it should be renamed, Modern Monetary System, for reasons I will explain, there have been occasions when I have felt a sense of futility, trying to explain something so simple, but finding myself unable to convince even those who should know better.

Firstly, MMT should be referred to as MMS because it is no longer a theory. It is the way our fiat economy was set up to operate and does operate today. Its implementation took place in 1983 and the fact that it has never been used as it was intended, does not mean it is theoretical.

The fact that we still fear deficit spending, strive to balance budgets, lust for surpluses and consider bond issues as debt, is a hangover from a past era, that of the gold standard.

The fact that we fail to fully utilise our available resources, consider 5% unemployment near full employment, shy away from providing the necessary infrastructure for our industries and neglect our national health and education needs, when each of these represents real jobs and growth opportunities, is a travesty of mismanagement and failed leadership.

Last night’s Q&A which highlighted the difficulties experienced by those reliant on the NDIS, gave us a clear indicator that the government is not even spending its own budget allocation on this vital piece of infrastructure. The NBN rollout is just another example of this failed leadership.

And it seems that no matter how clear and concise we are in explaining the economic reality of MMT, successive governments still cling to the gold standard mindset. Why?

Michael Pascoe’s article in ‘The New Daily’ today, sheds some light on the truth of the matter. In discussing the latest on the never-ending tax debate, something the entire country is heartily sick of hearing, he points to what the government is really doing in pursuing this matter.

He writes, “In the short term, it’s a formula in keeping with the Institute of Public Affairs’ prescription for a new Australia – an Australia with less government, richer rich and fewer controls on markets – especially the labour market.”

He goes on to say, “The IPA has emerged as not just the favoured right-wing think tank, but the government’s guiding light. It is too tempting to not again repeat one of John Kenneth Galbraith’s many golden quotes:
“The modern conservative is engaged in one of man’s oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.””

We have known from the beginning of the Howard years, and perhaps from some of Paul Keating’s decisions, that it is the rich who run the country. They run it for the rich and they get the best results by supporting conservative leaning parties and their politicians.

Trying to establish a tax system, using confected figures to present fairness and equality, as Scott Morrison has done suggesting average workers are expected to earn six figure sums in a few years’ time, displays a height of arrogance as bold as his government’s self-serving aspirations.

It is a disgrace. But, we know that if you tell a lie, big enough and often enough, people who don’t know any better, will be inclined to believe it. And therein lies the difficulty with people like me who are trying to explain MMT to the average person in the street. How could anything so simple be right. It must be more complicated than that, surely. No, actually it isn’t.

As Michael Pascoe says so eloquently in his article, “In the longer term, flattening our progressive tax system is a tiny part of one of history’s repeating cycles: wealth and power being used to entrench and extend wealth and power until it becomes unsupportable.”

Notwithstanding the difficulties of explaining MMT, there is progress. But it is painfully slow. Much like the NBN. However, one day we will get there, even if it is only a partial implementation. The alternative is the status quo, which, for those who haven’t yet worked it out, is all about keeping the average worker at arm’s length from the rich.

And that really is an unsustainable option.

My question is directed to the Prime Minister. Your treasurer has just brought down your 2018/19 budget laced with tax cuts to woo the low paid. Some of it will be delivered in a year’s time when everyone files their tax return. The rest over the next seven years.

You have your party’s future in mind and, dare we suggest, your own with this budget. You have been telling everyone that the next general election will be held a year from now, while quietly contemplating the likelihood of going early, perhaps September or October this year.

Suddenly though, there’s a new issue on the horizon, courtesy of the High Court. It comes in the form of five bi-elections. What are you to do? Should you go ahead with the five bi-elections knowing secretly, that those same seats will/might/could be recontested in as little as three months?

If you were to lose all five, which is probable, how would that play with your colleagues and their view of your leadership? What if your support group panics and decides to tap you on the shoulder in the interests of their own self-preservation?

Which would you rather: face them on a cold, dark Canberra night, or place yourself at the mercy of the people? Is it possible those tax cuts, as pitiful as they are, could swing enough voters in marginal seats?

Watching some of the post budget interviews given by Scott Morrison as he began his big sell, one could be forgiven for thinking he really believes all the rhetoric he espouses.

His/your budget has revealed a seductive set of numbers that might fool the person in the street, although, when one compares your generosity with that of Bill Shorten’s, you could be found wanting. You also know that it’s all based on some pretty ambitious forecasts.

Except for a flush of extra cash generated by new tax-paying migrants, the numbers would have painted a very different picture. But, as usual, the party’s conservative ideology continues to reign supreme: Give the biggest share to the wealthiest. Your party does it every time.

How long will it take for the electorate to realise they have been duped….again?

Then, there’s that looming re-distribution. Could you call a general election before that wretchedly unfair re-adjustment of the boundaries is finalised? Once that goes, you know you’re stuffed.

What are you to do? Might it be, that the best course of action, is to call a general election now, rather than proceed with the five bi-elections? It will certainly save a lot of money, not to mention the embarrassment of losing all five.

We know the people don’t like early elections, but this is different. It’s all Labor’s fault when you think about it, Bill Shorten has a bit of egg on his face after boasting that no Labor member was holding dual citizenship. Can you exploit that?

Surely your spin doctors can come up with something to explain why going early this time, has been unfairly thrust upon you and calling a general election, rather than five bi-elections, will save the tax payer millions of dollars?

But the polls, those wretched polls. People believe them. People are influenced by them. What are you to do? Perhaps you would prefer the verdict of the people rather than the party room. Gallant in defeat, something like that? History might be kinder to you, if not your party.

Perhaps you can muster all your charisma, your preferred popularity and go head to head with the guy that ripped all the goodness out of your budget in his reply speech. Let’s face it, no one else in your party could.

SO, ARE YOU FEELING LUCKY, MALCOLM?

Get ready! We are 4 months out from a federal election. It’s not the polling that has determined this will happen, it’s the roadblock ahead.

Between the 4th August this year, the earliest an election can be called and the 19th May next year, the latest, there is a minefield of events that the Coalition will not want to compete with, in its attempts to stay in power.

The most difficult are the Victorian state election in November and the NSW state election in March 2018. Throw in the AFL and NRL football finals in late September/early October, Christmas, School holidays and Easter and it’s obvious.

Politically speaking, this August or early September is the only clear-air time realistically available for the government to try to redeem itself.

And the first opportunity for redemption will be the May budget, next week. Already, the signs are that it will be as generous as it can be for a government that realises it needs redemption.

The promise of tax cuts resulting from higher company tax revenue, a higher job participation rate, the abandonment of the Medicare levy hike, all indicate the government has already locked in a date with destiny.

They will be able to spruik a lower than expected deficit and a better than projected surplus in 2020/21. They will tell us that the economy is strong (it isn’t), that business is investing ((they aren’t), that they stopped the boats (actually we don’t know) and that Labor will be soft on immigration (simply not true).

They will tell us that without them in charge, the economy will collapse, that our international relations with the USA will be damaged, that Indonesia will invade us, that the sky will fall in, that God has chosen them to rule.

These are the credentials they will present to us over the coming months. This is what they believe will save them. Never mind their incompetent handling of the Banking Royal Commission or their massive accumulation of what is wrongly referred to, as the national debt.

Never mind the absence of meaningful policies, their internal squabbling, the Abbott factor, the Joyce factor, the Cash factor, their broken promises, the savage spending cuts that have devastated community groups across the country, the NBN debacle, the shameful inaction when dealing with Manus Island detainees, never mind all that and more.

They realise too, that the planned electoral redistribution, which does not favour the Coalition, may not be finalised in time for an early poll. That redistribution renders two liberal seats notionally Labor and several others marginal.

Labor, in the meantime, have not been asleep at the wheel. They realised an early election was probable a year ago and have been on an election footing for some months.

Their recent policy announcements on franking credits, no company tax cuts, removing the GST on tampons, the establishment of a federal ICAC, all point to a party ready to go to the people.

The election battle will be a tale of two parallel approaches. Labor will concentrate on micro issues, that of household debt, housing affordability, wages, the cost of living and equality, while the Coalition will present the broader picture of company profits, employment growth and projected budget surpluses and union thuggery.

From the Coalition’s point of view, the rhetoric will be mind-blowing, perhaps overwhelming. In the absence of a policy framework, they will be relentlessly attacking Labor, saying anything to mask their deception and their ignorance.

They will try to scare the bejesus out of us. The truth of it, however, will be easy to discern. They will say, “judge us on what we say, not on what we do,” a clear indication that they are a policy vacuum.

Without a proper policy framework, the coalition are always reactionary. Labor, on the other hand, will demonstrate how proper economic management should be, when fit for purpose. Malcolm Turnbull is also conscious of the possibility of a leadership challenge before the end of the year, courtesy of a slip of the tongue by Barnaby Joyce.

They are a desperate rabble and determined to stay in power. However, it will be up to us to decide and that will happen either in late August or early September,

It is difficult to understand how an intelligent, highly trained man like Richard Di Natale could seriously suggest that Australia should introduce a Universal Basic Income.

It was even more surprising to hear channel 10 television host, Waleed Ali give some credence to the idea on The Project, last night, suggesting it was “no lefto pinky nonsense”.

Natale made his announcement at the National Press Club luncheon this week. For those unsure of it, a UBI is a basic, liveable payment to all citizens without any conditions attached.

Economists tell us it could replace all government spending on welfare, as well as housing, health and education. Even if that were true (it isn’t), it would still be a very bad idea.

According to Professor Bill Mitchell, a UBI is nothing more than, “a scam to absolve the government from its responsibility to create full employment.”

An article by Chris Hedges (April 1, 2018) – The Oligarchs’ ‘Guaranteed Basic Income’ Scam – published by Truthdig explains very succinctly, the purpose behind the recent push for a UBI.
He says:
“A number of the reigning oligarchs … are calling for a guaranteed basic income. It looks progressive. They couch their proposals in the moral language of caring for the destitute and the less fortunate. But behind this is the stark awareness, especially in Silicon Valley, that the world these oligarchs have helped create is so lopsided that future consumers, plagued by job insecurity, substandard wages, automation and crippling debt peonage, will be unable to pay for the products and services offered by the big corporations.”

We are being told that we are on the precipice of a technological revolution where robots are being assembled as we speak, to take over 40% of existing jobs. Never mind that those robots will still require human management.

Never mind also that the computer revolution that began 40 years ago was also going to put most of the workforce out of a job. It’s a familiar projection of future trends that keeps us both enthralled and intimidated at the same time.

A UBI would be another win for the top end of town. They are concerned that the downside of the technological revolution is that no one will be able to afford their products in the future. They are positioning themselves to put pressure on governments to spend money for no return, just to keep them in business.

The result is, the rich would continue to get richer as the poorer continued to be the victim. Paying people to do nothing, is as silly as it sounds. It is, as Bill Mitchell says, “a neo-liberal strategy for serfdom without the work.”

“Business leaders want to avoid attacks on their power as they kill off jobs in swathes. But they also will continue to work out ways to maintain control over workers and what better way than dishing out a little consumption bundle and keeping them out of the workplace,” he says.

A UBI would create a society where people become mere consumption units, where the demand for labour goes into decline, wages and conditions suffer and the inequality balance shifts even further in favour of capital.

National GDP levels would fall as people opting not to work, lowered their expectations and their living standards, forcing production rates to spiral downwards, prices to rise, inflation to run amuck and the only winners are guess who?

Little wonder business CEOs support the principle. It would mean more money for them, less overhead and bigger profits. This is not the society we want for the future, it’s the society from which we have been escaping these last 100 years.

If our business leaders were truly keen to care for the destitute and the less fortunate, they would support a job guarantee where the government provided a job for everyone who wanted work but were unable to find it.

A job guarantee would ensure a pool of workers ready to join the mainstream workforce when the economy was in recovery, help maintain production levels, increase taxation revenues and overall GDP.

Strangely sinister, is it not, that the wrong message, sugar-coated to appear electorally popular, is always the one that seems to get the most media attention, while the more beneficial option, the one that best serves the interests of the majority, languishes in the “it won’t work” basket.

Bill Shorten and the Labor party are beginning to demonstrate true grit. The latest policy announcement that will see an end to a welfare handout to the rich, otherwise known as the Dividend Imputation Scheme M2, is a masterstroke.

The dividend imputation scheme enables salary earners who own shares to minimise their tax liabilities with franking credits. However, where a person has a very low income those franking credits not only mean they pay no tax, but they result in non-taxpayers being owed money by the ATO.

Yes, it will hit some part-pensioners, perhaps as much as $4800 a year but, as they weren’t paying any tax, it was only acting as a supplement to their pension payment anyway. Its cancellation will result in them receiving a larger pension payment.

They will likely be no worse off, or minimally out of pocket. But for those who have large shareholdings and have used John Howard’s overly generous system to firstly, pay no tax, and then receive a cash handout each year from the ATO, effectively working the initiative in a way Paul Keating never intended, their days of sponging off the system are coming to an end.

This is just another example of the Howard era’s middle-class welfare that has reached its use-by date. We can place this in the same basket as capital gains tax breaks and negative gearing concessions that are wasted on the wealthy and which offer no benefit to our economy.

This May, Scott Morrison will deliver the last budget before the next federal election and it is not surprising he has been talking up the possibility of personal income tax cuts. So it wasn’t surprising then, when Bill Shorten made his announcement, that Morrison immediately began a scare campaign trying to frighten pensioners into thinking they will lose their imputation credits. They won’t.

They will only lose the amount over and above the point where they stop paying tax. And that will likely mean they receive a higher pension payment as compensation. As if to counter Morrison’s plan, Shorten has demonstrated that Labor can also offer tax cuts and he is showing us how they will pay for them.

And just so we get it straight, the amendment to Paul Keating’s original scheme was one of several measures introduced by Peter Costello in the early 2000s, that was introduced on the back of the mining boom and which was nothing more than a vote-buying exercise.

Shorten believes that the economy cannot afford such generous arrangements for the wealthy in much the same way Morrison believes we can no longer afford welfare for the unemployed, the sick and the less well off. It’s an interesting dichotomy. It’s neoliberalism versus left-wing ideology. We now have a clear distinction in policy approaches by the two major parties.

At a time when we have record high levels of private debt, record low interest rates, and mortgage stress tied to wage stagnation, the combination of which threatens to bring about an economic meltdown, highlighting the two starkly different approaches will make for a robust debate. It is one Shorten and his shadow treasurer, Chris Bowen are confident they can win.

We will probably get some indication of its acceptance or otherwise when the next opinion poll is published. However, putting some sense and sensibility back into the dividend imputation scheme is the right call.

Scott Morrison’s belief that he will be able to produce a surplus budget by 2020/21 is either a pipe dream or a con-trick. It is simply not achievable.

And, to our collective relief, it is ignorance rather than good management, that will ensure it doesn’t happen. Notwithstanding the fact that a surplus budget is the last thing our economy needs now or then, it is government policy that will stop it from happening.

Morrison thinks giving tax cuts to the private sector will create jobs. It’s called ‘trickle-down theory,’ but like all theories, it will only become fact when proven so. There is a weak link in his theory and it is a vital one. He has no control over what happens to that extra money kept by the private business sector.

Morrison et al, are constantly boasting that they have created a jobs boom when in fact, the jobs created are simply proportionate to the increase in population. They occur naturally.

If there was a real jobs boom, there would not be 700,000 unemployed today, which as it happens, is the same number that were unemployed in September 2013 when this government came to office.

They haven’t created anything, but they will happily take credit for what occurs naturally through immigration.

In the meantime, they are more than happy to maintain a pool of 5% unemployed, which some OECD countries regard as full employment, to keep wages stagnant. But low wage growth restricts a nation’s capacity to grow. It limits workers’ capacity to spend.

So, the question should be asked: why would companies use a tax cut to invest when low wage growth inhibits workers ability to purchase more goods and services? Such investment would be counter-productive. Which begs the next question: what would corporate Australia do with the extra cash?

It might be used to invest and expand, or it might be used for share buy-backs, or just bigger executive bonuses. History, however, tells us that it is bonuses and share buy-backs that usually win out, but history also tells us that one in five companies don’t pay tax.

So, a tax cut offers nothing for them, no reason to invest, no reason to hire. So, the projected surplus in 2020/21 is a myth. Without wage growth which produces higher tax revenues and the promise of higher sales volumes and bigger profits, the only way Morrison could achieve a surplus in 2020/21 is to reduce government spending further.

That too, is counter-productive. When government spends less, one of two things happens. People spend less, or they take on more debt. We are already one of the top three privately indebted countries in the OECD.

The likely outcome is contracted growth, leading to recession. We have been on this path now for five years. It has been delayed because of our large immigration intake including 457 visa holders. It’s not rocket science.

So, when we hear Scott Morrison and Malcolm Turnbull spruiking tax cuts for business, we know it’s not designed for jobs and growth.

Is it possible that they have other reasons for wanting to give business breaks they don’t deserve?