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John Kelly is 69, retired and lives in Melbourne. He holds a Bachelor of Communications degree majoring in Journalism and Media Relations. He is the author of four novels and one autobiography. He writes regularly for The Australian Independent Media Network and on his own blog site at: The View from my Garden covering a variety of social, religious and political issues.

Website: http://johnbkelly.wordpress.com

When Bullshit Baffles Brains

Those of us who regard truth as a fundamental democratic value and who have now realised that truth no longer plays a part in our parliament, or our media, know that our democracy has been usurped by plutocracy.

The rest of the population has, through blind ignorance, been reduced to a second-tier living standard and they don’t even know it.

The ways in which information that is freely available to all, is being ignored both by politicians and media outlets, demonstrates that no matter how well educated we are, we will continue to play right into the hands of those who are really running the country, unless we take a greater interest in what our government and their media allies are doing.

The release of an utterly useless Fairfax-Ipsos poll asking if we thought Treasurer Scott Morrison was doing a better job than his boss, Malcolm Turnbull, is a case in point.

It’s like asking if I am better at writing than my wife is at cooking. It’s confusing to say the least. It gives the wrong impression about both people and worst of all, encourages less intelligent voters to think more highly of one, over the other, using a false measuring device.

Asking if someone did better at one job than another person doing a different job is irrelevant and Mark Kenny’s interpretation of the results is equally confusing.

On the broader issue of the economy, it reported that the Coalition led Labor on the management of the economy at 39% to Labor’s 28%. But Labor is not in government and therefore, not managing the economy.

Voters were being asked to compare the Coalition’s performance today, with Labor’s performance of 4 to 10 years ago. How do you compare two completely different time frames, two different sets of circumstances?

The conditions faced by Labor from 2007 bear no similarities with the issues the present government are trying to manage. Clearly such a comparison must produce a distorted and necessarily flawed point of view from the voter’s perspective.

But at election time, people factor in such flawed information when deciding who they want to represent them in government. It would serve the country better were they not to vote at all.

It’s not accidental. There is a plethora of irrelevant questions being asked of people week in, week out. It gives newspapers a headline as they exploit a variety of opinions, few of which have any electoral relevance.

Invariably they are painted as being relevant, all of which gives the average voter a distorted view of his ever-diminishing role in how the country is being run and how little power he/she has to effect change.

A classic example is the view Scott Morrison gave on Insiders last Sunday.

Interviewed by Andrew Probyn, Morrison waffled away, as only he can, talking a lot, but saying nothing, before making this stunning comment, “As the labour market tightens, that’s obviously going to lead over time to a boost in wages,” he said.

Morrison claimed that the creation of 240,000 jobs in the last fiscal year was an indication that the labour market was getting tighter, which would lead to increased demand for higher wages.

“That’s why I talk about the better days ahead because we can see all these things lining up – more jobs, more investment, profit performance improving,” he concluded.

To the brain dead, that might sound like he knew what he was talking about. But there is nothing by way of evidence to indicate any of that is true. In fact, the evidence suggests the opposite is true.

The June Quarter 2017 National Accounts data released by the Australian Bureau of Statistics (ABS), on September 6th shows quarterly growth at 0.8% and year to June 2017 growth of just 1.8%. You can read Bill Mitchell’s assessment of it here.

In the June quarter, government spending contributed all of that growth. Growth in the private sector was zero. Private investment was negative and household savings fell again. This means that stagnant wage growth is forcing households to take on more credit to maintain living standards.

The unemployment rate has barely moved over the last 12 months. The 244,000 jobs created has not even kept pace with the population growth.

Little wonder Scott Morrison says better days are ahead, because the average man and woman in the street is certainly not experiencing better days now. After four years at the helm, the government has shown no improvement in the economy whatsoever.

They continue to fail on every indicator used to judge economic performance at the same time as company profits are running at an all-time high. We have one economy for the wealthy and one for the average man and woman in the street. And it’s all happening right under our noses.

Winston Churchill is quoted as saying, “Democracy is the worst form of government … except for all those other forms that have been tried from time to time.”

One suspects some of China’s leaders might observe such a statement and have a quiet chuckle. But we, in the west, must wonder when bullshit baffles brains so easily, if democracy really does deserve its ranking as better than the rest.

 

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Can the Government Survive?

When the Turnbull government won the last election by just one seat it was generally felt that they would probably survive the next three years with the aid of a sympathetic media willing to gloss over their vulnerable areas.

Unlike the minority Gillard government, which had to bring all its negotiating skills to the table and stare down a viciously anti-Labor reaction, the Turnbull administration has blundered along, bouncing from one crisis to another protected from a public backlash by a sympathetic media.

Thus, they have managed to last a little over a year despite having lost the confidence of the people and having exposed their obvious inadequacies for all to see.

The ineptitude and incompetence they have displayed since election night has been breathtaking as they have drifted from uncertainty to disbelief. It draws to mind the lyrics from the musical, ‘Les Miserables’ when Mrs Thenadier laments, “I used to dream that I would meet a prince, but God Almighty, have you seen what’s happened since.”

The only reason they are able to present themselves in any recognisably coherent form is because very few are paying attention. The press are so consumed with the incompetence of the Trump administration.

One gets the feeling, however, things are about to change.

Over the past month the public has seen Scott Morrison answer Leigh Sales very soft questions on the ABC’s 7.30 and felt lulled into believing that we were already experiencing a rebounding economy, except that we are not. The release of the HILDA survey gives us a picture of an economy that is haemorrhaging in a sea of private debt.

Anyone watching Josh Frydenburg try to defend coal in favour of renewables could be forgiven for feeling sorry for him. Anyone experiencing difficulties with the NBN are beginning to realise it has been downgraded to a second class service.

Not that the government would notice any of this. They are so haemorrhaging themselves in a sea of acrimonious bloodletting over one relatively minor issue, that of marriage equality, that the business of government has been relegated to second place.

And now, it seems, even the media have begun to desert them.

The constant barrage of assaults coming from the conservative wing of the Liberal party and led by Tony Abbott has so seduced the media overall, that they have forgotten they are supposed to be conservative friendly. They are making their vicious treatment of Julia Gillard, five years ago, look positively childlike by comparison.

Will the government see out its present term? Things are not looking good. The legitimacy of their one seat majority is looking very shaky. If Barnaby Joyce has to face a bi-election to win his seat back, a very real possibility, who knows how that will play out.

Furthermore, an election in 2018 is inevitable if bringing the senate back into sync is considered politically important. And it is. No one wants half senate elections held separately from general elections. It’s too risky.

So, with the looming marriage equality postal survey likely to result in a ‘yes’ win, Turnbull will then have to support a private member’s bill which could lose him any remaining support from the conservative wing of his own party.

Perhaps he will consider an early poll around April next year to put himself beyond the carpetbaggers in his own party who have their own sinister agenda and would like to see him gone.

But who knows? By then they may already have lost their majority.

 

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Should Parliament be Prorogued?

There was a suggestion on ABCs Insiders yesterday Sunday that, due to the present chaotic state of government brought about primarily by Section 44 of the constitution, parliament should be prorogued.

What does this mean? Prorogation of parliament simply means bring the current session to an end. It does not mean an election follows. Only when parliament is dissolved can an election be held. However, prorogation does mean that no legislation can proceed because when a parliament is prorogued, it cannot meet.

This is important at the moment because the legitimacy of several members that we know of, is in question and more might yet be in question. The issue of dual citizenship has cast a cloud over the legitimacy of legislation passed or intending to be passed.

Until this matter can be properly resolved, any legislation or any major decisions made by members, particularly members who are ministers, can be the subject of a High Court challenge.

Thus, the decision by the Prime Minister, Malcolm Turnbull, to allow Deputy Prime Minister Barnaby Joyce to remain in his ministerial role is fraught with danger. Section 44 of the Constitution is unambiguous. Any person holding the citizenship of another country is not eligible to be in parliament. Therefore any member whose citizenship makes their election invalid should not be permitted to vote on any issue.

All subsequent claims by those affected that they did not know, that they only have loyalty to Australia, that it wasn’t of their doing, that it was their mother’s fault or their father’s fault, that it was another country’s fault and so on, ignores one basic premise, namely, that ignorance of the law is no excuse.

Frankly, the excuses offered by all, except the two Greens senators, have been pathetic. Thus, if the government wants to avoid lengthy High Court complications that might, even now, see a number of legislative items overturned, it should prorogue parliament right now.

Parliament should not sit again until such time as matters relevant to Section 44 are resolved. Better still, dissolve parliament and call an election. Thus, any candidate who cannot verify that they are not a citizen of another country, cannot stand.

It’s not rocket science!

 

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Turnbull looking both ways

For those of us who have been pushing to have Tony Abbott produce his renunciation certificate (his RN form), to show he is no longer a British citizen, we can finally relax. It looks like he’s done it. But it took Australian/New Zealander, Scott Ludlam’s resignation and a twitter poke from Deryn Hinch to finally get him to mention it.

It looks like he’s done it, although what he has released is not actually a certificate, as such, but a letter dated quite recently, from the Permanent Migration Nationality Team in Liverpool, UK, which says that according to their records, he renounced his UK citizenship, and did so on 12th October 1993 (see below).

It’s not a certificate, but perhaps the original certificate was lost. If so, why not ask for a duplicate? Nevertheless, we should all now be satisfied that Tony Abbott has renounced his U.K. citizenship and did so before entering the Australian parliament in 1994.

It’s a relief, in a way. It means he’s going to be around for some time yet and that can only mean more wrecking, more undermining and more sniping. This can only be of benefit to Bill Shorten, who is now looking odds-on to be elected Prime Minister, probably in 2018, although it’s quite possible, he won’t be the next Australian prime minister.

As they say in the media, a week is a long time in politics and within a few months, we might yet see another Liberal PM stand before them and proclaim the party is a broad church, that all is now well and how bad it would be for the country if Bill Shorten were to become prime minister.

The problem for them is that no one is listening anymore. The problem for Malcolm Turnbull, if he is to avoid a leadership challenge, is to decide when the next election will be held. That decision now lies in the timing of next senate election, a problem he created himself when he called the double dissolution last year.

Under our constitution, the next senate must take its place no later than the 1st July, 2019. For this to happen, a half senate election must be held no later than 18th May 2019.

While an election for the House of Representatives is not required until 2nd November 2019, it is preferable and probable that elections for both houses will be held at the same time. Choosing the date will be tricky.

Waiting until May 18th, 2019 would box the PM into a canyon. Going three months earlier, in February is possible, but messy, given its proximity to the summer holiday break and the start of the school year.

That leaves November 2018 as the most convenient time and this is where it gets tricky. If Turnbull is going to be replaced before the next election, you can be sure those planning the night of the long knives will have done their homework on the possible dates for a necessary early poll.

They would want “their man” to have a reasonable settling-in period; a year or so, possibly eighteen months. The likely candidates are, Bishop, Dutton, Morrison, or if they are looking for a rank outsider, Josh Frydenberg.

That would mean a leadership challenge sometime between now and the end of this year. With current polling suggesting the government could lose more than twenty seats, those government members sitting in marginal seats are getting increasingly nervous and they have a lot of thinking to do.

Which brings us back to Tony Abbott. His seat of Warringah is safe, but is he safe? While he plans to be around for some time, his branch members might have other ideas. A number want him out, preferably right now, and it is possible, albeit unlikely, he will lose pre-selection?

Either way, the conservative right in the party are determined to oust Turnbull as soon as possible and Abbott will want to be there when it happens.

All indications are that either Turnbull, looking both ways, will call an early election to head them off, or a leadership challenge will happen sooner rather than later.

What a delicious thought.

 

 

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The Government is betraying our right to work

If there is one single fact that proves the government’s “jobs and growth” mantra is a deliberate and misleading lie, it is this: Mass unemployment occurs when there is insufficient spending in the economy, to generate a demand for labour that would create enough jobs for everyone who wants one.

Thus, for a party to commit to a policy of jobs and growth and then fail to address it satisfactorily, can only leave us to conclude that it never intended to honour that commitment in the first place.

Put simply, the government chooses the level of unemployment and the circumstances under which that occurs. They treat employment as a non- core right, subject to other considerations.

Those other considerations centre on the demands of our commercial and industrial leaders. Those leaders engage in targeted lobbying tactics, contribute to campaign funds and threaten to retrench staff if their demands are not met. These captains of industry call the shots. Governments are bullied into complying.

All too often we hear politicians telling us how important it is to protect jobs. What they are saying is, they want to protect the existing workforce from those who are unemployed. That existing workforce is determined by employers. It is the employers who decide the appropriate level of employment.

And this brings us to the act of betrayal by government. Employment is a fundamental human right, not something to be manipulated for the benefit of any particular group or individual.

The whole “jobs and growth” mantra is a confidence trick, a deliberately constructed three-word slogan to deceive a gullible public into believing what is, in fact, the opposite of the government’s intention.

In the words of Professor Bill Mitchell, “After all the spending (and saving) decisions of the non-government sector have been taken and implemented, any idle labour is the result of the net spending position of the government being lower than is required to generate full employment.”

It is the government’s failure to spend, that serves the cause of employers who are able to suppress real wages and by extension, jobs and growth. Our commercial and industrial leaders suppress them to the levels it decides are appropriate. Those levels are geared to produce the maximum profit possible for their industries and commercial enterprises.

Therefore, when we address the present position of 5.5% of the workforce (over 700,000 people) unable to find work, we know that this is due firstly, to the intensity of the lobbyists, the campaign contributions and the sheer clout of industry and commerce and secondly, to a government too weak to oppose them, too weak to spend what is required to ensure full employment.

Transposing that blueprint onto our economy today, it is the government’s unwillingness to spend that places more than 700,000 men and women in unemployment, men and women who are looking for work and cannot find it.

That number is further compounded with a further 8% underemployment rate, where people are working part-time, some by choice, but most being manipulated by opportunistic employers offering limited hours with lower pay.

This means we have close to 2,000,000 Australians of working age currently under-utilised. That is a betrayal of our basic right to work. Any government that denies its responsibility to provide work for all those who want it, betrays its own people.

The only way this betrayal can be remedied is to establish a job guarantee program. Not a universal basic income, as some would argue, but a guaranteed job for everyone who wants one.

 

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Memo to Mortgagors…get your house in order

Whether you believe it or not, an economic tsunami is coming and if you think we will survive the damage and the fallout, as we did the GFC, you’re dreaming.

The next GFC will make the last one look like a vicarage fund raiser. Why? Because we are not just making the same mistakes as last time, we are making bigger ones.

One simple statistic reveals a frightening scenario. Currently, the big four banks have a combined equity of around $162 billion. Place that alongside their current exposure to domestic mortgage loans of $1.6 trillion and you begin to see the looming threat.

Those mortgage loans have been fuelling an unsustainable housing bubble. But the banks see that as secondary to ensuring their share prices are maintained. What they seem oblivious to, is the plethora of business loans outstanding that feed off household demand. The early warning signs are there.

Stagnant wage growth is restricting spending and slowing demand. Household spending is becoming highly selective, limited to essentials but still relying on credit card financing. Our economy, all economies are reliant on consumer spending. When the consumer stops spending, the economy stops moving.

We have ignored the warnings, we have been seduced by low interest finance, cheap money and banks ever eager to lend at levels well beyond responsible management. As a result we have now reached the point when irrational expectation meets unmanageable debt.

As matters stand today, it’s not so much a case of the economy not moving, soon, the inevitable job losses will start to mount.

As with the GFC, the prime mover is the housing bubble. Let us be clear here. We are not talking about sovereign debt, what our national government has issued in bonds. That is always serviceable.

We are talking about what consumers owe and what is about to happen when it becomes apparent that they can no longer meet their debt obligations. We are talking about mortgage defaults.

Look at the chart sourced from the Australian Bureau of Statistics, the AOFM, the RBA and others.

Australia’s current household debt to GDP is currently at 123 per cent, the second-highest in the world behind Switzerland. It has a household debt-to-income ratio at an all-time peak of 189 per cent. Mortgage loans to borrowers amount to more than six times household incomes and could wipe out 20 per cent of the major banks’ equity base.

When the banks begin to see rising levels of mortgage default they will react without mercy. Foreclosures will follow, leading to a glut of homes for sale as the banks try to recover their money. House prices will crash. And that is just the start.

Businesses reliant on a strong, stable vibrant housing environment will feel the fall in sales of consumer goods. Unemployment will rise quickly leading to further decline in demand. From there, it’s all downhill.

The question then arises. What will this government do about it? If you think they will react the same way Kevin Rudd’s government acted, forget it. They will not. Their aversion to sovereign debt far outweighs any interest in issuing more debt.

The banks will demand the government protect their equity with guarantees and possibly a round or two of quantitative easing. That will save the banks but it won’t stop falling demand, businesses failing and higher levels of unemployment.

We, the consumers, the lifeblood of the economy will be left to fend for ourselves. That is the way of conservative governments. They look after their own. If we are reduced to soup kitchens and charitable handouts, so be it.

This government would rather give a company a tax break than stimulate an economy with direct debit consumer grants. So here is a warning. Get your house in order. Reduce your debt burdens. Pay down your credit card and look for a cheaper house with a lower mortgage if you can.

When the value of your four bedroom, double garage with swimming pool falls below the level of your mortgage, the bank will come knocking on your door. Better you act first. In situations where the inevitable is all too obvious, you have one option: be first.

If you would like a broader overview of the impending tsunami, read Nassim Khadem’s article in today’s Age. When the spaghetti hits the fan and you decide it’s time to capitalise by selling your home for something less ostentatious, it will be too late.

The Myth of the Balanced Budget

Something will happen this week that will alert us to the reality of this government’s failures.

Despite all their rhetoric and their pathetic attempts to demonstrate their economic prowess, despite all attempts to gloss over their outright lies, their pretence at understanding economics, this week these champions of capital, of fiscal irresponsibility, will have the honour of taking our gross debt position beyond half a trillion dollars ($500,000,000,000).

Even in their eyes, this is a disaster for their credibility.

Check it out for yourself at the Australian Office of Financial Management. Surely we should celebrate this achievement with a public holiday. Or perhaps more appropriately with a fireworks display. More likely, those who believed their false claims should hang their heads in shame.

It is an unprecedented amount and double that which they inherited from Labor in 2013. Incredibly, they have done this in less than four years, compared with Labor’s six years of solid economic management that included a recession-saving stimulus after the GFC.

One Nation senator, Pauline Hanson was moved to remark, “At this rate we will never be able to pay it back,” she said. “We need to rein in our spending.” That is what we call an observation from ignorance. But let us not be too hard on her. There are 150 lower house members and 75 other senators who think the same way.

Some MP’s are calling for the reinstatement of the debt ceiling. You may remember former treasurer, Joe Hockey wanted to lift the debt ceiling to $500 billion back in 2013. In the end, the whole idea of a ceiling was abandoned following a deal the government did with the Greens.

A quick word of advice for Senator Hanson. No, we won’t be paying it back, not ever. The fact is, a currency-issuing nation can never run out of money, can never owe anything in its own currency, can always afford to buy whatever is for sale in its own currency, and indeed, has a responsibility to ensure all men and women seeking work, are able to find it.

If work cannot be found in private industry they should be employed by the state. As matters stand today, the government is failing in that responsibility because over 700,000 Australians are currently seeking work and cannot find it. That means we are not spending too much, we are spending too little.

The government’s reluctance to spend is consistent with their pursuit of what is, in their eyes, the Holy Grail; a balanced budget, one where spending equals taxation receipts. It is a grossly flawed objective.

To avoid the embarrassment of having to fess up to that failure, to provide work for its citizens, our treasurer Scott Morrison has found a very convenient loophole for his, and the nation’s, future. He calls it “good debt.”

His plan is to somehow separate value-adding “good” debt (infrastructure spending and the like), from the ever burdening “bad” debt (pensions, unemployment and sickness benefits etc), when preparing his next budget, in the hope that it will miraculously produce a balanced budget.

It’s actually a half good, half bad idea. The good half is that he recognises the value of infrastructure spending. The bad half is that he can’t see that welfare spending also puts money into the hands of people who spend it. Money spent on infrastructure is no different from money spent on welfare. It’s still spent!

What he can’t see, is that rather than spend on unemployment welfare, he could harness the idle resources of the unemployed in ways superior to welfare spending, thus raising the living standards of all Australians and in turn, benefit the nation as a whole.

He could give them a job. He could, by his own definition, so easily convert his “bad” debt into “good” debt, by eliminating unemployment benefits in favour of employing the unemployed and the underemployed in public works.

He could then confidently argue that because it is all good debt, there is no need to issue bonds. The money can be classified as “Overt Monetary Financing”, another way of saying, money created out of thin air. In doing so, he would have the so-called “balanced budget”, he so desperately wants.

A balanced budget is all just numbers in a computer. The trick is to have the numbers in the correct place. At the moment they are not, but they could be, so very easily.

Incompetence and Expediency

Despite overly optimistic, but what should be called laughable forecasts in the budget, wage growth in Australia is now the lowest it has been since the mid-1990s. And it’s not hard to see why.

Private-sector annual wages growth, at the March 2017 quarter, was 1.8%. The latest labour force data released yesterday by the Australian Bureau of Statistics shows a modest decline in the unemployment rate from 5.9% to 5.7%.

The reason is, full time employment fell by 11,600 jobs, and part-time employment increased 49,000. As a consequence total hours worked fell by 0.12%. But here’s the kicker. Underemployment rose by 0.1% and there are now over 1.8 million Australians who a) want to work and b) want more working hours, but are under-utilised.

In seasonally-adjusted terms, 58 per cent of the net jobs created in Australia in the last 12 months have been part-time. When one grasps the reality of this depressing state of affairs, it is not hard to see why wages growth is so low.

When Scott Morrison brought down his fiscal statement (budget) last week, he predicted wages growth over the forward estimates to be 3.5%. This then, is factored into the tax revenue estimates and the broader bottom line. His projected surplus in 2020-21 is based on a wage explosion. That is the stuff of fantasyland.

It is laughable to the point of negligent. It’s as if a bottom line figure was established first and the rest put together to justify it. This is the way of it with the present government. It is incompetence and expediency played out to mask any realistic plan for job creation.

They simply do not know what to do, or do not want to. Either way, they are traitors to the nation they govern. The participation rate while steady at 64.8 per cent is well down on the most recent peak in November 2010 of 65.8 per cent when the labour market was still recovering from Kevin Rudd’s fiscal stimulus.

The answer, therefore, is blindingly obvious. Unless the government undertakes a significant spending program, targeted to soak up the idle capacity in our workforce, Scott Morrison’s budget estimates will not be realised.

There is no evidence that there is sufficient activity planned in the budget that will make this happen, even allowing for the additional infrastructure allocation announced last week. It is too little and too remote.

Despite the bluff and bluster coming from both Turnbull and Morrison, the economy is going nowhere. In the meantime, a debt burdened private sector is drifting precariously toward a precipice that has the capacity to cause a monumental economic collapse.

And we can’t say we didn’t see it coming.

 

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A Budget Primed to Backfire

We will know pretty soon, probably next week, how Scott Morrison’s fiscal statement (aka the budget) has gone down with the electorate. Trying to judge the mood of the voters today is fraught with difficulty. It is safe to say, however, that at least 52% will not be swayed by this so-called Labor-lite document.

Some would even see it as a complete capitulation of long standing Liberal values in their desperation to remain in power. For indeed that’s all it is; a pathetic attempt, not to balance the books, for they now know that is a bridge too far, but to give the impression that they can make the right call given changed circumstances. They will fail.

Initially, the swinging voter, however, might be impressed. Such is the ignorance at street level of what is really required despite what has been thus far, a fairly spirited reaction from Labor. But of one thing we can be certain. Any bounce in the polls for the government will be short-lived.

They now have too much baggage, both in what they have failed to do and what discontent exists within the party with this and other issues. All this means further displays of discontent that will, from time to time, spill over onto Main Street where those swinging voters, ignorant and ill-informed as they are, will recognise a government in disarray and revert back to their pre-budget position.

Taking a swipe at the banks is good politics, but Labor won that initiative a couple of years ago. By taxing the big four, the government has legitimised and strengthened Labor’s call for a Royal Commission. By forcing students to pay higher fees they have placed a generation at odds with a government full of graduates who received their degrees for free.

By drug testing welfare recipients, they not only demean the unemployed but clearly show their deep dislike for them. This resonates with all of us. This is blame shifting designed to disguise their inability to provide sufficient jobs for all those who want to work. It will end badly.

Bill Shorten has rightly emphasised the lack of fairness, the inequality of taxing the poor to service the wealthy. It is not a two day headline grabber. It is something that will become increasingly apparent as families continue to struggle meeting mortgage payments.

On Insiders this morning, Scott Morrison stated that the next likely move in interest rates would be up. He is right, but does he have any idea what that will do to the outer suburban mortgage belts of Sydney, Melbourne and Brisbane? For him, and his government, it will become like a festering sore that won’t heal.

As for the attempt to placate those trying to buy into the property market by offering salary sacrifice incentives, this too will fail. Who has the flexibility, in the short term, to establish a home saving account with sufficient funds that could keep pace with prices today?

The government knows, that to introduce a program abolishing negative gearing, the one issue we all know is fuelling the housing market, would mean most of their own members would be disadvantaged. They can’t bring themselves to do it. The rewards have been that good and they all want them to continue.

But they will pay for it in the long run. It’s not that hard to see how an increase in interests rates will hit investors just as savagely as it will the average homeowner, now mortgaged to the back teeth.

This fiscal statement may well prove to be worse than Joe Hockey’s first effort in 2014. And wouldn’t Joe salivate at the thought of that.

The Budget: an ongoing lie

As a political commentator, I probably shouldn’t admit that I’ve given up on Q&A. I came to the conclusion late last year that it had lost its way. I felt it was pandering more to ‘gotcha’ moments for entertainment purposes rather than in-depth political analysis and holding politicians to account.

I haven’t watched a full program this year, tuning in only at the tail end to see if anyone had imploded or proclaimed Australia a Republic. None of that happened last night, but what I did witness toward the end was the Minister for Veterans Affairs, Dan Tehan, give us his view on how we were going to repay the national debt.

He went on with some rubbish about having to get the budget back into surplus before we could begin paying down the debt. “Until you can get your balance sheet right, you won’t be able to (address the debt),” he said. His comment reaffirmed how right I was to stop watching Q&A.

Tehan said we needed to get the budget back into surplus, before we could start paying down the debt and I have no doubt he actually believes this. Most government and opposition members do. And therein lies the problem. They are economic illiterates.

How does one cut through on this issue? How do we go about explaining the reality that is a fiat currency? How do we explain in words of one syllable, that a government bond purchased by an investor and held in an account at the Reserve Bank as a deposit for that investor, is not a debt repayable by the people of Australia?

How do we explain that money received by the Reserve Bank for bond sales is not spent providing services? How do we explain to our politicians that all government spending is new money issued by the Reserve bank and electronically transferred to the commercial bank accounts of those who provide government services?

How do we explain that taxation receipts are monies drained out of circulation to enable the infusion of new money to keep the economy turning? How do we explain that a budget surplus is not a saving to be spent at some later time?

How difficult is it for a politician or the average person to grasp this reality? How much better would a platform like Q&A be if it were to confront politicians with this reality and call them to account on their failure to address poverty and inequality?

What is the point of having those who receive welfare payments, those who are public servants, pensioners and so on, believe that they are the beneficiaries of someone’s taxation receipts?

How much better would the conversation be if we were no longer tortured with comments such as, “my taxes are paying for this” or “taxpayers’ money is being wasted,” or other such absurdities?

Tonight’s budget will be, as it always is, the greatest lie a sovereign currency issuing government can tell. And the lie is perpetuated day in, day out, on an unsuspecting public who don’t know any better.

Tonight’s budget will be a chest-beating, blowhard of fiscal allocations that are meaningless to most people because they will neither understand the language used, nor be sufficiently informed to make a judgement on its value.

 

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Good and Bad Debt from Dumb and Dumber

Finally something of interest came forth from the mouths of our good Prime Minister and Treasurer this week. They began talking about good and bad debt. It sounded a bit like funny money, at first, coming as it did from two staunch economic conservatives who hate debt of any kind while having little understanding of it.

What they were trying to tell us, albeit quite badly, is that they see no way out of the debt (so called) spiral they have been taking us and want to redefine it in such a way that shelters them from the harsh realities of their own incompetence.

They have looked into the crystal ball, sought to find a way out of the mangled economic mess they have created and save some of what they think, is their credibility. In doing so, they have exposed their ineptitude even further.

As a former banker, Malcolm Turnbull would make a good janitor. As a former tourism director, Scott Morrison would make a good cleaner. Neither indicates that they have the slightest idea how money works.

This latest move on trying to explain the difference between good debt and bad debt is like a parent explaining to their five-year-old why they have a mortgage. The detail is right, so is the reasoning.

The problem is that the parents forget the number of times they told the child that money doesn’t grow on trees and how some things are not affordable. The result is an utterly confused child who thinks it’s all too hard and goes outside to play. And anyway, didn’t money come from daddy’s bank and mummy just kept it in her purse?

If ever we had proof of the level of incompetence Turnbull and Morrison have sunk to, Thursday’s announcement delivered it.

“It can be very wise for governments to borrow, especially while rates are low, to lock in longer term financing and invest in major growth producing infrastructure assets, such as transport or energy infrastructure,” Mr Morrison said.

Has it really taken them over four years in government to realise that? Where was this sort of thinking when they were crucifying Labor over the cost of the NBN? Where was this sort of thinking when Joe Hockey boasted he would return the budget to surplus in their first year? And how’s that working for them these days?

If yesterday’s announcement had come from Bill Shorten, just imagine the outcry from the unadventurous, mean-spirited, let’s screw the little guy to help our rich friends, conservative camp. How quickly would they have warned the nation against the reckless, high-spending, debt laden foolishness that we have come to expect from Labor governments. But there’s more….

“But to rack up government debt to pay for welfare payments and other everyday expenses, is not a good idea,” Morrison continued.

No, it’s not. So why don’t they do something about unemployment beyond talking about it? Why not put welfare recipients’ to work with a job guarantee? Why not demonstrate, in practical terms, how utilising idle resources (the unemployed and underemployed), by creating value-adding projects, can stimulate an economy and benefit the nation as a whole?

If last Thursday’s announcement about “investing in major growth producing infrastructure”, was a genuine mea-culpa from this mindless duo, one could be a little magnanimous and say better late than never. But that’s not their plan or their vision.

Like everything else they do, it’s all just cheap politicking. Their inability to articulate a sound platform for arresting the housing spiral has run its course and now they are trying something else. It sounds suspiciously like the budget numbers are revealing a bigger deficit than projected in the forward estimates and this has to be explained somehow.

So, without admitting their inability to stop the debt spiral (so called), they have decided to redefine debt. Their jealousy over state governments’ taking the credit for infrastructure projects financed with federal money is their first target. They want some (perhaps all) of the credit.

What hypocrisy! After spending the last four years flogging off anything that moved, these princes of privatisation want some equity in infrastructure. They now want to own stuff. Really? What brought about this 180 degree shift in thinking?

It’s the fear that the upcoming fiscal statement (the budget), will expose them as failures. They have looked into the crystal ball and seen their legacies trashed. They have decided to embrace debt rather than demonise it.

Well, that’s fine. Better late than never, but they still don’t understand it. They still think it has to be repaid. They still think money they create has to be repaid to someone. They still have such a long, long way to go and they will never get there until they understand the power of a sovereign currency issuer. They probably never will.

 

What They Say, Is Not What They Do

“He’s a can-do prime minister,” she said, “He’s got a vision for this country, he’s got a lot of issues to deal with but he’s performing strongly and he will retain the support of the vast majority of the party room in order to lead us to the next election.”

These are the words of Foreign Affairs Minister, Julie Bishop on 26th March when asked if the Government might dump Malcolm Turnbull as party leader. Let’s unpack this seemingly simply statement and juxtapose it with the March 26th Fairfax-Ipsos opinion poll.

The poll puts the government 10 points behind Labor, (55/45%) on a two-party preferred basis, so one might expect a show of support for an embattled leader. But to say he’s a ‘can-do’ prime minister is ridiculous.

If Malcolm was a can-do PM, we would have marriage equality, we would have an emissions trading scheme, we would be heading toward becoming a Republic. Most likely, we would have a state of the art NBN, not the second rate one he was forced to cobble together when he was Telecommunications Minister.

If Malcolm has a vision for this country, it has not emerged thus far. What has emerged is his willingness to cave in to the far right of his party in an effort to keep his job. Not a good look from an electoral point of view.

When is it going to become apparent to the MSM that the Federal government’s “Jobs and Growth” mantra is a farce? In fact, it’s far worse than that. It is an utterly deceptive political stunt to give the impression that they have a plan and the plan they have, is working.

And this seems to have become the standing mantra. The constant reminders that they are doing the job that will lead us back to prosperity. The only problem is, what they say, is not what they do.

“In last year’s Budget, I said we needed to focus on jobs and growth … Since last year’s budget, we’ve made good progress,” Scott Morrison told the AFR Banking and Wealth Summit on 6th April. What rubbish. There has been no improvement this financial year.

Unsurprisingly, the March Labour Force results as analysed by Bill Mitchell confirm this….

“I repeat my standard monthly warning – we always have to be careful interpreting month to month movements given the way the Labour Force Survey is constructed and implemented.

Today’s figures show that the Australian labour market has improved in March 2017, although we have been led down this path before in recent years.

Total employment rose fairly strongly, relative to its recent history – by 60,900 but it was the strength of full-time employment (up 74,500) that is welcome.

The curious fact is that despite the strong full-time employment performance, total monthly hours barely moved.

But the analysis shows that employment growth over the last few years has been zig-zagging around the zero growth line on a more or less monthly basis with some positive spikes such as we saw in March 2017.

So it is too early to form a view that this month marks a turning point in a positive direction.

Over the last 12 months, Australia has gained 67.8 thousand full-time jobs (in net terms) and gained 78.1 thousand part-time jobs.

Overall, employment has grown by only 145.9 thousand jobs (net) – a fairly modest annual figure.

While this month’s surge in full-time work represents a break in the dominance of part-time work, we need more months like this before we can reject the obvious conclusion that Australia has become a nation of part-time employment growth with all the attendant negative consequences – poor income growth, precarious work, lack of skill development etc.

Underemployment remains high at 8.5 per cent and taken together (unemployment and underemployment) there were 14.7 per cent of the labour force counted as broadly underutilised (1,890.3 thousand).

The teenage labour market remains in a poor state even though this cohort shared in the full-time employment growth in March 2017.

Overall, the state of the Australian labour market is tenuous verging on weak.

It is clear that the current restrictive fiscal policy position adopted by the Federal government is not sufficient to redress the inadequate non-government spending growth.

It is also clear the cutbacks the Government is planning in the May Fiscal Statement are unwarranted.”

So where is the growth? Where are the jobs? Overall, the labour market is weak and showing no signs of improvement. Yet Malcolm Turnbull continues to spruik his government’s commitment to job creation. He is either a supreme optimist, or a very poor salesman. Either way he is spruiking rubbish.

His hapless bunch of Coalition cohorts put on a brace face but can clearly see the writing on the wall. In the coming months look for a diversionary campaign. Something, anything to distract the voters’ minds from the bleeding obvious.

There have only been 52.4 thousand jobs (net) added in Australia over the last six months while the labour force has increased by 82.2 thousand. Furthermore, employment growth over the past twelve months has failed to keep pace with population growth. We are going backwards and the Coalition government are a monumental failure.

They simply do not know how to arrest a declining economy.

Dysfunction and Disunity: The End is Nigh

“Those who fail to learn from history are doomed to repeat it,” is a near perfect description of what is going on inside the Liberal party right now. They don’t just appear to be disunited and dysfunctional, in reality, they are all of that.

No matter how hard Malcolm Turnbull tries to convince us that he is succeeding where Tony Abbott failed, the truth is otherwise. He is proving to be as big a failure as Abbott was, the only exception being that he is able to articulate his failures.

Who would have thought after the debacle that was the Rudd/Gillard/Rudd dysfunction, that this government would be journeying down the same path? Yet here we are, witnessing an internal donnybrook every bit as fierce as that which brought an end to the Labor government in 2013.

What is it about politics that lets this happen? What is it about politicians? What is it about us as a people, that we breed such mongrels? We shouldn’t be surprised, I suppose; it has been going on since Adam and Eve. Never though, has it been so open.

The Turnbull government is in deep trouble and they know it. Their policies are shallow, their vision is non-existent, their judgement is pathetic, their inability to deal with relatively simple issues like marriage equality, climate change, the economy, education, health and welfare is indefensible and the polls show the electorate has lost confidence in them.

Little wonder they are fighting each other. Labor members watching from the sidelines can’t believe their good fortune. What they see is a mirror image of their own behaviour just three and a half years ago. But this one is nastier.

The government’s problems are clear to those of us watching from the balcony. Their inability to think for themselves has allowed outside forces, the ones that fill their coffers, to dictate the terms. These external forces want to maintain the status quo and continue to broaden the gap between them and the working man and woman.

Hence, there is no room to serve the people.

Winning a pay cut for the lowest paid in our society says it all. While politicians, state and federal, feather their nests, taking advantage of rules of their own making, that encourage them to bleed money from the system and while those in the corporate sector pay themselves obscene salaries, those that work on Sundays are being penalised to advance the cause of inequality.

Governments around the world have been dismissed for less. There’s not a spin doctor alive that can fix this.

It’s what happens when one loses control. Someone else steps in to fill the void. The federal government are just pawns playing out a script, backed into a corner with no means of escape. The plutocrats have taken over.

The Coalition will lose the next election by a landslide. Mind you, a landslide in Australian elections might be as little as 53%. For some reason, mostly to do with a flawed electoral system, it only takes a few percent to create a huge imbalance in party representation.

At least when Labor were defeated in 2013, they were governing well. But the electorate saw through the disunity and exacted a price. This time the electorate can see bad government in addition to disunity and the Coalition will suffer for it, big time.

When the level of despair and dysfunction has escalated to a point where Peter Dutton is being considered as prime ministerial material, you know the end is nigh. But changing governments every six years is not good for the country.

Labor needs to learn the lessons of the Rudd/Gillard/Rudd disgrace. Sound leadership, sound economic policies, embracing equality and not being intimidated by the media or the plutocrats, will endure, provided the party, as a whole, works as well on the inside, as it does serving the people.

It’s Labor’s to lose.

Catholicism and the Liberal Party

So Cory Bernardi has finally made his move and put his career where his mouth is. A brave move whatever one might think of his politics, but one where at least his job won’t be at risk for another five and a half years.

He leaves the Liberal Party no worse off really. He’ll still support them. But it’s not a good look, electorally. At the moment it’s easy to watch the Liberal Party imploding. But it shouldn’t come as a surprise to those of us who have witnessed the party’s evolution over the past 50-60 years.

The decay has come from within. It has come because the ultra-conservative wing of the party, Cory’s wing, feels the party is losing its grip on values it believes are central to its raison d’être.

The irony though, is that those values, now under threat, were never part of the party’s original platform, not Menzies’ party. They came in by stealth and quite recently at that. They are essentially Catholic Church values. They are Opus Dei values.

Around 30 years ago, the Liberal party began a covert transformation, so covert in fact, that few inside the party even noticed it was happening.

It began with a disproportionate influx of Catholic members that traditionally, would have been more comfortable in the Labor Party.

This new membership came primarily as a result of encouragement from within the Church, which saw its traditional influence in the Labor Party falling away. It was coming from within Opus Dei.

Traditionally, the Liberal Party was a bastion of Protestantism. At one point when Sir Robert Menzies was Prime Minister there was only one Catholic Liberal member in the House of Representatives.

By the time Tony Abbott became the first Catholic Liberal Party Prime Minister, nearly 50% of his cabinet was Catholic; all this added influence, when only 25% of Australians claimed to be Catholic.

The disproportionate nature of this representation is even starker when one realises that only 15% of Australian Catholics are actually practicing Catholics, i.e. those who attend church regularly.

Church teaching opposing communism, divorce, abortion, gay marriage and euthanasia has been progressively under threat since the 1970s and as local parish congregations continued to dwindle, the need for the Church to have strong parliamentary influence became paramount.

To the Catholic Church, power is everything.

The current disproportionate representation is by no means accidental or coincidental. But lately, things have not been going well for it. The elevation of Malcolm Turnbull to the leadership has upset the cosmic order of things and the conservatives (aka, hard-right Catholics), see themselves on a collision course with irrelevance.

The defection of Cory Bernardi from the Liberal Party is a symptom of this malaise. This image of him as Australia’s Donald Trump is misplaced. Bernardi is nothing like Trump. If anything he is the opposite of Trump.

But he can see where the populist shift is going. And that is what concerns him.

Bernardi is not a populist, he is a committed Christian conservative concerned that a populist movement in Australia, as might be witnessed with the rise of Hansonism, is gaining momentum.

Primarily, Bernardi is concerned with the threat Australia’s secular lifestyle and the influence of Islam, means to traditional Christian values. His defection won’t weaken Catholic influence within the Liberal party but he did not think it was doing enough.

What he thinks he can achieve out on his own is not known, possibly even to him. But clearly his idea of where Australia should be heading is at odds with Liberal party agenda.

What we do know, is that the Catholic agenda within the party comes at the expense of rational policy decisions, something that will do the party no good at all.

Therefore, we can expect that the crumbling of the party will continue.

 

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A Race to the Bottom

Firstly, Donald Trump and the future of the world……

Here’s my take…….Donald is possibly the most narcissistic person I have encountered in public life. From history I have concluded that John Paul II, Nixon, Hitler, Bismarck, Lincoln, Napoleon, Henry VIII, Pope Innocent III, all the way back to Augustine and Alexander were narcissists. They all caused, to some degree greater or lesser, serious upheaval within their sphere of influence. Trump will do the same. How serious this upheaval will be is hard to say, but I do not rule out some military conflict and certainly some global economic consequences. He might pal up with Putin but if China is the target, make no mistake, Russia will side with China when the spaghetti hits the fan.

What has that got to do with Australia? Ask Malcolm Turnbull. He has first-hand knowledge.

Who would have thought 2017 would be the year of the narcissist and the amateur? But here we are. Donald Trump is President of the USA, Malcolm Turnbull is our Prime Minister and Pauline Hanson’s One Nation Party might poll better than the LNP in the upcoming Queensland and Western Australian state elections.

If that wasn’t enough, Cory Bernardi is tipped to form a breakaway Conservative party that will be further to the right of the Liberal Party. Mind you, it’s not altogether clear if Cory’s party will be further to the right of One Nation.

If you thought that was depressing, take note that “fake news” is the latest genie out of the bottle. The chances have never been higher that a flood of unbelievable rubbish oozing out of Canberra, Washington, the right wing MSM and certainly social media will be forthcoming in spades.

One can barely imagine the level of mis-reporting, fake news, lies and deception that is about to be unleashed upon the poor unsuspecting citizens of the world this year.

It will be unprecedented. Little wonder some are feeling like Alice through the looking glass. It is humorous enough watching Senator-no-longer, Rod Cullerton refusing to accept the decision of the Federal Court and vowing he won’t vacate his office, but that is small chips.

On more serious matters, as much as the Coalition partners here will try to hide it, or limit themselves talking about it, our government is between a rock and a hard place with The Donald in the Maison Blanche.

Beware though. This Liberal/National Coalition are a bunch of opportunists and rednecks without a vision beyond perpetuating their own existence.

Trump is a Republican president; their kind of people. He’s a Reagan man, again, their kind of people. But he’s a loose cannon and they are going to be bullied in ways they have never experienced before.

How on earth did it all come to this? That’s an easy question to answer. What we are experiencing as we observe these unexpected outcomes is a worldwide revolution against inequality.

The Americans who voted for Trump, however, have shot themselves in the foot. If they were looking for someone to restore equality to America, they should have chosen Bernie Sanders.

Instead, they have put a filthy rich guy in control because they were sick of filthy rich guys hoarding all the money.

But let’s not concern ourselves with them. What is likely to happen here? As Trump begins to legitimise crassness, political incorrectness and post truth, you can be sure our government will be paying close attention and attempt to capitalise on what he gets away with, by doing something similar here.

If the Queensland and Western Australian state election outcomes show strong support for Pauline Hanson’s One Nation, it will be at the expense of the conservative side of politics.

Coalition members will feign displeasure, of course, but quietly use this lurch to the far right to push for the repeal of Section 18C, call for harsher adjustments to their border protection policy and their immigration intake.

And perhaps, as the doors of the conservative media fly open, ready to embrace public mood swings, they will begin attacks on any minority group that One Nation targets. Trade Unions will also come in for some special attention. Anything to reverse the current disastrous polling figures.

So, get ready to witness the race to the bottom as lobby groups and spin doctors are brought in to soften us up and proclaim closet racists and rednecks as the new normal.

The Coalition will do whatever it takes to recover from their current poor polling in readiness for an election in 2018, a year earlier than required, but necessary to bring the senate timeline back into sync.