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Day to Day Politics: Pre-budget time without Barnaby.

Tuesday 13 March 2018

On this day in 2016 I wrote: “I have been writing daily about Malcolm Turnbull’s takeover of the Liberal Party leadership. In the passage of months, indeed years since, I have constantly expressed my view about Turnbull’s failure as a leader.”

Anyone who follows my writing will attest to me, at first, embracing him as a new light on the hill. I said that Australians would be eternally grateful to him for removing the greatest liar of a politician the country has had to endure. He would bring a new era of reasoned political discourse.

For the ensuring months it became apparent that despite his eloquent, articulate and grandiose presence, he had no plan, no economic reform agenda and his only motive has been one of self-interest. There was nothing to reasonably debate.

Some said I was overreacting and he just needed more time. Well, I’m pleased that at the time one of his own in former Victorian Premier Jeff Kennett let it be known openly and with forthright manner just what he thought of the new Prime Minister. Jeff, whether you liked him or not, could never be accused of holding back.

I got to ask him a question at a function many years ago. I asked him why he was going to an election when there was no reason to do so. His answer was a lie, but forcefully put.

Anyhow this is what he had to say about Malcolm Turnbull during a 2UE radio interview:

”When they changed leaders, I thought we were in for a period of government, a period of stability, a period in which policy was going to be enunciated.”

”This talk about an early election is an indication, sadly, that the government does not have a plan for the future of the country and they are trying, I think, to use this talk of a double dissolution, an early election, simply to cover up their own failings.”

Mr Kennett said the Prime Minister ”did not have any plan at all’ when he took the leadership for his own self-interest”.

He added that Turnbull had received much public goodwill in taking over the leadership but had squandered it with his failure to create a narrative when the public was ‘craving good leadership’.

”What they can’t stand is vacillation where politicians don’t have the courage, in this case in my opinion, to put the interests of the country well before their own and their own party”.

He went on to say that he had failed to stand by his beliefs on negative gearing and same-sex marriage.

”We don’t need a plebiscite on this. We don’t need to waste another $139 million on a vote.” If Malcolm had any courage, he would have simply stood up and said ”I’m going to put this through the Parliament.” What he’s saying now. ”This decision, this policy position was decided by Tony Abbott and we’re going to stay with it,” he said.

Back then it was a good example of where Malcolm set himself apart from Tony Abbott and yet, when he took on the leadership, he hid behind Tony’s clothes and did not have the courage of his conviction and that applies right across the board.

Nothing different in all that than what I have been saying for some time. At the risk of repeating myself the fact is that he never had a narrative to express, nor the conviction of his own beliefs. We had a “yes” man, a hypocrite doing what he was told to by the extremists in the coalition. Nothing has changed since.

We still have Abbott’s policies with Abbott’s problems. They may have cunningly gotten rid of Barnaby Joyce for obvious reasons. To give Turnbull a singular voice but that aside the Nationals leadership is still in the hands of the extremists.

After his masterful elimination of Joyce, a slight hurdle at Newspoll’s 30th, you can expect the PM to re-emerge as the best economic manager the country has ever seen. And Murdoch will back him to the hilt.

We have now gone into a pre budget period minus Joyce and we can expect the voices of Turnbull and Morison to become a crescendo that will join with the presses of Murdoch to tell us what good economic managers JUST AS OUR DEBT REACHES $517,987 million.

With a negative outlook on the credit rating.. is there any adult in the government who can make a case for permanently reducing our tax intake and blowing this out further? I don’t think so. Deficits should fund productive capacity not enriching the super wealthy.

Net debt in the next year is expected to reach 19.2 per cent of GDP — 0.6 per cent or $12 billion lower than forecast in the May Budget — while gross debt is on track to be $23 billion less in the forward … But Australia’s debt this year is still a record-breaking $517 billion, with an interest bill of $18 billion.

My thought for the day

“It is a pity that fact in journalism cannot be made compulsory and decency legislated.”

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  1. Don A Kelly

    One hundred and four years ago on this day Wednesday (13 March 1914), the new member for Granville stood up to make his maiden speech in the State Parliament of New South Wales. He was a big man, with broad shoulders, a powerful jaw and forceful manner. Introducing himself, he said that he represented Granville and a voice from the body of the House, perhaps wishing to take the wind from the sails of this confident newcomer, called: ‘Granville? Where’s that?’ The big man turned and fixed his questioner with a steady gaze. ‘If you have never heard of it before,’ he said, his resonant voice carrying into every recess of the parliament chamber, ‘you soon will.’ There was no doubt about that. The maiden speaker was the redoubtable John Thomas (Jack) Lang, who was to become a turbulent, colourful and controversial figure in Australian politics and my Grandmother idolised him.
    At the age of nineteen Jack Lang was to marry one of the McNamara daughters of McNamara’s Bookshop in Castlereagh Street Sydney and they had six children. Henry Lawson also married one of McNamara’s daughters, hence they became brothers – in – law. In the year of Federation they moved to Auburn where Lang had a real estate office. He established a Labor League, won a seat on Auburn Council and became mayor. Lang rose steadily in the Labor Party political ranks, moving up from Secretary and Whip of the New South Wales Parliamentary Labor Party to State Treasurer. He began his first term as Premier of the State in 1925. In the teeth of great opposition, but in keeping with his electoral promises, in his first term as Premier he brought in Child Endowment, Widow’s Pension, a better brand of Worker’s Compensation, a forty hour week, a Main Roads Authority and inaugurated the Government Insurance Office. Lang also started the State Lottery to provide revenue for hospitals and introduced ‘tin hare’ racing at greyhound tracks to save live rabbits from being torn to pieces. His shadow fell across much of what constitutes modern Sydney: the Harbour Bridge, the Underground City Railway, the electrification of the suburban railway system where all schemes he instigated and which were greeted with critical disapproval by some. His Government planned a branch railway to Balmain, an Eastern Suburbs Railway and a railway to Palm Beach, as well as other road – widening for the city. Lang’s Government fell, however, before these projects could be carried out. He became Premier for a second time in 1930 at a time when Australia was in the grip of the great depression. When the Bank of England wanted the interest paid on outstanding loans and ordered the Government to tell the people to eat less and to work harder in order to pay the bondholder’s money, he said, “Go to hell, I won’t do it. I’d sooner make you wait for your interest. YOU can share the sufferings you so coldly inflict on the people,” The repayments must wait or the people would starve. Then came the famous Lang Plan. One: That the Australian Government should pay no further interest to British bondholders until the financial position improved. Two: That interest on all Government borrowings be reduced to three percent. Three: That Australia abandon the gold standard and go onto a currency based on its wealth – the goods standard. During retirement Jack Lang once stated, “If I had my way, Parliament would enforce a minimum wage for every Australian adequate for the wants of a man, wife and three children. I’d do away with the lying statements about prices invariably rising because of wage increases. Why are wages and not profits always to blame?” Jack Lang was a remarkable man and an outstanding politician and will be remembered for his contribution to the welfare of many Australians.

  2. Time for Terry

    Everyone can see the massive iceberg.Though our captain is in lounge playing the pokies and chewing his fingernails.

  3. Terry2

    I noted that Turnbull, when being interviewed by Leigh Sales on 7.30 on the subject of the TPP11, used the Labor party as his motivation to pursue this agreement when the USA pulled out. Shorten had said it was “dead in the water” adding “Why on earth is Malcolm Turnbull taking us down a frolic on a treaty which the Americans are never going to sign.”

    So evidently this energised Turnbull to get the TPP11 signed : does that mean that we have to blame or applaud Shorten for getting this agreement through ?

  4. Keith

    After the Leigh Sales interview with Turnbull last night, Four Corners was about excessive migration. Turnbull had congratulated himself about the number of jobs created on the 7.30 Report; the but is, that migration provides an avenue for more jobs to be created when new infra-structure is required to provide for the new residents. Q&A went on with the issue of excessive migration, and it is clear that it is a dogs breakfast which reflects the lack of long term planning beyond political cycles.

  5. Terry2

    So, who exactly is responsible for our migration policy and, by extension our population policy ?

    There is no longer an Immigration Department or a Minister for Immigration. Does that mean that Peter Dutton is responsible for our immigration policy ?

    Surely not, Dutton hates foreigners and usually sends migrants to offshore islands.

    It seems that we will have to wait for Dutto to speak to Ray Hadley on 2GB – no way will he speak to the ABC – and explain his population policy for Australia.

    These people give me a headache !

  6. Paul

    I can’t help but wonder why you have included several paragraphs about the increasing “debt” when I’m sure I have read articles from you espousing (quite rightly in my opinion) the overwhelming superiority of MMT when it comes to framing our view of the economy. We on the left cannot have it both ways and more importantly by choosing to bash the Libs over the “rising debt” we are simply making a rod for our own back as no government , Liberal or Labor , will return to surplus or even balanced budgets without a reoccurrence of the once in a lifetime export boom that allowed Costello his free ride. Please … as tempting as it may be let go of the neo-liberal mantra of debt and deficit and find more worthy metrics for assessing the health of our economy/society.

  7. Terry2

    A Labor government would cancel cash refunds to taxpayers who own shares and claim tax credits on their dividends.
    More than one million shareholders would lose their cash refunds for what’s known as excess dividend imputation credits, saving the budget up to $59 billion over a decade.

    Mathias Cormann says that this would hit the Mum & Dad retirees who play the stock market : Labor say that as these dividends recipients have not paid tax , they are not entitled to a cash refund from the tax office. This, in fact was a recommendation by the Murray Report on Financial matters who found this system of tax credits to be a drag on the economy.

    The Murray Report on which Labor are basing their policy was commissioned by the coalition in 2015 but not acted on.

    You decide !

  8. Matters Not

    Yes Labor will bite the bullet on dividend imputation as it affects a significant number of retirees. A courageous decision that will arouse the ire of those who included such income in their retirement plans. Why they don’t grandfather some aspects, as they are doing with capital gains, is curious.

    The implications are many and varied that will have taxation experts burning the midnight oil. Expect (complicated) family trusts to become more popular and more monies invested in already overcapitalised family homes. But I’m sure they thought of that. Nevertheless Turnbull will be ecstatic. Witness, another exposed flank of sorts. Can’t see how it will win votes but I can see how it will lose a number.

  9. Roswell

    Matters Not, you might be able to help me here, but wasn’t it our best ever Treasurer (Paul Keating) who hammered the first nails in the coffin of family trusts?

    They had far too many tax loopholes.

    My memory on the subject is poor, as is my knowledge.

  10. Kronomex

    Gosh, isn’t it a surprise that the “30 Bad Polls” excuse Trembles used to knife Abbott now, magically, doesn’t apply to him.

    I think Shorten has made a mistake announcing this tax idea at this juncture in time. The LNP will now slam him from pillar to post with their hoary old “what about the mums and dad?” bullshit. Rupert, Jones, Bolt, and other sundry rabid cretins will scream from their pedestals that Labor is going to destroy civilisation as the LNP knows it and they MUST-BE-STOPPED!

  11. Matters Not

    Roswell, I am not an expert (I leave such matters to the accountant) but with the introduction of the GST, Peter Costello stressed that we would have what he called a whole new tax system. Part of that new tax system was a promised crack down on family trusts. However, the National Party wasn’t having any part of that and they threatened a revolt. Costello’s promised crack down died a quiet death.

    Hockey also entertained the same reform and faced the same revolt. He too went really quiet very quickly.

    If one wants to get serious about the tax treatment of assets, it won’t become realistic unless the dispensation given to the family home is, if not abolished, then seriously revised. Not much chance of that. Thus you can have people with multi million dollar homes and still receive the pension. A complete distortion of the market, causing an overcapitalisation and making is even harder for young people trying to enter that market.

  12. Glenn Barry

    I listened to some of, couldn’t deal with the entire episode, the interview with Morrison this morning – continually he speaks as though he were in opposition, blaming Labor, as if Labor are in government

    The LNP still haven’t learnt to behave like the party in government – vacuous approaches an adequate description, but it’s impossible to distil something from nothing

  13. Kaye Lee

    ” Expect (complicated) family trusts to become more popular ”

    Labor will impose a 30% tax rate on distributions from discretionary trusts in an effort to crack down on income splitting and aggressive tax minimisation by high-wealth individuals.

    Bill Shorten unveiled Labor’s new policy at the New South Wales party conference on Sunday. The measure is expected to raise $4.1bn in revenue over the first four years and $17.2bn over the medium term, and take effect from 1 July 2019.

    The new tax rate will apply to trust distributions to beneficiaries over the age of 18.

    It will not apply to non-discretionary trusts, such as special disability trusts, deceased estates and fixed trusts, nor will it apply to farm or charitable trusts – carve outs which will likely reduce some of the political backlash to the measure”

  14. Matters Not

    Yes KL, Bowen announced that some time ago and a lot of small business owners are outraged. That there will be carve outs provides loop holes nevertheless.

    Note that we are having an Inquiry into Banking that is wide ranging but does not included the Big Four accounting firms which provide the tax avoidance advice to the big end of town. Note also that the big accounting firms are now acquiring legal firms so that can use the loophole of legal and professional privilege when advising clients.

    Meanwhile, some of the largest and most profitable companies operating in Australia pay zero tax. That’s the elephant in the room.

  15. Kaye Lee

    There is going to be blowback from any proposed tax changes but at least Labor are having a go at policy. Add to that, their changes to negative gearing and capital gains. They could reintroduce the changes to the fringe benefits tax which only required people to actually justify their claimed business usage of their car by keeping a log for a period once every few years.

    On the other hand, their cravenly populist special deal for Catholic schools is undoing the good started by the Gonski reforms. What is the use of having a funding formula if you then go make deals on the side?

  16. Wun Farlung

    Thanks for the Jack Lang summary Don.
    The Big Fella was a man for all times who looked at the long term and not just the next election

  17. helvityni

    Matters Not, doing away with dividend imputation will certainly affect our retirement, says the one in family who understands such matters…

  18. Möbius Ecko

    Awww… Kill Bill isn’t working.

    Essential; Coalition down 1, Labor up 1.

  19. Harry

    Paul: I agree with your comments about debts and deficits. (I think you left out the word “not” though).

    John Lord: Basically a budget deficit or surplus is not a useful metric or a sign of either economic recklessness or prudence without reference to the state of the economy. Since Federation the Federal budget has been in deficit about 75% of the time. Deficits are almost always required to prevent the economy from tanking and its more a question of the size of the deficit that is required to run the economy close to capacity with unemployment no greater than the 2% we once had. The “debt” that is so often bandied about as “unsustainable” is never a problem. By convention instead of necessity, the federal government issues “debt” (bonds really) when it spends in excess of what it destroys (yes, destroys!) in taxes. It need not do so.

    A deficit represents a net injection of often much needed spending into the economy and a surplus is the opposite, a net withdrawal of money that is invariably damaging.

  20. Dale

    “Money Myth 3: America borrows from China to fund our national debt. ”
    “FACT: The USA doesn’t “borrow” from China (or anyone else) to “fund” government spending. ”

    ” China (and other countries) want to sell a lot of products to the USA; more than they want to buy.
    In the US consumers and businesses want to buy a lot of products from abroad at low prices.
    So the US receives real goods; China receives US dollars.
    Note that in real terms, the US is gaining since we get more real things than we can make in our own country.
    China is working hard for low wages to make stuff for us and all they get are credits to a bank account.
    The Chinese companies that sell these products need to buy supplies and pay wages in Renminbi so they exchange the US Dollars they receive at their central bank for their local currency.
    The Chinese central bank now accumulates these excess reserves of US Dollars in the form of an account at the US Federal Reserve Bank (all nations and international banks that deal in dollars have accounts there). They now have a choice:
    Hold onto reserves of US Dollars that pay no interest.
    Buy a Treasury Bond that earns interest.
    Of course they choose to buy bonds to earn interest.
    What just happened? China now owns some of our “debt” but it’s simply an accumulation of US Dollars that result from our large trade volume. We also hold the “debt” of countries that we run negative trade balances with. We just happen to have a very large one with China right now. In another ten years it may be another country.”

  21. New England Cocky

    I look forward to day to day politics without Turdball, Morriscum, Dutton and Barnyard Joke.

  22. Harry

    A BULLSHIT version about money is relentlessly propagated in the national media which are controlled and financed by the 1%. The narrative will sound very familiar. It goes like this:

    Our wealth as a nation is a finite resource privately and individually held by us and therefore all government spending must be funded by the collection of taxes. An “out-of-control” government spends more than we are willing or able to pay in taxes – and this lack of “fiscal responsibility” requires the government to borrow from the financial markets to make up the difference. This borrowing places the “out-of-control” government in direct competition for dollar resources with business. Since all of us are dependent on business to create jobs and pay wages, this competition for dollar resources by government reduces our prosperity due to the burden of tax payments, further compounded by the government’s debt which represents future tax burdens on us and our grandchildren.

    The BULLSHIT continues with the line that government gets “out-of-control” because in a democracy citizens with meagre financial resources are able to vote for government spending programs which provide services and benefits which they, themselves, cannot afford to buy. The 1% agenda, therefore, is focused on limiting or eliminating government spending programs which benefit the poor or less well off. The 1% view is that the best that can be done for those with meagre financial resources is to shrink the government and limit its spending, thus making more dollars available to business for job creation and wages. Providing financially struggling citizens with assistance, or welfare, or “free” services succeeds only in creating a culture of dependency. The very last thing the 1% agenda would ever want is for the government to “print” money to pay for the costs of its “out-of-control” spending, since such a policy would destroy the value of the citizen’s dollars (of which the 1% own the vast majority) and create the disastrous consequences of inflation.

    To date, the 99% have NO effective response because they accept its most basic premise: in order to spend, the federal government has to either collect taxes or borrow dollars from the private sector. This is taken to be such a logical, common-sense truth that it never occurs to the 99% to question its validity. Ergo, the 99% are forced on the defensive – trying to justify higher taxes on the wealthy to help the government ease the pain and social problems of poverty. “Pay as you go” is the only logic of the 1%. Thus, for example, the DSP has to be “funded” by tax increases or by cutting other programs – in other words something has to be taken from somewhere else—a zero sum game that requires someone to lose in order for others to gain.

    What the 99% must realize – even if it seems breathtakingly counter-intuitive – is that because of the realities of the modern fiat currency we use today, the premise of the 1% narrative is UTTER BULLSHIT.

    The TRUTH

    Any sovereign nation which fails to provide its citizens with the full benefits available to them by virtue of the sovereign’s inherent ability to issue and manage its own fiat currency should be strongly challenged by its citizenry.

    Any economist who makes the claim, either explicit or implicit, that a nation which issues and manages a sovereign fiat currency must either borrow or collect taxes in order to have currency to spend, should have his or her degree revoked.

    Any political leader in a sovereign nation which issues and manages its own fiat currency who claims the national government doesn’t have the “money” to pay for goods or services which are available – and which would greatly benefit the citizens – should be ridiculed as ignorant or evil.

    Any banker who suggests that a sovereign nation which issues and manages its own fiat currency is dependent upon the bond market to “finance” its spending should be investigated and prosecuted for financial fraud.

    Any journalist who makes his or her living writing about economic matters, who fails to take the time to understand and explain to his or her audience how sovereign fiat currencies actually function, should be stripped of their journalistic credentials and pushed out the door of the newsroom.

  23. Matters Not

    helvityni at 1:30 pm It will have a significant effect on our annual income as well. A cut somewhere north of 10 percent. It will hurt and straight out of left field..

  24. Jack Russell

    Many thanks Harry … very succinctly and accurately expressed!

    I will be making sure my kids read it, and understand it, next time they come for dinner (and before dessert – if necessary).

  25. Don A Kelly

    Most mainstream news services, including the ABC are particularly remiss when they are constantly using the so-called bank economists to give the daily commentary despite their vested interests. Most say the same thing and none that I ever hear know anything about how the modern monetary system actually operates. They seem to parrot mainstream textbook renditions of the daily events and reinforce the collective ignorance. Any opposition party that jumps on the ‘balance the budget’ bandwagon is making a rod for their own back.
    A Government that issues its own currency, that has its own Central Bank so that it controls the setting of interest rates and doesn’t sell any debt in a foreign currency, can never go broke. Debt should not be confused with deficit, which is simply the difference between what the Federal Government spends and what they receive in tax revenue, if the Government spends more than they receive in tax then they are in deficit. The Governments of most countries run deficits most of the time. If the external trade is in deficit, ie. imports are greater than exports, as they have been for the past decade and the Private/Domestic Sector tend to save then the Government will always be in deficit.
    So, why does the Government issue debt? The issuing of debt to the Private Bond Market is just corporate welfare. It gives corporations or affluent people and foreign Governments a risk free asset to hedge their uncertainty in a safe asset and gives them an income, a guaranteed annuity each year. The big wigs in the bond market are those that often lead the charge in the public debate about the need for structural reform and that is to reduce unemployment benefits or income for the most disadvantaged citizens yet they’re sitting on a welfare pool supplied by the Federal Government, far greater by many factors than the amount that is given out in income support for low income groups and the fact is that that debt is not necessary to support Government spending.

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