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.