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Hockey rattles the Corporate Sector

Joe Hockey gave a speech at the Lowy Institute on Thursday, 6th February to outline this year’s G20 agenda. The mainstream media practically ignored it and for good reason; the public just don’t understand, or are not interested in, the detail. If you have the patience, I recommend listening to it. Its author (whoever it was) has found the words to fit the timing, the scene and importantly, the audience.

“Too many tax payers’ dollars have been spent on corporate and middle class welfare and too often previous governments have been drawn into areas that are better left to the private sector,” Joe Hockey said. He went on to say, “The budget that we inherited from the previous government reflects the entitlement mentality that has dominated government decision-making over recent years.”

What he didn’t say was that the Howard government started most of that ‘entitlement mentality’. Mind you, his reference to ‘recent years’ could include the Howard era and could be interpreted as an acknowledgment that they share the responsibility. But he did not actually say that. He did, however, acknowledge that the Australian economy was in its 23rd year of uninterrupted growth. Interestingly, when you break that down on a two party preferred basis it is 12 years of Labor growth and 11 years of Conservative growth; so much for all the claims about who is better at managing the economy.

You may have noticed a change in the rhetoric now being delivered by our treasurer since he took over. One could say he has seen the state of the books, he has looked at the forward projections and in an arresting moment, after first thinking the roof had fallen in, he has realised Labor’s supervision of the economy had not created a budget emergency, rather, they were skilfully managing a full-scale world monetary meltdown in recovery. His G20 speech contained all the words you would expect from the man who had just been given the keys to the safe, who now knows how much is there, how little is coming in and how much of what is going out cannot be stopped. He also knows the cost of the promises his boss made at the last election. It is not pretty and Joe knows that rather than his boss being the one to carry the can, it is he and he alone who will cop the blame if the spaghetti hits the fan. For all his blustering and bellowing prior to the election, the raw truth has now hit home and he has nowhere to hide.

Thus his G20 address was specifically targeted. He has called on the cashed up private sector to get off its bum and do what it is supposed to do. My immediate thought was: good luck with that! But there is another problem. There is no one else in the government who is smart enough to help him. Joe’s only friend is Treasury and their predictions are, to say the least, uncertain.

To give him his due, pretty much everything he said at the Lowy Institute was on the money although I don’t think the audience would have found any joy in hearing it. The members of the private sector he was telling to get off their collective bums were shifting uneasily. “The business sector must shoulder more of the burden. It must restore corporate accountability, and rely less on government assistance. It must stand on its own feet, and it must pay its fair share of tax,” he said. To the private sector, this is new stuff. Sitting inside the comforts of their ivory towers they are often quick to point out what government should be doing for them (usually Labor governments), but not used to being told by conservative governments what they should do for the country. Hockey was playing the John F Kennedy card, “Ask not what your country can do for you. Ask what you can do for your country.”

His plan looks like a re-invention of the old trickle-down economics theory; the one Ronald Reagan proved didn’t work. If the treasurer thinks that by lifting red tape and encouraging innovative and creative thinking he will attract sufficient investment by the private sector to kick-start a slowing economy, then he would have to be a supreme optimist. Again I say good luck with that.

Speeches given at the Lowy institute are generally targeted. It was not to soften up the public for a razor sharp budget as Remy Davidson of Monash University suggested. The public were not even listening. He was aiming his words at the corporate sector. Joe was serious about the long term and he has every reason to be. He will most likely NEVER deliver a surplus budget. For him, that hurts.

One wonders where Tony Abbott fits into this bleak equation. The reality is, it doesn’t matter. He knows little about economics, has nothing of value to contribute and notwithstanding his previous experience as an amateur boxer, I suspect he would be loath to take Joe on in a fiscal punch up.

 

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26 comments

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  1. Billy moir

    If only little billy or anyone in labor would read your last paragraph, they may realise how vulnerable the rabbott is to ridicule. We may be spared some of his excesses but it may be hockey not turnbull so minimal improvement.

  2. lawrencewinder

    poor fella, my country…

  3. Stephen Tardrew

    John I have a sneaky suspicion that the TPP is the wolf in sheep’s clothing. There is a similar trade agreement being negotiated with the UK and it appears that the City of London, not the government, is the major player. As with the TPP there is an attempt to shut out public, as well as political discourse (back backbenchers included) and critical analysis of the agreement by the media before it is a fait accompli.

    None of the backbenchers in any of these governments are proxy to these negotiations. I don’t know about you but this worries the clappers out of me. I do not trust Hockey or Abbot one iota. Hockey’s apparent attack on corporate largess may well be a cover to lead us into complacency while playing the main game in the TPP background. This governments secrecy means anything goes.

    Corporations desperately want a global agreement based upon the lowest common denominator represented by Wall Street and the City of London. And so the effort is to formulate a global agreements with the the goal of weakening European standards to be more compliant with the US and UK.

    Were just minor players in the background. This reeks of government by corporations and negation of national laws and regulations. I don’t know if we can even trust Labor in this case. Labor’s suicidal dive into internal factionalism has made it powerless just when it needs to be a strong voice for reason and democracy.

    Make no bones about it the TPP is a direct attack upon democracy.

    No real accountability for the collapse in 2008, minor fines for insider trading, libor rigging, mortgage backed securities and on and on it goes. These guys are a bunch of known criminals still holding the financial purses of power. They own the Fed.

    Here we have a blatant attempt to put the final wedge into democracy so that local and national elections have little effect upon the corporate sector. This isn’t my imagination. Abbot, Howard, Hockey and LNP are neoconservatives and economic rationalist. Make the connection and be prepared for the battle.

  4. Kaye Lee

    “The business sector must shoulder more of the burden. It must restore corporate accountability, and rely less on government assistance. It must stand on its own feet, and it must pay its fair share of tax,”

    Yeah….right.

    “Tax commissioner Chris Jordan (with Hockey’s blessing) is backing a plan to provide a taxation amnesty to extremely wealthy people who have illegally offshored income or assets as a chance for them to avoid jail.

    It may seem cynical to assume that the present amnesty is being mooted just to spare the Coalition’s super-rich backers a legitimate legal punishment. But with the bleating of Hockey’s pre-election “debt crisis” pronouncement still ringing in the electorate’s ears, what the hell else could excuse it?

    The situation reveals that either Hockey is a great obfuscator and that the “debt crisis” is a furphy being used to justify some sick ideological punishment of the poor for being poor, or that the comfort and convenience of the very rich takes precedent over any considerations of the nation’s best interest. Or maybe it’s both – and that’s the most terrifying conclusion to draw should this tax amnesty go ahead. Australia is not merely being lied to, we’re being robbed as well.”

    http://www.theguardian.com/commentisfree/2014/jan/21/tax-avoiders-australia-amnesty

  5. Mic

    Rudd got it right when he paid the $4000 to pensioners as a cushion against the u.s.-induced finance “crisis”. The money still found its way to the top end of town but those of us who can’t work because severe ill-health or other disability at least got rid of some debts, or a couple of pseudo-luxuries to make the day more bearable.

    Remember that Abbott lives in a world where no one is poor (well no one worth speaking of).

  6. Marfi

    Kaye Lee, I wonder if one of those..”extremely wealthy people who have illegally offshored income or assets” is Alexander Downer? He had/has money in Cyprus, some of it which he lost in the Cyprus economic crisis. May or may not be illegal but…why in hell does he have money invested offshore???

  7. Tracie

    Stephen I agree with you entirely. With everything.

    I believe the only difference between the Nazis (or the Taliban) and us here today is action. There isn’t action… yet…but with Abbott’s and Murdoch’s minions riling people up, I’m not sure that difference will last long…

  8. revolutionarycitizen

    Do people realise that government induced wealth redistribution is based on the same “trickle down” theory?

    If this government does not tackle the underlying problem it will become unfixable under the next government.

  9. Stephen Tardrew

    Kaye Lee! What the? I missed that one. Good lord things just seem to get worse and worse. Toyota down the gurgler today. We are sitting by watching our workers lose their jobs and security for what? A global corporate elite obsessed with the lowest bidder and the greatest profit. Thatcher’s individuals writ large while societies cave in around the edges just for profit. The gross inhumanity and downright indifference by the government is appalling. And I thought governing was about the people fulfilling their hopes and desires in some feasible manner . Too right the debt crisis is a furphy meant to drive workers into paroxysm of fear. MSM will make sure of that. Voice, voice, voice we need a voice. Hello Labor anyone out there?

  10. Mike 1

    It can’t get much worse under this current Govt. Joe can only count up to eleventy so we are safe. What am I saying ? It can get worse and is, Hockeynomics is bad for this Country.

  11. Matters not.

    Marfi

    Downer is currently the United Nations Special Adviser to the Secretary-General on Cyprus and has been since 2008. He was paid ‘locally’, and suffers as a result. Which is fair enough, given that his task is an impossible one and he’s had no success..

  12. jasonblog

    @Stephen Tardrew

    I suspect you’re correct re: TPP. Tony Abbott only needs to be PM long enough for Australia to sign off on the TPP with ISDS provisions & he’ll have accomplished exactly what his puppet-masters want. The potential ramifications for Australia could well be catastrophic.

    Until Joe Hockey starts talking about taxation reform to address the structural problems in the budget than he’s simply blowing smoke out of his clacker. The top tax rate in Oz is a joke & the PBO has fingered the Howard government for giving unsustainable tax breaks (although Rudd / Swan continued on in this vein).

    It’s odd that Abbott knows nothing about economics yet has an Economics degree. I’m not sure what this says about the University of Sydney!

  13. jasonblog

    @revolutionarycitizen

    I agree this government has to tackle the underlying problems. But will they do anything about the structural deficit?

    Whatever Hockey does will to a degree further impugn the mismanagement of Howard / Costello.

  14. jasonblog

    @revolutionarycitizen

    “Do people realise that government induced wealth redistribution is based on the same “trickle down” theory? ”

    This statement dressed as a question does not make sense. Can you please elaborate to give a clearer explanation to what you mean? In particular with regards to taxation and the top tax rate…

    Robert Reich in “Beyond Outrage” quite clearly demonstrates how so-called Reagan-omics – the infamous “trickle down” approach – has failed the USA.

  15. Paul Raymond Scahill

    Hockey was always a big bag of wind. The only thing wrong with that is that “The Mad Monk’ has control of Joes economics. All I can say is God Help us and Australia. Get rid of Abbott and it will go a long way to correcting the budget/financial problem that exists.

  16. John Kelly

    Reblogged this on THE VIEW FROM MY GARDEN and commented:

    If the treasurer thinks that by lifting red tape and encouraging innovative and creative thinking he will attract sufficient investment by the private sector to kick-start a slowing economy, then he would have to be a supreme optimist. I say good luck with that.

  17. Put Pollies on a Nurses Wage!

    Thanks Matters Not – that would explain it.

  18. mars08

    The business sector “must pay its fair share of tax”. Riiiiight… I suppose it depends on who gets to define the meaning of “fair”

    ANDREW LEIGH MP

    SHADOW ASSISTANT TREASURER

    ACTING SHADOW FINANCE MINISTER

    MEDIA RELEASE

    BIG BUSINESS LOOKING AFTER THEIR OWN TAX LIKE PUTTING A FOX IN CHARGE OF THE HEN HOUSE

    “The Australian Taxation Office’s plans to allow corporate auditors, paid by large companies, to conduct assurance reviews on the ATO’s behalf is concerning,” said Shadow Assistant Treasurer, Andrew Leigh.

    “Putting big business in charge of their own affairs creates a conflict of interest.

    “It appears the ATO is being forced down this path by the Abbott Government cutting public service jobs.

    “Why should families have their tax audited by the ATO but big business are given the option of using their own accountants to sign off on their tax bills.”

    “This is likely to result in less tax revenue being collected,” Dr Leigh said.

  19. revolutionarycitizen

    Jason, to answer your first question, the “structural deficit” wasn’t created by Howard, that is a modern myth, his government left the budget with a growing surplus across the forward estimates. The only thing his (like Keating’s) government failed to address was the obvious future blow-out in Medicare spending. That in itself would not have been so bad had Swan not increased direct welfare payments by 30% in 6 years, which in itself wouldn’t have been so bad had he not also agreed to create a whole new level of welfare spending that will reach $20,000,000,000 or more per annum on top of the current welfare spend.

    And all of that wouldn’t matter if we weren’t already over $300,000,000,000 behind. What has created the structural deficit is essentially not enough people working for more than the average median wage. The inability to create jobs at the top end of the economic scale to counter the 3,000,000 or more people who currently work for minimum wage, who are a net drag on government finances.

    That to a degree began with Keating failing to emphasise the need for very deep economic reform, accelerated by Howard failing to use favourable conditions economically to his advantage and cemented into place by Rudd/Gillard/Rudd who had zero economic sense between them.

    How will Hockey fix it? There is three ways he can fix it, he can substantively increase income taxes on middle income Australia, he can take an axe to the budget, or he can do something about the 3,000,000 people on minimum wage. He will do none of those things because none of them will get him re-elected. What he will do is, trim fat out of the budget, tinker with revenue stream to get some extra revenue and then sit back and pray to whatever God he believes in that the Indian economy grows faster than it has been to re-invigorate our resources sector.

    So, we’re screwed, hope that answers your question.

    As for your second question, both theories essentially blame the rich for the poor being poor, and view the money held by the rich as a means of stopping the poor being poor, one asks the rich to part with their money, the other forcibly takes the money. Neither actually work, but I think we already knew that.

    It is value adding industries that create wealth for the economy, not redistributing the wealth it already has. So, in Australia’s case, there is far more money making and turning steel into things than there is mining iron ore, there is more money in computer chips than there is in sand mining, there is more money smelting and creating engines than there is in rutile mining (titanium) and on it goes. Essentially, the mining booms have made us a very lazy short-sighted country, and quite frankly our business schools teach garbage, and it is beginning to show.

  20. mars08

    Abbott incessantly talking down the economy for 3 years didn’t exactly boost consumer confidence…

  21. John Kelly

    RevolutionaryCitizen, your comments pretty much hit the mark save that the Howard government also failed to realise the mining boom revenue was temporary. Had they done so, they would not have embarked upon the unsustainable middle class welfare programs they introduced and which are now so difficult to remove.

  22. revolutionarycitizen

    Mars, consumer confidence collapsed in 2008, Abbott was drawing attention to that fact amongst others whilst Treasury was re-assuring Swan that GDP would grow by over 4% per annum when in reality it was limping along at half that. In-fact, I should have taken a stick to Treasury, who got every single budget and economic forecast wrong for 6 years.

    John, Yes, Howard should have known better, however both he and Costello had planned to move middle-class welfare towards greater tax relief, like raising the tax free threshold to over $20,000.

    Brian, if they piss everyone off now they’ve still got three years to call an election, by which time everyone will have forgotten about it. Yes, they are deliberately getting the pain out of the way early.

  23. Brian

    I’ve never known or heard of a mob in so much of a hurry to piss off absolutely everybody. Their friends, their enemies, innocent bystanders, foreign governments, foreign businesses. It’s hysterical. I fear the Australian economy is headed in the same direction as the Confederate States of America. The expression used was “died of a theory”, I believe. Well, if we’re to follow the U.S. so slavishly, we should prepare ourselves for what happens when big business runs the show. The people of this country are about to be shit-canned.

  24. Heather

    Thanks. Good article.

  25. Theo Coufos

    YES ! And as minister for health , was in control of the catholic cover up on child molestation,
    Note that you can’t win . The thieving charlatans are on both sides. The catholics have taken control,
    Ask Gonski.

  26. Buff McMenis

    Stephen Tardrew, you say it as it is, Kay Lee is, as usual, spot on, and many of the rest of you as well. Disheartening, isn’t it? By the way, Mic … which Pensioners got $4,000 .. ??? I got $900 + a small increase of $30.00 per f/n which was then inhaled by grocery costs, rent, and as the Yankees say – utilities rises. Were you including the $30.00 in the $4,000?

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