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What If Malcolm And Scott Had Been In Charge During The GFC!

8

People have trouble switching from the micro to the macro when it comes to a whole range of things, and in particular economics.

On the micro level, the recent proposal to allow people to access their superannuation to buy a home has a superficial appeal. And, Chris Bowen made a terrible blunder when he said that if couples could access $40,000 from their super, then that would just add $40,000 to the cost of houses. He overlooked that it’s the deposit that the money goes to, so if a couple have an extra $40,000 then, assuming a twenty percent deposit, they may be able to borrow another $200,000!

But hey, isn’t it in their long-term interests to have a home now, because, well, their access to super is a long time off and even then, won’t they be better off if they own their home. The short answer is possibly, but so much depends on unknown variables, I’m sure that it’d be better to let super do what super was meant to do and to find another solution to help those poor first home buyers.

However, the proposal has appeal to two groups of people: many of those trying to buy their first home and to the Coalition government. The former because they’d be happy with anything that helped them now because nobody under forty even thinks about super and isn’t retirement going to be banned anyway? The latter because it gives the appearance of action while delaying any consequences or action to sometime in the future. Snowy 2.0, anyone?

And after thinking about Malcolm’s “let’s solve the current energy problems by announcing a feasibility study” and Scott’s “let’s solve the potential housing bubble by inflating with more air”, I thought back to Labor’s handling of the GFC. Of course, the Liberals don’t want to acknowledge that we avoided recession. No, even though at the time they said that, Labor was going too hard, too early and there’d be nothing left for when we were actually in recession, they quickly adjusted this to accusations that Labor didn’t need to stimulate the economy at all because we didn’t go into recession. You know the sort of argument, why did you build the levy bank so high, when the water didn’t even spill over the top.

Anyway, I started to wonder how the current mob would have handled the GFC… (This is where we go into the dream sequence!)

* * *

2008 in a mythical Australia. Press conference. Malcolm Turnbull and Scott Morrison stand by the podium.

Malcolm: Good afternoon. Now recently we’ve had a lot of ideas floated about how we best handle the recent financial collapse in the USA. I’m here today to tell you that we’ve decided that what we’ve considered all the ideas that were on the table yesterday and decided that most of them shouldn’t have been put on the table, so had someone clean them away. We will not be changing the personal tax rates. And, owing to a hostile senate, the idea of leasing the Great Barrier Reef to the Chinese for 99 years has been shelved.
But we need to take action. Strong, decisive action. And that’s what we’ll be doing.
(MALCOLM NODS. HE STOPS SPEAKING.)

Reporter 1: And what action will that be?

Malcolm: It’ll be strong. And it will be decisive. And it will protect jobs.

Reporter 1: Yes, but specifically.

Malcolm: Now, I don’t want to get into the specifics at this stage, but let me just say that we’ve been working hard on this and I think you’ll find that Scott Morrison will have more to say in the coming days. Scott?

Scott: Yes, we’re looking at cutting taxes to major companies in order to encourage investment, but we’ll release the detail in the coming weeks.

Reporter 2: But how will cutting taxes help? I mean, that’ll only help the profitable companies and isn’t the concern that very few will actually make a profit.

Scott: No, the concern is that when the crisis hits Australia, there’ll be no investment, so by cutting taxes we’ll be encouraging investment.

Reporter 1: But who’ll want to invest in companies that don’t make a profit?

Scott: That’s why we want to cut taxes. That way companies will be able to keep employees on and that’ll protect jobs

Reporter 1: Not if they’re not making a profit, because they won’t pay tax anyway…

Scott: What’s your question?

Reporter 1: Can you respond to how cutting taxes helps companies not making a profit?

Scott: There’ll be more detail in the upcoming mini-Budget.

Reporter 3: And when will that be released.

Scott: As soon as we’ve finalised the details…

Reporter 3: Details about what? What is it exactly that you’ll be releasing?

Scott: Our response, obviously. What else would we be releasing?

Reporter 2: But what exactly is your response?

Malcolm: If I could just butt in here, our response, as I’ve already said is STRONG and DECISIVE.

Reporter 2: But exactly what are you going to do?

Scott: I’m sorry but we’re not going to comment on operational matters.

Reporter 3: What about Labor’s idea of giving everyone a handout of $900?

Scott: People’ll just waste by spending it!

Reporter 3: Isn’t that the idea? Stimulating the economy.

Scott: We’d rather do something more substantial.

Reporter 2: Like infrastructure projects?

Scott: No. Absolutely not! This is a time of crisis. This isn’t the time to be spending money. We should be looking at ways to save money, like cutting back on services.

Reporter 3: But won’t that make things worse?

Malcolm: Sorry, but Scott and I need to go and work on the final details of our plan, which is a strong one and a decisive one. And it’s different to Labor’s so it has to be good. Thank you!

* * *

Yes, I know, it’s totally unbelievable…
As if the reporters would question Malcolm and Scott that hard!

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13 comments

  1. David Bruce

    I get the same feeling about Australia now, that I had last year prior to the US election. No matter who won, the US was screwed! We avoided the GFC and we avoided the Abbott and Costello comedy, so how can we avoid the next Malware infection/affliction?

  2. pierre wilkinson

    breath taking arrogance in their ignorance, unbelievable hypocrisy and a willingness to obfuscate and deny, whilst either outright lying or telling monumental untruths…. 1984 was never meant to be a reality play but it draws closer each day

  3. jim

    Malcom turnbull…,” we tried to save Australia by having a one lane only Sydney Harbour bridge but bloody labor wouldn’t have a bar of it and of course the Liberal party was totally against the stupid opera house just think of all the money we’d have to give our own big businesses if labor didn’t build the Snowy Mountain scheme, surely you can see that Labor spend like drunken sailors whenever they fluke an election victory.”

  4. Jaquix

    I dont think Chris Bowen blundered at all – the fact is that “the market” adjusts its prices (upwards) when benefits like “access to super” or and increased “first home buyers grant” are on the cards. In answer to your Headline Question – I often think what a mess the Coalition would have made of the GFC. Australia came through that reasonably easily, thanks to the courage and boldness of the Labor government in the policies they set in place. The Coalition would have done the opposite and we would probably be still paying the price.

  5. lawrencewinder

    Well, Eleventy Hockey said at the time that spending should be cut … they would have created the depression were about to enter just that much sooner and more severely…

  6. Halfbreeder

    Buying a house is a future investment. The alternative is renting which is not an investment. They forget that renting is an unrecoverable outgoing while paying a mortgage creates equity…an asset. Buying a house saves wasting money on rent and is a more efficient way of spending income than renting. They have not included the savings made on rent payments in their calculations. These politicians are just dumb. They are so incompetent they are not fit to make decisions for people. I include the ALP neo con Bowen in that statement.

  7. Rossleigh

    Jaquix, Bowen didn’t blunder by saying that house prices would go up – he simply underestimated the potential amount. Assuming a 20% deposit is needed, someone with deposit of $60,000 could borrow $300,000, but if they have access to an extra $40,000 thanks to their super, then they could potentially borrow up to $500,000, so there’s a potential to push house prices up by a lot more than the amount that they gain access to.

  8. stephengb2014

    Actually I think that there would be no harm in sequesting some super cash to assist home buyers. With the appropriate controls it is not necessarily going to be inflationary.

    I think though that Chris Bowen is right that the negative gearing and capital gains lurk is a better target.

    BUT – by far the obvious solution is increasing supply. NOT more houses but more APPROPRIATELY priced houses.

    To do that we have to offer low cost securered tenure for renters, and that means Public housing, not ptublic housing managed by private enterise but real Public housing. Not just flats and ‘fibros’ but real up to date houses. And lets dump this idea that we all have to own a house to make a home, public housing can do that.

    This will take the heat out of the investors the developers the real estate rip off merchants and solve the homelessness problem.

    Yes people will still want to buy but there will never be a housing bubble again.

  9. totaram

    GFC? What is this GFC you speak of? This appears to be some sort of “financial crisis” invented by the usual lefties.

  10. Phil

    If there is one more enterprise I now regard as pathalogically despicable other than the surgeons and anaesthetists (who top the list of tax avoiders through trusts and negative gearing) it is the real estate thieves who are wringing their greedy paws in anticipation of gargantuan profits pouring in from young families raiding their superannuation for home deposits. And how many young Aussie families even have enough or any superannuation to speak of? Many don’t even have super because they are in part time, casual and contract work.

    Ordinary Australians, and especially younger Australians – wake up – the bastards you refer to as ‘government’ are running a scam of monumental proportions and you are its victims. Face the facts and opt out now because your status is not going to improve by supporting the current system – in fact your status is heading for rock bottom so you’ve everything to gain by attacking the system as only youth can.

    Treasurer Morrison is a singer in the choir of the ‘happy clappy’ Hillsong version of corrupted christianity – he cares only for his ‘church’ coffers and his status as wannabe priest of greed.

  11. Max Gross

    This will end in tears. It usually does.

  12. Matters Not

    Phil re surgeons and anaesthetists and their incomes:

    Not for the first time will the golden ‘goose ‘ (an unchecked fee for service payment system ) be sacrificed by those who gain most under the current system – private specialists! And it will hurt everyone – but particularly patients …

    First Medicare could publish the annual income from Medicare of every doctor in Australia and put it on the web – it is after all our money (the peoples money I mean. It will not tell you how much each doctor earns but it would flag the importance of transparency. Interestingly you can access the www and see what every doctor in the US earns from Medicaid.

    … Pierre Trudeau and his government did in 1984 when they took on a system not dissimilar to ours –uncontrolled fee for service- and legislated that doctors could charge what they liked BUT unless they adhered to the fee negotiated between the Provincial Government and the profession (on an annual basis) the doctor lost all access to a Medicare reimbursement. This system still works today in Canada and few doctors opt out of it. Now there is a thought- and a significant game changer.

    What’s wrong with a bit of transparency? Perhaps Hunt will do something that actually improves the health system?

    http://johnmenadue.com/?p=10027

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