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!