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Tag Archives: Debt.

Do Not Obsess About Debt, Obsess About the Vitals

By Darren Quinn

Professors Edmond, Holden, and Preston are mistaken in that Modern Monetary Theory (MMT) says we should not worry about budget deficits. The effects of budget deficits are significant. As Stephanie Kelton, the most well-known MMT economist in the world, says, we should focus on the deficits that matter. The jobs deficit, the environmental deficit, the deficit of affordable housing for homelessness, and many more. The financial deficit from the budget is the private sector surplus, the money in your pocket and mine.

Keynes used financial praxis to argue for fiscal stimulus in severe recessions, and since financial praxis is always and everywhere an MMT phenomenon, Keynes used MMT.

The professors are also mistaken to say that it is a well-accepted idea that the spending comes first. Many politicians and commentators who talk as if the government spending is like a household budget are economists or have worked in the central bank and Treasury, among other public service jobs. So the television talking heads like financial commentators and public-facing economists such as Stephen Koukoulas and Saul Eslake are not saying these things.

The professors have not been paying attention if they think MMT proponents and economists do not explain when the inflation constraint binds. Every time MMT talks about real resources and their availability, MMT proponents are talking about inflation constraints. The real resource constraint is the inflation constraint.

It is a truth universally acknowledged that central banks do not have a working theory of inflation. Therefore, they must be in want of an excellent post-Keynesian economist like Joan Robinson or an MMT economist like Australia’s Bill Mitchell. After all, those economists have a working theory of inflation that matches reality.

The professors claim that conventional economics has a comprehensive analysis of what causes inflation; however, they would have to elaborate on this to prove that claim. Perhaps the professors are just thinking of the debunked monetary and neoclassical theories of inflation. Daniel Tarullo, a former Federal Reserve Bank board member in the United States, explains [The Financial Times, paywalled] that central banks do not have a working theory of inflation.

MMT has always acknowledged that inflation can occur below full employment, as currently demonstrated through the coronavirus pandemic and the Russia-Ukraine conflict, with Australian unemployment at 3.5% and still 1.3 million people looking for work. As the professors should know, bottlenecks can occur in various sectors from spending before full employment is reached. This congestion can occur in the form of a resource shortage in a greater supply chain of production. It is currently being demonstrated by the lack of oil and natural gas supply in the Australian production chain.

If the Ukraine conflict had not affected oil supplies, then automotive fuel would not have been ever-increasing in price. The price increase was alleviated by the temporary excise cut in fuel. Who would have thought that reducing prices reduces inflation? Inflation is a measure of prices, so of course, lowering prices reduces inflation.

What about price rises for natural gas? These rises have occurred because we have sold our industries off to foreign owners who demand world prices for our gas instead of us owning our energy industry and setting our own prices. Putting aside environmental concerns with these fossil fuels, we are not in control of our energy resources. What we need is an Australian strategic reserve of our energy, owned by Australians and priced in Australian dollars. We briefly saw this achieved when the government activated the Gas Supply Guarantee Mechanism.

As stated earlier, we should focus on the deficits that matter, so yes, if you want to implement policies from the Green New Deal or a larger social safety net with increased social security payments, they should be argued for on their own terms. This conflicts with the professors agreeing that spending comes first (meaning that there is no purely financial constraint) but then saying that implementing any given progressive policy may cause politically unacceptable inflation. MMT explains that keeping an eye on resources and/or expanding capacity in domestic production can minimise inflation risk.

It is worth noting that neither Treasurer Chalmers nor Finance Minister Gallagher has formal training in economics or finance, but they have public service experience in these fields. These Labor ministers have concerns about increased expenditure on Health, NDIS, Aged Care, and Defence. It is an exaggeration to say these are a political concern. As the professors have previously explained, they are reasonable goals that the public can argue for on their own terms.

The professors have not disputed nor disproved Modern Monetary Theory but, in effect, agreed with it. It is clear that Modern Monetary Theory’s time is now. The time to flick the switch is now!

Darren is a leader in educating people in modern macroeconomics. He played a founding role in educating Australians via social media channels and has engaged some prominent Australians on commentary about Modern Monetary Theory. Darren is a member of Modern Money Australia, Australian Real Progressives and has been involved with the Modern Money Network. You can see more of his work at https://www.darren-quinn.net and https://www.realausprogressives.com

You can find him on Twitter @AusMMT @dquinn03


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Malcolm Fears neither Debt nor the Conservatives.

What a monumental turn around. In a newspaper interview this week, Prime Minister Malcolm Turnbull has shrugged off the Abbott-Hockey debt and deficit rhetoric and signalled more debt to come.

“What we’re trying to achieve is to ensure that Australians who do live today in a high-wage, generous social welfare net economy, will be able to do so in the years ahead and in an environment where wages will be higher and we’ll have a bigger tax base and we’ll be able to provide for those in need more effectively,” he told Fairfax Media.

Contrast this with some of the verbal diarrhoea that came out of the mouths of both Abbott and Hockey when they convinced the more gullible amongst the electorate both before and after the 2013 election, that austerity was necessary to rein in Wayne Swan’s debt and deficit disaster.

Turnbull went even further when he said, Everything, every single element, is on the table, and I know that always means that someone can then run a scare campaign, but I’m sorry, we’ve got to stop … this is part of the political tradition I’m determined to end. We have got to be able to consider policy options in an unfettered way.”

The significance of this statement and his acknowledgement that both revenue and spending options are on the table, cannot be ignored. While signalling a reversal of the previous administration’s scare mentality and adopting an expansionary mindset including borrowings for public transport projects, he has also, deliberate or otherwise, checked Scott Morrison for suggesting we only have a spending problem.

What are we to make of this policy about-turn?

My reading is that Malcolm has decided he will be his own man and if the party doesn’t like it, they can’t do much about it without making themselves a laughing stock. While the extreme right wing of the party might like to think it has its leader on a short leash, the opposite is the case.

Turnbull, it would seem, has decided that he will crash through or crash. To make public his intentions in such flamboyant language is a challenge to those who still cling to the ultra-conservative mindset that would hold the nation back.

transCiting public transport as the flagship of future expansion is a good start. Who among us would deny a pressing need to upgrade and prepare ourselves for future population growth that will require some radical thinking in the area of mobility.

Victorian Premier Daniel Andrews will be delighted as will Mike Baird in NSW. Both have big plans for improving transport in our two major cities. Turnbull has foreshadowed that roads, urban infrastructure and ports, previously considered state responsibilities by Abbott and Co, are now up for Commonwealth funding participation through additional borrowings.

The burning question, ‘where is the money coming from’ has been answered before it has been asked. The former Goldman Sachs CEO knows how money works, unlike his parliamentary colleagues and is not afraid of debt.

This will not be good news for the banks. Such projects, normally financed within the private sector’s financial houses, will have the Commonwealth participating for part of the return on investment.

“We don’t need the same internal rate of return as Macquarie Bank would, obviously, but if we have a piece of it, then we’re able to invest more, frankly. Then we’re much better off being a partner rather than simply being an ATM, for which you get generally scant thanks or recognition,” Turnbull says.

abb anshhTony Abbott and Joe Hockey never understood this, nor does the conservative wing of the government that never wanted Turnbull as leader. They will be alarmed at his recent comments and will fight tooth and nail to stop him. But they cannot ignore his popularity and his importance in keeping them in power.

That is why he will win and so too the unemployed. While the private sector is twiddling its thumbs Government must take up the slack. That is not a theory, it is an accounting rule for a national economy. It is exactly what is needed today. Joe Hockey failed as Treasurer because he expected the private sector to do the heavy lifting.

At today’s historically low interest rates, issuing public debt has never been cheaper and when invested in projects that add value to the nation, promote growth, increase employment and by extension, increase tax revenue, everyone benefits.

Turnbull’s approach to inclusivity will enrage his conservative colleagues, but he knows there’s little they can do about it now.


My Thoughts on the Week That Was

Saturday May 30

1 I put on the telly this Morning to find Greg Hunt giving a press conference self-congratulating himself on the UNs decision to not place the Great Barrier Reef on the endangered list. Then a half hour later a Greenpeace spokesperson explains that we are only on probation for 18 months and that the effect of future climate change had not been taken into account, nor the proposed coal mine.

What a snake oil salesman he is.

2 Sepp Blatter wins another term as boss of FIFA and gives corruption a serious boost.

3 It comes out that our Prime Minister and the Emigration Minister tried to put one over on the Cabinet and we’re suitably chastised. Abbott had even tipped off The Daily Telegraph without any Cabinet discussion.

When you try to dud your own Cabinet you cannot expect its respect.

4 Does the public realise that the Government has put a freeze on doctor’s fees which, in effect, is the same as applying a copayment because it will force the Doctors to raise fees to cover costs. Sneaky bastards aren’t they.

Sunday May 31

Australians were greeted yesterday with this headline in the Fairfax press.

“Deficit decade: Tony Abbott’s $100 billion black hole”.

black hole

Only weeks after presenting a budget based on pie in the sky predictions punctuated with so many ifs and crystal ball maybes, independent analysis by the Parliamentary Budget Office suggests the economy is in dire straits.

It is not beyond repair. All it needs is a government prepared to forego its ideology and govern with fairness for the common good. Too much to ask you say. You’re probably right.

Monday 1 June

1 Labor’s offer for a Liberal to replace Tanya Plibersek as co-sponsor of its Marriage Equality Bill will be rejected and it will lapse. Abbott, who vehemently opposes gay marriage, will present a bill in his own time so as to get all the kudos. Ironically it may be the only legacy this out of touch Prime Minister will produce from his tenure of office.

Abbott lies

2 Another stunning example of his lying is when he says it’s only the States who can change the GST. In 2004 a number of items had their GST status changed. Guess who the Health Minister was at the time. Yes none other than TA himself.

Tuesday 2 June

House of cards

1 After three seasons of “House of Cards” I have concluded that it is the most compelling television show I have ever watched. A superb production on every level. Can’t wait for season four.

2 In my experience young people are fully conversant with the issues of the day if not political ideology. The worldwide move to lower the voting age to 16 is a good debate to have but equally so is the need for a form of Political Education in our teaching curriculum.

3 After listening to Abbott’s press conference this AM I am left with the undeniable conclusion that he is going to fight tooth and nail to destroy marriage equality. He won’t win of course.

4 Someone is lying about what happened in cabinet about withdrawing citizenship. I am under no illusions who that might be. And if 27 back benchers supported the proposition they are as stupid as those who proposed it. They have denigrated science now it’s the law’s turn.

An observation:

“The word “Frugality” is one of the most beautiful and joyful words in the English language, yet one that we are culturally cut off from understanding and enjoying and a consumption society has made us feel that happiness lies in having things, and has failed to teach us the happiness of not having things.”

Therefore life is about doing things not having things.

Midday Thoughts

1 Interesting to see the Government Benches empty when Bill Shorten presented his Marriage Equality Bill. Although it’s not surprising when, if you recall, they were also absent when the NDIS was introduced.

2 “We are on a steady path back to surplus” The PM said in question time. The Independent Budgetary Office tells us the opposite.

Bishop b&w

3 What an embarrassment the Speaker of the House of Representatives is. She seems to have a rule book of her own. Tony Burke, yesterday showed up her bias in no uncertain manner.

4 Morgan Poll has Labor at 53/47. Returning to pre-budget figures further confirming my belief that the budget did nothing for the Coalition. Well other than not making it worse that it was.

Wednesday 3 June


1 After doing some research I can explain what the term “come to Jesus” means in the context of politics. It is an American Tea Party expression to describe the instant at which team members recommit to working in unison or pursue their own interests. You’re either on the team or you aren’t.”

How did this religious nut job ever become Prime Minister?

2 The third last poll we are likely get from Newspoll-as-we-know-it, has Labor’s two-party lead at 52-48, down from 53-47 a fortnight ago.

3 Essential follows with the same numbers. In addition their polling on Same Sex Marriage has yes 59% no 30% and undecided 11%. That’s an overwhelming YES I should think.

joan kirner

4 Joan Kirner was underestimated as a politician and her work for women and the advancement of education will not be forgotten.

Thursday 4 June

1 A reminder:

“It is an absolute principle of democracy that governments should not and must not say one thing before an election and do the opposite afterwards. Nothing could be more calculated to bring our democracy into disrepute and alienate the citizenry of Australia from their government than if governments were to establish by precedent that they could say one thing before an election and do the opposite afterwards.” (Tony Abbott).


2 There are that many Cabinet Ministers denying they leak that one might wonder if they use the bathroom at all. The journalist in question is a friend of the Foreign Minister. Leave it at that.

3 Yesterday in Question Time the PM responded to a question from Bill Shorten about violence against women in a very bi-partisan manner. He must be reformed I thought. Remember he was accused of assaulting a woman at University and later acquitted. He was defended by a QC and the girl defended herself. Another women accused him of throwing punches at her and hitting either side of a wall she was standing against. He says it never happened but others collaborate her story. The newspaper involved settled out of court.

Posted my thoughts on Australian democracy.

Friday June 5

1 The worst trade deficit ever.

There are people who say what they think and do the opposite of what they say! There are people who say the opposite of what they think and do what they say! Then there is the current LNP who don’t think, say the opposite of what everyone else thinks and does absolutely nothing! This has been coming for a while and no, it’s not this governments OR the last governments fault but most definitely the Howard Governments fault and the current and previous governments have stuck their heads in the sand. However, only the Abbott lot have made such a song and dance about how bad Labor were at economics while at the same time adding to the problem!

2 Its called an own goal or a self wedgie.

Treasurer Joe Hockey has again put himself at odds with Prime Minister Tony Abbott by failing to rule out reforms to superannuation if the government wins a second term.

Prime Minister Tony Abbott has said super will not change in this or future terms, despite calls for an end to retirement tax breaks for wealthy retirees.


3 Tony Abbott’s Reject Shop photo aptly highlights the political worth of our PM. Every picture tells a story.

3 No wonder Parliament House cleaners are asking for a pay rise. People are leaking everywhere. Peter Hartcher, the journalist who got the leak in the first place, makes it clear that the cabinet dispute may never have seen the light of day were it not for extreme frustration within cabinet, not so much over the proposal of the policy itself but over the poor excuse for a cabinet process it constituted.

5 On World Environment Day UN Secretary General Kofi Annan says Australia is not taking credible action on Climate Action and calls us a free rider.

Two observations:

In terms of the environment. I wonder what price the people of tomorrow will pay for the stupidity of today

“We all incur a cost for the upkeep of our health. Why then should we not be liable for the cost of a healthy planet”

6 If the week in politics has revealed anything, it is that Tony Abbott is has never divorced himself from the negativity of opposition. He is continuously in electioneering mode. He told voters a Labor government posed a threat to their house prices and their superannuation.

“It is absolutely crystal clear what would happen if members opposite were ever to get back into government: the carbon tax would come back, the people smugglers would come back, the value of your house would go down – because hasn’t he been trying to talk down the economy for the last few days? And your superannuation is going to be raided again and again to try to get a Labor government out of trouble,” Abbott said.

He wants to pick fights with the opposition – even where there is agreement, or a strong prospect of it – and to deeply plumb populism. This maybe marginally helping in the polls, but it is degrading both policy and politics.

We are still waiting for the adults.

A final thought.

I am having trouble coming to terms with the unhinged nature of the rhetoric in which our Prime Minister now engages.

And this is the week that was.


Chris Bowen misses an opportunity.

Yesterday Chris Bowen addressed the National Press Club to announce a Labor initiative to have the independent Parliamentary Budget Office prepare the forecasts to be used in government budget and fiscal statements to allow for greater transparency, accountability and rigour.

He started well by talking about the Charter of Budget Honesty and how Joe Hockey has manipulated the figures to inflate the debt and deficit. He mentioned Hockey’s decision to give $8.8 billion to the RBA which was designed to maximise the deficit, attribute it to Labor, whilst hoping for increased dividends in the future. He also mentioned the effect of Hockey’s manipulation of assumptions about key projections like unemployment, inflation, terms of trade, and GDP growth.

Bowen briefly ran over the comparison of PEFO projections with MYEFO – the former being prepared independently by the secretaries of Treasury and Finance, the latter being a propaganda sheet prepared by Hockey and Corman.

I was optimistic for once. This is exactly what needs to be highlighted in the media because it is what this government is basing all its rhetoric on. The attack on the ‘leaners’ is necessary to avoid saddling our children with an unpayable debt. Apparently we don’t mind burdening them with an unpayable personal debt to pay for their tertiary education but we can’t have public debt because…ummm…we are the knights of No and we want a surplus.

But it went downhill from there.

Instead of continuing in this vein, Chris Bowen then went to great lengths to explain that this was not a criticism of Treasury for whom he has the highest regard. He backed away from direct criticism of Hockey’s lies, concentrating on what the PBO would do and who they would collaborate with. This was what stuck in people’s minds. The introductory part of the speech, by far the most important aspect, was forgotten and not one question by the ‘journalists’ afterwards related to Hockey’s deceit.

Straight afterwards on ABC24, Lyndall Curtis interviewed Matthias Corman who had already been out that morning pre-empting Bowen’s speech. In his usual fashion, regardless of what he was asked, Corman repeated his preprepared lines like a doll having the string in its back pulled. “Layboor’s debt and deficit disaster leaving us with $123 billion in deficits, debt spiralling to $667 billion, and no credible path back to surplus.” Despite Chris Bowen’s introduction, Curtis, like all other journalists, allowed this to pass without question.

So there we were, back where we started with Corman’s mantra ringing in our ears.

Bowen’s answers to the questions that were asked was entirely inadequate. Having admitted there was a budget problem, Bowen was asked how Labor intended to address it. His response – “I’m not going to reveal our policies today. We are in the process of carefully developing them and rest assured you will all know them well before the next election and they will be fully costed.” What a fizzer. Where was the vision for the future? Where was the promise of a better way? Where were the ideas even if the detail was still to be determined?

When asked about negative gearing, Chris nearly got a hernia twisting away from the question and talking instead about housing affordability whilst making it clear that he was not suggesting specific changes to taxation. When pressed further about the very low numbers of first home buyers, he waffled on unconvincingly about stamp duty and construction.

The speech was the wrong way around. He should have started with the changes he wanted to make with the PBO and then outlined why he wanted those changes by listing the duplicity engaged in in the preparation of MYEFO.

Just for the record:

PEFO gives independent predictions using Labor policies. MYEFO gives Hockey’s assessment using Coalition policies.

PEFO shows a cumulative deficit of $54.6 billion over the forward estimates with a predicted surplus of $4.2 billion in 2016-17.

MYEFO shows a cumulative deficit of $122.7 billion with no surplus predicted over the forward estimates.

PEFO states, in 2013-14, net debt for the Australian Government general government sector is estimated to be $184.0 billion (11.7 per cent of GDP) and is projected to return to zero in 2023-24.

Hockey’s MYEFO predicts, nay BLARES, a debt of $667 billion. This figure is quoted ad nauseum every time you press the button on Matthias Corman’s belly. This is a projection of the GROSS debt in a DECADE under COALITION policies.

Let me make that absolutely crystal clear…this is a projection of the future with the Coalition’s decisions to axe the carbon tax which, according to MYEFO, “will reduce receipts by $6.3 billion over the forward estimates period” and the repeal of the minerals resource rent tax which “reduces receipts by $3.4 billion over the forward estimates period”. Add in the decisions to repeal the changes to the FBT and superannuation taxation and to gift $8.8 billion to the RBA, and also the payment to Rupert Murdoch of $882 million from the tax department, as well as the PPL that won’t go away and billions for Direct Inaction, and I would contend that Hockey and Corman OWN that projected debt. Increased spending on defence, searching for missing planes, attending memorial services whenever and wherever you can…these are all discretionary decisions made by this government.

Gross debt was approx. $280 billion when the Coalition took over. It is now $337.686 billion. Since September 30 2013, they have been borrowing over $157 million extra a day.

This article quotes the numbers presented in recent fiscal documents. I wish Chris Bowen had rammed it home a bit harder because Joe is setting us up to say “look how much I have saved” when the numbers tell a different story.

To my local member

Karen McNamara and Lucy Wicks (Image from dailytelegraph.com.au)

Karen McNamara and Lucy Wicks (Image from dailytelegraph.com.au)

Dear Ms Lucy Wicks,

Thank you for your recent unsolicited advertising pamphlet. Unfortunately it contains a great many errors which I am sure you would prefer to know about rather than spreading incorrect information to your constituents, particularly since we are paying for your advertising.

You state that “Labor’s last Budget” projected a deficit of $50 billion in the 2013-14 financial year with no surplus over the forward estimates. This is entirely untrue unless Mr Hockey is a member of the Labor Party.

The last budget delivered by Labor in May 2013 projected a deficit of $18.0 billion.

In August Penny Wong and Chris Bowen released an updated Economic Outlook with a projected deficit of $30.1 billion moving to a surplus of $4 billion in 2016-17.

PEFO produced by Treasury and Finance in August agreed with the figures in the Economic Statement with a slightly larger projected surplus.

Three months into your term, Joe Hockey produced the MYEFO which estimated a deficit of $47 billion. To quote:

“The deterioration in the underlying cash balance since the 2013 PEFO is $16.8 billion in the 2013‑14 financial year and $68.1 billion over the forward estimates.

The deterioration in the budget position since the 2013 PEFO reflects two key factors:

– the softer economic outlook; and

– essential steps to address unresolved issues inherited from the former government.”

Your projections about a “softer economic outlook” have proven unfounded, as many thought they would, with growth continuing at a better than expected rate.

The “essential steps” you talk about were spending decisions made by the Coalition:

  • an unsolicited $8.8 billion gift to the RBA (with the $300 million a year in interest that loan will cost)

  • another $1.2 billion for offshore processing to go into the hands of security firms that maim and kill refugees.

  • restoring the $1.2 billion offered by Labor to the States who wouldn’t sign up for Gonski but hung out to sign up with you so they didn’t have to commit to increased State funding or performance evaluation.

  • some money into the Contingency Reserve for future superannuation liability for universities (sitting money in a slush fund for a rainy day while we pay interest on it).

  • giving up $2.9 billion in revenue including $1.8 billion in tax revenue from people who fraudulently claim business usage on their cars and $900 million in taxation from people drawing over $100,000pa from superannuation

We then move on to Mr Hockey’s budget brought down in May where we see that, since coming to office, you have borrowed an extra $50 billion – the gross debt has grown from $270 billion in September to over $319 billion. Your claim to be “reducing Australia’s debt” is rubbish as are the figures you use.

Now I have no problem with increasing the debt per se. What I DO have a problem with is you continuing to rail about debt and deficit as you continue to borrow money for the things you choose to spend money on.

And that is by far the greatest problem – not the spending but the priorities. You are inflicting dreadful harm on the most vulnerable in our society while choosing to spend a great deal of money on things we don’t need like school chaplaincy programs and marriage counselling vouchers and fighter jets and very expensive paid parental leave and Royal Commissions. These might be desirable in your opinion but they are hardly more important than education and health and welfare and jobs and affordable housing and childcare. You have cut funding to these most essential services and abolished advisory bodies.

You show your priorities by creating a highly paid job for Tim Wilson to be the Human Rights Commissioner in charge of repealing the racial discrimination laws while sacking the Human Rights Commissioner for the disabled.

You take money away from the Royal Commission into institutional child sex abuse to fund your pink batts political witch hunt.

You cut wage increases for aged care workers to provide bigger subsidies to the providers.

You cut wage increases for child care workers and cut the childcare rebate that parents will receive.

You make changes to the aged pension which, in the future, will increase inequity.

You give drought relief packages to farmers while disbanding water management groups and defunding research into irrigation and delaying the Murray-Darling buyback scheme, with no credible action to address the climate change that will send these very farmers to the wall. The photos of your party laughing and high fiving at the repeal of carbon pricing are looked on in disgust around the world.

You want to pay employers $10,000 to take on workers who are over 50 while telling our young unemployed that they must find a job or face 6 months a year with no income at all and cutting all the programs designed to help them find a job or suitable course.

You defund research causing many amazing programs with huge potential to be cut and scientists to leave our country.

You conscript a Green Army but then defund Landcare, the perfect people to oversee this group, and choose instead to give “service providers” tens of thousands of dollars per team and a free workforce who has no workplace entitlements.

You have slashed funding to Indigenous programs.

You have slashed foreign aid.

Yet you seem to have unlimited resources when it comes to searching for a lost Malaysian plane or fishing boats carrying a few refugees. And the defence budget just keeps on growing so fast they don’t know how to spend it all.

You promise me that my electricity bills will go down but I just got a letter saying prices will go up from July 1.

You say you are helping small business by reducing regulations. Tell that to small businesses involved in the health industry who will now have to administer your co-payment as well as GST. Will they have to fill in cards for concession customers and children to keep count of how many times they have paid a co-payment? Will you be developing and distributing the software to support this?

You claim to be saving $1 billion through cutting red tape for small business…could you tell me what you have done and how you came up with that figure? You cost us all money with the phasing out of the $6,500 instant asset write-off but I am yet to see anything that will help. Reducing company tax doesn’t help sole traders.

You say you are helping apprentices by allowing them to go into debt but you took away their tool allowance.

You say a new Commonwealth agency will open in Gosford bringing 600 new jobs to the coast. For starters, these aren’t “new” jobs as many people from the ATO have been sacked or will be offered relocation. Secondly, I notice you have steadfastly refused to answer any questions about this including why you are apparently building new premises when there are so many vacant already, and when this is likely to happen.

You will also need to adjust your boast about no successful people smuggling ventures. For my views on that I will refer you to Father Rod who was none too happy with the email you sent him from Scott Morrison on the eve of World Refugee Day.

“Firstly, I would like to say to Lucy Wicks that passing on this kind of misleading propaganda does your credibility no good.

Secondly, Mr Morrison has asked that I share this email. I do so gladly so that people may see this dishonest propaganda for what it really is. The use of language is interesting. The basis of this falsehood of that our borders are threatened. How can a few thousand weakened, terrified, dehydrated people threaten our borders? These Asylum Seekers are precisely that Asylum Seekers. They are not invading, or sneaking in or coming through the back door. The very nature of their journey means that the wish to declare their presence.

The entire foundation of the government’s policy is based on the lie that our borders are not secure. And this kind of propaganda is needed to sell the deception.

Not in our name Mr Morrison. You do not lie in our name.”

I have seen you asking Dorothy Dixxers in Question Time. Is that what we elected you to do? To read out lines you have been fed by others? You refuse to answer any questions and gag anyone who posts facts on your facebook page. Is your engagement to be limited to social functions, photo opportunities, and forwarding of party propaganda emails full of lies and distortions?

Your constituents deserve better than unthinking regurgitation. Our children deserve better from the future than what your party is offering. Do you feel no shame about leaving your children a society far worse than the one in which you grew up?

And before you start on the “Labor’s debt” line, I suggest someone in your party starts learning about Modern Monetary Theory and listening about the value of Job Guarantees and raising people out of poverty. Let demand drive supply and provide jobs. Your theory of trickle down economics is a proven front for those who facilitate corporate greed.

You disappoint me.


Maths is a marvellous thing

Like climbing mountains, maths is a marvelous thing. It is objective rather than a matter of opinion. It can’t be argued with. A fact is a fact.

But like many other powerful tools, maths can be used for evil in the hands of the unscrupulous.

Take our present government – please.

On a Liberal Party page called “The Prime Minister – securing Australia’s economic future” our fearless leader makes certain claims.

“When the Coalitions (sic) last left office, Australia had a $20 billion surplus and $50 billion in the bank but over six years, Labor squandered this and ran up five record deficits and a further $123 billion in projected deficits and gross debt headed towards $667 billion.”

Firstly, how many Coalitions do we have? There is the one with various forms of the National/Country party – are there other agreements I should know about?

Now, how about those numbers.

From the 06-07 Budget papers:

“Net debt, which reached zero in 2005-06, improved by $25.4 billion over the financial year to -$30.8 billion”.

From the 07-08 Budget papers:

“Over 2007‑08, the level of Australian Government net debt improved to reach ‑$42.9 billion by 30 June 2008”.

Labor won the election on November 24, 2007, so the Coalition left a net debt somewhere between -$30.8 and -$42.9 billion – not the $50 billion claimed by Mr Abbott.

In 2006-07, the Australian Government general government sector recorded an underlying cash surplus of $17.2 billion, not quite the $20 billion claimed but that could have been the case by the time of the election.

When Mr Abbott said we had $50 billion in the bank when these “Coalitions” left office he was speaking about net debt, albeit somewhat inaccurately. Gross debt is another matter. The Howard government never eliminated gross government, and never once since Federation has any government eliminated gross government debt. Nor should it and no government ever will. As at 30 June 2007, our gross debt was $58.284 billion.

In the first decade of the century, Australia struck it lucky. A voracious global appetite for commodities meant that we could sell unimaginable quantities of our mineral resources at unimaginable prices. The result was a windfall to our public coffers of at least $180 billion over and above long-term GDP growth trend over the six years from 2002 to 2008.

In 2001-02, a ton of exported thermal coal sold for around US$27. A ton of iron ore went for US$13. By 2008-09, these prices had reached US$131 and US$106, increases of fivefold and eight-fold respectively.

In 2001-02, we exported 90 million tons (mt) of thermal coal and 165 mt of iron ore. By 2008-09, these figures were 115 mt and 363 mt. Eight years into the decade, growth in exports of these two commodities alone were delivering an extra $49 billion in national income to Australia each year. The gold price increased by 600% from 2001 to 2011, while the value of our liquid natural gas exports almost doubled over the same period to $11.1 billion.

What Tony also fails to mention is that $61 billion of the reduction in net debt came from the sale of Publicly Traded Enterprises (PTEs) between 1993 and 2006.

Telstra $45.6 billion

Commonwealth Bank of Australia $6.8 billion

Airports $8.3 billion

Qantas $2.1 billion

Having a look at the profits of these companies (OK maybe not Qantas), one wonders whether we should have shown less haste in selling off our assets to reduce a debt that could have been paid off from the profits these companies make. We would also be able to afford a real NBN because we wouldn’t be paying Telstra billions for the privilege.

And it’s not like the Howard government stopped borrowing money. Even though they were raking money in from the mining boom and the sale of assets, including most of our gold reserve at rock bottom prices, the Howard government went to capital markets on no fewer than 400 occasions to borrow money.

Between March 1996 and November 2007, there were 135 lines of bonds that were taken to market in various bond tenders which were issued with a face value of $51 billion, while there were over 280 T-Note tenders with a face value of over $220 billion.

Indeed, in the three months before the November 2007 election, the Howard government went to the bond market on 8 separate occasions to borrow money with a series of bond tenders. Even during the election campaign, just 11 days from polling day, it borrowed an additional $300 million in bond tender number 236. In the final term of the Howard government, from October 2004 to November 2007, there were 43 bond tenders or times the government borrowed money. If we had tens of billions in the bank, why was he still borrowing right up until the death?

In its last five years, the Howard government spent $250 billion, including $133 billion in new spending and $117 billion in tax cuts. Australians could be sitting on a $300 billion sovereign wealth fund to rival the oil-rich nation of Kuwait if we had banked the budget windfall of the now deflating mining boom.

Compared with gross debt, net debt is a better measure of a government’s overall indebtedness as it also captures the amount of debt owed to the government. Which begs the question as to why Hockey and Abbott use net debt when referring to Howard and gross debt (projected in ten years’ time no less) when referring to Labor?

For some historical perspective, gross Australian Government debt increased from around 40 per cent of GDP in 1939 to around 120 per cent of GDP in 1945. By 1974, it had declined to around 8 per cent of GDP.

Net debt reached 10.4 per cent of GDP in 1985-86. It took only three years (from 1986-87 to 1989-90) to reduce net debt by around 6 percentage points of GDP.

Ignoring the war years, net debt peaked at 18.1% of GDP in 1995-96. According to Mr Hockey’s own budget, gross debt in May 2014 was $319 billion and, in 2014-15, net debt for the Australian government is estimated to be $226 billion (13.9 percent of GDP) as opposed to the $667 billion bullshit.

Tony tells us that Labor ran up 5 record deficits. Whilst this may be true if you look at scary numbers with lots of zeroes after them, it is completely false if we talk percentages of GDP. For example, the deficit in 83-84 was 4.2% of GDP, as was the peak deficit in 2010 at the height of the stimulus spending. Since 2010 the deficit has been decreasing and was 1.2% of GDP in 2013.

Then there is Tony’s claim that Labor left “a further $123 billion in projected deficits and gross debt headed towards $667 billion”.

This claim is based on MYEFO which can only be described as a Coalition propaganda sheet rather than any sort of realistic fiscal outlook so I will treat that document with the ignore which it deserves and go back to PEFO which was an independent assessment of our fiscal outlook just before the change of government, based on Labor policies.

According to PEFO, the cumulative underlying cash balance (total deficit) over the forward estimates was $54.6 billion with a surplus in 2016-17. Mr Hockey’s budget shows a cumulative deficit over the same period of $107.4 billion – a deterioration of $53 billion in 9 months, with no surplus predicted over the forward estimates.

Mr Abbott then goes on to say:

“Our plan will strengthen the economy, create jobs and reduce Labor’s debt by almost $300 billion. We need to take action now or an even greater burden will fall on our kids’ generation. Now, the Labor Party is desperately trying to scare people by spreading untruths about the Budget. For example, they won’t tell you that funding for schools and hospitals increases each and every year under our Budget. And that the rate of the pension will continue to go up twice a year, every year.”

By Mr Hockey’s own words, the debt is projected to rise to $226 billion in the next financial year – reduce Labor’s debt by $300 billion? I don’t think so.

And speaking of our kids, how about the danger you are placing them in, both physical and fiscal, by taking no action on climate change.

And what the Coalition won’t tell you is about the myriad of cuts to health and education and pensions. Yes, there will be increases on current funding each year but they will be much smaller than previously agreed to and many programs and concessions have been cut. They also do not take into account population increase which necessitates yearly increases in funding regardless of any reforms.

Joe Hockey said “Of the 17 top surveyed IMF countries, Labor left us with the fastest growth in spending of anyone in the world … and they left us with the third highest growth in debt of anyone in the top 17”. This is true if you look at percentage increases but if you spent $10 last week and then $20 this week, that represents a 100% increase, so these figures mean nothing without context.

Saul Eslake, chief economist at Bank of America Merrill Lynch, says Mr Hockey’s comments “represent only a partial summary of what the IMF actually says in this section of it its report”. He says Mr Hockey omits one important conclusion, “namely that Australia would still have the second-lowest general government net debt as a per cent of GDP among the countries shown by 2018”.

In its generally upbeat assessment of Australia’s economic position, the IMF says “gross debt is expected to peak at around 32 percent of GDP in 2015 and is among the lowest in advanced nations”.

Elsewhere, in the fund’s recommendations for Australia’s fiscal policy, it says “Australia’s modest public debt gives the authorities scope to delay their planned return to surpluses in the event of a sharp deterioration in the economic outlook”.

There is only one side of politics trying to scare people by spreading untruths. Maths doesn’t lie.


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Let’s be absolutely crystal clear about this

Photo by The Daily Telegraph

Photo by The Daily Telegraph

If you click on the official Prime Minister of Australia government page the first thing you will read is:

“Over six years, Labor ran up a $667 billion debt on the nation’s credit card.”

Aside from wishing that the Prime Minister of Australia had a more visionary or engaging opening line, it is a bald faced lie and that isn’t a good way to convince people to trust you.

You will be subjected to a rolling slide show of Tony, Joe and Matthias, photographed in various serious looking poses. Is anyone else getting sick of these photos of Tony sitting at tables with people surrounded by lots of booklets and oversize graphs? Is that supposed to convince me that he knows what he is doing? Because he has his photo taking wearing a white lab coat trying to look into a microscope am I to say oh well the $7 co-payment must be a good idea?

But back to the lie.

“Ran” indicates past tense – in fact Tony Abbott specifically states that this happened “over six years”. What he fails to mention is that the figure of $667 billion was a projection for possible debt in ten years’ time from Hockey’s MYEFO report produced last December, and it included increased Coalition spending decisions like the $8.8 billion gift to the RBA and all the interest that will cost us, and the foregone revenue from the carbon and mining taxes, and changed assumptions about future unemployment – in other words it was a political exercise designed to come up with as big a number as they could so they could then justify draconian measures as they claim to be reducing it.

Using the term “nation’s credit card” is purely designed to cause fear. The nation doesn’t have a credit card. In fact we actually print money and can do so if we have to as they have done in the US. Credit cards can get individuals into serious debt and the interest rate is crippling. Using that term makes people think of that rather than a sensible understanding of how government finances work.

While the Coalition continues to peddle this lie I will continue to remind people of the truth because the Australian people have a right to know the real state of our finances. And because nothing pisses me off more than getting lied to about important stuff.

So what is the truth?

The independent pre-election economic and fiscal outlook’s (PEFO) medium term projections, using long-standing methodology, show that on Labor’s policy settings the Budget reaches a modest surplus in 2016-17, surplus grows to 1% of GDP in 2020-21 and net debt returns to zero in 2023-24.

The latest Budget update shows net government debt for 2013-14 of $191.5bn, or 12.1% of Australia’s GDP (not $667 billion Mr Abbott). By contrast, net government debt in advanced economies around the world averages 74.7%, according to the International Monetary Fund.

Gross debt in 2023‑24 is projected to be $389 billion with surpluses projected to build to over one per cent of GDP by 2024-25. There are no surpluses predicted over the forward estimates, there is a higher debt, and surplus of 1% 4 years later than predicted by PEFO using Labor policies.

After the GFC hit, the deficit peaked at $54.5bn, or 4.2% of GDP, in 2009-10 – less than half the advanced country average. In 2012-13, the federal deficit was $18.8bn or 1.2% of GDP, compared to an advanced economy average of 4.9%.

The claim that Labor left “fiscal time bombs” and secret cuts and spending is another blatant lie. In the 2013-14 Budget, Labor took the unprecedented step of releasing 10 year figures for the National Disability Insurance Scheme and Gonski school reforms, demonstrating how they were funded over the long term. Those figures, as well as the efficiency dividends on the public service, were there for all to see. The fact is that Tony’s election promises were made knowing this but, as we saw, working out how to pay for his promises was not on his mind.

Australia is one of only 10 economies in the world with AAA ratings from all three agencies – in the company of other countries with strong public finances like Germany, Canada, Sweden, Singapore and Switzerland. This status shows our finances are considered to be stronger than those of the vast majority of advanced economies – including the US, the UK, Japan, France and New Zealand.

Despite headlines to the contrary, and ill-informed statements by the Prime Minister, the agencies have confirmed our credit rating with a stable outlook.

I hesitate to compare government finances with individual or business finances, but I will say this. When you go into significant debt, you usually aren’t looking to pay it off completely the next week. The decision to go into debt is made by looking at your assets, your ability to service the debt, and the value of the investment of the debt.

We do need to make some changes. There will never be a time when fine-tuning isn’t needed because we live in an ever-changing world with an often volatile global economy. Situations change requiring adjustments to be made.

We are not in any sort of crisis. We have the luxury to be able to do long term planning to meet the challenges of the future whereas so many other countries are having to make decisions for the short term as a matter of survival.

Tony Abbott is looking for a legacy for himself rather than for our nation. He wants to say the debt was huge and I made it smaller and he doesn’t care if he has to lie about figures to make this look true. If he really wanted to reduce debt why on earth would he stubbornly insist on his paid parental leave scheme? Why wouldn’t he look at negative gearing and superannuation tax concessions and capital gains reductions? Why would he buy 58 fighter jets that won’t be in service until sometime next decade?

The “Infrastructure Prime Minister” is building the Abbott Highway to Hell to speed up the path to destruction and he is more than happy to sacrifice anyone who can’t help him along his way.


Would you buy a used car from this man?

Photo: townsvillelabor.org

Photo: townsvillelabor.org

The budget has been handed down and the salesmen have hit the road peddling their plan. The only trouble is they don’t seem to know what they are selling.

Tony Abbott told Melbourne radio listeners an average person would only have to pay the $7 GP fee ten times and then they would be bulk billed.

In fact the government has put no limit on the number of times an ordinary worker will pay the $7 charge, however, there is a ten visit safety net just for pensioners and children.

The Australian Medical Association accused Treasurer Joe Hockey of also getting it wrong when he says the chronically ill won’t be hit by the $7 GP fee. AMA spokesman Dr Brian Morton said “He either doesn’t understand or is misusing the statistic or is lying.”

LNP backbencher Steve Ciobo also told ABC radio listeners ‘if they have a chronic disease they are exempt from making the co-payment”.

While it is true that Medicare’s chronic disease management item will be exempt from the $7 GP fee, this is only for one doctor’s visit a year where the GP plans the patient’s care for their chronic illnesses. All further visits, treatments and tests will attract the co-payment.

A spokeswoman for Mr Hockey said yesterday “his comments stand”.

When asked whether the government would be introducing new chronic disease treatment items exempt from the $7 charge she said “the legislation was still being drafted…I can’t give any detail”.

So even though the details haven’t been finalised, this woman is sure Hockey is right even though his own budget papers and the AMA say otherwise. These people don’t like criticism and truth is irrelevant. Look what happens when Andrew Robb tried to tell the truth after a previous budget reply – his staffer nearly had apoplexy trying to shut him up.

And then we have the debacle over the deregulation of uni fees.

Mr Abbott told ABC radio that only students who start studying in 2016 would face potentially higher fees when universities can charge what they like. But the budget papers clearly state that anyone who enrols after May 14 will face deregulated fees in 2016. Only those who were already studying on budget day would continue to have their fees capped – and only if they finish their studies by 2020.

Education Minister Christopher Pyne reiterated this in a separate ABC radio interview after Mr Abbott’s comments. A mother asked him whether her daughter, already at university, would have to pay more.

“If that student stays in the course that she’s doing, she’ll continue under the rules that she started. If she changes course, then quite rightly she will face the new measures.”

A spokesman for Mr Pyne said the prime minister “may not have been as clear as he could have been”.

National Union of Students president Deanna Taylor wasn’t surprised by the confusion at high levels.

“I don’t think the government really put a great deal of thought into their policy,” she told AAP, saying it appeared to be very ideologically driven. “They’re trying to make us sound like spoiled little brats who don’t know how good we’ve got it. They have a very clear agenda,” she said.

Christopher Pyne is still selling his cuts to education as an increase in funding. Alan Jones, while interviewing him on Wednesday, was astounded that despite the education minister’s “brilliant” advocacy skills the “blockheads” running state governments could not understand that the allegation of an $80bn cut was totally wrong. In fact, Jones said, “there hasn’t been a more monstrous lie perpetrated since Julia Gillard said there’d be no carbon tax”.

Pyne somehow neglected to refer Jones to page 7 of the government’s glossy budget overview which clearly states that the government is changing indexation of state grants and “removing funding guarantees for public hospitals. These measures will achieve cumulative savings of over $80bn by 20024-25.”

David Gonski made an impassioned plea last night for the government to reconsider education funding from 2017.

Even the IPA are sick of the lies saying the party which was elected promising to reduce the size of government and reduce taxes, will preside over large expenditure growth and is hiking, not axing, tax. The following is an excerpt from Chris Berg’s article about the budget.

“For all the fire and brimstone that accompanied last week’s commentary on the budget, the bottom line is simple: under the Coalition, government spending is going up, not down.

This is the long-term significance of Joe Hockey’s first budget.

A modest 1.7 per cent real reduction in expenditure next financial year will be more than offset by 0.4 per cent growth the year after, 2.1 per cent growth the year after that, and 2.6 per cent growth in the 2017-18 financial year (the end of the Treasury’s forward projections).

And tax? Well, while this year the government will collect $363 billion, by 2017-18 it plans to collect $467 billion. That’s a jump in the tax take from 23 per cent of GDP to 24.9 per cent.

The most controversial policies (like the “learn or earn” welfare changes, the increase in the pension age, and the university reforms) sound like classic austerity measures but in truth don’t alter the fiscal equation all that much. They’re social reforms being smuggled in under the cover of a budgetary crisis.

And most of the big spending cuts to health and education have been punted far into the future – beyond the next election, and many out past the Treasury’s forward estimates.

The budget is also full of policies that superficially look like aggressive cost reductions but are in fact new spending.

For instance, the $7 GP co-payment is, astonishingly, being poured into a huge new medical research fund. It will apparently be the biggest in the world.

This is a bizarre decision. The policy case for a co-payment is that introducing price signals will give patients a financial stake in their healthcare choices. But using that money to fund an entirely new government program makes the $7 charge look less like a co-payment and more like a research tax.

Likewise, the reindexation of the fuel excise isn’t to fix the budget emergency, but for new road projects. This is so Tony Abbott can live up to his self-applied “infrastructure prime minister” nickname.

Abbott said in August, 2013 that “the only party which is going to increase taxes after the election is the Labor Party”. It’s worrying the Coalition now pretends no such commitment was made.

In opposition Coalition spruikers said Abbott offered two things: the integrity Julia Gillard lacked, and the fiscal discipline Kevin Rudd lacked. After this budget, what’s left?

Abbott is no Gough Whitlam-of-the-right. He has no plan to redefine the relationship between state and citizen, despite his stirring oratory from opposition.

Nor, contrary to Joe Hockey’s assertions, has the age of entitlement come to an end. The paid parental leave scheme puts a lie to that little fantasy.

Governments think election to election. But Australia’s fiscal problem is measured in decades, not electoral cycles.”

It is hard to know whether the government just didn’t read their own document or whether they are deliberately trying to mislead us. A quick look at the Prime Minister’s page suggests the latter.

“Over six years, Labor ran up a $667 billion debt on the nation’s credit card. Every single month this debt is costing us a billion dollars just to cover the interest bill.”

His own budget papers show this to be a lie.

Total CGS on issue as at May 8 2014 $319 billion.

Net debt in 2014‑15 is estimated to be $226.4 billion.

Net interest expense in 2013-14 $10.952 billion

As an employer, I expect my staff to know what they are talking about and they are required to undergo ongoing education to keep up with current developments. If they tried to sell products they knew nothing about, or lied to customers to make a sale, they would be receiving their notice.

Tony, I am hereby providing you with notice. Should you choose to leave before your period of notice expires, the nation will be eternally grateful.

I refuse to live in fear!

The tactic of a bully is to keep their victims living in fear of what could happen so they are grateful when they don’t get beaten or abused. They make their victim believe they are powerless by cutting them off from their support and telling them only the bully can look after them. This is exactly what our own government is doing. It is their tactic of choice in so many areas.

In the past, Australia was a country who willingly offered safe haven to refugees. We recognised their need for a home which complemented our need for population growth. As time passed, the contribution made to our society by those we embraced became obvious and we are the richer for it in so many ways. We are a wealthy multicultural society who used to lend a hand. Those days are gone.

We must spend whatever it takes, and alienate whoever we must, and inflict terrible physical and mental harm, to save the nation from the invading hordes of asylum seekers who will threaten our way of life. They will impose Sharia law, take your jobs, clog up your roads and hospitals, and are just waiting for a chance to kill you. Yes I am sure that’s why they are fleeing their homelands, leaving family and friends, risking their lives on unseaworthy vessels – just so they can come and turn Australia into what they are escaping from.

I do not fear refugees and we can easily accommodate 30,000 a year if not more. We should be welcoming them, assuring them they are safe now, and assisting them to become productive members of our society.

Climate change is real. It is not a conspiracy by bankers for world domination. It is not collusion by scientists to get funding. It is not a fake perpetrated by the IPCC. I refuse to believe the conspiracy theories though I am terrified by the consequences of our inaction. The government has inculcated fear about carbon pricing into the community – Whyalla will be wiped off the map, lamb roasts will cost $100, the cost of living will skyrocket – none of which happened. They tell us that wind farms are bad for our health and when that didn’t run, they revert to they are ugly?

We were told that the mining tax would hinder investment in Australia with investment and jobs going offshore. This scare campaign was also a lie. We have the resources and a stable economy, the investors are banging on our door. The high Aussie dollar caused by the success of the mining industry is what is hurting jobs and sending industries offshore, but Hockey hastened to reassure the miners that they will not have any of their subsidies cut or tax increased. In ‘fear’ of the miners choosing to rape another country instead, we have gotten rid of our environmental protections and given virtually open slather for the short term cash grab of developing our finite resources.

Our country is not broke. Using great big numbers about possible debt in ten years’ time and inflated deficit figures is purely designed to scare us. Why do that? Don’t you want business and consumer confidence? This scare campaign is purely political to exaggerate the problem, blame it on Labor, and use it as an excuse to implement their corporate agenda and social engineering.

People struggling on the old age and disability pensions are terrified about the recommendations from the Commission of Audit. We can reassure the miners but we cannot reassure the pensioners. They have to wait in fear so when they only have to pay $6 instead of the recommended $15 as a co-payment to the doctor they will feel grateful.

We are told that our health system is unsustainable yet the government didn’t ask the people in the industry how it could be improved. We straight away go to the scare campaign of we can’t afford this so you must pay. The experts have said there are many ways that expenditure could be better spent and areas of waste that could be eliminated but starting with preventative health is patently counter-productive.

The same applies to the old age pension. We have now scared everyone by saying they will have to work to 70 yet once again the experts disagree with the fear campaign being spread. Hockey said the number of people aged 65-84 would quadruple by 2050. The ABS says otherwise. They do three predictions – high, low, and medium – their high range estimate is 2.5 times growth in that age bracket. Hockey predicted that only 37 per cent of the population would be of working age in 2050, yet the best available estimates from the ABS show it is in fact between 61 and 63 per cent.

The scare campaign about unions is the government’s way of cutting us off from our support. What collective voice do the people have other than the unions? Who offers protection for our workplace rights other than unions? Who can represent individuals other than unions? Reducing the minimum wage or the availability of Newstart is not the best way to tackle unemployment. There are so many better ways like investing in new industries such as renewable energy, and investing in education and supporting research to develop the industries of the future – something we have been amazingly good at in the past.

George Brandis even wants to change the law to protect bigots and bullies. Apparently they have every right to offend and humiliate people. What sort of crazy backward thinking is this, done in the name of freedom? Next, will we be defending the rights of countries to commit human rights abuses? Oh, wait…

We must stand up to this government who consciously, willingly lies to its own citizens to keep them in unnecessary fear. We must point out their crazy priorities where we waste hundreds of billions on fossil fuel subsidies, tax rebates for superannuation and private health insurance, fighter jets, paid parental leave, grants to polluters, Operation Sovereign Borders, lifetime gold passes and entitlements for politicians, political advertising and campaigning and the like, while insisting that our most vulnerable must live in poverty and fear. We must expose their lies about debt, deficit, and the affordability of our health and welfare system.

You are the one who should be afraid Tony – be vewwy afwaid – because I refuse to live in fear and will do everything in my power to make sure the Australian people know the truth so we can protect ourselves from the bully by ending this relationship at the first opportunity.


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Abbott Solves World’s Problems! G20 Shocked About How Badly Labor Did.

Scene: Davos.

“Hello, Hans, did you catch that Tony Abbott’s speech?”

“No, unfortunately I was delayed. Was it good?”

“Was it good? it was brilliant. I learnt so much. Did you know that this World Economic Forum at Davos has been an important contributor to global progress for over 40 years?”

“Has it? No, I didn’t know that. Wow, I’m sorry I missed it. That would have been really worth hearing. Was that all?”

“No, he was quite an expert in economic matters. I mean I knew we’d have some extraordinary minds here, but this Abbott’s insights were quite breathtaking. For example, did you know that as soon as people have economic freedom, they create markets.”


“Yes. He went on to say that growth would solve all the world’s problems. And he told us that profit is not a dirty word because success in business is something to be proud of.”

“That must have made all the business people rethink things. I mean, many of them so are ashamed of their success that they hide their profits in places like the Cayman Islands.”

“Well, thanks to this Abbott person they can now be proud again.”

“Such a shame I was late. This sounds like the sort of speech that will prevent a global financial crisis from ever happening again.”

“Yes, according to Abbott, that was not a ‘crisis of markets, but of governance”. We need to strengthen governance without suppressing the vitality of markets.”

“And how does one do that?”

“He didn’t go into much detail. But a man as brilliant as he is would surely have a plan. He then went on to explain how the previous Australian Government really messed things up by not going into recession, and started spending their money on drugs. Or something like that. I wasn’t paying attention. After all, Australian domestic politics is of little interest to me. I’m just interested in seeing that ideas like his are spread as widely as possible.”

“Well, I must go and see if I can meet this Herr Abbott. I understand he is quite an expert on mountain climbing too.”

“Yes, he knows that there are a limited number of mountains and you can’t climb what isn’t there!”

“Well, thank you for catching me up on what I’ve missed, Rupert. I may see you later.”


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Davos Nothing to Do With David, and We Only Want Stronger Borders Sometimes.


“All models are wrong but some are useful.”

George E. P. Box

Now think of the economy like a household and think of government debt like your credit card. Use that model. Get it firmly in your head. Then judge every action of the government in the same way you’d judge running your household like that.

In this household model, of course, nobody ever explains how tax actually fits in, given that for a government it’s revenue. I suppose that it would be your investments and wages. Mm, so it would seem an obvious way of reducing debt would be to get a second job. Or raise taxes if we’re using this model.

Of course, ignore your mortgage. Or for the purposes of this. If you’ve taken out a mortgage, image that it’s on your credit card. The same if you have a car loan. If any of your kids are considering going to university, consider that HECS debt as being on the credit card too.

Good God! You are in a mess, aren’t you? Better stop spending money. Don’t, whatever you do, call a tradesman to fix something or make improvements to your property. That’s just saddling your kids with more debt. They can have the hot water fixed when they have children of their own.

I suspect there was a lot of this simplistic thinking behind Tony Abbott, when he announced at the World Economic Forum:

“No country has ever taxed or subsidised its way to prosperity. You don’t address debt and deficit with yet more debt and deficit.

“And profit is not a dirty word, because success in business is something to be proud of.”

When he talks about profit, is he suggesting that governments should be making a profit? Remember that a budget surplus means that they take more in revenue than they give back in services. Sometimes this will be necessary for the health of the economy, but should a government always be planning to run surpluses?

We also heard that Labor had messed up by trying to spend its way out the GFC:

“Well, the reason for spending soon passed but the spending didn’t stop, because when it comes to spending, governments can be like addicts in search of a fix.”

There’s an assumption in there that stimulating the economy in a time of crisis is the only reason for spending. Sometimes spending on things will be worthwhile in the long run. For example, we spend far more per capita on education than some of the poorer African countries. Is Mr Abbott suggesting that they wouldn’t eventually improve their economic situation by spending more on education? Or that well-targeted subsidies haven’t helped certain businesses in their early phase?

Well, I look forward to his removal of all the subsidies to the fossil fuel industry.

No, we need that simple model of the household. Keep government out of the way, keep taxes low and business will prosper. And, if particular businesses don’t, well that’s capitalism.

We need to remove all borders and allow free trade. Except when it comes to people smugglers, then we need stronger borders. What’s so bad about people smugglers? They’re just profiting from human misery. I thought profit wasn’t a dirty word! That’s only when companies are engaged in legitimate enterprises. Like the AWB in Iraq, or ANz in Cambodia?

Yep, let’s not think too deeply about economics. Otherwise I might be forced to point out that all the companies Mr Abbott praises in Davos have a much higher debt to asset ratio than the Australian Government.

But, just as it’s a mistake to think of the government as a household, it would be a mistake to try and model a government on a coorporation. I remember the quote from George W. Bush.

“When I’m president, I plan to run the government like a CEO runs a country. Ken Lay and Enron are a model of how I’ll do that.”

I leave the reader to decide how closely Bush came to achieving his aim.


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Five Have an Economy to Save (apologies to Enid Blyton)

five chapter 1

“The nicest word in the English language,” said Dick, “is holidays.”

“Don’t be silly,” said Uncle Joe, “they’re bad for productivity.”

“Well,” said Dick, “by holidays, I meant ours. And the places we can go at taxpayers’ expense.”

“But, only if it’s on official business,” said Anne.

“Pah, you’re such a worrier, Anne. Father Tony said it was ok, as long as we said it was official business. And as we’re always on an adventure, isn’t everything we do official business?” laughed Dick, as he licked the caviar off his fingers.

“Speaking of Father Tony, where is he?” asked Anne. “He should be here and he was bringing George, whose father is one of those silly scientist people and he gets quite cross like George does. It’s probably because she wishes she was a boy, although that’s strange because the only boy she likes is Timmy, her dog.”

“That’s quite enough sub-text for you, my nervous little sister. I just hope that he’s bringing some food, I’d really like to stuff myself tonight,” said Dick.

“Weren’t the sausages at tea-time enough for you?” asked Julian entering.

“You know me,” replied Dick. “I can never get enough to eat.”

“Hang on,” said Anne, “I think that I hear a car.”

The children cheered, but Uncle Joe remained unmoved.

“What’s the matter, Uncle Joe?” asked Julian.

“I expect that Father Tony will prefer to give you the bad news himself,” replied Uncle Joe.

“Bad news, oh no,” said Anne, “I don’t like bad news.”

“Poor Anne,” said Dick, placing his arm round his sister, “you’re such a girl.”

“You better not say that when George is here,” said Julian. “She’s so politically correct!” and everyone laughed, including Uncle Joe.

Suddenly, the door flew open and in bounded Timmy. First, he bounded up to Anne, licking her face, then he moved to lick Julian, and Uncle Joe, before carefully avoiding Dick, because after all this is a children’s story.

“Stop that, Timmy!” yelled George. “I’ve had a perfectly wretched journey. Father Tony has something very important to say to all of us.”

She stepped aside to let Father Tony in.

“What’s the matter, Father Tony?” asked Dick.

Father Tony held up his hand. “It’s the economy. It’s a big mess. And I need you to help save it.”

“Another adventure,” squealed Dick, excitedly, while Anne looked worried.

“You can count on us,” said Julian.

“Right,” said Dick, “what do you want us to do?”

“Well,” said Father Tony, “it’d help if you stopped going to school. That would be a great start.”

“Excellent,” said Dick, “then what.”

“Ah… nothing,” said Father Tony, “that’s as much as Uncle Joe and I have worked out for you. But it’s all right. Just wait here, while the adults work out what’s meant to happen. Uncle Joe, can we talk privately, there’s no need to tell the children any more.”

“Of course,” replied Uncle Joe.

As they left, Father Tony added, “And put that dog outside where he belongs.”

George scowled. “As if those two could fix anything,” she murmured after they’d gone.

Although nobody said a word, even Anne knew that, if the economy was going to be fixed, then it’d be up to the Famous Five, because the adults clearly didn’t have a clue.

(End of Chapter 1)

No excuses! Except that we have really, really good ones.

When Tony Abbott promised a “no excuses, no surprises government”, I must say I only half believed him. What I mean by that, is that I expected plenty of excuses, and because that’s what I expected, I didn’t think I’d be surprised.

But Tony Abbott has surprised me!

I really didn’t expect that anyone could be this incompetent.

As for the excuses, we have Paul Sheehan today complaining how Labor “booby-trapped” Australia’s future. He complains that Labor is blocking the carbon and mining taxes in the Senate, but overlooks Abbott’s blocking of the ETS in 2009. Only some things are a mandate apparently.

“And what do we get? Labor and the Greens opposing all four mandates, and everything else, and some of Labor’s booby traps already exploding. Rudd’s authorising of spying on Indonesia’s President and his wife blew up on Tony Abbott, who suffered further damage as he doggedly covered up for Labor. Labor’s multi-billion-dollar expansion into school education, a state issue, also exploded when Education Minister Christopher Pyne ineptly fumbled his attempt to rein in its costs and impositions.”

Read more: http://www.canberratimes.com.au/comment/how-labor-boobytrapped-australias-future-20131215-2zf8y.html#ixzz2na3KxxRy

So there you have it, “Labor’s multi-billion dollar expansion into school education” which Tony Abbott promised to keep before the election wasn’t part of his mandate. Only the things that the Coalition truly believe are part of their mandate, and everything else is just something that you say to get elected. And surely, the voters know which is which!

You know, things like bringing down the debt, that wasn’t a “real” promise. And they’ve made a good start on that, by cutting $3 billion dollars worth of taxes that have been announced, but not enacted. “We don’t need taxes to pay off the debt,” they seem to be saying. “If only we could get rid of this MASSIVE carbon tax, we’d have the deficit ballooning out by so much that we could really complain about Labor… Oh, wait we’re the Government.. Doesn’t matter, it’s all Labor’s fault!”

Paul Sheehan’s article is so full of contradictions that answering it would be like allowing Mitch Johnson to bowl at a blind man. (Actually, not being able to see him may help the English batsmen.) Perhaps, he’s trying to outdo Bolt in the hope of boosting his readership, but somehow he just sounds like he’s making excuses.

Of course, he’s not part of the Government, so we can’t really hold Tony Abbott accountable for what some grumpy, old man writes to excuse the Coalition’s failings.

So, on the promise of repealing the carbon and mining tax, we have the excuse that it’s being blocked in the Senate. I suppose one could argue that’s a reason, not an excuse.

On “stopping the boats”, well, they’ve been very successful, haven’t they? They’ve slowed them, we’re told. But by only announcing arrivals once a week in a press conference that Morrison discourages the press from attending by announcing its location at the last minute, refusing to renew the contract of the Salvation Army to provide services to detainees and sacking the Howard appointed health advisory board they’ve certaining stopped the flow of information. Which is practically the same as stopping the boats, isn’t it?

And, anyway, it’s all the fault of the Indonesians. As Tony said, it’s high time they cooperated! I mean, we expected them to do that when we told the public that we had a good understanding about turning back the boats, and wandering in to Indonesian fishing villages with a wad of cash saying, “Who wants to sell their boat for twice what it’s worth?”

Again not an EXCUSE. A reason!

Christopher “Hey, presto!” Pyne had a neat little act with the incredible disappearing and reappearing $1.2 billion that sounded suspicious like an excuse to me. But Abbott stepped in and announced that Christopher didn’t know what he was talking about and there were no excuses needed because everything was going ahead, so no need to look at this closely any more.

Then we come to the NBN, which they aren’t going to be able to deliver on their promise of a 2016 date. Oh, and the costs have blown out.

‘Mr Turnbull said he didn’t “feel any shame” about the government’s inaccurate pre-election forecasts.

“They were (cost) estimates done in the best of good faith from opposition,” he said.

“As far as the 2016 target is concerned, I’m very disappointed that the company is not going to be able to do that.” ‘

The Age, 15th December.

You see, the estimates were done in good faith. From Opposition. They can’t be held responsible for promises they made then. Sorry. ESTIMATES. Only Labor makes promises. The Liberals have aims, objectives, goals, aspirations, and ESTIMATES. And as for the target, Mr Turnbull is very sorry that THE COMPANY is not going to be able to deliver on the timeline that he ESTIMATED in Opposition. (Gee, I think he should sack the people running that Company and appoint more competent people… Oh, these are the more competent people that Malcolm just appointed. Better bring up your support for a conscience vote on gay marriage, Malcolm!)

There you have it, they’re all REASONS. I don’t know why some people keep calling them excuses.

  • * *

I first published this before the election, but I think it’s time to shout bingo.


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Electricity Bill and Raising the Standard of Debate in Seven Easy Points.

1. My Maggie Thatcher Moment:

Joe Hockey said that most other countries were moving toward a “direct action” approach to Climate Change. My response: Name Two.

2. Tony Abbott wants to raise the standard of debate, but decides that making fun of Shorten’s first name is appropriate.

“TO celebrate his 50 days since winning the election, Tony Abbott made a special meal – of “Electricity Bill” Shorten.

What the Prime Minister did last weekend to the Opposition Leader in just one sentence should terrify Labor. He put a label on Shorten that will stick like Tarzan’s Grip, reminding voters Shorten is keeping power bills too high by stopping Abbott in the Senate from scrapping the carbon tax.”

Andrew Bolt

Tarzan’s Grip? That brings back memories of my childhood. It was considered a very strong glue until superglue came along. Still perhaps, Andrew Bolt hasn’t heard…

But given that’s the way we’re going to raise the standard of debate. I suggest Labor start using names like “Tiny Tony”, Joe “Even More in Hock” key, or “Moron” Warren (You know, the Deputy PM)! That should make the Liberals shiver, shake and what didn’t Andrew Bolt – I know let’s call him Andrew Nut, that should really nullify him – say? Terrify, that’s it.

3. Tony Abbott: “This was a very, very big fire.”

Who needs experts when you have Tony Abbott to analyse the situation. Apparently, he was a Road Scholar, which explains why he won’t put into money into public transport.

4. Abbott on President Obama: “He’s a very busy man, and I don’t want to make his life more complicated by demanding an early meeting.”

Tony, I suspect that you wouldn’t make his life more complicated. I suspect that if he didn’t want one, you’d just be told no. So, if you demanded an early meeting, and he said no, you’d just have to find some way of saving face. Like saying:

Obama’s a busy man and there’s no need for us to meet any time soon.


5. From an interview with Lally Weymouth:

“So do you believe in climate change or are you skeptical?”

Tiny Abbott (teehee, that’s almost as good as “Electricity Bill”): This argument has become far too theological for anyone’s good.

Yet Abbott abolishes the Climate Commission, incoorporates the Science Ministry into other portfolios, dismisses evidence from the CSIRIO and other bodies and makes no comment about George Pell’s sceptism on Climate Change. Perhaps, he’s right – perhaps it HAS become too theological.

6. Apparently, he’s a “Rhodes Scholar”. Sorry, but easy mistake to make.

7. From the same interview:

“But Labor wanted to extend fiber to every household?

Welcome to the wonderful, wacko world of the former government.”

Giving everyone access to faster broadband without paying an enormous amount for it. How wacky is that? Labor haven’t done anything that wacky since they introduced health care to everyone whether they were sick or not, or since they introduced superannuation for all workers.

[polldaddy poll=7512845]

The Economy is Like a Giant Blancmange, Except that it’s Not.

Many people see the economy as like a household budget. You need to keep it all neat and orderly and manage it. Others see it as like the weather. There’s nothing you can to do change it, so you just have to adjust as it happens. I could find plenty of analogies for what the economy is like, but I think it’s worth quoting George E. P. Box here: “All models are wrong; some are useful.”

As far as the economy goes, here in Australia, we’ve often been encouraged to see it similar to the “weather” model: Lots of things beyond our control dictate how well it performs and beyond having an umbrella handy, there’s nothing much we can really do about it. We’re a small country and we don’t have the scale or clout to affect things very much.

Of course, this is partially true, which is what makes it compelling, but let’s not forget that all models, all analogies, all comparisons are arbitrary and man-made.

An economy is – well, an economy. And while there are various ways we can look at it, break it down into sub-sections and individual parts such as the local economy or the world economy, in the end these are just to give it meaning and structure. When Margaret Thatcher said that there was no such thing as society, she may as well have added that there is no such thing as “the economy”.

I make this point, not as a sort of first year philosophy discussion, but because a lot of convention wisdom about the economy is just that. It’s an agreed set of beliefs that economists generally agree about (and disagree, within certain parameters). A few years ago, for example, I heard an economist explain that China was doing the wrong thing by not floating their currency. Apparently, the reason China wasn’t doing this is because it was to their advantage. But it was the wrong thing to do.

Australia has been doing the “right thing” for years – opening borders, privatising, floating the dollar, reducing Government spending in certain areas. And it could be argued that this has served Australia well, but that’s a rather large debate and not completely relevant the point I’m making.

The Labor Government copped both praise and criticism for the way it responded to the Global Financial Crisis. The strongest comeback for Labor is that Australia was one of the few countries in the world that didn’t go into recession. To counter this, the argument that the Liberals have been running for years is that the money they spent was too much, and mismanaged. Of course, it’s always easy to argue hypothetically about something past. (I can argue that if Melbourne Football Club had appointed me coach two years ago they’d have been in the finals now, rather than near the bottom of the ladder. Nobody can prove me wrong!)

Labor did what it did, borrowed what it borrowed and spent the money on identifiable things. But let’s not take up the politics of this, or the conventual economic view that Labor were wise to get into as little debt as possible, let’s take a totally “irresponsible” view. What if Labor had borrowed twice* as much, and awash with funds set up a state of the art, world class research facility which would have attracted the best scientific minds in the world. Or something long-term to help our competitiveness in the future. Like improving the availability and speed of the internet. Oh, yes, I forgot. When’s that stopping again?

The thing is Labor were in Government. They had control. They could have spent more, or less. They could have lowered taxes, or raised them. They had lots of ways in which they could affect the economy. The debt itself wasn’t the issue. …

The debt was political. The Liberals would have squawked about things getting out of control under Labor. Whereas now, a 66% increase in the debt ceiling is ok. Except that we’re not meant to be hitting it for ANOTHER THREE YEARS. That’s three years of “responsible” economic management.

Responsible economic management that may include the sale of Medibank Private, which was mentioned before the election, and the sale of the HECS debt, Australia Post and a range of things that weren’t. Imagine if Labor had tried even selling one of these to pay off debt or to bring in the NDIS.

Of course, the real reason that Hockey is increasing the debt ceiling by so much, I suspect, is so much that he expects to hit it, but that he doesn’t want to have raise it again before the next election, and that not hitting it will be used as “sign of good, responsible management” as in Labor raised the debt ceiling more that once, but we just did it the once and look we haven’t hit it, aren’t we good?

I think that’s about the size of it, economically speaking. As the economy is like the weather, I’ll end with this analogy:

Labor was blamed for the rain. They then bought too many sand-bags to use in the levy bank to protect us from the flood. We didn’t need that many sand-bags because no water got over the levy bank, so we put the Liberals in charge. It’s stopped raining. We put in an order for nearly twice as many sand-bags. When the next lot of rain comes, the Liberals will claim credit for the fact that they didn’t use all the sand-bags.

So Labor went $285 billion into debt to save us from the GFC, what’ll be the Coalition’s excuse?

*Someone I’m sure will point out that funds were not easy to obtain in the GFC, even for Governments. I’m conveniently overlooking that because it’s not relevant to the points I’m going to make later on, and as this is hypothetical, I can – like Tony Abbott – completely ignore reality when it doesn’t suit me.



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