One of Joe Hockey’s first acts as Treasurer in 2013 was to gift the RBA $8.8 billion. The main reason for this was to make Labor’s deficit look bigger. As a side bonus, it allowed the RBA to invest in the forex market, banking on the Australian dollar losing value as the mining boom subsided.
And that is exactly what happened allowing the government to draw…wait for it…$8.8 billion in dividends over the last six years. That’s all very well (if we ignore how the Coalition screamed like stuck pigs when Labor took a one-off dividend of $500 million in 2013) except Hockey borrowed the $8.8 billion so we are still paying interest on it.
We have also paid a fortune in “fees for banking services” as investment banks have raked in hundreds of millions in trading fees.
Had Hockey not engaged in this political chicanery, we would be billions of dollars better off.
And then there are the six Future Funds which contained $198.8 billion as at June 30 this year.
The direct cost of managing these funds was over $1 billion for the last three years alone.
The DisabilityCare Australia Fund had $16.4 billion sitting in it, which must be aggravating to the many people still waiting to access services or those who have had their services reduced.
The Aboriginal and Torres Strait Islander Land and Sea Future Fund (ATSILS Fund) was established in February 2019 with a capital contribution of $2 billion transferred from the Aboriginal and Torres Strait Islander Land Account.
The purpose of the Indigenous Land and Sea Corporation, to whom the fund will make payments apparently at the discretion of the Minister if the investment mandate targets have been met, is to acquire and manage land, water and water-related rights so as to attain economic, environmental, social or cultural benefits. One wonders how much will actually be handed over for that purpose now that Peter Costello has his hands on it. I am sure the mining companies would prefer that money to be tied up rather than used.
In July, the government deposited another $7.8 billion into the Medical Research Future Fund. As we were still in deficit, this was a pretty amazing feat which must have come at the cost of other research cuts and/or interest costs for the borrowed money. It’s interesting how they can find a lazy $8 billion when they want to.
The Education Investment Fund, originally intended for new facilities in the higher education sector, had payments frozen in 2013 and it has been accumulating funds since. These have now been taken to create the government’s new $4 billion Emergency Response Fund.
Then, on 1 September 2019, the assets of the Building Australia Fund were transferred to the newly created Future Drought Fund.
The original Future Fund was established in 2006, funded in part from budget surpluses but mainly from the sale of Telstra. As at June 30, there was $162.6 billion sitting in it.
Kevin Rudd, as Opposition leader, suggested using $2.7 billion of it to invest in a National Broadband Network with profits being returned to the Future Fund. The Howard government screamed blue murder, claiming that Labor intended to “raid” the Future Fund for their own means. Gee, that has worked out well for us hasn’t it.
While legislation permits drawdowns from the Future Fund from 1 July 2020, the Government announced in the 2017-18 budget that it will refrain from making withdrawals until at least 2026-27.
What on earth is the point of sitting on that pile of money when only 20% of it is invested in Australia?
The ten year return has been 10.4% for the Future Fund which might sound good until you look at Infrastructure Australia’s High Priority Project list where every project has a cost benefit ratio of better than that.
We could be employing people in productivity enhancing infrastructure construction. We could be increasing primary healthcare and reducing hospital waiting times to save money and improve quality of life. We could be investing in research and education, both of which bring a far greater return than 10%.
But the Coalition are obsessed with accumulating cash and apparently have zero understanding of the value of actually using the money for the benefit of our economy and our citizens.
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I wonder if the Coalition realise just how incongruous their rhetoric is with Tony selling the ‘death cult’ and ‘home-grown terrorist’ angle and trying to convince us he has to spend billions to keep us safe, while Joe Hockey is telling us it will be ‘intergenerational theft’ to spend money on health, education, and welfare.
Tony has a hard sell because we don’t actually feel as afraid as he would like us to and people are starting to wonder about someone who uses twenty billion dollars to buy a vote to keep him leader when he may already have used that same $20 billion to buy a signature on a free trade agreement.
Now he is asking us to chip in over $400 million so he can spy on innocent people because the proposed metadata retention laws have so many gaps in them that they will be easily circumvented by anyone who wants to, be they genuine terrorists, pedophiles, or journalists.
Rather than helping the “war on terror”, I think we got more truth from AFP commissioner Andrew Colvin who said the scheme could “absolutely” be used to tackle online copyright infringement.
“Illegal downloads, piracy, cyber crimes, cyber security, all these matters – our ability to investigate them is absolutely pinned to our ability to retrieve and use metadata,” he told reporters.
Funnily enough, Malcolm Turnbull and Steve Ciobo were quite vociferous in their opposition to metadata retention when they were in opposition. This time around, Malcolm was excluded from National Security Committee discussions of the proposal but then, even though he hadn’t been at the meetings, he was sent out to explain it after both Tony Abbott and George Brandis struggled to clarify what data would be held.
Expecting them to have a consistent view on anything other than ‘stop the boats’ and ‘axe the tax’ has become unrealistic.
Against this backdrop, Joe is softening us up for the soon to be released Intergenerational Report which will contain lots of big scary numbers with no context.
Whether the delay in its release, which is a breach of the Charter of Budget Honesty, has been forced on Joe so he can do a quick rewrite, or he is choosing the timing to be closer to his next budget, we can be certain to hear a lot of “stealing from our children and our grandchildren”.
This is also going to be a very hard sell.
He has to convince students that, to save the government from having a future debt, they should take on a very large personal debt – so large that many of them will choose not to take on tertiary education.
He has to convince pensioners that they should take a cut to their indexation because it is too hard to tax high-earning superannuees.
He has to convince us that a “value signal” on going to the doctor won’t lead to increased chronic illness and hospital admissions.
He has to convince us that we must hunt down all the people who are rorting welfare payments but that chasing corporate taxation would be “detrimental for business”.
He has to convince us that, with unemployment rising particularly amongst our youth, that we should all work till we are 70.
And he has to convince us of this while Tony is boosting defence and security spending and buying submarines and fighter jets and helicopters and patrol boats hand over fist; while Peter Dutton is spending billions keeping children locked up in detention ; while Tony is spending tens of billions building his (finger number four) roads of the 21st century.
I would suggest that even Joe’s quivering references to his children won’t save him this time.
I have a suggestion on what we can do to fix the “debt and deficit disaster” without having to burden anyone at all or cut anything at all.
Well, as at the 31st of December 2014, it was $109.21 billion in the black. We also have $3.77 billion in the Education Investment Fund, $3.71 billion in the Building Australia Fund, $1.95 billion in the Health and Hospitals Fund and $830 million in the DisabilityCare Australia Fund.
Its investment returns for the 2013-14 financial year yielded $12 billion ($48.7bn since its inception in May 2006 on accumulated contributions of $60.5 billion invested). The 2014-15 budget shows $13.2 billion interest will be paid to service CGS liabilities for the year to June 2014, so we came out roughly square (give or take a billion) so you can stop worrying about our billion a month in interest payments.
Despite the global financial crisis in 2008, the fund has enjoyed an average nominal annual growth rate of 7.2 per cent.
The Australia Government Bond 10Y rate is currently about 2.57 per cent. That means we could borrow money (issue bonds) and reinvest it making a net gain of almost 5%.
Interestingly, though you will hear Conservatives tell us this nest egg is solely due to John Howard’s surpluses (and the sale of Telstra), in the 2008 and 2009 federal budgets, the Labor Rudd Government transferred A$41 billion into the Future Fund, and established three new funds, known as the Nation-building Funds: a A$20 billion Building Australia Fund to invest in roads, rail, ports and broadband; an $11 billion Education Investment Fund, which absorbed a similar $6 billion fund set up by the previous government; and a A$10 billion Health and Hospital Fund.
These transfers created or contributed to the budget deficits of A$27 and A$57 billion respectively in the 2008 and 2009 years. Rather than burdening our children with our debt they were setting money aside for their future needs.
Costello took money out of the economy by running surpluses and sold our assets to make his contribution. Swan borrowed money when times were toughest to invest even more to stimulate the economy through investments and to grow a fund for future generations. The Coalition takes from us while the Labor Party gives to us, and they call the progressives economic vandals. The Coalition simply have no understanding of how it works.
In 2007, Labor suggested it wanted to withdraw $2.7 billion to start the NBN, paying the Future Fund a commercial rate of return on the invested funds, with all profits being returned into the Future Fund allowing further investment.
The Howard government screamed blue murder proclaiming that Labor intended to “raid” the Future Fund for their own means. Surely this is exactly the type of thing we have a future fund for – something that would benefit all Australians through immediate employment in the design and construction, future generations who will benefit from access to high-speed broadband, and the investors who will receive a return on their investment.
Joe Hockey will tell you that the purpose of the fund is to meet the government’s future liabilities for the payment of superannuation to retired public servants. I very much doubt that bill would be anywhere near the fund’s annual return – $12 billion and growing – and this is entirely unnecessary anyway as any future liabilities can be paid for as they arise by issuing bonds if necessary. It is also not how the fund describes itself and nor should it. This money should not be quarantined but used to build our children’s future.
So the next time Hockey tears up about what we are doing to our children, remind him of the Future Fund that is sitting there earning money to “benefit future generations of Australians.”
What would be far more sensible than borrowing to park money in the Future Fund would be to follow Michael Pascoe’s advice in the SMH:
“Commonwealth 10-year bonds are trading with a yield of 2.5 per cent. Right now, the government could borrow as much as it can dream of for very little, invest it in infrastructure development with a double-digit rate of return, improve the nation’s productivity, overcome some of the shorter-term challenges of our structural adjustment, reduce unemployment, end its over-reliance on monetary policy and restore some of the inter-generational balance that has been lost by public sector investment falling to its lowest level in generations.
But that would take leadership and trust and confidence in the leadership – not a boy who’s been crying wolf.”
Whilst Tony and Joe will be pushing counter narratives on our spending power – unlimited funds for national security, but health education and welfare are unaffordable – they are consistent on one message – they want us to be afraid.
Joe Hockey has been making noise about tax avoidance.
“They’re stealing from us and our community,” he told the Nine Network on Friday, labelling tax cheats as “thieves.”
Tony Abbott told us we should judge the Coalition on their actions rather than their words – sound advice considering their words bear no resemblance to what they actually do – so it would be timely to consider what they have done to address this growing problem.
While other countries are closing their tax minimisation loopholes, the Abbott government has spent the past year opening them up.
One of Treasurer Joe Hockey’s first acts in office was to roll back Labor’s measures to tackle profit shifting and improving tax transparency – effectively handing back $1.1 billion to big global firms.
As it pushes for a G20 summit agreement this weekend to crack down on corporate tax evasion, the Abbott government has set a timetable for action that is about one year behind the biggest European economies including Britain, France and Germany.
The “early adopters” in the global program will begin exchanging information in September 2017, however, the exchange of information with Australian authorities will not take place until September 2018.
In March this year, the ATO announced an amnesty for offshore tax cheats. For those who come forward before the end of the calendar year, there is a guarantee of no prosecution and only four years of offshore income is assessed with a maximum shortfall penalty of 10 per cent.
“For lots of people, their forebearers came from war-torn Europe”, tax lawyer Mark Leibler told the ABC’s AM program. “They wanted to keep nest eggs overseas, not primarily in order to avoid or evade tax, but just as a measure of security.”
So these people and their families have been avoiding tax since they arrived here after the war but let’s not worry about that.
Around $150 million worth of assets is the most declared by one person so far. The money has come from 40 countries including Switzerland, the UK, Hong Kong, Israel and Singapore.
Australian Tax Office deputy commissioner, Greg Williams, said new migrants with limited knowledge of Australia’s tax system and people that have deliberately sent money offshore are also among those coming forward.
“You’ve got that whole gamut from old money, new money, recent migrants and people sending the money offshore,” he said.
These ‘people’ include our own government.
Australia’s Future Fund has revealed it has invested more than $20 billion through offshore tax shelters, including the Cayman Islands, warning of lower returns if it does not minimise its tax bill.
The $77bn fund for federal public-servant pensions has revealed that 14.4 per cent of its assets, worth about $11bn, are invested in subsidiaries based in the Cayman Islands (a tax haven in the Caribbean) and a further 1.3 per cent is in its subsidiaries in the British Virgin Islands and Jersey.
On top of this, the fund has tipped 12.6 per cent of assets, about $9.6bn, into private market vehicles based in these tax shelters and a small fraction is invested in a vehicle based in Luxembourg.
Answers to a Senate inquiry revealed that, at June 30, the fund held stakes in 15 tobacco manufacturers including a $55.4 million stake in British American Tobacco in Britain, $44.5m in Lorillard and a $44.9m investment in Philip Morris in the US.
Individuals within the government also embrace the benefits of tax “minimisation”.
In July, it was disclosed that Malcolm Turnbull, Australia’s second-richest parliamentarian, has invested in a ”vulture fund” based in the tax haven Cayman Islands.
Mr Turnbull, who has divested himself of shares and switched his investments to managed funds and hedge funds since being elected, updated the register of members’ interests on June 18.
The IPA, not surprisingly, is against any moves to tighten up the laws.
“Inspired by the sensationalist headlines, the emerging policy agenda for a clamp down on tax avoidance should be seen for what it truly is: a ploy by indebted countries, with overgrown public sectors, to hoover up more cash from productive people and enterprises, stifling tax competition in the process.”
You have to give them credit for never letting morality or ethics interfere. They were no doubt impressed when their much-loved patron, Rupert Murdoch, single-handedly blew an almost billion dollar hole in our budget when the ATO chose not to appeal a court ruling condoning Murdoch’s tax avoidance practices.
In a 1989 meeting, four News Corp Australia executives exchanged cheques and share transfers between local and overseas subsidiaries that moved through several currencies.
They were paper transactions; no funds actually moved. In 2000 and 2001 the loans were unwound. With the Australian dollar riding high, News Corp’s Australian subsidiaries recorded a $2 billion loss, while other subsidiaries in tax havens recorded a $2 billion gain.
By last July that paper “loss”, booked against News Corp’s Australian newspaper operations, had become an $882 million cash payout.
Under a legal arrangement when the company was spun off last June, News was forced to pass all of the tax payout to Mr Murdoch’s 21st Century Fox.
News Corp said it had retained $A81 million because it faced income tax charges on the interest payments by the Tax Office. However it seems unlikely to actually pay these funds: News Corp Australia carried another $1.5 billion in tax deductions from a separate paper shuffle that it made when News reincorporated in the US.
The Australian Taxation Office says its $882 million loss to Rupert Murdoch’s News Corporation may just be the tip of the iceberg.
Tax Commissioner Chris Jordan and deputy Neil Olesen told a parliamentary inquiry the Tax Office has recently lost even more valuable cases against individual taxpayers.
“There are others bigger than this one,” Mr Olesen told a parliamentary hearing in March. “There were significant amounts at stake that we were also unsuccessful with through the courts.”
In a current case, Australian tax authorities allege multinational oil giant Chevron used a series of loans and related party payments worth billions of dollars to slash its tax bill by up to $258 million. The claim is now being heard before the Federal Court of NSW.
Despite growing pressure to crack down on multinationals reaping massive profits in Australia each year and paying little tax, the ATO has been scaling back its technical ability to force the “transnationals” to pay up.
After cuts of $189 million in the May budget, the ATO announced that they had to cut staff by 2,100 people by the end of October.
Public servants with hundreds of years of combined technical know-how have left the ATO’s “Internationals’ Group” in recent years, with the process accelerated by the present massive cuts to the agency.
Private advisors hired by “transnationals” to minimise their tax payments know too much about internal workings of the ATO and are using their insider knowledge to profit their clients.
Case deadlines of 90 days imposed on audit teams by ATO bosses eager to increase the number of cases covered have allowed transnationals to simply “wait out” the Taxation Office or to have low-ball settlements accepted.
Swedish furniture giant IKEA paid just $7.7 million in tax in Australia in 2013-2014, despite banking an operating profit of $92 million for its Australian activities that year.
Even the government’s domestic decisions belie their stated willingness to crack down on tax rorting.
Repealing the legislation regarding novated car leases and FBT cost us $1.8 billion in revenue and the only people to benefit are those who fraudulently claim business usage of their car, and the salary-packaging industry that has sprung up to service this perk.
But what can you expect from a Prime Minister who keeps caucus waiting for an hour – his excuse being “he had to schedule an early morning visit to a cancer research centre in Melbourne on Tuesday so that he could justify billing taxpayers to be in the city for a “private function” the night before”.
Or a Treasurer who defended “his practice of claiming a $270-a-night taxpayer-funded travelling allowance to stay in a Canberra house majority-owned by his wife” as did the Communications Minister who “rented a house from his wife Lucy when in Canberra.”
In Canberra, MPs are not required to show a receipt to prove they stayed in a hotel because the blanket $270 rate applies whether you stay in a hotel or a house owned by yourself or another person.
Because of the rules, many MPs purchase property in Canberra to provide a base during parliamentary sittings and use their travel allowance to pay off their mortgage.
We also have our Prime Minister, Attorney-General, Foreign Minister and Agriculture Minister defending their practice to claim travel and accommodation costs to attend weddings whilst grudgingly refunding the money only after it was exposed in the press. Attendance at sporting events apparently still constitutes official business.
Tony Abbott had promised to lead an honest government that would respect taxpayers’ money and end the age of entitlement.
Joe Hockey has “vowed to give the Tax Office whatever laws it needs” and is “determined to use all available resources to close tax loopholes.”
Sorry boys – your actions make me doubt your sincerity.
I do not profess to being an investment whiz or understanding all the nuances of government finance, but I am good at managing a budget and I have a few queries about our current strategy.
Let’s start with the Future Fund.
The Future Fund was established by the Future Fund Act 2006 to assist future Australian governments meet the cost of public sector superannuation liabilities. Investment of the Future Fund is the responsibility of the Future Fund Board of Guardians with the support of the Future Fund Management Agency. The Board and Agency also invest the assets of the Building Australia Fund, the Education Investment Fund and the Health and Hospitals Fund which were established by the Nation-building Funds Act 2008.
The 2013 budget stated that:
“the portfolio of assets has performed well, given the extent of uncertainty and volatility in financial markets over the past five years. Since the effective start of the investment program on 1 July 2007, the Future Fund has generated a nominal return of 5.6 per cent. Since the first contribution to the Future Fund on 5 May 2006, the return has been 5.7 per cent per annum.
At 31 March 2013, the Future Fund’s return for the financial year to date was 10.6 per cent.”
A press release on 13 June 2014 further stated that:
“The Future Fund has generated a return of 7.0% per annum since its establishment, adding around $40 billion to the portfolio which now has a value of $100 billion.”
It is interesting to note that the underlying cash balance in the budget (ie the deficit) does not include net Future Fund earnings, so we are actually better off than they let on.
As at 31 March 2014, these funds contained:
$97.57 billion Future Fund assets
$3.87 billion Education Investment Fund assets
$4.09 billion Building Australia Fund assets
$2.47 billion Health and Hospitals Fund assets
The 2014 budget informed us that the Health and Hospitals Fund will be dismantled and replaced with a medical research fund paid for by GP co-payments and increased PBS co-payments.
Further, the Government has committed $5 billion to provide financial incentives over five years to the States and Territories to sell assets and reinvest the sale proceeds into additional productive infrastructure. The Asset Recycling Fund will be set up on 1 July 2014 to facilitate the Government’s investment in new infrastructure. It will include unspent funds from the Building Australia Fund and Education Investment Fund, and proceeds of the sale of Medibank Private and other possible privatisations.
“The Government has announced the sale of Medibank. It will continue selling assets where no compelling reason for government ownership exists with scoping studies to be undertaken into the ownership of Australian Hearing, Defence Housing Australia, the Australian Securities and Investment Commission Registry function and the Royal Australian Mint. The proceeds from future privatisations will be reinvested into the Asset Recycling Fund for new productive infrastructure.”
This money is being committed to an expansive road building program.
Projects getting the green light include:
• Fast-tracking $2 billion to accelerate stage two of Westconnex linking Sydney’s west and south-west with the CBD, Sydney Airport and Port Botany
• Roads for second Sydney airport, $3.5 billion
• Extra $1.5 billion on top of the existing $1.5 billion commitment for the East West link in Melbourne, with an anticipated 6000 jobs created.
• $944 million for Adelaide’s North-South corridor
• Perth – $1.6 billion freight-link package in partnership with the private sector
• Brisbane’s gateway motorway, no figures provided
• Northern Territory – Tiger Brennan Drive $70 million and $523 million in NT road improvement
• Tasmania – $400 million investment in the Midland Highway.
The splurge continues over the next decade to include duplicating the Pacific Highway between Newcastle and Queensland and an upgrade of the Port Botany Line in Sydney, but there are no figures.
A further $550 million is being committed for the Roads to Recovery and Black Spot Programmes, on top of the $2.5 billion previously committed.
Many of these projects are going ahead with dubious or no published cost benefit analyses, inadequate environmental impact and productivity surveys, and little consideration for the coming peak oil crisis. The business case for Westconnex, for example, states:
“While the prospect of peak oil is emerging, vehicle technologies are rapidly progressing with vehicles powered by alternative energy predicted to reach mass market production in the foreseeable future. While this may shift demand away from fossil fuels, it is unlikely that the demand for travel will reduce sufficiently as consumers adapt to alternatives and hence travel demand on our major road network is likely to remain.”
They give little evidence to back up this claim.
So this brings me to my question.
The current government bond rate is between 2.57 and 3.8% depending on the term (2 to 15 years). If the future fund has generated a return of 7.0% per annum since its establishment, and 10.6% in 2012, why aren’t we borrowing and investing more? Why are we taking money out of the Health, Education and Building Australia Funds, which are earning us a good return, and selling off profitable assets, to build roads? It seems to me that investing would bring us a greater return which could then be spent on the things we need.
If we are so worried about our interest payments, why not use some of the future fund to pay for guaranteed productivity enhancers like the NBN instead of borrowing the money?
And as far as future superannuation liability for public servants is concerned, this can be fairly accurately predicted and we can always issue more bonds should we need to.
Building roads may employ a few people in the short term, but if it is at the cost of investment in health, education, the environment, public transport, renewable energy, and the sale of assets, one has to question the advisability of such a move. Couple that with heavy expansion of coal mining and we could end up with a whole heap of roads to nowhere creating heat islands in the suburbs, and stranded assets as the world moves away from fossil fuels.
In June 2013, the Greens started a new campaign to push the Future Fund to stop investing in coal companies. Greens leader Christine Milne says up to $3 billion of the, at that time, $83 billion fund is invested in coal, which she describes as a “risky investment”.
In February last year, a Senate Committee was told that the Future Fund also had investment in cigarette and tobacco companies worth $221 million. Under pressure from the Greens and health groups, the fund decided to get rid of its investment in tobacco companies.
Joe Hockey was right when he told the Kiwis that our economy is in good shape and that we have no debt or deficit emergency, but it seems to me our investment strategy and asset management could do with a rethink. It’s our Future Fund and it should be used for our future.
With the government facing a hostile Senate passing all of its Budget measures, John Massam reflects on how wicked and unnecessary this Hockey Budget actually is. And the contrived ‘budget emergency’ – popularly spouted by our Treasurer – also appears to have been adopted by a State counterpart.
The Hockey Budget of May 13 seems to be the most wicked since the budgets of the Great Depression of 1929-41. Those cheese-paring budgets and large wage cuts left Australia unprepared for the attempted invasion during the Second World War. Global austerity had ruined the lives and psyches of millions throughout the world, and had triggered Fascist and Communist dictatorships. However, when the Second World War broke out, after about a year, rivers of credit then appeared out of thin air, and after the war the cash kept flowing to re-absorb the armed forces and the male workers in the defence industries.
There is a A$97,570,000,000 Australian “Future Fund” earning dividends. For Prime Minister Tony Abbott, Treasurer Joe Hockey, and the Finance Minister, the future HAS COME – pay off debts.
It is alarming to learn that the Australian national debt is $339 TRILLION (that is, $339 thousand million) and rising; the annual interest bill is $11 trillion, according to the Debt Clock. (Each citizen’s share is A$14,450).
Soon after being elected, in October 2013 one of the new Abbott Government’s silliest actions was to give $8.8 billion (that is, $8,800,000,000) to the Reserve Bank of Australia, which had not requested any money. (See also The West Australian, page 15, Tue May 20, 2014).
That RBA $8.8 billion, plus the $97.57 billion in the Future Fund, ought to be immediately used to pay off some of the $339 trillion debt, thus saving trillions of dollars now and into the future.
WESTERN AUSTRALIA’S CONTRIVED CRISIS
Just like the Federal financial situation, the supposed crisis in Western Australia’s State finances had also been carefully contrived, by taking on unnecessary public works like digging up the Perth Esplanade, and removing the school-children’s tiles at the Bell Tower. Mr Colin Barnett’s Liberal-National government plans to build ovals for million-dollar-a-year footballers. Another waste was spending millions removing the Perth tunnel’s emergency lanes, just as a coroner in another state was recommending that tunnel emergency lanes be introduced there as a safety measure. The ministers sold land worth $90 million at Burswood for $60 million.
To catch great white sharks, blamed for killing several people, the Coalition spent millions of dollars on drum-lines, but though other sharks suffered, no great whites were caught.
Although the Barnett-Buswell government broke election promises such as not building rail to Ellenbrook, the W.A. debt rose from $4,000,000,000 in 2008, to $20 billion by Dec. 2013 (ST, 22 Dec 2013, p 57).
W.A.’s credit-rating fall from AAA to AA should be given a quadruple A award for deception.
The Liberal-National W.A. Government, while building a kind of palace for ministerial offices, even abolished the Government Astronomer. One wonders if he and his colleagues can be “retrained” to obtain other careers! Coffee-making baristas, lens grinders, or government “spin doctors”, perhaps?
While the Liberals-Nationals are planning to change the laws to introduce mandatory minimum crime sentences, there is a judge short on the W.A. Supreme Court, prisons are over-full, and a whole police training intake would have been cancelled, except for a public outcry. The compulsory amalgamation of local government councils will be forced through, no matter what the cost, defying the spirit of the W.A. Act.
FEDERAL $7 MEDICAL LEVY FOR SENIORS, SICK, AND CHILDREN
To return to the federal scene, do the Federal Liberals’ partners, the National Party (formerly the Country Party), really intend to saddle the old, the sick, and children with a $7 medical levy? Do they join in the pretence that some of the money will go into medical research, yet the Federal Government wants to take millions of dollars away from Australian research bodies like the Commonwealth Scientific and Industrial Research Organisation (CSIRO)?
Image by getup.org.au
Are our country cousins supporting the trickery of acting as if the medical researchers in our universities and teaching hospitals are not efficient? The W.A. burns cures discoveries alone prove their excellence. Yet universities are to have cuts. Are our Nobel Prize winners and their laboratories to be “privatised”? When everything has been sold, how will governments, State and Fedeal, “balance” their budgets then?
Have voters for the National Party already forgotten that the Liberal-National government was willing to allow Shepparton’s cannery to close in Victoria, thus threatening to ruin most of the small fruit-growers in the Goulburn-Murray Valley region? Have Liberal supporters forgotten that many small engineering enterprises will be ruined as the three car-manufacturers wind down? These metal-fabrication experts could be “retrained”, perhaps, to be prospectors?
Don’t the Coalition know that many overseas governments underwrite and subsidise industry and agriculture?
WASTE, SILLINESS, SELL-OUTS
Without consultation, Abbott’s boys (only one female minister) have ordered a larger number of warplanes than Labor did; these planes have no limit to their final cost, just like the Liberal-National coalition purchase of the F111s decades ago.
Another silliness is to plan to privatise the Royal Australian Mint, although for thousands of years governments have jealously guarded the right to mint coins, and in later centuries they forcibly took over banknote issuing from the private banks. Will the sell-outs of public assets be accompanied by the corruption that was recently uncovered in New South Wales, causing a Liberal Premier to resign that day?
UNIVERSAL LAND TAX – OTHER TAXES MINIMISED
As was reported in recent months, David Airey, a leading Perth real estate agent, suggested a no-exception land tax (I suggest about 5 per cent for a start, rising to no more than 10 per cent in future) on the land’s value (not the buildings, etc). A side benefit would be that this would slow down land speculation and the withholding of land. New home buyers might then have a chance of taking on affordable mortgages for land and houses.
Calculations are that this could pay all the government’s expenses. As this huge revenue came in, a priority must be to reduce and/or abolish the enterprise-stifling taxes like payroll tax, stamp duty, and the goods and services tax (GST). If the land-site revenue covers the running costs, income tax and company tax could be immensely reduced, moving towards abolition, as debt was gradually eliminated. In the meantime, negative gearing plus company tax evasion and avoidance could be stopped by a few simple laws.
A universal land tax idea, backed by some academics, was recommended in the Henry Report (Australia’s Future Tax System Review) around 2010. However, widening land tax was so unpalatable to the Big End of Town that the recommendation was dropped at once by the politicians.
An alternative is that Federal and State governments introduce the Tobin Tax – a small levy on every financial transaction. A 0.1 per cent Tobin Tax would collect huge sums from parasites such as those who use sophisticated computer programmes tied to the stock exchange to manipulate share prices by speculative buying and selling of shares, bonds, etc, in microseconds, thus cheating the ordinary Mum and Dad investors. It would raise $135 trillion (about a third of the national debt) at the start, but might decline markedly later.
If that tax is not acceptable, there are billions of dollars worth of minerals being exported, so a reasonable royalty per tonne would bring in millions or billions. Norway and other countries levy a very large percentage. Don’t charge on profits, because the multinational corporations and some big Australian investors are experts at exporting their profits overseas to places with little or no income tax.
It would be too much to expect that the politicians and their advisers would study how money comes into being, and so adopt credit policies, instead of debt policies.
INTERNATIONAL BANKERS, BUREAUCRATS
This is a nasty bankers’ budget. Just read the words of Treasurer Joe Hockey, in his speech “The end of the age of entitlement” on April 17, 2012, to the Institute of Economic Affairs, in London, when he said that bankers “have a more active role to play in policing public policy and ensuring that countries do not exceed their capacity to service and repay debt.
“This is playing out most dramatically in Europe where the European Commission and the European Central Bank are either directly or indirectly heavily influencing public policy in Greece, Italy, Spain and Portugal, to name a few.” (page 14).
In plain speech, he was saying that the EU bureaucrats and the ECB bankers were calling the tune for an austerity campaign. Mr Hockey seems to be in thrall to what he called that mysterious and amorphous group defined as “bondholders” (page 4 of the same speech).
So, Mr Hockey in 2012 thought that it was good for Australia to accept the wrong-headed policies adopted under duress by those countries, even though they have led to higher unemployment plus hardship to small business in those lands, and have driven many people to bankruptcy, crime or suicide.
Wild riots and possible takeovers by dictatorships are quite possible in countries which take the International Monetary Fund’s poisonous medicines.
The brave little country of Iceland refused to take the advice of international funds and bankers, and took firm action. Icelanders have been saved from the artificial depression planned for them.
A most amazing fact is that when Mr Hockey took over as Treasurer after the September 2013 election win, it was brought to his notice that the Federal Parliament had set a debt ceiling of $300 billion, and this had nearly been reached.
He promptly said that Australia must not have a stoppage of government action like the United States had suffered twice in recent years, and the debt ceiling should be doubled. The high debt level was caused by the Labor Government, he said. Not long after he said that the debt ceiling should be tripled.
Another version in a report of December 5, 2013, said the Liberals wanted a $500 billion limit, but later did a deal with the Greens in the Senate to set it at $400 billion.
Before the 2013 election the Liberals had said they would reduce debt. Voters, another promise broken!
WORK TO 70, PREVENT YOUNGSTERS WORKING
The minor parties have a duty to stop the Government from expecting the old to work until 70, thus preventing the younger generation from starting careers, while ordering the under-25s who can’t get jobs to starve for six months. At present about 25 per cent of the young are unemployed, and this budget seems certain to increase the number of jobless.
To dismiss 16,000 public servants would turn them out onto the streets, and double the workload of those not dismissed. Perhaps they could “retrain” to be politicians?
These cruel Canberra federal policies would increase the crime rate and the demand for more prisons – and that would cost money (a State responsibility, no doubt!), and lead to more deaths, nervous breakdowns, and suicides. Will overworked police be less inclined than at present to investigate and prevent petty offences?
FOR 39 YEARS STATE LIBERALS WERE NOT RESPONSIBLE MANAGERS
While in Opposition in 1975 Liberal leader Malcolm Fraser (later that year elected as Prime Minister) said that “those levels of government responsible for spending money should also be responsible for raising the taxes.” (Malcolm Fraser; The Political Memoirs, 2010, M.Fraser and M.Simons, Melbourne University Publishing, Carlton, Victoria, page 278).
So, if this was principled “federalism policy” 39 years ago, why didn’t the Liberal-National Parties, which were at times running the States and the Northern Territory, keep out of debt by levying universal land tax, and/or revert to collecting income/company tax? Or is it easier to blame the Federal Government when States are reducing the police forces, cutting the number of judges, and under-staffing hospitals and schools?
The Liberal Party has a cheek asking the disadvantaged to stand on their own two feet; this was exposed as hypocrisy in the news-item “Pay your way, backer tells Libs,” The West Australian, page 3, Feb 7, 2014. The party’s WA branch has been operating rent-free in Menzies House, Level 4, 640 Murray St, West Perth, for decades. The landlord is now giving them their own medicine.
In the minds of some Australians, perhaps the only Abbott policy that is working is Operation Sovereign Borders, which at present has stopped the ‘illegal’ undocumented clients of the people-smugglers coming in as asylum-seekers. But even those effective government instrumentalities are to be chopped up and the command structure amalgamated, presumably at great cost. Who knows if the new management will be asked to sack people after another demand for an “efficiency dividend”?
A real cost-saver would be to cut out “457 visa”, “student visa”, and “working visa” visitors who in a few year become Australian electors, at least until unemployment goes down to 1 or 2 per cent, not long-term 5 per cent.
Anyone who doubts my statements about the way the Money Lords over-awe nations’ governments ought to read Confessions of an Economic Hit Man, 2005, by John Perkins, Plume Publishing.
For an Australian perspective on deceit by the Big End of Town and the banksters, read Bankers and Bastards, 1992, by Paul McLean and James Renton, Hudson Publishing, Victoria, Australia.
My final word is that the Coalition is breaking nearly all of its pre-election promises, including “There will be no surprises,” just like the Labor Rudd/Gillard/Rudd government did. The latter tried to stave off the unnecessary Global Financial Crisis with its spending on Roads to Recovery (good) and Ceiling Batts (no OHS there! Dr Troy Delbridge was dismissed). Fortunately, the Senate and the States, if they stand firm, might be able to curb the Abbott-Hockey irrational and irresponsible plans that are likely to lead to a trade depression, and a down-spiral of budget deficits.
If there was any stand-out from Joe Hockey’s performance on Q&A it would have been his ability to permeate the studio with an overwhelming odor of wealthy complacency, with weasel words thrown in for good measure.
It was with considerable smugness that Joe Hockey admitted that the GP co-payment, “. . .is a new tax – or a rabbit.”
“We didn’t say we wouldn’t raise any taxes. That’s absurd because we went to the last election promising to introduce a levy for the paid parental leave scheme“, Mr Hockey said.
Tony Abbott’s original argument was that this addition to upper class welfare, and ‘signature policy’, was the insistence that the PPL was not a tax; it was a levy. However, and currently in vogue and up until Hockey’s appearance on Q&A, all was but a mere levy and not a tax. The consequences of Hockey’s statement, is that according to himself, both he and Prime Minister Abbott made deliberately misleading statements, and on numerous occasions.
That is, “We did say we wouldn’t raise any taxes…”, (because) the PPL levy is in fact a tax.
It seems that the words ‘tax’ and ‘levy’ are bandied about by the Liberal Party, changed at whim and to which ever circumstances suit. Those who voted Liberal on the premise that Abbott would get rid of Labor’s “greatbig new tax” must be bitterly disappointed as we now have an even bigger, great big new tax … or series of them.
However, should we care to address the practicalities of this issue, there is a world of difference between a PPL with a proposal that this be paid by “a 1.5% levy on the biggest companies” and a $7 GP co-payment taxed on GP visits, pathology and X-rays, and which would further distort access to medical treatment for those on the lowest incomes. This is akin to stating that the economic impact of the cost of two beers to an old age pensioner has an equivalent impact as on a business entity, and an extraordinarily wealthy one at that. Abbott and Hockey’s insistence that they be ‘right’ – and all of the time, often leaves logic in its wake.
In Abbott and Hockey-world, business being business and poor people being poor people, it will of course be business who will be compensated for the PPL tax/levy by receiving an equivalent tax cut of 1.5%. Might there be any equivalent breaks for those having to fork out for Hockey’s other tax – the GP co-payment? No of course not. Hockey’s proposition that the PPL tax/levy is therefore equivalent to the GP co-payment therefore falls so flat as to not only be just an illusion, but could be counted as a blatant attempt at deception.
On the debt levy, will the the richest 3%’s contribution/levy likewise put unreasonable pressure on anyone’s ability to feed, clothe and house themselves? Doubtful, unto too ridiculous to contemplate. The Liberals have gone to great lengths to ensure the wealthiest that this is a very temporary tax hike. And what would it matter anyway? . . . this cigar and Moët et Chandon tax will be easily be absorbed through multifarious untaxed lurks – “superannuation concessions, dividend imputation, negative gearing and family trusts.” Tony Abbott and Joe Hockey have now successfully reinforced the image that to themselves and most of the front bench, that the obscenely wealthy remain as they always have been, The Untouchables.
You can be assured that these changes (with the exception of the debt tax) are not just for a couple of years, but forever. Along with this decimation lurks in the background cuts to science, Aboriginal health and education, with extreme pressure on the states to privatise almost everything. And all the while the reaction from both Abbott and Hockey is smirking disregard. Abbott “Dismisses concerns”, the headlines read and this is apart from the lewd wink aimed at a pensioner forced into working on a sex-line as the only thing available to her. Any empathy? Any sympathy?
However, most perplexing was the ‘carrot’ offered by Hockey in the form of medical research. That is, suffer now and one day if we splash enough cash at the problem so that ‘we’, and where all other countries have failed, will by some act of divine providence cure the world of all of it’s ailments.
Today (17th December, 2013), Treasurer Joe Hockey cut:
• $100 million in funding for Westmead Hospital • $10 million from the Children’s Medical Research Institute and $12 million from the Millennium Institute – one of the largest medical research institutes in Australia working on cancer and leukaemia research, heart disease, eye and brain disease and heart and respiratory disorders. • $15.1 million from the life-saving Cancer Care Coordinators program. Despite knowing that Australians in regional areas have a lower life expectancy and find it more difficult to access life-saving treatment the Government has decided to cut this funding. • $6 million for Medical Resonance Imaging service at Mt Druitt, the cutting of the $10 million life-saving Queensland Cancer Package, $15 million from the Flinders Neo-Natal Unit, the $10 million Western Australia cancer team, and the $50 million stroke package. • $3.5 million from the Biala Health Service, the only free sexual-health clinic in Brisbane. • The Coalition will scrap the $100 million committed for the redevelopment of the Victorian Eye and Ear Hospital.
It seems that the Abbott Government taketh with one hand to return ‘who knows what’ at some unspecified time in the future. Why would anyone cut funding from medical research into things such as cancer and childhood leukaemia, only to siphon it off to be paid to ‘who knows who’ at some non-specific time in the future? The cynic in me asks the question, who is set to gain from this? Which multi-national benefactor might it be? I believe that there are certain hints and clues provided by certain photos of Tony Abbott and his ‘sponsor’.
The Liberal Party’s own website provides that the projected $20 billion will not be achieved until around 2024-2025. “To establish the Fund, approximately $1 billion in uncommitted funds from the existing Health and Hospitals Fund will be transferred into the Fund at its inception”, which is supposed to be 2015-2016. But wait a moment; hasn’t the Abbott Government already cut an (estimated) half billion dollars from existing medical research and services? Hockey’s gushing at the government’s beneficence and commitment to human-kind suddenly loses it’s rosy bloom.
But don’t worry, there is some good news contained in Joe Hockey’s attempt at a budget: there will be more roads – well, in the cities at least.
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