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Trending Issues: The Call to Action Versus Old School Market Economics

By Denis Bright  

The federal LNP wants the national election to become an ideological auction about the merits of its prescription for market ideology with its unaffordable housing, homelessness and falling real wages.

Ironically, for the professional ideologies in the federal LNP, there is scant attention to trends in private sector investment which should be the forte of outstanding centre-right leaders worldwide.

In the marginal LNP Queensland federal electorate of Capricornia is still a strong supporter of the old economy (Katharine Murphy in The Guardian online 17 April 2019):

One of the Morrison government’s strongest backers of the controversial Adani coal project, Michelle Landry, says the company has attended fundraisers for her re-election campaign, but she doesn’t have a figure on how much has been donated.

Landry, who is the member for Capricornia, told the ABC on Wednesday she was not in control of her campaign finances, so she wasn’t in a position to nominate a specific figure for Adani donations. She said taking financial support from a company trying to secure federal and state backing for the project “certainly doesn’t sway me”.

“My main job is to look after the people of Capricornia, and [the Adani project] is about jobs for the people of Capricornia,” the Queensland MP said.

“I have the biggest coal mining electorate in this nation, and I stand up for my people here and will continue to do that”.

An analysis by the Australian Conservation Foundation of federal and Queensland donations data shows Adani has given the Liberal and National parties $60,800 since the last federal election.

One Nation has received $30,000 from Adani. Labor received $2,200, but later returned the money to the company.

The ACF’s Stop Adani campaigner, Christian Slattery, notes that Queensland has real-time donation disclosure laws, but it can take up to 18 months at the federal level for donations to be made public.

Josh Frydenberg wanted to dazzle the electorate with hopes of a $7.1 billion surplus for the financial year ahead in his budget delivery speech. Then came the welcome distraction posed by Bill Shorten’s response to a reporter’s question about Labor’s long-standing superannuation contribution tax concessions for incomes above $200,000 (ABC News Online 16 April 2019).

This is very old school political debate as apologists for the current market economy wait for the next El Dorado to replace the resources and property market booms while keeping tabs on opposition leaders under pressure without the resources available to a government in office in caretaker mode.

Balanced private sector investment to promote economic diversification is no art-form in current government policies.

Coverage of Investment in the 2019 Budget Speech

Like successive LNP Treasurers, Josh Frydenberg has squandered the opportunity to extend national investment levels by the temptation to offer the most generous tax concessions to its upper middle-income support base (from John Kehoe as Senior Reporter for AFR Online 12 April 2019):

Completely overlooked in the federal LNP’s rhetoric about that Stronger Economy are the languishing trends in private capital expenditure which accounts for 75-80 per cent of all investment in the Australian economy.

In the private sector, investment trends have plateaued since the election of the federal LNP in 2013 with an anomalous improvement in the December Quarter data for 2018-19. This will be the last set of private capital expenditure data to be released before the forthcoming election.

Capital expenditure in the Australian economy has lagged since the federal LNP was narrowly re-elected in 2016 as shown by the plateauing out of the longer-term trend-line of private sector capital expenditure. Only the last December Quarter in the series offered a good seasonally adjusted result due largely to a vast improvement in expenditure on plant and equipment associated with inducements to tax write-offs which commenced in the 2018 budget and were continued this year with bipartisan support.

The federal LNP’s blind-spots on the need for policies to foster economic diversification continues in the budget. Investment was mentioned six times in the budget delivery speech. Each time it was about the need for prudent government investment with overall government spending below 23.9 per cent of GDP to 2029-30.

Amidst all this rhetoric about containing government spending little attention was given to the trend-lines for Australian Capital Expenditure which should be the forte of any conservative government.

Percentage Trend-lines in Australian Private Capital Expenditure

The latest global data from the McKinsey Global Institute (19 January 2019) shows the importance of these new forwardly looking investment strategies for application in a middle-sized economy like ours.

Best practice in the application of the McKinsey Model occurs in the Scandinavian style of social market economies which achieve bipartisan support from the mainstream political parties.

As Australians are not ready to accept such high levels of taxation and government intervention to implement the McKinsey prescription for economic diversification, our future must lie in taxing every opportunity of available investment from the global market economy.

Missed Investment Opportunities: Missed Diversification Options

Missed Opportunities for the Consolidation of Net Capital Inflows to Australia from Asia have not been assisted by the federal LNP’s deference to policy directions from the Trump Administration with its America First focus. This makes Australia a client state in key areas of economic diversification.

Co-operation between Financial Consultants KMPG and the University of Sydney can offer new strategies for a progressive incoming Australian Government with real initiatives to break with the old economic jargon from the federal LNP. The full report from KMPG is available online.

While China is repairing its financial relationships with immediate neighbours like Japan, South Korea and Taiwan its financial relationships with the Indo Pacific Basin are being extended by Belt and Road initiatives in the important areas of higher technology investment and financial services which are crucial to the Australian economy.

Since the election of the Trump Administration the scope of China’s investment outreach has been contained with some assistance locally from investment controls by the federal LNP. Let data contained in the new report assist in explaining the situation:

Fortunately, a reservoir of goodwill exists between China and Australia which cannot be extinguished in just two terms of a federal LNP Government:

Great opportunities are available to continue to diversify Chinese investment away from the strategically safe areas of property investment to potential growth areas like healthcare, infrastructure, renewable energy and IT sectors:

New horizons present themselves for Australia if the federal LNP does not spook the electorate before 18 May 2019 with the quest for the market El Dorado to replace the resources and property boom with a new age of mass consumption for the aspirational side of town in the hope that the benefits of new tax packages might be passed down the line.

Despite the regressive certainty of our federal LNP leaders, a new investment direction is available that is quite mainstream in its assumptions about the opportunities for stabilising change. Like President Roosevelt of old, Bill Shorten can hopefully calm the fear strategies from the LNP’s most eloquent fear strategists to upset the leadership transition after 18 May 2019.

Will theme music be developed for application to Australia’s successful social market transitions at the 2022 elections?

Denis Bright is a member of the Media, Entertainment and Arts Alliance (MEAA). Denis has qualifications in journalism, public policy and international relations. He is committed to citizens’ journalism by promoting discussion of topical issues from a critical structuralist perspective with support from evidence-based data. Readers are encouraged to continue discussion on the issues raised. Comments from financial, academic and political insiders with access to a better range of resources.

***********************

Some farcical but thrilling road-blocks were encountered in attempts to extend this article through phone calls and emails relating to private sector investment trends.

From the Treasurer’s Media Office Melbourne

Thank you for your email.

 Treasury is best placed to respond to your questions and will do so.

Can everyone conclude that the federal LNP is flying without radar in tracking projected private sector investment trends?  I don’t belief that this is true so let’s wait for the ABS data from future quarters which the mainstream press has chosen to ignore in the past.

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13 comments

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  1. New England Cocky

    No doubt about it, the Liarbral Notional$ are the best economic managers in the country cause in only six (6) years they doubled the national debt and expended that credit paying off their corporate mates and undeserving middle class voters at about $150 BILLION PER YEAR!!!

    But wait, there’s more ….. which two Nat$ Ministers had a hand in the sale of virtual MDB water for a whopping multi-MILLION dollar profit ….. without paying any tax on the proceeds????

    ….. WHICH WOMEN SUPPORTING ADULTERY SUPPORT NAT$???? How about Michelle Landry and Bridget McKenzie??

  2. Mia

    Thanks Denis for your optimistic take on Investment Issues in contrast to the fearful hype from the Conservative parties in Australia both mainstream and populist. May change prevail!

  3. Ivy

    Denis, thanks for an interesting article on the Australian economy and your proposed investment recommendations.

  4. Leila

    Role on the Federal Election, & a Labour victory. The Coalition have had their chances & need to go back to the drawing board & establishment sh what they stand for

  5. Kronomex

    A number of people I know are getting a horrible feeling that the LNP may well be voted in again. If that is the case the country will be well and truly screwed beyond repair. Rupert and the rest of the scumbag media haven’t really begun yet to try and destroy not just Labor but the Greens and the rest of the field that isn’t LNP. So now it’s a wait and see situation.

  6. Paul Davis

    ABCs The Drum featured Zali Steggal Liberal lite not so independent, Georgina Downer IPA born to rule gorgon seeking her ‘rightful’ place in the family fifedom, Katrina Hodgkinson Qld LNP climate change denier and coal drone, Jason Ball Greens Labor hating robot, along with Labor candidate Shireen Morris. Downer a complete waste of time as always, couldn’t possible attract many votes could she? The Liberals could have backed Abbott and given Steggal a senate ticket, she ain’t an independent, Hodgkinson thinks that Galilee coal is essential to saving Qld economy, Ball believes no compromises with Labor is possible while at least Morris was reasonably articulate didn’t spit foam at the mouth or drool.

  7. Phil

    have confidence Kronomex – if your friends opinions are starting to undermine your views, then perhaps its time to find some new friends. A majority of voters detest Morrison – he will be wiped out.

  8. paul walter

    No. Not even Morris, who lied through her back teeth about whether Labor would launch an inquiry into Adani including as to the fudged CSIRO water report amongst many things.

    None of them.. between them, our politicians have as good as made Adani our government.

  9. Paul

    Failure to accept the peaceful rise of China in the Asia Pacific Region is comparable to Britain’s rivalry with Germany before 1914. It was a Loss-Loss Scenario in which millions died and whole societies were devastated. A balanced argument in favour of peaceful change.

  10. Chris

    There are far too many homeless people in the Liberal Party’s miracle economy.

  11. Tessa_M

    The electorate assume that the Liberal Party has the best economic credentials to manage a market economy. The mainstream Murdoch press promotes this interpretation. This article shows that the real focus is simply winning the next election and there is a fall-back of blaming Bill Shorten for the Investment mess that he might inherit on 18 May.

  12. James_Robo

    Its fortunate that Australia has an ABC and some good print media to challenge the Propaganda Model of Big Brother in a digital age.

  13. DrakeN

    James_Robo,

    it is more unfortunate that few people actually read beyond the headlines and billboards of the mainstream commercial media and that the small minority of folk who actually listen to and agrre with the likes of 2GB and Sky after Dark is actually significant in what is a virtual two Party electoral system.

    With, by current polling, a margin of 4% – meaning that only 2% of the electorate needs to change sides – those few can be the critical “last straw on the camel’s back.”

    That frightens me more than I usually care to admit.

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