We might have a small surplus soon – so what?
As the grinning Josh and Scoff strode into the courtyard to tell the assembled media throng that we will probably have a surplus in a year or so, I found myself wondering so what?
A surplus doesn’t house the homeless or feed the hungry. It doesn’t protect the vulnerable. It doesn’t improve the environment. It doesn’t build infrastructure.
We are told that a strong economy will mean more schools and hospitals, but that only works if you spend the money rather than sitting on it.
Announcing a future surplus is a meaningless gesture.
Now if they had announced that, because of an increase in revenue, they were increasing pensions and unemployment payments, then that may have been cause for celebration. If they announced that, as power is an essential item, they were removing GST from it, we would have felt some benefit.
As it is, Josh and Scoff are telling us that companies are making such huge profits that the government has plenty of unexpected revenue coming in. Full stop.
Well great for them.
But what about the workers whose wages have been stagnating for years while company profits have soared? If the government announced a resumption of the scheduled increases in the Superannuation Guarantee then workers would share in a small part of the profits their labour has generated. If they don’t want to pay penalty rates because Sunday is just like every other day, how about lifting the minimum wage?
Instead of hatching a surplus, which is, after all, just a number on a spreadsheet, what if they built high speed rail to make decentralisation easier and more attractive? Not to mention the employment it would generate in regional areas for decades of construction.
Instead of advertising campaigns about domestic violence, they could fund refuges and early intervention and support programs. They could build more affordable public housing. They could restore legal aid funding.
They could even realise that education is an investment and restore funding to public schools and increase subsidies for tertiary education so our children don’t start life with a huge debt.
If they have a surplus, why did they need to increase the fuel excise?
My point is that a surplus is a pointless waste when there are so many pressing needs to address. It is the perfect example of how society now serves the economy rather than the other way round.
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Kronomex
Return to home pagegood one and to the point
Even if they are telling the truth about the small surplus, it will have only been achieved by government spending cutbacks to everyday Australians in desperate need. It should have been achieved by making multinational corporations pay their fair share of taxation, each and every corporation. If each and every multinational corporation paid at least 17.5% income tax on their billion dollar incomes everyday Australian people could be helped and a good surplus achieved.
Sadly the L’NP government is ideologically opposed to this measure, and everyday Australians suffer as a result.
Any surplus, even a “small” one, will destroy money, sucking it out of the productive economy. Corporate and overseas investment is stumbling slowly anyway, employment is slow and wage growth negligible. MMT demonstrates that “balancing the budget” and “running a surplus” are the wrong metaphors for a modern sovereign economy
Here’s an idea, Morrison might like to restore some of the funding that’s been ripped from domestic violence services (to name but one item where funding has been ripped). Shorten is. https://www.theguardian.com/australia-news/2018/nov/27/labor-promises-18m-for-anti-domestic-violence-program-after-funding-discontinued
There might be a surplus, but who is it who has paid for it?
A surplus is only meaningful if everyone, including business, pays the appropriate tax, all the social services are fully financed, our public education system, including our universities, are fully funded, there is a raft of social and capital projects started, public institutions such as hospitals and gaols administrations are no longer contracted out to a third party and there is a huge investment into environmental issues. At the moment what the government is doing can best be described as a political version of the ‘Three Card Monte’!
If the government spends $100 and taxes back $90 then that is a deficit. Somewhere in society someone is $10 better off. It’s not a problem for the government because the extra money in society is spent by people on goods and services, so gradually comes back to the government in taxes anyway, while being more productive for society.
If the government spends $100 and taxes back $110 then that’s a surplus. Now society is $10 poorer than before. There is less money to be productive. And the extra money the government now has? It is meaningless because its only real use is out in society anyway.
In any logical sense the names “surplus” and “deficit” are backward.
It’s not a surplus if there is no investment, progress or even maintenance.
Economics 101
JD Anthony: You don’t need MMT to tell you that the budget surplus is bad for the economy. The simple 3-sector financial identity, which is based on arithmetic, will tell you that. In any closed financial system of payments, all surpluses and deficits must sum to zero. A government budget surplus requires a deficit somewhere else in the world. If our trading partners don’t have a deficit, then it is the Australian private sector that bears the burden, and increases its debt. Peter Costello was able to deliver his surplus budgets only because our household debt shot up from 50% of GDP to well over 150% and is now one of the highest in the world. It is very simple but the mainstream economists just ignore this fact and keep on suggesting that these government surpluses are desirable. They are desirable only if the the country has a large trade surplus, and the private sector does not need to pay down its debt. I am saddened that even Andrew Leigh doesn’t seem to get this and Labor is promising “larger budget surpluses”.
Miriam has got it right.
Kaye Lee, you should be recognised as a national treasure.
Sadly our nation does not treasure those who advocate for social justice and integrity, and that fast- disappearing principle, truth.
For ‘oiks’ in the LNP/IPA party to be bleating about a future small surplus…. ffs. How can one have a small surplus when the national debt has tripled to the tune of hundreds of billions?
Or is the ‘small surplus’ the justification for the mountains of cash they will now throw at the electorate in the Biggest Pork Barrel Exercise leading up to next year’s election?
With this giant shit storm brewing in the federal LNP I get the feeling that Scummo and Friedeggburger are scared witless. Could we see yet another change of loser, I mean leader, in the very near future?
https://www.smh.com.au/politics/federal/treasurer-josh-frydenberg-cancels-g20-economic-trip-amid-liberal-party-chaos-
20181128-p50isn.html
Today outside parliament the Treasurer announced a surplus of 3.50.
“Billion?” asked a reporter.
Ah, no,” replied the Treasurer. “3.50 dollars. It’s only a little surplus but a surplus none the less.”
Of course they will expect Shorten to sit there like a stunned mullet with no answer to their miracle. A miracle by the way bought about by what is expected to be a short rise in mining profits.
They will quake in their boots when faced with reality, that Shorten has indeed has options. Shock that it is not a surplus that counts but how one spends the money. I expect Shorten to do, as I believe he has done in the past, to put forwarded a detailed budget of his own. A budget that invests in human infrastructure, the environment, state of the ark power generation & science and for future productivity.
Governing is about much more than balanced budgets, which the public expects anyway.
Oh what’s the point? Regardless of what these village idiots do, they are toast at the election unless they come up with a scare campaign built on outright lies and innuendo of such a magnitude that a lot of swing voters will believe it.
As previous respondents have said, a surplus is genuinely bad for virtually everyone, except pollies screaming at their braindead audience, some of whom will believe them.
One has to wonder where these bumbling muppets will make their cuts…… Pensions? Medicare? Public schools? Community services? Social services & payments? Will they be taxing the rich?
Regardless of where these mudding misfits make their cuts, one thing is for certain, the working population and unemployed of Australia will most certainly shoulder those cuts.
They are pushing the idea that they have been fiscally responsible. Well I dunno about that…..
They have blocked the Auditor General from releasing his criticism of some of their planned $400 billion in ‘defence’ (read strike force) capability spending.
The forced move of the AVPMA to Barnaby’s electorate cost a fortune and lost us many people of great expertise.
We paid out $70 million just in one group compensation case to the refugees we have illegally incarcerated.
The legal bills for the government fighting against freedom of information requests, or to fight against a court summons, or to fight against medical removals from Manus and Nauru is huge.
What was the point of the pink batts royal commission which found nothing that the previous eight inquiries had not already uncovered?
Redundancy payouts for public servants has been another big expense whilst the cost of consultants has soared.
I could go on….and on…and on…..
‘Odd thing is that the government’s net debt as at October 2018 stands at $354 Billion as against budget forecast of $350 Billion and that compares with the net debt of $174 Billion in September 2013 when Labor left office.
If you remember, we were in a debt and deficit disaster when the coalition came into office and even today Christopher Pyne was talking about how the coalition have cleaned up Labor’s mess.
By doubling government debt !!
Have a look here : https://www.finance.gov.au/publications/commonwealth-monthly-financial-statements/
Thank you Kaye, we are going to need to be on our toes as there will be a tsunami of misinformation spewing out of coalition mouths in the weeks to come.
Holy hell, the federal LNP are being into a dragged into a political black hole of their own making –
https://www.theguardian.com/australia-news/2018/nov/28/coalition-threatens-to-retaliate-against-kerryn-phelps-over-dutton-referral
Well Kronomex, they don’t have any nation-building policies to offer, so they revert to what they do best: to abuse anyone with good efforts, progressive policies..
Beat me to it terence mills, funny how the liberals never mention debt.
Keep up the good work Kaye Lee, as Adrianne Haddow said you should be recognised as a national treasure.
Keep the bastards honest.
Naughty Kaye Lee, proposing workable policy alternatives to the policy free Liarbral Notional$. Slap on wrist with a wet tram ticket!!
Pyne is saying, as I understand it, that because Kerryn Phelps was/is a doctor and as most or perhaps all patients have Medicare insurance coverage, then she is in breach of section 44 (v) of the constitution.
Section 44(v) says that any person who “has any direct or indirect pecuniary interest in any agreement with the Public Service of the Commonwealth” is disqualified from sitting as a member of parliament.
If Pyne is correct and a payment by medicare to a doctor falls within section 44 (v) then there is no medical professional in Australia who could stand for parliament (e.g. Di Natale).
This is distinctly different from the Dutton situation under the same section of the constitution but in his case the pecuniary interest is a subsidy to his child-minding centres the legislation for which he was instrumental in introducing. On 2 July 2018, the Federal Government replaced the Child Care Benefit (CCB) and Child Care Rebate (CCR) with a single means-tested subsidy, known as the Child Care Subsidy (CCS) and payable directly to the childcare centre.
This is the reason that we need Dutton’s situation clarified by the High Court : what Pyne is doing is just muddying the waters.
We are dealing with some very tricky and desperate people here !!
Just feeding the Chooks.
Terence
Indeed, Mr Fixit loves to muddy the waters.
And Pyne describes himself as a “moderate” Liberal. Whatever. The capital “L” still stands for liar.
Also an MD has studied for years to qualify, whereas Dutton? Is there a degree in CEOing of childcare centres?
Seems to me that Pyne may have a very interesting legal point. Phil Cleary, a teacher, was paid directly by the Victorian government and therefore deemed to occupy an office of profit ‘under the Crown’. He was ruled ineligible and lost his seat. Since that time teachers (in Queensland), wanting to run for Parliament, resign with an understanding they will be re-employed if unsuccessful. It’s an ‘arrangement’ honoured by all sides of politics in Queensland, although years ago a returning ex Labor MP was reemployed far, far away from his home town of Toowoomba. But that was in the Joh years.
As for medical practitioners, it possibly depends on whether they bulk bill (and receive monies directly) or whether it’s the patient who claims a rebate. In the case of Phelps there is the further problem of her being a paid Sydney City Councillor at the time of her election (she didn’t resign) and her stated intention to continue in that role. Phelps claims she has ‘helpful’ legal advice but they all say that don’t they.
Could be the case that Section 44 strikes again.
So we have MMT adherents constructing and advancing a particular economic reality while virtually all politicians cling to a much more orthodox economic view and claim that the political reality is all about balanced budgets (low debt and all that). A duel of competing realities but currently at some distance apart.
Who knows what world view will prevail in the longer term. But a synthesis of sorts is an emerging possibility.
Yay! Six months or so of “Crime! Labor’s fault! Crime! Labor’s Tax Grab! Illegals! Labor bad! Illegals! Pork barrelling! Terrorists! Elect the adults! Terrorists! More pork barrelling! Surplus! Nasty Labor! and on and on and…ad nauseam!”
After reading your article and looking at the photo, my distrust of the current Australian Government franchise holders has increased 10 fold!
When visiting Brisbane recently and seeing homeless women sleeping under the railway bridge near the Cultural Centre and homeless men sleeping in every doorway in Adelaide St near the City Hall, I was appalled! Some of the men, still in hi-vis clothing, maybe itinerant workers looking for employment in Queensland. Apparently it is also the situation with homeless people in the UK now! Fortunately, in Brisbane, they haven’t spiked the pavements, yet!
If people talk about “Economic Growth”, they are speaking for the current banking system. Economic growth is necessary for repayment of loans provided by our dysfunctional bankers and their corrupt Ponzi money system. I have been in meetings with the World Bank where these people extol the benefits of Economic Growth, so when I asked for recent examples, they were lost for words. Then people from the International Misery Fund (IMF) tried to gain a foothold in the underwater resources of the South Pacific Islands with promises of grants and loans to match those from China.
At a recent forum on the benefits of Economic Growth, the Islanders identified increased teenage pregnancies, youth suicide, drug use, domestic violence and homeless men returned from Australia and New Zealand.
The UN and many NGO’s have been promoting and funding programs to reduce poverty, increase gainful employment and improve mortality in under-developed countries for many years! How soon before Australia qualifies as a recipient if these party hack MP’s get elected, instead of a more diversified group of people with different skill sets (doctors, teachers, engineers, tradesmen and environmental scientists, for example)?
A useful definition of insanity is repeating the same behaviour, after failing many times, expecting a different outcome. If we keep electing the LNP to hold the franchise for the Australian Government, should we be certified!
So we are likely to get a Labor Government in the new year and there are high expectations for a new deal. But I have lived through those times on many previous occasions and the performance rarely matches the promises made. Reasons for those apparent failures include: – lack of conceptual clarity about the declaration made (the what); a non-existent or undefined timeline (the when); and an absence of the methods to be employed (the how).
Seems to me that we as electors should be demanding that Labor fleshes out their platform with more detail so they too can be held accountable. When Rudd was elected in 2007, he promised extensive reform of educational funding – but not in the first term. When the second term arrived it was again delayed and delayed so that once again it could be an election promise. So reform of educational funding became another missed opportunity.
Needless to say, since 2007 there have been some changes – but as the recent Report Counting the cost of the education revolution demonstrates – it’s not a pretty sight. For example:
Things didn’t get fairer, they got worse. Rather revolutionary from a Labor administration, one would think. But there’s more – a whole lot more.
Note we are talking about public funding not talking about fees and charges paid by parents. Incredible! And there’s more.
There’s more here (if you have the stomach for it.)
https://www.abc.net.au/news/2018-11-22/counting-the-cost-of-the-education-revolution/10495756
But never mind Labor promises a funding revolution this time around, just like Rudd did all those years ago. One can only hope the relative funding of public schools doesn’t get worse. But I suspect public education, under Labor, will continue its relative decline. And I have recent history on my side.
As for promises made re Multi National tax evasion …
Matters Not: I am happy to see that you are enjoying your own “constructed reality”, which completely ignores my post above and in previous posts that the 3 sectors financial identity is an identity in school level algebra, and actually has nothing to do with MMT, although MMT proponents use it to advantage. To clarify, it is true no matter what kind of currency is being used – fiat, backed by gold, or backed by coloured beads, or even by pig-iron (tee, hee!). It can be ignored only by those whose constructed reality excludes school-level algebra and arithmetic. The politicians and neoliberal economists who ignore it, actually do so wilfully, because they are in the business of fooling the gullible voters or are themselves brainwashed. Notice, that no one actually has the wherewith-all to actually challenge it. ( Wayne Swan anecdotally said “I don’t agree” but instead of offering a counter- argument simply walked off).
In the meantime, I will continue to enjoy my own constructed reality, which I hope is more closely aligned with what some of us like to call “objective reality”. But never mind, enjoy your day/night/ and any other constructed realities regarding the space-time continuum, quantum entanglement, and Schroedinger’s cat and any other interesting realities that you may like to construct. As you know, I would hesitate to force my ideas on anyone. If I found someone who disputed the laws of gravity, I would try to convince them that stepping off a 50 floor skyscraper might be deleterious to health. The ethical question is would I forcibly prevent such a person from carrying out such an act, and if I did use force in such a case, would that be justified? A serious conundrum in my view but perhaps in your constructed reality, this may be completely meaningless. Inscrutable are the laws governing constructed realities, and verily I say unto you: believe in your own constructed reality, irrespective of how it aligns with the constructed realities of others you may meet. We are a broad church, where all constructed realities are equally valid and all must be given equal weight. Those that maintain the the earth is a flat plane, stretching away to infinity in all directions, and those that maintain that it is spheroidal must be given equal weight, as also those who maintain that it is actually a two dimensional surface with negative curvature. Myriad are the possibilities and all have equal validity. Hallelujah!
Things seem to be going from worse to worserer for the Losing Numerous People –
https://www.smh.com.au/politics/federal/craig-kelly-planning-to-quit-the-liberal-party-as-government-braces-for-more-defections-20181128-p50iyk.html
Anecdotally and in media it appears the govt. has been slowing down applications and claims for payment, hence, fewer payments to carers, veterans, pensioners et al., lower levels of outgoings in past year.
totaram, describing what people actually do (identifying the IS) should not be taken as one’s belief as to what they ought to do.
I’ll leave it at that and accept it’s entirely my pedagogical fault.
So Kelly is also destined to be politically homeless (apologies to Andrew Elder).. If this keeps up, in the new Parliament, the Opposition will likely be also known as the Cross-Bench – both literally and figuratively.
The Parliamentary cafeteria will now be on half staff as the members of the LNP eat each other. Oh – Happy Days.
The breaking news is that Pauline Hanson will desert PHON and sit on the cross-bench. Hang on … isn’t that .. where
Kelly is just another rat deserting a sinking ship.
He realises he’s unlikely to get Liberal preselection at the next election and wants to build some sort of momentum as an Independent before the next poll.
Whether he joins with Bernardi or some other splinter group remains to be seen but he will naturally act in his own best interests.
I expect more Liberals will leave over the Christmas break.
Each time I read the commentary about MMT and Mainstream Economic Theory, I wince.
The commentary is often based on long held beliefs that are simply not based on comparison.
So I offer for those who real would like to know the following – it is a link, to Professor Bill Mitchell’s blog where for many years he has discussed MMT, he is (I consider) Australia’s own guru on Modern Money Theory.
Here Bill discusses, The divide between mainstream macro and MMT is irreconcilable – Part 1
Posted on Monday, September 10, 2018 by bill
If you read Part 1, you will I hope begin to understand your own reluctance to accept MMT, you may go on to read Parts 2 and 3. I hope so.
Here I provide the Link only for those wishing to understand.
http://bilbo.economicoutlook.net/blog/?p=40313
I see The Brainless has nicked off overseas leaving The Gormless in charge of The Useless.
No doubt John Kelly will soon publish an article about this over the AIM network. If the Labor Party has any political acumen, as well as understanding of basic macroeconomics (a big ask, I know), it will highlight this – as the irresponsible and destructive objective that it is – in the run-up to the forthcoming federal election. This is part of Scomo’s pitch that his band of brainless rabble are “sound economic managers”.
Good luck getting Scummo and Crony Co to cut back on black holing the “windfall $21 billion” because it’s election time and we all know what happens when the diarrhea in a spacesuit known as the LNP blow it, and a few extra billion, on promises, promises, promises.
https://www.smh.com.au/politics/federal/parties-urged-against-squandering-21-billion-windfall-on-election-spree-20181129-p50j4l.html
Darn, and here I thought they were talking about Trump and possibly the LNP here. Drat! My day is ruined.
https://thehill.com/policy/healthcare/418944-cdc-warns-of-new-tick-species-capable-of-spreading-deadly-disease