What was he saying?
The address by Scott Morrison at the National Press Club and his subsequent interview with Leigh Sales on Wednesday evening was, to say the least, uninspiring. Much of the generous time he was given was wasted on waffle.
For his audience of journalists, it was sleepy time, and one or two of them looked like they were about to drop off. For the politicians there lending moral support, they too looked none the wiser as to whether his message actually had content.
What was he saying? Answer: not much. The only message seemed to be a plan to move spending around, take from some, lump it somewhere else with no appreciable difference in the bottom line.
He talked about an, “uncertain outlook” limiting the government’s options. Really? When has an outlook ever been certain and doesn’t that mean you lead from the front, not hang back waiting to see what happens next?
His pet goal is to reduce spending and this is where he just doesn’t get it. He wants to take money away from some and give it to others, presumably in the form of tax cuts. That doesn’t mean more money available to spend. That means re-distributing existing spending. That won’t generate economic activity.
If you are confused, join the queue.
His interview with Leigh Sales saw him defending his government’s decision not to proceed with a proposal to increase the GST. That too was waffle. But even though he wanted to increase the GST and now couldn’t, he was keen to attack Labor for putting out policies that, in his words amount to “tax and spend”. Wow!
There’s every chance he is now feeling the heat after Labor have grabbed the initiative and announced tax expenditure savings in negative gearing, superannuation, capital gains and multi-national tax avoidance.
We will have to wait until the leaks from the budget begin before we can see how innovative Scott will be. His form to date suggests there’s not much turning around in his head beyond what Laura Tingle describes as, “overblown rhetoric”.
On the positive side, he has reinforced the common perception that the Coalition are a policy vacuum.
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Return to home pageWithout his ” we dont talk about operational matters” mantra to hide behind, Morrison is exposed as the true incompetent dullard he really is.
Good article John. I totally agree. I just watched it. All I ever see is when the Liberals are on TV is “It is such a shame they aren’t Labor.” At least the journalists would have his guts for garters. So tired of the humdrum from the media. The Drum all had a good snort and chortle tonight about how Labor was going to lose the election – in fact I think Sabine Wolff had a few good snortles on how they didn’t have a hope in hell of winning the election, backed up by serious nods from the host. I guess that is the message the ABC will continue to give voters until the election, regardless of how good Labor’s policies are. Can’t let the facts get in the way of good Governing now can we?
Thanks John. I watched Morrison’s address today and he seemed to be extremely nervous and uncertain. When he was immigration minister and able to play the full on bully he seemed extremely comfortable. So, I guess which mode comes more naturally to Scotty. Put him in a situation where he has to think, appear to have a level of intelligence and be at least somewhat diplomatic and he seems lost.
And what is with the anecdotes?? Is this meant to show us cuddly, lovable Scott? If that is the intent then someone needs to tell him it just makes him look like a fool. Seriously, he comes across as just trying a bit too hard.
You nailed it John. When private spending is forecast to go down the government should enact spending to compensate. Not do the opposite and just make it even worse!!
I hope this is why Turnbull put Morisson in this role so that he crashes and burns. His ideology must involve some huge mental gymnastics in that role. Imagine trying to ideologically oppose everything treasury is telling you to do. What a fool.
Please can someone in labor wake up and see what Bernie Sanders is doing in the USA via grass roots movement and a real progressive agenda. He knows the USA isn’t budget restrained like the media tells the masses it is. Now we just need enough voters to work it out. Start by reading economist Bill Mitchell’s blog post today it’s a cracker!!
http://bilbo.economicoutlook.net/blog/?p=32961
Interesting that the LNP ‘talking points’ are portraying Labor’s policies on Negative Gearing and Capital Gains Tax as a tax on ordinary Australians who want to get ahead.
Had these been LNP policies they would have been necessary savings.
Good précis, John. But Jason, Labor is awake; have you not seen their economic offerings lately? The nonsense from the MSM that Labor is going to lose is just that: nonsense. Probably ordered by the Murdoch/Moloch monster. Labor is timing its media releases and so far getting them just right.
@ Trish. Yes, the sniggering on the Drum last night about Labor’s electoral chances, colluded with by the host, was obvious. But after Morrison’s abysmal and hollow performance at the National Press Club, all that the Conservatives had left was the tool of criticism.
Also, Sabine Wolff’s previous role and links to the IPA were not mentioned that I could see.
This from Chris Bowen: gives me no confidence that his (and current Labor) economic ideology is much different from the LNP:
”… But a gradual, well considered pathway back to budget balance is an important part of economic policy. I’ve previously outlined Labor’s fiscal rule of more savings than spending over the decade to help return to budget balance…
Knowing that that there are sensible plans in place for return to budget balance over time gives both consumers and businesses the confidence necessary to spend and invest to engender growth….
…There is nothing right-wing about a prudent fiscal approach.
Australia’s first post-War budget surplus was delivered by Paul Keating in 1987.
The Menzies, Holt, Gorton, McMahon and Fraser Governments did not manage a budget surplus between them, not a single one. Paul Keating delivered three.
A commitment to social justice must and can partner with a fiscally rigorous, prudent approach.
New spending commitments are not the only way to improve social outcomes.
Often, they are not even the best way… ”
The above from Bowen is populist neocon groupthink nonsense – he fits the description of ‘deficit dove’ in MMT nomenclature. See Steven Hail’s video (at the 60 min mark).
We need to further invest in our nation, just like we did after WW2 – fiscal deficits are the norm; surpluses are the (perilous) exception. 77% of national fiscal balances since federation have been in deficit.
The economy must serve nation building and us ‘the people’ – we should not be slaves to “the economy”
How does a nation “save” when it is the currency issuer? Is pulling ‘money’ back out of the economy from the private sector (making citizens poorer) considered to be desirable ‘saving’?
From his comments he seems to have adopted the achievement of a budget surplus as the hallmark of responsible budget management – which is essentially acceptance of neoliberal trickle down/austerity economics.
Unfortunately, Labor if elected this year will deliver LNP lite fiscal management – not what Australia needs at this time of domestic activity contraction – the common people will still be squeezed, albeit in a kinder gentler way.
Bowen will deliver little more than the LNP if he remains on the ideological course he espouses.
@JohnB, have you communicated this to Bowen somehow? (Facebook or email). Just your comment above would be good for him to read. I’ve seen the Hail video you reference and it’s fantastic, very easy to follow.
Scummo Morrison was all motherhood statements, bashing unions, and blaming labor and “naff” sporting analogy’s. … as Laura Tingle said to Phillip Adams that night,” …… you know when children go from cardboard pasting projects to reasoned, articulated essays at school? Well, Morrison is still at the cardboard stage!”
He still had the temerity to “blame labor” for their (Liarbril) blowing out the deficit by another 50% without a journo picking up on that truth manipulation…. even “Horseshite” Corman looked unimpressed… worried, even.
This ruling rabble have wasted 2 1/2 years, still have no policy beyond slash and burn and now are saying what good shape the economy is in….and all the talk of Labor losing…. just might not be correct, just The Ugly American, Murdoch’s mis-information!
All Spin No Substance – That was written for the LNP.
Thanks for the bill Mitchell link, a bit heavy but well worth persevering with. Makes you realise how poorly served we have been by governments of all persuasions sucked in to the global economic whirlpool. I wish Chris Bowen and the rest of Labor would read this and then start the process of reclaiming control of every aspect of the economy.. We need a New Deal, and someone who can sell it.
Be interested to know your opinions on this idea I floated on a facebook comment?
Why not put a ceiling on superannuation funds?
I read in a recent article comment on some super funds being $62,000,000!!! I wont calculate the interest on that but it represents a seriously big yearly income for someone who already owns their own home (which we don’t want to tax right?) and probably a couple of holiday homes (you can only ever be in one place at any given time right?) their own car/s and a house/s full of goods and appliances and basically all they could ever need to be comfortable.
It could be a very, very high ceiling but surely forcing superannuants to divest their excess cash to family members would put that money back into the active economy? As is the cash gets loaned to mining companies and other businesses to increase their business activity and profits which doesn’t create anywhere near the amount of ” jobs and growth” as the same cash would being spent on younger families who need houses, education for kids, goods and services, holidays etc. ( and all the jobs those areas create)
As I said the government would not be taking the money away from the retirees just compelling them to put it in a place where it will stimulate the economy. But I suppose the same incentive would be provided by greater taxation above a certain level of superannuation investment.
As the quote in the musical “Hello Dolly” goes
“Money is like manure. It is no good unless it is spread around encouraging young things to grow!”
“That means re-distributing existing spending. That won’t generate economic activity.” This is simply wrong! If you take from the wealthy and give to the poor. The poor spend most of it and the rich don’t change anything, so there is more money in the economy.
Or course ScoMo wouldn’t take from the rich and give to the poor. Far too Robin Hood to his little John.
<
"What was he saying?"
Something about a religious nutter in the U.S. via N.Z. who threw alligators into someone's pants and asked "how can I help you".
Also quite a bit about how he is going to "back you in" …… I think he means a corner.
He mentioned "cheap money" via quantitative easing but forgot to mention Australia's Prime Minister for Infrastructure didn't borrow any and didn't build anything.
China is our BFF …… unfortunately the Foreign Minister for Movie Stars didn't hear that bit and is currently refusing selfies with Chinese.
Saved $80 billion spent $70 billion …. blah, blah , blah.
I think that was it.
Oh ! … wait on, wait on … the most important part :
"Thank you for your attention."
Easy peasy.
@JohnB unless you communicate your complete post here, to Chris, then he isn’t going to read it. For us it’s informative, but that’s about it. I suggest you use this http://www.chrisbowen.net/chris-bowen/home.do;jsessionid=F5F435E1105EBADE949D6EE1D6403DA0
Thanks,
Cheers
@trishcorry. Totally agree, I found it sickening and wrong. Why does the media write Labor off when what we know have has done nothing positive?! By all rights they don’t deserve to be there.
I can’t understand why commentators aren’t questioning Morrison’s claim of $80billion in savings??? Sure, he may of “found” $80billion in savings, but in order for these saving to offset spending, they need to be legislated… As Lenore Taylor identified following MYEFO;
http://www.theguardian.com/australia-news/2015/dec/15/myefo-budget-banks-on-unrealistic-139bn-savings-blocked-by-senate
So from this we can do some simple maths and say that if the government have found $80billion, of which $13.9billion will not be legislated, we can safely assume that a government that won an election based on a debt and deficit disaster, has over the space of 2.5 years, expanded spending by about $4billion… I’m astounded that this observation hasn’t been put to the treasurer…? Where are all the economists???
When the was a disparity between capability of the person and the responsibility of the position, the default is to use many words, quickly, authoritatively and demean if any signs of bafflement – we used to call it – bullsh*t baffles brains – now we have degrees in the mantra of spin – should we be surprised?
@David & Garth,
I have responded directly to Chris Bowen by email, and have posted critical responses to some of his articles at the Labor Herald – but have never received any response from Chris Bowen (other than auto email acknowledge).
Any mention of MMT practical economics causes ALP policy makers to run for the hills.
I have come to the conclusion they really do not want to know – I think MMT does not sit comfortably with the corporate allegiances of the ALP right wing.
David – your link supplies his parliamentary email address – I have already sent correspondence re MMT to that address – all to no avail.
@JohnB….John you may have more luck with Assistant Shadow Treasurer Dr Andrew Leigh. Andrew has responded to my tweets from time to time and while I could never converse with him on economics, except on a very basic level, given his qualifications in that area, he has always been courteous.
https://en.wikipedia.org/wiki/Andrew_Leigh
You will note by the tenor of his website he is approachable and includes his email contact and office phone number
http://www.andrewleigh.com/contact
Regards
JohnB, I sent your response to Chris Bowen, with a link to the AIMN. It has also been sent to Andrew Leigh.
In his interview with Leigh Sales, Morrison also claimed that some of the $70 billion of additional spending was to bring 12,000 Syrian refugees to Australia. At present, the number of Syrian refugees brought here under that program is, wait for it…….10.
Thanks JohnK,
IMHO it is past time progressive politicians formulating finance policy addressed MMT – the neocon imagery and metaphors they repeat and project are inaccurate, if not dishonest – they are ducking the issue for political convenience.
If they disagree with MMT they should clearly outline their evidence or reasons it is in error – that is their profession, We elect them to deliver best policy to Australia and its citizens – they individually swear an oath of office to that effect.
Wayne Swan is reported to have replied curtly, when queried on the about the applicability of MMT principles, “I disagree”
Of course, the ALP is not alone in ducking MMT – the Greens too duck the issue, even though they know full well of its existence. If you look through the credits at the end of Steven Hail’s video it will be seen that the event was organised by ‘Australian Greens (Mayo Branch)’.
We live in hope that macroeconomic reality will eventually prevail.
I don’t know about all this. When everything is taken into account you have to admit that Morrison’s watch is pretty nice.
MMT? – anyone help?
I(n)M(y)H(umble)O(pinion)?
Michael,
M(odern M(onetary) T(heory)
Video here (Stephanie Kelton) might help you to understand basics.
Google Bill Mitchell for Australia’s best academic reference.
Michael:
MMT refers to a controversial economic doctrine that many if not most progressive economists (and politicians) will not embrace because (among other things) it may be seen to promote the notion that we can spend whatever we like and not have to answer for it.
John Quiggin puts it thusly:
“…the claim that government expenditure does not require taxation is politically pernicious. Even if it is true in some limited cases (I don’t think it is), the way it is made leads people to dodge the issue that taxation is the price of civilisation. One way or another we have to pay for what we consume, and it’s silly to try and dodge this. It’s particularly damaging to the extent that MMT is associated with the left. The last thing the left needs is to be portrayed as offering a deceptive ‘free lunch.”
Michael,
The short version is that deficit spending does not have to be funded by borrowing. As a sovereign currency we can just credit an account at the RBA to fund things like full employment, infrastructure, health and education. If we have unused productive capacity in our economy, and we invest in productivity enhancers, this will not be inflationary but will boost growth and decrease poverty.
Is the $80 billion revenue from the now defunct carbon tax?
From the budget….
“In this Budget the Government is adopting sensible indexation arrangements for schools from 2018, and hospitals from 2017‑18, and removing funding guarantees for public hospitals. These measures will achieve cumulative savings of over $80 billion by 2024‑25.”
Is that the 80 billion he is claiming?
Kaye Lee
Yeah, cutting essential services to reduce income tax – that
makes sense….. in bizarro world.
It is hard to know where Morrison’s $80 billion is. It might be in the forward estimates, some may be in the budgets that the senate has not passed. Some may be in his imagination.
The game is zero sum:
(a) shift (appropriate) monopoly services from government (public) to mates (private) = less spending = tax cuts = mirror, mirror on the wall, whose the greatest treasurer of them all? (blows a kiss)
(b) tax cuts = more of income to spend – on mates’ services = you are (in unison)
the big shift.
Later: access to services decline as mates creatively increase price = turn to government for relief
Mirror decides to self destruct on moral, ethical and despair grounds.
It comes from health, education, welfare, foreign aid, the arts, supposed savings from red tape reduction (I think it was $18 million claimed for not having to turn your mobile off during takeoff and landing), indigenous funding, NGOs like the National Preventative Health Agency and the Council for the Aging, the CSIRO, Landcare.
Thankfully we still have plenty for Dan Tehan to spend on war toys, Peter Dutton to spend torturing asylum seekers, and George Brandis to spend removing our rights.
Our free trade agreements are costing us billions in reduced tariff revenue.
When you think back to what was achieved under Julia Gillard it’s enough to make you cry.
John, I keep hearing this crap about the money gained by Labor’s negative gearing changes being so little that it would only pay off less than one month’s interest on our debt. Could you please blow that bunkum out of the water for me??
$80 billion is the go to figure for right-wing nuts:
http://blogs.news.com.au/dailytelegraph/andrewbolt/index.php/dailytelegraph/comments/cutting_80_billion_of_worthless_labor_ious/
Sean,
The policy, which would limit negative gearing to new homes only from July 1, 2017 onwards, and halve from 50 per cent to 25 per cent the capital gains tax deduction on investment assets, including shares, raises $585 million in its first full-year of operation – 2018-19, which is the final year of the current four-year budget estimates period.
“By the end of the decade, our changes to negative gearing and capital gains will deliver an annual $7 billion boon to the budget bottom line, which will continue to grow until full maturity,” he writes.
http://www.afr.com/news/politics/negative-gearing-plan-worth-7bn-a-year-in-a-decade-labor-20160217-gmw5b6#ixzz40UpjHfVo
Apparently they have modelling from the Parliamentary Budget Office.
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Sean, Kaye Lee has covered it above. You are going to hear a lot of waffle from Morrison et al about Labor’s policies that provide significant tax expenditure savings, from now on. We will be watching and listening.
JohnB and others: My usual take on discussions on the macro-economy is that MMT requires a nuanced understanding. If you just say we can spend whatever we like (with or without qualification) it will be taken out of context by opponents (like Julia Gillard’s “there will be no carbon tax..”). Again, if you say “taxes don’t pay for anything”, people will simply interpret it as “no need to tax”, which is again wrong.
If you read all of Bill Mitchell’s blogs (and I have not yet done that) you will see that real macro-economics requires that you take all the variables of the macro-economy into account. If you do his week-end quiz regularly, you will see how easy it is to get tripped up because he has left out one crucial fact. I used to get annoyed by that, but soon realised that it has immense didactic value. Simple measures you read in the MSM, like budget surplus, tax revenue as a % of GDP, etc. do not have any meaning by themselves. It is as bad as saying “fat is bad for you”, which we now know is too simple. The neoliberals have been using these oversimplifications for half a century now to dupe the public, and it works because the MSM amplifies it.
Just as an example consider the latest from the coalition: ” we don’t tax and spend”. The counter to that is ” you SAVE by cutting health, welfare and education”, but it doesn’t sound that good. The real question is this: why should we worry about some govt. debt which is barely even 40% of GDP, when the private sector debt is around 150% of GDP? If ScoMo then tells us that this is the problem of the private sector and he cannot interfere, we have to again counter that somehow. The only way to do that is to say that the private sector cannot pay down its debt unless the govt. runs a deficit. This statement only makes sense if you understand the sectoral balances identity, which nobody ever mentions, but it is the starting point of MMT. This little piece of logic has nothing to do with fiat currency. That will come in when we talk about govt. “debt”, which is really no debt at all. I don’t know about the rest of you, but my super fund invests in Australian govt. bonds in its default option. So those bonds (the govt. debt) are part of everyone’s financial wealth.
So I’m not surprised that people run for the hills when you talk of MMT. It is too much to take in at one time. They just assume you are some kind of nut. We need a gentler, more gradual strategy to win people over.
Totaram read bills blog today and you’ll find some simple framing. Real youth unemployment at 28% and real under and unemployment at 16%+. http://bilbo.economicoutlook.net/blog/?p=32964
Setting aside the adults (cause it’s easier? Not sure their kids would agree but anyway) how does it make sense to not allow our youth who want to work to not have a chance. It’s not only learning involved but things like having money to save up for a house deposit etc if they want to. We won’t have enough smart productive happy people in the future for all that super money. Why isn’t a government apprenticeship scheme for any young people who want to work a viable policy option for a political party?
The neo-liberal answer seems to always be import hard working immigrants that accept lower pay. Think of all the educated doctors the west steal from 3rd world countries for example. Imagine the real impact on those populations. Why is education an expense for government? It’s an investment. Germany gets it even though it’s stuck in the mad neo-liberal Euro currency union with youth unemployment above 50%.
I highly recommend bills talk in London for framing of modern economics he has done a lot of work on how to speak in english about it with someone who’s specialty it is: http://bilbo.economicoutlook.net/blog/?p=31725
or his talk in Finland is even better IMO but not so much framing as its a non native English speaking audience: http://bilbo.economicoutlook.net/blog/?p=32070
Honestly forget the theory it doesn’t matter to talk to people. Once u get that it’s real resources available that matters eg a finite planet that needs educated people and infrastructure; that’s the REAL reality at the end of the day, it’s easier to talk about reality hopefully. Countries aren’t households. But that analogy works in politics as people understand their household budget. Same with business they have similar limitations. If only they understood government deficits are good for them when required.
Everything else the media economists talk about is mass-groupthink and wrong. Thanks for getting involved. Please spread the word far and wide and get them to read bills blog it’s part of my daily routine. 🙂
You have a lot of converts here to MMT but I agree you need to be careful how you present it. I often think that you emphasise phrases that confuse the issue for newcomers. I must admit, wading through Bill’s blogs is hard work at times though of great value for the initiated.
MMT gives us a chance to ask what does our society need, How can we best use available resources to satisfy those needs. What should we invest in to provide for the needs of the future.
Kaye pls don’t get caught up in the theory. We could analyse how the earth orbits the sun or just take it as a given and then talk like it’s true. Honestly there is nothing not true about MMT but it’s a huge reprogramming required just to go back to reality. It’s bizarre once u realise how mass groupthink has taken hold in politics and economics.
The reality is If people don’t understand natural real limits to the world like the environment and education for example then humanity will eventually destroy itself. The earth doesn’t care, it will carry on hotter etc then slowly go back to its own equilibrium again. Likely without humans but the next dominant species or not. Doesn’t matter. Maybe intelligent dominant species are a very temporary concept for future historians if they exist?
Too late. I am already caught up in the theory. That does not make me an acolyte. I am that annoying person who understands a little and just keeps hammering away with questions as I try to learn more. I just think it sometimes gets unnecessarily complicated which obscures its potential. I think the talk about bonds and overnight cash rates should be left out. That is a secondary issue IMO. I also get frustrated by the lack of clear information about how things are accounted for. I have my own ideas but no-one ever answers my specific questions about this to my satisfaction despite their very patient attempts to do so.
Jason H: No argument with you at all. The point of my post was about trying to win over people who agree it’s a good idea to educate our youth but get stumped by the inevitable “how do you pay for it?”. They need to have MMT explained to them, but the question is how we go about providing the explanation. You need to do it in a way that they find comfortable, rather than confronting.
Kaye Lee: the bond rates come in when people talk about the “interest on govt. debt”. Notice how ScoMo has brought it up in relation to Labor’s plan for Negative Gearing and CGT. There is also talk of bond yields going up as our debt increases, which is rubbish BECAUSE of the RBA using bond yields to manage the interest rate as part of Monetary Policy.
I agree with you about lack of detail on accounting by Treasury. It seems to me that Treasury liases with the ATO and continuously estimates govt. revenues. It then issues bonds for spending required in excess of revenue. This must be so because when Peter Costello had “paid down the debt” and was making surpluses, they wanted to stop issuing bonds. However, the Financial Industry is so fond of bonds that they implored the govt. to continue issuing them. Bill Mitchell has a reference to it in his blog on past treasurers:
http://bilbo.economicoutlook.net/blog/?p=32861.