$1 billion dollars a week. That is what the LNP
have been “borrowing” every week since they were elected in September
2013. At this rate, by September 2016 they will have “borrowed” in
excess of $150 billion taking the national “debt” from $284 billion to
$434 billion plus.
There’s a reason why the words, ‘borrowing’ and ‘debt’ are in
inverted comas above. In reality, it isn’t debt at all and it is not
borrowing and I can only guess how much Joe Hockey would like to say
that publicly. In reality, it is the total amount of Commonwealth
Government Securities on issue that have been purchased by various
institutions and individuals, in Australian dollars, held here and
around the world.
They are like shares, purchased as an investment in the future
prosperity of Australia. They can be sold on the bond market if, for
whatever reason, a buyer needed to redeem them. You and I can buy them
whenever an issue is announced by the Australian Office of Financial
Management.
Twice a year, the Commonwealth Government pays interest on these
securities, just like a publicly listed corporation pays out a dividend.
The interest payment is created out of thin air by the Reserve Bank of
Australia, our Central Bank. They can do this because they are the only
currency issuer of Australian dollars anywhere in the world and because
the strength of the Australian economy is the buyers’ guarantee.
Image from abc.net.au
So, if you are asking yourself, or if your friends ask, what about
Labor’s debt? This is how it should be explained. One thing is for
certain. Joe Hockey would never be heard explaining it this way. But oh,
how he would like to. How easy would it be to start calling it what it
is and to stop worrying about the size of the deficit?
But he can’t. Because all his previous rhetoric about budget
emergencies, of ballooning debt, of saddling our grandchildren with the
cost of our excesses, of crippling the dreams and aspirations of future
generations, will be seen for what it is; a lie, a deception, an
untruth, told to instil fear into the hearts and minds of vulnerable
people whose only understanding of economics is that of managing a
business or a household budget.
Why did he do this? Why did he instil fear into our hearts and minds?
Because he wanted to be Treasurer. And now he is and he is stuck with
his own rhetoric. On the economics side, it doesn’t matter that Hockey
has borrowed $1billion a week since September 2013. In fact, right now
it is necessary because private sector investment is in decline.
Spending is what currency issuing governments should do when the private
sector is struggling. But that is incidental compared with the ambition
of a politician.
But what of the Labor Party? Is it too much to expect them to step up
to the plate and play the honesty card? To explain what the “debt” they
have been condemned for, really is? The Labor Party, who have always
put the people first, who have in the past, embarrassed the business
community with their economic rationalism, their willingness to spend
money into existence to create economic activity that gets people back
to work building value adding projects; is this what they want to
inherit?
Don’t expect the LNP, this present government, who pander to the will
of institutions like the IPA to kick start an ailing economy. Their
answer is to cut spending, to make life difficult for those who, given
the opportunity, would restore a nation’s wealth. Their answer is to
consolidate the existing wealth into the hands of the elite, super rich,
the powerful and the influential.
Their
answer is to wait, in the forlorn hope that at some time in the future,
when the numbers of unemployed have reached a level so high it will
encourage the upper echelons of wealth creation to act. Only then will
they grab the nettle, demand a lowering of worker’s wages, a change in
workers conditions that reflect John Howard’s ‘Work Choices’ and give
business the green light to get things moving again. It’s called the
‘trickle-down effect’.
Is that what the Labor opposition is waiting for, too? Have they
deserted their roots? Will they meekly accept the dishonesty of the
‘debt and deficit disaster’ mantra and hope that an unpopular government
will be voted out, without them having to do or say anything? Do they
really want to win government by default as did this government?
They should think ahead before they choose that path. Because when
that happens they will inherit the same sort of economic conditions
their predecessors did, except that it will be worse. Why? Because Joe
Hockey will have continued “borrowing” unable to arrest the mounting
“debt burden” that will be his downfall.
Hockey will soon, if not already, rightly be seen as a failure in
economic management, a bed he made for himself when he coined the term
“budget emergency”. Does Labor really want to inherit that? Do they want
to be facing the same absurd false-debt scenario that will strangle
their capacity to restore near full employment, improve our stand of
living and be true to their mission to first serve the people?
If
Labor doesn’t want to find itself on the same old Merry-go-Round in
2016, it would do well to come clean now, with a gentle heart to heart
chat with the Australian community and tell them how a nation’s economy
really works.
2014 was a year of disastrous growth for the Newman Government in Queensland.
Waiting list queues up. Unemployment up. Class sizes up. Power bills
up. Debt up. Election-time ads up. Hidden political donations up. Unpaid
fines up. Voter disaffection up.
These are just some of the many measures which demonstrate the LNP
government has failed dramatically and dismally to deliver what it
promised Queenslanders.
Let’s deal now with some of Campbell Newman’s catastrophic growth figures.
HEALTH
Without good health our enjoyment of life is diminished.
One image from the LNP Government’s current $20 million advertising blitz shows a queue
of people waiting for an operation. It is designed to illustrate the
fact that a queue of 6,485 patients waiting for an operation in March
2012 had been reduced by 5,954 to 531 by September 2014.
But 5,954 is a mere drop in the ocean compared with about 190,000 Queenslanders who have joined the list waiting to get on the waiting list since the LNP came to power.
Using the LNP’s imagery, if all those extra waiting people lined up in single file, two people for every metre, the queue would stretch from the Royal Brisbane and Women’s Hospital to Caloundra. Now, that’s a queue!
Verdict: A cynical and despicable attempt to hoodwink voters.
UNEMPLOYMENT
The financial pressure on families caused by losing a job can cause depression and marital breakdowns.
“Unemployment is too high for a state with such potential.”
The unemployment rate had been 5.5% when Mr Newman came to power. He
promised to create 420,000 new jobs in six years and cut the
unemployment rate to 4%.
Imagine the misery associated with the fact that 35,000 more men and
women have become unemployed in Queensland since the LNP won government.
That single file queue would stretch for more than 17 kilometres.
The facts: More than 61,000 full time jobs in Queensland have been lost and the unemployment rate has risen to 6.9%.
Verdict: A miserable failure.
CLASS SIZES
A recent Monash University study
found that reducing class sizes in the first four years of school can
have an important and lasting effect on student achievement.
The Newman Government promised that frontline services would not
suffer in its public service cutbacks but a shortage of teachers has
resulted in the number of oversize classes growing.
In only two years, the number of oversize classes in the prep to year three range has increased from 8% to 13% — one in every eight classes.
In years four to seven, the number of oversize classes has more than doubled — from 5% to 11%.
For the rest of the years, the rates are either slightly worse or the same.
Verdict: The Newman Government’s actions have had a negative effect on the long-term future of thousands of our children.
POWER BILLS
In a letter to Ashgrove voters in 2012, Campbell Newman signed his name to a promise to
''Reform electricity tariffs to lower your bill.''
Since then the peak rate in Brisbane with Origin has increased from
20.69 cents per kilowatt hour to 25.378 — an increase of 23%.
The T33 off peak rate has increased from 12.43 cents per kilowatt hour to 18.454 — an increase of 48%
Verdict: A massive increase affecting every Queenslander.
DEBT
The Newman Government had already received a report from its
so-called Independent Commission of Audit and was therefore fully aware
of the state of Queensland’s finances when it promised a fiscal surplus
of $652 million for 2014/15.
Instead, it is now forecasting a loss of more than $2.842 billion.
Borrowings for the 2012/13 Budget were $41.309 billion. The recent
Mid-Year Financial and Economic Review forecasts this will have grown to
$45.801 billion for this financial year.
And this month (December 2014), Premier Newman signalled that things are now so out of control that:
"We''re on the way to accumulating $100bn of worth of debt.”
Verdict: The Newman Government has driven the State deeper into debt.
ADVERTISING
In its election promises, the LNP said [IA emphasis]:
''The Bligh government has abused its own advertising rules to go
on a pre-election self-promotion spending spree – for politics not for
outcomes…When governments forget that it’s not their money but taxpayers’ money – it’s time for a change.''
Premier Newman told Parliament on
25 November that the Bligh Government had spent $9 million in three
months just before the election. That’s $3 million a month.
With an election due in March, the Newman Government is spending nearly $20 million of taxpayers’ money on advertising between November and the end of February — a rate of $5 million a month.
The advertising blitz is now so crass that there are sometimes two taxpayer-funded ads in just one television commercial break.
Verdict: The Newman Government is ignoring the fact that the $20 million being spent on electioneering is not its money.
HIDDEN POLITICAL DONATIONS
Campbell Newman promised his government would be accountable and transparent.
In May, the Newman Government made it possible to hide the identities
of people and organisations making donations of up to $12,400 to
political parties. The previous limit had been $1,000.
''Premier Campbell Newman has delivered real results for
Queensland. On every significant measure of government – from the
handling of the economy to leadership, law and order, health and
education, the Newman Government has exceeded expectations.''
Attorney-General George Brandis's office
said an expensive dinner on taxpayers during a visit to London was
usual practice. Photo: Alex Ellinghausen
Attorney-General George Brandis racked up a $1100 dinner bill on
taxpayers during a visit to London this year, just a month before his
government called on the poor to accept budget cuts and new taxes to
help pay off the deficit.
Labor said the cost was obscene but the
Attorney-General's office said the dinner was usual practice, because
Senator Brandis was hosting "important stakeholders".
A freedom
of information request lodged by the Labor Party has revealed Senator
Brandis opted for Australian wine on the night of April 4 when he dined
with a group of senior British arts representatives at the Corinthia
Hotel's fine-dining Massimo Restaurant.
The group ordered three
bottles of 2010 vintage Tyrrell's Semillon-Sauvignon and supped on a
bottle of upmarket Italian Vin Santo del Chianti Bonacchi dessert wine,
as well as glasses of Laurent-Perrier Champagne.
The dinner cost taxpayers £627 pounds, with £228 in alcohol charges
alone. Currency site XE said the Australian dollar was worth 56p at the
time, meaning Senator Brandis's bill came to $1123, including $408 in
alcohol.
Just five days earlier, Treasurer Joe Hockey, who was
preparing to unveil his first budget - which included the now-revised GP
tax, a rise in the fuel excise and an extra tax on the rich - said everyone in the community needed to help to do the "heavy lifting" in repairing the budget deficit.
A spokesman for Senator Brandis defended the dinner.
"It's
usual practice for senior cabinet ministers to host dinners for
important stakeholders within their portfolios," the spokesman said. "On this occasion the Attorney-General and Minister for Arts hosted key UK senior arts representatives."
Fairfax
Media asked Senator Brandis's office how many people attended the
dinner but staff declined to say. Labor's Waste Watch spokesman Pat
Conroy said the dinner bill was for Senator Brandis and three guests,
which was obscene.
"To spend over $400 of taxpayers' money on wine
is unpardonable, especially at the same time as the government is
making people pay more at the doctors and petrol pump," he said.
"Maybe
George can put the empty bottle of vintage Italian dessert wine that
cost $124 on the $15,000 bookshelves also paid for by taxpayers," Mr
Conroy said.
If you want more evidence that the present
government is doing its best to wreck our economy, a stark example was
revealed just before Christmas, one that should satisfy the most
hardened of LNP supporters. It further illustrates their lack of
understanding of how our economy works.
When reporting the national accounts figures in early December, Joe Hockey stated that, “We have falling commodity prices and we have weaker wage growth.” We
all knew about the falling commodity prices and why that was happening
but little has been said about weaker wages growth and why that has an
impact on demand.
The LNP believes higher wages lead to higher costs and therefore
higher unemployment. That’s why they oppose them at every opportunity.
But wages growth as at September 2014 was just 2.6% for the year, which
translates to a drop of $2.3 billion in tax revenues from the 2014-15
budget estimates. No wonder Hockey was looking so despondent when
presenting the national accounts. And guess what? Unemployment is
increasing.
You would think it was a no-brainer. Higher wages means higher tax
revenue as well as greater demand for goods and services which then
feeds into more employment opportunities. But, it seems our three
amigos, Abbott, Hockey and Abetz, don’t see it that way. The irony is
that if they had their way, the wages growth figure would be even lower.
In an address to the Sydney Institute last January, Eric Abetz chided employers for being too willing to give in to excessive wage demands. In addition to that he said, “Employers
and unions must be encouraged to take responsibility for the cost of
their deals, not just the cost to the affected enterprises, but the
overall cost in relation to our economic efficiency and the creation of
opportunities for others.”
On the face of it one would say this is perfectly reasonable. But the
subsequent actions of the minister throughout 2014 suggest a different
outcome in terms of economic efficiency. On July 1 he cancelled the
Commonwealth guidelines for cleaners on government contracts that
guaranteed them $22.02 per hour.
When their existing agreements expire they will receive the minimum
wage of $17.49 an hour, a 20% cut. That means they will pay less tax.
The offer of 1.5% to the defence forces, the one that got Jacquie
Lambie all fired up, was going to be the benchmark for pretty much every
other wage offer that would be put on the table. In addition, Abetz own
staff were offered a 0.5% increase. Other government agencies will get
nothing.
Bill Mitchell
All of these decisions are contributing to low wages growth that will
continue to impact on tax revenues. As Bill Mitchell, director of the
Centre of Full Employment and Equity at the University of Newcastle told Peter Martin of The Age:
“It’s as if they don’t join the dots. They’ve got a range of
little narratives that they pull out at different times to suit
different needs. One is wage restraint. That’s to placate business.
Another is the health of the economy. Another is fiscal deficits. They
don’t seem to realise that they are connected,” he said.
This is the reason real wages are stagnant and consumer buying power
isn’t moving. This hasn’t happened since the late 1990s when Peter
Costello began producing surplus budgets and starved the economy of
money.
On that occasion consumer demand continued to grow but was financed
not by wages growth, but by a massive increase in private sector debt,
namely household credit card debt. Households were borrowing to meet
their needs.
Credit card debt today suggests that not much has changed. If wages
growth is constrained to the present 2.6%, credit card debt will
continue to rise and tax revenue will continue to fall. Ultimately this
will lead to a private sector debt bubble and a recession. It’s not
rocket science.
It is pretty obvious that the average man and woman in the street
already realises this. Their opinion of the government’s economic
credentials is in decline. An opinion poll taken in November reveals
that Tony Abbott’s popularity with all voters, but particularly women, suffers in all areas of management, but particularly in the area of the economy.
“While 29 per cent of men rated as good the government’s performance on economy and finances”, only 16 per cent of women did,” writes Jacqueline Maley of The Age.
Perhaps
Abbott’s recent reference to the carbon tax and women’s concerns about
household budgeting missed another more crucial factor, i.e. wages
growth or lack of it. The problem is neo liberal ideological paranoia.
So much of what they believe centres on the private sector thriving.
But the private sector is not thriving and if it is allowed to
continue this way without some injection of government spending similar
to Kevin Rudd’s 2008 stimulus, the economy will implode. That’s not
rocket science, either.
Joe Hockey said “We are going to give economic reform a red hot go in 2015.”
He went on to say “The taxation discussion with the Australian people
next year will not be about increasing the revenue take for the
Commonwealth, it needs to be how we can have a taxation system that
makes us a more efficient and productive nation, and is fairer for all
Australians.”
If we want to make revenue collection fairer, and we want to cut
wasteful spending, then I have a few suggestions of where to start.
Superannuation tax concessions will cost the budget around $35
billion in 2013-14 projected to rise at a staggering 12 per cent
annually to be $50.7 billion in 2016-17.
Generous government tax breaks for property investors see them
benefit from a 50% discount on capital gains tax (at a cost to the
government’s budget of $4.4 billion per year) and negative gearing
(costing $2.4 billion a year).
Tony Abbott said Australia will acquire another 58 Joint Strike
Fighters at a cost of around $90 million per plane; $24 billion has been
budgeted to purchase and operate the aircraft until 2024.
The Commission of Audit’s report shows that in the past four years,
the Australian government has increased spending on the detention and
processing of asylum seekers who arrive by boat by 129 per cent each
year. Costs have skyrocketed from $118.4 million in 2009–10 to $3.3
billion in 2013–14.
This is the fastest growing government program and projected costs over the forward estimates amount to more than $10 billion.
(It costs $400,000 a year to hold an asylum seeker in offshore
detention, $239,000 to hold them in detention in Australia, and less
than $100,000 for an asylum seeker to live in community detention. In
contrast, it is around $40,000 for an asylum seeker to live in the
community on a bridging visa while their claim is processed.)
The Abbott government has given Transfield Services a $1.22 billion
government contract to run immigration detention centres on Nauru and
Manus Island.
(Tony Shepherd, who was the chairman of Transfield until he resigned
in October to Head the Commission of Audit, left with more than 200,000
Transfield shares, allocated to his family superannuation fund, on top
of his final salary of $380,000. Shares in Transfield soared 20.8 per
cent on the news, lifting the company’s market capitalisation by about
$80 million. He now heads the WestConnex Delivery Authority where money
from the East-West link may be redirected)
The Coalition Government has released its exposure draft of the
purchasing arrangements for a new employment services model – a $5.1
billion investment over three years from July 1, 2015 – which includes
the new Work for the Dole scheme.
School chaplaincy will be continued for another five years at a cost
of $245.3 million. Under the program, 3700 schools are eligible for up
to $72,000 funding to employ chaplains.
NEWLYWEDS across Australia will be given a $200 voucher for marriage
counselling from July 1, as part of a $20 million trial to strengthen
relationships and avoid family breakdowns.
TONY Abbott’s hand-picked human rights adviser has been given a $56,000 expenses package to top up his six-figure salary. Human
Rights Commissioner Tim Wilson now has a total salary of $389,000 plus
vehicle and telephone expenses following a recent decision by the
Remuneration Tribunal.
Hope that gets you started Joe, or whoever is now doing the budget. (Cormann? Frydenberg? Thawley? Credlin? Rinehart?)
PS In light of the above potential savings, you may want to read my plan to get half a million people employed at a cost of $8.8 billion
PPS In South Africa, Boxing Day was renamed Day of Goodwill in 1994. May you use it to contemplate wisely.
Poverty and unemployment can make Christmas a very bleak time for
some folk. While thinking about their struggle I was overwhelmed by how
we have demonised and abandoned so many who need our help, so I did
what I so often do, escaping to my world of numbers, knowing there has
to be a better way.
The Federal Employment Minister Eric Abetz said
“… it should be the task of every job seeker to make it their
full-time job to gain employment … Because the data is overwhelming … If
you are unemployed, the physical health, mental health, self-esteem,
social interaction of that individual are all diminished.”
“If the unemployed have a responsibility “to make it their full-time
job to gain employment” even though the income support payments the
Government provides leave most of them impoverished (and deliberately
so), then the Government has a responsibility to use its fiscal capacity
to provide sufficient work.”
So here are some numbers to contemplate as some of us digest our Christmas feasts.
The Commonwealth spends $7.5 billion on Newstart
Allowance each year and the number claiming is rising by about 5%
annually. It has also committed to give $5.1 billion to Employment
Providers over the next three years and $525 million for the Green Army.
At present, the Newstart Allowance supports approximately 740,000 people without a job.
The national minimum wage is currently $16.87 per hour.
Instead of forcing unemployed people to work 15 hours a week to get
their Newstart payment (with a possible additional payment of $20.80 a
fortnight to help with costs of taking part in the Work for the Dole
activity), why don’t we give them real jobs for 20 hours a week starting
at the minimum wage. This would give them a wage of $674.80 a
fortnight, give them some work experience, and also allow them some time
to be studying or looking for other work. Considering the maximum
payment a single person with no children can receive now is $515.60 a
fortnight, this would be a significant boost.
If 500,000 people were given jobs under these circumstances it would
cost us about $8.8 billion a year, less than we are already spending
($9.4 billion), and the same as Joe Hockey gifted to the RBA. It’s less
than we spend on Operation Sovereign Borders and much less than Tony is
spending on foreign built fighter jets and submarines…..to get half a
million people into work and one step closer to moving out of poverty.
There are hundreds of thousands of jobs that can be created which
meet current unmet community needs and would help people and the natural
environment and which would be accessible for any skill level.
All it takes is for a government to have the brains, courage and heart to do it.
If you’re a regular reader of, or contributor to The AIMN, right now you’re probably warming your tootsies by the Yuletide log of Schardenfreude as the Coalition reels in disarray.
The polls are plummeting, the back-bench is in foment while the front
bench are preening and fighting amongst themselves like Kilkenny cats.
The latest move of a cabinet re-shuffle in a desperate attempt to
shore up what Fairfax’s Mark Kenny refers to as “an improvement to the
team and hope for 2015″, is simply rearranging the deck-chairs on the
Titanic.
The Coalition’s efforts to resurrect a Frankenstein’s monster of
neo-liberalism from the Reagan-Thatcher-Howard era and present it to the
electorate as the Fairie Queen of free trade have failed so miserably
that the public has long since stopped listening, nor is it likely to
regain interest.
Since election, the ongoing debacles ranging from Australia’s
relations with Asia to the ruling by the High Court that funding school
chaplains was unconstitutional, the Coalition’s performance has become a
gospel to incompetence.
Ironically, the conformation of this came from the very heart of the
machine which had given Abbott such a smooth ride to PM – the mainstream
media.
When an info-tainment lightweight like Karl Stefanovic told Tony
Abbott that; “No-ones buying what your selling!” and Minister for
Education Christopher Pyne, to “man up and call a double dissolution”,
and when Jones and Bolt chimed in, it was clear that the tide has
irrevocably turned for the government.
For the Coalition, the Sylph of the mainstream media has turned to
Succubus, feeding and profiting from the government’s torment.
No amount of ministerial re-shuffles or assurances from the Treasurer
that fairness will be central to political debate about tax and
federation reform or workforce participation will regain a shred of public confidence.
Moreover, the Senate, the Fort Zinderneuf of Australian democracy has
in the main managed to hold out against the assaults by Tony’s tribe of
Tuareg’s, leaving the government ineffectual and crippled by its own
ideology.
The power brokers in the Coalition are now faced with the unpalatable
choice of either leaving Abbott as leader in the hope that the cabinet
re-shuffle will give the appearance of a ‘Re-booted’ government and
subsequently claw back enough lift in the polls to carry through and
save the party from total annihilation at the next election, or to
replace Abbott with Bishop in an attempt to restore party unity, cross
their fingers and hope for the best.
In light of the latest assurances from the suppository of all
knowledge that he counted abolishing the carbon tax as an achievement
not only for his government but also for himself in his role as Minister
of Women; “who many of us know, are particularly focused on the household budget”,
it’s a fairly safe bet that any efforts to preserve party unity in the
mind of the public will be sacrificed for the more important goal of
winning a second term, and therefore it’s likely that the leadership
spill will occur before the end of April 2015.
For LNP, the Ship of State has become Tony’s tumbril bearing the party to its inexorable fate.
Ross Sharp wrote
recently that no more needed to be written to convince the average voter
that; “This government is shit!” and he was right.
Rather than chronicle the ‘sorrows from the bosom of the earth’
wrought by this government of poltroons, let us collectively and
individually, writers and readers, gather our brickbats and our barbs,
our jibes and our jeers, and seek firstly to ensure that the tumbril
bearing Tony and the Tories does not escape its electoral fate.
Secondly, let us try to bring forth new and logical arguments for
seeking change in the areas of addressing the massive challenge of
global warming, abandoning the ‘supply side’ economic theory which has
contributed greatly to its acceleration, and an intelligent (dare one
say visionary?) foreign policy platform for the Asian Century.
Finally, every writer wants to be read. Bloggers perhaps more so (the
Devil drives!). As someone once remarked; comments and ‘likes’ to a
blogger are as coins to a busker. It may only be a small contribution
(good or bad) and you certainly can’t feed yourself from it but
nonetheless it provides nourishment for the soul.
As the AIMN approaches its 6 millionth visitor, I can only say that
not only is it a remarkable achievement but also offer my
congratulations to Michael and Carol Taylor and the rest of the hard
working staff at AIMN and my heart felt thanks for the opportunity to
proffer my cap to a larger audience.
Their
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