AMANDA VANSTONE A THIRD RATE CLAYTON JOURNALIST WHO MIGHT AS WELL GIVE UP DOING IT.
No, Amanda, debt is NOT the problem
Amanda Vanstone’s article in The Age, 8th December,
is so full of holes that water would pass through it quicker than it
does over Niagara Falls. Amanda has sprung to the defence of Joe Hockey
even though she acknowledges he has made mistakes. She says, “The government has clearly spelt out the need to tackle the debt situation, but it didn’t cut through.”
No, Amanda, it hasn’t cut through and the reason is its lack of balance, its lack of fairness. Amanda goes on to say, “I
think the PM’s phrase “inter-generational theft” says it all, and if
every minister gets on board we may see a more responsible approach by
the Parliament when it resumes in February.”
It’s a catchy phrase, “inter-generational theft”. It has all
the hallmarks of something sinister, something underhanded going on. In
fact, what she is referring to is the level of deficit spending. As the
mantra goes, deficit spending is borrowed money that must be repaid
sometime in the future by, presumably, our children and grandchildren.
Well, in fact, we are the children of our parents whose debt (so
called) we are paying off in exactly the same way every generation pays
off part of a previous generation’s debt. That is because the issuance
of Commonwealth Government Securities can be, and is, long term
issuance; it crosses over generations. So, in fact, every generation is
at some point, paying for a previous generations borrowings. It’s
ongoing, never ending. It’s business as usual.
Thistactic of pulling at our heart strings, appealing to our emotional
weaknesses, trying to have us think that our darling grandchildren will
be so saddled by debt that they will have to work 60 hours a week until
they are 90 years old all because we were so selfish and borrowed their
future wealth, is pathetic. It is also utter rubbish.
We are all the grandchildren of our grandparents. Are we so saddled
and overburdened by national debt that we can’t breathe, can’t hope to
achieve the same standard of living our grandparents enjoyed? No, we
have a much better standard of living than they experienced.
Our standard of living today, as it has always been, is not debt
related, it is productivity related. It is tied directly to our ability
to produce goods and services. Our ability to produce goods and services
is measured by our gross domestic product, our GDP.
Our GDP is approximately $1.6 trillion per annum. Therefore, if in
any year we spend $1.6 trillion dollars more than our taxation revenues,
our spending ratio, erroneously called debt to GDP ratio would be 100%.
Currently Japan’s debt to GDP ratio is 237%. Germany is 80%. The USA is
106%. The UK is 90%. Australia’s debt to GDP a ratio is currently 27%.
Even if this was a debt we had to repay, which it isn’t, by world
standards it is very low.
Spending is not our problem. Debt is not our problem. Taxation, or
more correctly, our methods of collecting taxation, the imbalances, the
lack of fairness, are the problem. When those who earn hundreds of
thousands, indeed millions of dollars begin paying a rate of tax that
reflects a measure of their contribution to our productivity, our GDP,
only then will our tax system be fair, and be seen as fair.
When our tax system can show a ‘tax paid to productivity ratio’, rather than at present, ‘salaries paid for profit ratio’,our tax system will be fairer. Today, senior executives are paid
millions of dollars based on profits and stock prices, both of which can
be manipulated up and down by clever accounting practices.
They do not reflect a direct relationship to productivity. As an
example, compare executive salaries in the Australian motor car
industry. Have they declined as the manufacturing levels declined? Are
executive salaries declining as the price of iron ore and our export
income is declining? By contrast, farmers’ incomes decline if their
crops fail.
But I would be surprised if executive incomes have. I am not
surprised, however, at the numbers of mining workers and motor car
workers who have been made redundant. As our unemployment levels
continue to increase, how many senior executives on super salaries with
stock options and bonus payments, who engage in negative gearing are
among them?
Those are the sort of imbalances our tax system supports. They are
the problem and there was nothing in Joe Hockey’s budget that addressed
them.
Then there is the question of company tax, or more correctly, the
lack of it. We can add to that the government subsidies paid to the
various industries, the tax loopholes their bean counters take advantage
of, and ask, is this a fair system?
So, returning to Amanda Vanstone’s column in The Age, debt
is not the problem, the senate is not the problem, Mary Poppins is not
the problem nor are people living in homes worth over $1 million. Nor,
for that matter, are lazy journalists.
Theproblem is the twisted, ideologically entrapped mindset that thinks
targeting the less well-off citizens, the real workers and pensioners of
this country who actually contribute, or spent their working lives
contributing, to our GDP in favour of the super-rich who produce next to
nothing and, relative to their income, pay next to nothing.
But hey, I’m just an ageing pensioner who spent his entire working
life paying off my grandparent’s debt. What the hell do I know?
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