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So increasing the countries saving through super and our future through education and our health is a poor economic strategy.
You seem to have forgotten what economic activity is about. (Australia’s shocking budget mess, November 12)
Could Alan, like Robert, please make his mind up (Australia’s shocking budget mess, November 12)? He has previously acknowledged the reality that the banks (which lend to people, which the RBA does not) may not pass on interest rate cuts below the inflation rate. Those banksters are also trapped by borrowing money overseas (the government being too ideologically besotted to allow the RBA to lend them whatever is needed), plus also an unaffordable housing asset-price bubble to support.
While correct about the structural deficit, Alan ignores sensible and obvious remedies.
One is to end some of the massive rent-seeking. If Alan felt politically able to embrace elimination of superannuation tax concessions, doing so would end the looting and pillaging of public revenues by wealthy working rent-seekers costing $30.2 billion in FY12, $45 billion by 2015-16.
There, Alan, the structural deficit is gone.
Rent-seekers can console themselves with the fossil fuel subsidies, First Home Vendors Grants, dividend imputation, negative gearing, private health insurance rebate, and private school subsidies.
As usual it makes perfect sense Alan. Albeit, the coalition's portion of the structural hole pertaining to the personal tax cuts, can technically, be offset by the 2007 gifted budget surplus, huge cash reserves and the healthy future fund. (Australia’s shocking budget mess November 12)
Labor's crafty carbon tax compensation by means of tax cuts add to the problem of their own making.
So here we are with the end of commodity price boom apparently upon us with a $34 billion structural hole in the budget caused by the Coalition’s personal tax cuts and the ALP’s spending, and with both parties now promising to maintain impossible surpluses.
As you mentioned our economy benefits from its input taxes, with their up and downs (Australia’s shocking budget mess, November 12).
As part of the Budget Deus ex machina, starving the States of Revenue is our most popular Commonwealth vs States game. Our buying votes machine on the expenditure side does not change of gear with the down side.
In the West we could have had an Okajee/ Shangjee port, now it is likely to be an USAjee port with a Nukajee facility or more stuff here to risk the life of Freo residents, but no matter what, we will have a new entertainment centre and an extra stadium to entertain the voters and a... downgrade like most other large States... but voters will still fell for the rhetoric as usual as Rob Burgess pointed out in (How Jones will profit from the 'backlash', October 9)
“ It's an age-old question. Emperor Commodus, played by Joaquin Pheonix in Ridley Scott's 'Gladiator', weighs up the demands of the Roman mob, and puts on 150 days of gladiatorial games to appease them.
The move prompts Senator Gracchus to comment: "He will conjure magic for them and they will be distracted. He will take away their freedom, and still they will roar ... He will give them death, and they will love him for it. “ ….thanks to our many many many political election strategists.
Alan, the simple facts are that the Coalition left the country with a $20b surplus, a $40b Future fund, and having paid off $86b of past Labour debt. The current Labour govt is now some $250b in deficit, so let's not get confused here; the current government of 5 years standing is the one which is solely responsible for Australia's budget problems, and as is usual with Labour governments, they have failed to rein in their preoccupation with spending other peoples' money! (Australia’s shocking budget mess, November 12)
Thanks Alan. Its refreshing to listen to someone, who thinks outside of the box. Apparently, we are a dying race. (Australia’s shocking budget mess, November 12)
If I may contextualise the economic problem (as I see it). In my opinion John Howard was an economic vandal, Peter Costello, was an economic visionary.
Julia Gillard is an economic vandal, I have yet to see a labour visionary.
The GFC is with us, let no one misunderstand that fact. The US, is counting on growth from, its gas revolution.
So, if the EU continues to wallow around in the economic catastrophy (that it made for itself), US growth will be retarded. China will become insular and Australia will be left with increaing debt, that neither political party, wants to solve.
The USA, may get to the point, where monetising debt, is their only available option.
The Australian dollar, would head skyward. This would effectively kill, our total export market.
The death of Australian exports, think about it, because it is possible. Some would say, that is probable.
Now! how good, does our education look? How can, a disability reform, exist, when Australia cannot borrow money?
If either government, dismisses this scenario, without conceptualising it, then we have a strong case, for trying a government, for treason.
It has been done on hundreds of occassions, throughout history - be warned.
Might one enquire what the surplus would be if the exchange rate was 70 US cents to the dollar rather than 103?
One would suspect that Australian business would be more profitable, domestic retailers more competitive than online and the 'deficit' would disappear. Is there really a structural deficit if a major driver is the value of the dollar, which itself is driven by foreign confidence in our fiscal rectitude?
Catch-22 in an open macroeconomy. (Australia’s shocking budget mess, November 12)
As an ex wealthy working rent seeker (to use Roger Rabbit's perjorative language) still independent of the public pension, my last significant income tax bill was $98000, mainly the cashing of long service leave and unused sick leave at 48.5 percent, I would have exchanged the minor tax advantages of super for a little less of that bill! My super at the time, thanks to my looting and pillaging, was about twice that (about $200000) in1995, and I am confident that had I access to today's tax rates I would have been more interested in 'ordinary' investments than super.
I am sure the $30B figure quoted would not stand up to objective analysis. By all means, fix the first home buyer's grant and negative gearing, but leave super alone! (Australia’s shocking budget mess, November 12)
Forget the Asian language imperatives recommended in the recent Asian white paper. Australians should be learning Latin-Spanish so we can identify better with the Argentinian economy we now have. (Australia’s shocking budget mess, November 12)
Alan, Last time I looked the LNP were in opposition, not running the budget. (Australia’s shocking budget mess, November 12)
The opposition can't be hopeless at running a budget when they are not yet running one.
If the opposition when in government will run a balanced budget is this a bad thing? Governments cannot make wealth, only money. They borrow it, print it, or tax it. The big question to ask the opposition is just how long is it going to take to pay down the debt created by the current government? This will give us some idea what they intend in regard to taxation.
I think printing Aussies Dollar is a good strategy to address the budget mess. Australia cannot be running on a surplus budget when every other country is prinitng money. We will landup with an appreciating AUD and will not be able to compete with other countries in a global economy. (Australia’s shocking budget mess, November 12)
So lets print money and invest it wisely on education and health. We wll landup finally with a skilled, healthy population by the time the world comes to realise that money printing is not sustainable or may be it is... Who knows this scale of money printing globally has never been done before.
An increased government surplus will indeed lead to lower interest rates as the (unelected) Reserve Bank is forced to stimulate the economy in lieu of the (elected) goverment via fiscal policy (Australia’s shocking budget mess, November 12). Why is that a good thing? Should we really prefer to encourage private individuals to borrow and spend even more money to stimulate the economy than to direct increased government expenditure towards infrastructure, education and poverty reduction? A high dollar may lead to structural change in the economy but remember it means every piece of coal we export can import more Boeing airplanes. A high dollar is making every Australian richer versus the rest of the world. It also forces us to focus production on domestic consumption, for example, to educate our own population instead of foreign students. That is a positive structural shift. The business media needs to present a more balanced argument for and against a particular budget outcome. There are times when a budget surplus is a sensible economic decision, but at present the only rationale is a political one.
Alan,
We need to stop making excuses for the Labor government and cut to the chase. (Australia’s shocking budget mess, November 12)
When they came to office, they inherrited $20bn surplus, and the previous Labor government's $96bn debt paid off.
In their time in office, they have been solely responsible for converting that surplus into $250bn of debt.
Labor governments have always been big spenders. And when they've spent everyone else's money, they jack up the taxes to continue the spending.
Unfortunately, this message seems to be forgotten between generations.
I would be very surprised if people only vote on the debt. This government has a large catalogue of failures, mismanagement and wasteful spending. They also have a lot of socialist policies which most people don't like.
It is interesting to note the one-eyedness of Peter Hansen and his take on the Howard myth.Quoting $146 billion of Howards 'savings' he fails to mention the $650m and still counting on the appalling decision to go to war in Iraq and Afganistan,nor does he mention the $1 billion wasted and still counting on the heartless 'pacific solution'. There is no mention of the billions of dollars given to the needless in 'middle class welfare'.He also forgets or chooses not to disclose the fact that apart from the GST not one hospital,school or university was built and under the ministries of Tony Abbott universities and hospitals were starved of funds. (Australia’s shocking budget mess, November 12)
At least this government in the face of a toxic, disruptive, obstructive and negative opposition to everything, has built schools, the NBN is under way and yet continued the wasteage on wars and refugees(to their shame), and attempted to enhance the infrastructure left bare by the Howard years of wasted bounteous resources taxes-all but gone by 2007.
Whilst much of the commentary in this otherwise useful publication is for Liberal eyes only a little balance in the commentary would enhance discussion.
Hockey and Abbott should come clean and promise a deficit with breakeven in 4 years, surplus in a second term, as usual. (Australia’s shocking budget mess, November 12)
I hate to remind some of your readers like Geoff Crocker that the speed at reducing the deficit will depend on people like us willing to pay for it as only income and asset owners will be in a good position to be taxed. And if the Libs in government decide on a faster reduction...you better be prepared as I can assure you low income earners wont be contributing much (Australia’s shocking budget mess, November 12).
In response to X Y (November 12, 12:32 PM) I say it is a bad idea, very very bad idea. Just look at Zimbabwe... they printed and inflation went through the roof and it was cheaper to use the dollars for toilet paper than buying toilet paper. They had to load dollars in a wheel barrow to purchase a loaf of bread. The solution is simple infact very very simple. Call an election. Blast out the ALP and allow th coalition to bring back stability. it worke before it will certainly work again... (Australia’s shocking budget mess, November 12)
Shouldn't that read "Labor's .....mess" ? (Australia’s shocking budget mess, November 12)
It wasn't in a mess when Labor took over the well stocked-coffers of the previous coalition government was it !
Anyway , according to the 'powers-that-be' it seems that due to the NBN we will soon have fantastic new industries to replace all the current dirty and troublesome manufacturing ones and just import what we want.
May as well do away with agriculture as well since we seem intent on selling it off to foreign interests. That will also solve the 'live-exports-problem' with cattle and sheep !
No jobs ! No Problem !
Then we can all sit around playing with computers and downloading entertainment thanks to the wonderful NBN.
Only thing is , it won't be the Australia I thought I was going to live in either !
Agree re: rent seeking (Australia’s shocking budget mess, November 12)
Middle class welfare
Private health insurance subsidy
First home vendors boost
Negative gearing
Motor vehicle industry
Super concesssions
Widen GST to everything, make it 12.5%
Remove all tax deductions
No handouts to any industry
No stamp duty
Lower PAYG and corporate rates to 10% flat
No tax on any income (encourage savings and dividend seeking, term deposits = cheap funding for banks)
Problem solved.
So Hockey is going to leave the costing of the coalition's policies until the last week. Well who is not going to see that for what it is, an attempt to avoid scrutiny so that the black holes are not found. More reason to distrust the business owned political Party. (Australia’s shocking budget mess, November 12)
It is long overdue that voters showed some intelligence and voted in Independents so that both Labor and Liberal came to the realisation that you cannot indefinitely lie to the electorate and be rewarded for your deceitful behaviour and (intentional) mismanagement of the nation economy and interest.
Perhaps both sides of politics can continue to the nation to foreign investors. This is the well worn path and there is pleantly of freehold agricultural land left. So come and get it. Its all up for sale.
Hi Alan
Can you consider an article on the following.
It seems to be that governments keep coming up with new programmes and these need to be funded. However each budget has a large chunk of it booked to past promises so they have to increase the revenue base in order to fund new promises.
It would be interesting to see an graph showing the revenues collected over the last ten years matched to funding commitments, and committed funds - in order to show that spending promises are exceeding revenues and so they have to increase the revenue base.
Is this not pointing to an issue with the Westminster system that requires by convention that any new government retains the policies and programmes committed to by previous governments, thus leaving them hamstrung to fund the promises they made during the election. Inevitably they think of new taxes or increases in taxes e.g. taxes on online purchases.
The answer is total transparency on revenues versus commitments and funding new commitments without increasing taxes. My observation is that yearly debates about the national budget is mute and irrelevant when even before the process starts most of the monies are already committed to.
The nation cannot keep changing policies as it takes time to implement them but at the same time there is a vicious cycle at play where to win government each party issues a whole new range of promises, but clearly cannot fund them without tax hikes.
I would love to see a simple yearly historical statistic from you - how much of each year's national budget was allocated to initiatives more than two years old and what is the budget remaining and how does this compare in dollar terms to new promises (Australia’s shocking budget mess, November 12).