Ten top tips for Treasurer Joe

Dear Joe,

Congratulations on becoming Australia’s 38th Treasurer. You’re following in the footsteps of giants, including Ben Chifley, Harold Holt, Paul Keating and John Howard.

All of these men went on to become prime mnister. Perhaps you could too.

For now, it’s time to focus on the job at hand: overseeing Australia's $1.5 trillion economy. It won’t be easy. Australia’s mining boom is ending and our economy is slowing. The budget is deep in the red and under pressure from the population’s ageing.

There has been a complete breakdown of trust in the public policy-making process from business and taxpayers. And not without good reason. The Rudd/Gillard/Swan era was marked by a confidence-destroying, ad-hoc approach to policy making and an inability to communicate clear messages.

You job is to turn all this around. To get you started, here are my top ten tips for being Australia's Treasurer. You're welcome.

1. Put stability first. You’re about to hear a lot of squawking about the need for urgent reform of the budget. You've made some of these noises yourself. The reality is less exciting. The budget is not in a state of emergency. It is in need, however, of long-term structural repairs. It is your job to stop the constant budget tinkering and restore credible, stable and trustworthy policy making.

2. Make budgets boring again. Budgets are like Christmas – they’re only supposed to happen once a year. We don’t need to have another budget until May next year, which is the ordinary order of things.

Treasury will release a mid-year update this November, which should give you a pretty good picture of the budget. Your job is not to fix the budget in one hit, but to come up with a credible path back to surplus.

3. Take your time. Wisely, you have committed to twin reviews of both sides of the budget, including an audit of government spending and a review of government taxation. Don't rush them. This is our chance to get it right and to put the budget on a more sustainable footing. Make sure you include ALL taxes in your tax review, including the GST. Of course, all reforms create winners and losers.

4. Be honest with us. The Australian public are not dumb. Yes, we are tired of constant changes to the system. But you need to start a fresh conversation with us about what services people can rightly expect from government and what taxes we are prepared to pay to fund them. We're not mugs. We get that the budget doesn't add up. We know this means lower spending or higher taxes. But any tax reforms, such as increasing the GST, should ensure low income earners are not left behind.

5. Consult more with business. Hell hath no fury like a business lobby group scorned. If you fail to  consult properly with business – like the Rudd government on the mining tax and fringe benefits tax changes –  the end result is a business backlash and poorly designed taxes. This doesn’t mean you need to do everything business suggests, particularly on industrial relations. But you do need them inside the tent pissing out, rather than outside the tent pissing in, which is where Rudd kept them.

6. Ignore the Opposition. You are the government now. Wayne Swan and his staff never seemed to quite grasp this fact. They spent time and energy putting out press releases trying to discredit Opposition claims. This is a waste of time and government resources for purely political purposes. Forget them. Focus on your agenda instead.

7. Care less about what the media thinks. Rudd and co were also so focused on winning the daily media battle that they lost the war. Learn from that. Hold fewer press conferences. You don't need to have a presser for every minor statistic and Reserve Bank board meeting. Stop pretending independent Reserve Bank decisions reflect somehow on you. Speak less at press conferences, but say more. The media will try to trip you up with questions about the gross operating surplus and the price of bread. Don’t play the game.

8. Drop the obsession with debt. If you invest in assets that grow in value, debt is okay. Investing in building infrastructure will return dividends for generations to come.

9. Learn to say no to Tony. He’s a man accustomed to saying no, but less used to hearing it. But that’s your job. Peter Costello said no to John Howard and Paul Keating said no to Bob Hawke. Every good prime minister needs a good Treasurer to tell him or her “no”. He'll thank you for it one day.

10. Paint pictures. Being Treasurer is not about being a glorified accountant. You've got guys in Treasury who can add up for you. Your strength lies in your big picture vision. Paul Keating was an excellent Treasurer because he was an excellent communicator. He thought in pictures, rather than numbers. Australians are in need of a convincing narrative about how we will continue to grow our standard of living after the end of the biggest mining boom since the gold rush days.

Your time starts now.

Jessica Irvine is News Corp Australia's economics editor. View more articles at www.jessicairvine.com.au

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Love the tent pissing analogy...think your dad probably told you that one.

The advice should be treasured Joe.

All good women need a good father .......... like!

3 - Get rid of Neg gearing for property. People will say this means get rid of neg gearing for stocks as well but giving money to companies is productive. Buying established houses for a tax break is not.
5 - Consult with a business lobby? A business lobby is a UNION. Why are employee unions bad but employer unions good? Look up the definition of union, the ACCI, BCA etc are UNIONS
8 - Well said Jessica

3 - Get rid of negative gearing and you'll trigger a sudden collapse in housing supply and a rise in rents that hurt poorer people. That's what happened when Keating stopped negative gearing and he had to undo his changes. Do you have some sort of animosity to poor people, Franky?

5 - No, the business lobby isn't a union, Franky. There's no cohesion like that seen in the labour market and very few of the biggest employer group (i.e. small business) are members of industry bodies. Good government requires an understanding of the business community because it's the engine room of jobs and economic growth. When you get a government such as the Rudd/Gillard debacle making enemies of business they close their cheque books - something we don't wish to see a repeat of.

3 - you are factually incorrect. It didn't happen. For every price point fall there will be people who move from renting to buying, me included (eventually though as I still believe that renting is smarter financially). Neg gearing does nothing for housing supply, investors buy established houses, they dont build new ones

I think that is a fair assessment of the past and hopefully our future. Personally I believe it will eventuate, primarily because the Coalition doesn't have the unions looking over their shoulders. Contrary to what a number of people say, unions do have a major influence over a Labor government. The Rudd/Gillard administration was a prime example, purely because a third of their MP's were ex union leaders, not politicians.

Prediction: Joe Hockey will be a failure as Treasurer as he is not a leader.

Remember in the AbbottvTurnbullvHockey leadership challenge

Abbott "No Carbon tax"
Turnbull "Carbon Tax
Hockey "I will show true leadership, I have no opinion, do what ever you would like"

A. Mouse~ Joe only has to do 1 thing...to be better than the Goose ( or whatever KRudd called him)...
That is..don't brag about bringing about low interest rates ( can I make that 2 things....?...ta !!....don't brag about the high AUD).

Seeing as you asked Bruce, Joe is already better than the Goose, purely because he is not him! lol
Just for an interesting point that really has nothing to do with this column, a goose can also be a poke between the buttocks to startle. Hmmm, the name suits, yes! LOL ;o)

Can't agree with dropping the debt obsession Jessica. The debt has to go and the sooner the better.

One of your better articles Jessica.

I think Robert Gottliebsen said once having conducted an overview of the situation, having squared with the people, if a mini-budget is needed.

Then have one!

Read this in the Melb Herald Sun yesterday. Thought it was an excellent article. Both Tony A and Joe H should frame it, hang it on their respective walls and refer to it from time to time to stay in track. That said, I'd also like to see debt come down a little.

To those that want to see the debt reduced, no question it is high. On the other hand listen to those on the left and you would think the debt was manageable and within the scope of debt to GDP. The operative word here is manageable, unfortunately Labor saw taxes as the way to manage debt, taxes on those that create infrastructure and jobs. Removing the MRRT and carbon tax are two examples of Labor's tax regime on business.

I concur with Jessica, remove these aggressive taxes, remove adverse restrictions and regulations placed on business, and make Australia a more friendly place to invest in, and we will see business and consumer confidence soar, and the debt will largely take care of itself. Priorities being the return of confidence, not the debt.

Jessica, you claim the budget is deep in the red (it's actually around 10% GDP which is nothing), that we need a return to surplus (which will kill employment), yet you acknowledge that the economy is not in ruins and urge Joe to stop worrying about debt (a point on which we agree). Contradictory much?

Daniel, the budget is deep in the red, but that doesn't mean it's in ruins. Your comments actually highlights the reasoning behind Jessica's commentary . Labor was fixated on the debt, and not so much recovery of the debt. You focus on returning domestic and international confidence in Australia, the debt will go a long way to fixing itself.

You mentioned the GFC, Australia had 6 months of negative growth over an 8 month period, 3 months of consecutive negative growth constitutes an official recession. Fortunately for Labor the stimulus packages, which you refer to in steering us through the GFC, produced less then point 1 of a precent positive growth, blink and you would miss it. But with due respect it did the trick, it allowed Swan to crow on the world stage. Recessionary trends however are not just based on a countries economic credentials, discussions I have had indicate that Australia most likely did suffer a recession, it just wasn't official.

As far as the AAA credit rating goes, Australia has, and I believe is still being monitored. Swans last budget wouldn't have helped, a deficit, with the deficit revised upwards twice in a few months. And we all know how he fudged the figures to produce a surplus in 2011/2012. If we continue with deficits, it would almost be a certainty that we would loose our AAA credit rating.

Anyway how will a return to surplus kill employment, did Swan tell you that! I don't think that's true. And you talk about ethical standards. Why do you think Labor got themselves into so much trouble, come up with a new beaut policy, then go to treasury with the costing telling them to match it with a revenue figure. Like signing an unconditional contract to buy a million dollar home, then find your financials will only allow the bank to lend you half a million. You bring pressure to bare on the bank to approve your loan, and when the loan over, blame the bank, and everyone/anything else but yourself.

So tell me what do you think journalists should have done.

I completely disagree that the budget is deeply in the red. What nobody seems to be talking about is the level of private debt. The government, opposition and media need to recognise that government debt to GDP is at all time lows (10 - 20%), while private debt to GDP is at all time highs (150%). Once this is recognised all the fear mongering and calls for a government surplus can stop and we can get on with rectifying the imbalance. How to get private debt into the medias spotlight, and why is it not already in the spotlight baffles me.

The govenment needs to cut taxes, borrow, and start investing in infrastructure programs that will lead us into the future.

Your assesment of our AAA is purely speculative, I don't see any substance in your argument.

As for journalism I might be wrong but I thought their job was to report the facts as objectivley as possible. What passes for journalism these days appears to be largely personal opinions.

And what is GDP?

Total economic activity divided by population. Who owns the capital? Where are the returns going to?

What abt State Debts?

You make a good point, averages are often skewed, some sort of median indicator would be better, but I'm not aware of one.

States as they exist would do well to maintain a more ballanced budget because unlike the fedral governemt they most certainly can default on their loans. However with credit being so inexpensive at the moment I would advocate borrowing to spend on low risk investments, if it means bolstering employment. If they cut too much we could slip into some pretty nasty times.

"... Australia had 6 months of negative growth over an 8 month period, 3 months of consecutive negative growth constitutes an official recession." Hey? Were you looking at US figures or something? They were in recession for six quarters (in a row). We came nowhere near recession. Our GDP figures are quarterly (US is monthly). Two consecutive quarters of negative growth is the usual technical definition of a recession.

Actually, I was looking at the annual growth figures for the US. Quarter by quarter, they had four consecutive quarters of negative growth (from 3rd qtr 2008 to 2nd qtr 2009) and 5 out of 6 quarters (1st qtr 2008 to 2nd qtr 2009; 2nd qtr 2008 was positive).

Be kind Danile. Jessica's articles are often an island of common sense in the putrid ocean that are the News Corp tablolids.

The debt hawks here will never agree with her or me, but we are at a brilliant point in the interest rate cycle for the government to borrow to build quality infrastructure on the back of the AAA credit rating - they will never be able to borrow as cheaply as they can now for at least another generation. Yes, we need to pull our heads in as far as borrowing for consumption is concerned, but the idea espoused by some people here that all debt is, ipso facto, bad is ludicrous. This country, and its biggest businesses would never have been built without it.

Island of common sense or sea of confusion? In one breath she advocates cutting spending and raising taxes, while in the next it's borrowing for investment.

No confusion Daniel - she's clearly saying that consumption spending should be cut, or income raised via taxes, but is an advocate for investment spending. Most of us structure our lives that way if possible....it's how most of us bought and paid for our houses for instance.

But a nation is not like an individual. It doesn't have a forseeable expiry date before which debt needs to be paid down. Furthermore how do you distinguish between consumption spending and investment spending? The two are inherently interconnected and not simply separated. The government needs to spend right now and take some of the debt burden off of the private sector. It's our turn to save some money and deleverage.

Tip number eleven
Scrap the PPL scheme and use the money for Infrastructure that will reduce our costs, improve business viability and reduce Greenhouse Gas emissions. That includes scrapping the baby bonus. There are too many people on the Planet already.
We have abundant resources. We need to allocate some for our benefit.

If Hockey has the misfortune to read Jessica's article, he can only consider it pandering and condescending.

I don't doubt that he needs the advice, but as he will hold the second highest elected position in government, he would be embarrassed to be lectured to like an undeerperforming school boy.

But who knows - perhaps the Murdoch press is required reading for the Libs?

On balance a very good article despite some of the nit picking above.

4. Be honest with us.
He has just finished a 3 year run telling us we have a budget/interest rate emergency. I hink this point is a little forlorn.

He has been honest in saying that constantly spending beyond our means is dangerous - particularly when we're borrowing to buy junk like Labor has been doing. It's a refreshing change from Labor saying that all is well because there are worse countries in the world like Greece.

Ballooning budget deficits and debt have been heading in the wrong direction while at the same time our terms of trade have fallen from their highs. That does create a huge problem in weaning ourselves off Labor's debt-fuelled mismanagement. Fortunately, this new government has both the determination and ability to slow the debt before it can be repaid.

He should have told this to Howard before he went on biggest spendathon in our history winning IMF accolade as most profligate Government in our history twice. The only one to achieve that distinction. Rudd/Gillard/Rudd are first rate savers in comparison. Don't see any negative awards from IMF for them in fact if my memory serves me Swan got award for Worlds best Treasurer and we got high praise, Australia, for the way we got through GFC. So lets stop trying to rewrite history to suit a load of bulldust from Abbott and Co on the economy which even Arthur Sindonis on the ABC Election coverage confirmed was a economy in extremely good shape.

That is good advice telling Hockey there isn’t a budget emergency and to drop the obsession with debt, which is what the Coalition kept going on about in opposition. The Labor government had simply been conducting normal fiscal policy in a downturn.

4. Be honest with us. That’s a good one. Some changes will be required in that area from the Coalition.

The new opposition will be hard to ignore, especially on things like carbon.

Not sure about 7. Might not always been compatible with 4. I think the public will want to know what’s going on.

I would agree with Richard M, above, about a no. 11.

11. End negative gearing

12. Raise interest rates

Well done Ms Irvine, I always find your articles to be sound and balanced and that is a rare commodity these days.
You've provided some excellent advice, so I hope Mr Hockey can look past the slightly condescending tone (if politicians can't treat us like adults they should expect some of the same in return),

honest Joe you said that low interest rate was a bad sign and that we all should be worried.. If that was the case then. when Paul Keating had interest rate at 18% you said the same