Where you sit is what you see

Glenn Stevens, Retiring Governor of the Reserve Bank of Australia proffered this advice in an address to the Anika Foundation Luncheon in Sydney on the 10th August 2016:

Many difficult choices will need to be made along the path of budgetary adjustment. At present, general public debate starts with commitment to the need for reform and for putting public finances on a sustainable medium-term track. But when specific ideas are proposed that will actually make a difference over the medium to long term, the conversation quickly shifts to rather narrow notions of ‘fairness’, people look to their own positions, the interest groups all come out and the specific proposals often run into the sand. (Italics not in original) http://www.rba.gov.au/speeches/2016/sp-gov-2016-08-10.html

Stevens went on to say:

In Australia, gross public debt, for all levels of government, adds up to about 40 per cent of GDP. We are rightly concerned about the future trajectory of this ratio. But gross household debt is three times larger – about 125 per cent of GDP. That is not unmanageable – but nor is it a low number.

Malcolm Turnbull is running around strutting his stuff about his “omnibus bill” of $6 Billion plus Zombie Budget measures proclaiming that Labor has to agree to every skerrick of it because the Labor Party had announced in its pre-election submission to the Parliamentary Budget Office that it would accept them.

What Mr. Harboursidemansion did not say was that Labor was prepared to agree to some of these measures in order to fund specific policies that Labor wanted to be able to fund whilst still being engaged in lessening the Budget deficit.

In a carping speech to financial executives in Sydney on the 26th August 2016, Treasurer Scott Morrison, laid the blame for the parlous state of the Budget at the feet of young people and welfare recipients. In an attempt to appear even more out of touch with reality than his predecessor’s “end of entitlement” rhetoric, he declared that the country was divided between those who are “taxed and the taxed-nots”.

He went on to warn that:

More Australians today are likely to go through their entire lives without ever paying tax than for generations. And more Australians are likely today to be net beneficiaries of the government than contributors — never paying more tax than they receive in government payments.

Paul Bongiorno on the ABC Breakfast program, in the morning, prior to Morrison’s speech pointed out that less affluent people can’t avoid paying the goods and services tax on most of the things they buy in order to survive and that as a proportion of their income poor people pay far more tax than do their more affluent counterparts.

BuzzFeed’s News Political Editor in Australia, Mark Di Stefano notes that more than one third of Australia’s largest businesses (including Qantas, Apple, Transfield, Lend Lease and General Motors) didn’t pay any tax in 2013-14. http://buzzfeed.com/markdisantefano/morrison-taxed-and-taxed-nots?utm_term.wiva61D3M9#xanBpvwJa4

Oxfam asks “so who are the real ‘Taxed-nots’ ?”

The scourge of Neo-Liberal economics

The last Whitlam budget in 1975, introduced by Treasurer Bill Hayden, heralded the first footholds of neo-classical (neo-liberal) economics in Australian government.  Gradually, but surely the tentacles spread and within a decade Ministers on both sides of the house were taking about level playing fields, slashing protectionism, cutting business regulations, corporatising /privatising government agencies, efficiency dividends, the magnificent efficiencies of private businesses when compared with government run agencies, the need to contract out aspects of government departments and so forth.

The term economic rationalism was the descriptor applied to various neo-liberal economic ploys and scams. The implicit suggestion being that neo-liberal policies were the only rational form of economic theory. Keynesian counter cyclical spending that had helped drag Australia out of the 1930s Depression and helped Menzies avoid the worst of the 1961 recession became an anathema.

On the winding road since 1975, there has been many a twist and turn, but the overall direction has been relentless. The ex-merchant banker, now prime minister, has imbibed a heady dose of neo-liberal economics as have the bulk of his party. They are saddled with Maggie Thatcher’s “There is no alternative” mindset. They don’t see the Rudd/Swan counter cyclical Keynesian style actions that prevented Australia joining the rest of the world in recession, in 2008-9 as good economics. They see it as a cost.

They see social security as a cost, disability services as a cost, health services as a cost and family payments as a cost. To them public schools and universities are a cost. The ridged determination of most, if not all, economic neo-liberals to regard any welfare payment as a cost comes through clearly in Morrison’s Sydney speech to the business elite. They see every welfare measure as wasted expenditure pandering to the slothful, indigent failures of society.

Excessively generous tax breaks for the affluent are regarded as incentives. Hence they are prepared to give away $50 billion in tax breaks to business. Australian Governments already provide the fossil fuel miners an annual subsidy of $17-20 billion. The affluent have obviously a God given right to negatively gear houses and other asset and by way of added further incentives the neo-liberals want them to have subsidised capital gains taxes. Then there are family trusts, tax loopholes, off shore bank accounts and transfer-pricing mechanisms. A lucrative tax avoidance and evasion industry exists to smooth the wheels.

When it comes to superannuation the neo-liberals do not see it as an obscenity that many of the richest Australians receive more dollars in tax exemptions on huge superannuation investments than age pensioners receive in social security payments. The conservatives in the Liberal Party are horrified by the idea that tax-free superannuation should only apply to the first $1.6million in their super account or the suggestion that limits should be placed on the amount of after tax income that can be added to the retirement nest eggs of the affluent. They certainly mean to reassure the top 10 per cent on the income scale that it will be business at usual so long as the liberals can hold sway.

Labor and the Cross Benches

Whilst the Liberals are set upon trying to force conformity with their priorities and refuse to sit down with all the members of Parliament and work out sensible compromises, as Julia Gillard did, then the rest of the parliament should say “Up yours”.

The Liberals have yet to come to the realisation that they did not win the election. They have a technical majority of one in the House of Representatives. No single party won the election. They have no mandate to govern alone.

What the long election campaign established was that many Australians were dissatisfied with what was on offer. For the moment what the leaders in the Liberal Parliamentary Party have yet to realise is that life is like a monkey tree.

Those at the top of the tree when they look down – all they see are smiling faces. Those on the lower branches when they look up – all they see are arseholes.

Written September 2016.