TODAY I HAVE SEEN one of the best arguments on Australia’s debt position in quite some time; argued in The Australian, respected economics writer Judith Sloan points out — compellingly — that without radical action, Australia will find itself in a position no better than the basket cases of Europe.
It’s just a discussion starter today to share a really good article with readers; those familiar with my views know that far from being persuaded that Australia’s debt load is somehow justifiable because it is “low” by international standards, I’m a big advocate in curbing government spending until such time as the debt pile has been paid and retired.
You can access Sloan’s article here. A few observations.
I think the
Communist Party Greens are going to be sorely disappointed if they believe their deal with Treasurer Joe Hockey to abolish the debt ceiling will somehow garner them bargaining chips to cash later for doctrinaire social spending or similar socialist measures: I would argue the two are mutually exclusive.
In any case, the Greens have simply done a deal to restore the operating environment that existed pre-2008 — with no debt ceiling in effect — with the happy consequence that one avenue for Labor to ply its insidious and vapid brand of hypocritical grimy politics is closed off.
Paul Kelly published an excellent piece, also in today’s Australian, on precisely this subject.
Sloan sets out the case for returning the Commonwealth budget under a range of scenarios; all fraught with risks, of course, given the flow-on effects from moving money around the economy, or removing it from the system altogether.
But it’s clear that something needs to be done to rein in the explosion in the country’s debt; as I have said before, debt as a percentage of GDP doesn’t get to 100% if it isn’t permitted to pass through 10% first, then 20%, and 30%…
It brings into focus the priorities of the Abbott government, boxed in to some extent as it is by the ALP in its contemptibility and a hysterical ABC/Fairfax/Guardian media axis that makes shrill demands of total implementation of Liberal Party election pledges — irrespective of how bad the actual state of the government’s books is revealed to be — and acting on threats to raise merry hell if that doesn’t occur.
I think readers know my preference for reform of industrial relations mechanisms in Australia to at least move the “centre point” of the IR landscape back to its pre-WorkChoices position; as things stand, the reregulated labour market, with its rigidity and inflexibility and its hefty pro-union bias, are a huge drag on the economy as it stifles productivity and escalates wages growth well beyond sustainable levels.
(If anyone doubts this, cast a quick look at two heavily unionised companies I will soon be writing about — Qantas and Holden — and then come back and make a credible case they’re in rude, robust financial health. You can’t).
All of this also ties in to the discussion we have had about Gonski, which should be abolished: in its present form, it is an unaccountable waste of billions of borrowed dollars with no parameters around it to guarantee any meaningful results in terms of educational outcomes.
The NDIS is trickier; it costs an awful lot more than Gonski, but on balance has a lot more to recommend it. Even so, I have suggested in the past the NDIS might be a good idea that is simply unaffordable (at least in its current form) and I don’t resile from that view.
Of course, to make meaningful inroads into Australia’s public sector debt will require either higher taxes, reduced spending, or privatisations.
I argue that there’s no scope to ramp up taxation in any meaningful sense; consumers as a whole are stretched and burdened as it is by record levels of government taxation (especially when fees, charges and other imposts levied by the states are included) and in any case, taxing the hell out of people does not equate to delivering acceptable outcomes in return.
How many people view Centrelink as a lean, efficient contributor to the economic welfare of this country, for example? Enough said.
The other two measures, though, are the key: privatising those remaining enterprises no government ought be conducting (Medicare Private, Australia Post, and a host of others) and using the proceeds to pay down debt, whilst abolishing socialist monuments such as Gonski and (reluctantly) the NDIS, along with the renewable energy target, subsidies for things like wind power and solar energy, and the rest of the wasted money pissed up against a post on Rudd/Gillard-era Green schemes designed to mollify the Greens and secure their preferences.
Generally, and as a basic “mud map,” the greater the outrage Abbott and Hockey generate in Greens’ ranks, the better off the country will be: and in any case, if the hard decisions and actions aren’t taken now, it will be decades before they are.
After all, the next Labor government won’t behave with any economic responsibility or conduct itself with anything other than ineptitude: that much is certain.
So by the time the next Coalition government enters office from opposition in, say, 20 years’ time, the damage will have been done; and ALP hacks who apologise for their government’s wasteful, inefficient largesse will indeed be forced to confront Australia’s name near the fat end of the graphs they so enthusiastically circulate to justify themselves, rather than near the bottom of the debt pile where we rightfully belong.
Just some thoughts on two excellent articles. What do people think?