MYEFO: Labor Must Pull Its Head In – And Get Out Of The Way

TREASURER Scott Morrison’s Mid-Year Economic and Fiscal Outlook shows falling revenues and rising debt, but Australia will keep its AAA credit rating despite recession risks; the Coalition may be too tactically inept to hold the ALP to account for damage it caused in office and now perpetuates through Senate obstruction, but unless its aim is to win power in Australia by first wrecking it, Labor must pull its head in, and let the government govern.

The Mid-Year Economic and Fiscal Outlook (MYEFO) released by Treasurer Scott Morrison today (and you can read some of the coverage of it here and here)  paints a slightly rosier picture than many observers (myself included) might have expected; despite falling revenues and increases in both deficits over the next four years and overall government debt, Morrison’s projections nonetheless show the budget remaining on track for a return to surplus in four years’ time.

They have also elicited firm indications from all three of the international economic ratings agencies that Australia remains in a sound enough position to retain its prized AAA credit rating, and to be completely blunt, this news will devastate Labor types, who have spent three years talking Australia down and virtually daring ratings agencies to downgrade its investment rating, in a perverse approach to chasing cheap political gain through national misfortune.

In this sense, today’s announcement is a wake up call to the Labor Party under the charlatan Bill Shorten, which flatly refuses to permit the Coalition to fix the damage the Rudd/Gillard government inflicted on the national finances in office through its obstructive marshalling of anti-government forces in the Senate. More on that later.

But whilst the proof will be in the pudding with MYEFO — as is usually the way with these things — Morrison’s announcement, despite the histrionics and hysterics of shadow Treasurer Chris Bowen, is little more than a minor tweak on the figures presented at budget time. Barring anything unforeseen, or a second consecutive quarter of negative growth in February confirming a recession, there is very little that is exceptional in today’s announcement.

Government spending falls slightly, from 25.8% of GDP to 25.2%, as do both employment growth and GDP growth; Morrison is forecasting that no recession will hit Australia which — given the 0.5% contraction for the September quarter was at the upper end of expectations — might yet prove rather heroic.

Nett debt is forecast to peak in 2020-21 at $364bn, which in raw terms equates to gross debt of more than half a trillion dollars; in historic terms, this is a national embarrassment, for in my view it doesn’t matter how well able to service debt the country might be, borrowing to fund recurrent government spending is the wrong kind of debt altogether, and produces no lasting economic benefit whatsoever.

In short, the country should be living within its means. It still isn’t.

And the $1bn+ that will continue to be shelled out every month, in perpetuity, to service that debt would pay for an awful lot of schools, and roads, and hospitals, and dams, and railways if it wasn’t going to line the pockets of international financiers: a fact seemingly lost on Labor, which seems hellbent on stopping the Coalition from balancing the budget through Senate shenanigans for as long as it is physically able to do so.

But the real story here, yet again, is that three years after the Coalition took office with an explicit mandate to fix the federal budget, Labor — in cahoots with its favourite whore, the Communist Party Greens, and other undesirables in the Senate — apparently remains on a mission to prevent precisely that, using various fatuous semantic formulations (such as “fairness” and “cruelty”) to justify its brazen actions in allowing the budget to still be haemorrhaging red ink.

Make no mistake: the Global Financial Crisis is over, and whilst nobody blames Labor for the GFC (even if its response to it was overcooked), the only reason the Coalition has been unable to deliver a surplus budget by now, or to start paying back government debt, is that the insidious Shorten simply refuses to permit it to occur.

To be clear, the Coalition has deeply entrenched shortcomings that don’t help; the woeful inability to sell anything or to frame a convincing narrative for mass public consumption is one of them. The utter inability to pin Labor’s economic vandalism squarely on Shorten, and force him to carry the can for his actions, is another.

But Labor seems content to try to destroy the economy from opposition in is mad lust for power at any price, and whilst that might sound harsh, it’s the only logical conclusion to draw from its behaviour in the Senate. The ALP is prepared to wreck Australia for the criminally petty reason a majority of its people had the temerity to vote it out of office.

The exceedingly low level of regard in which most Australians hold politicians of all partisan hues is increasingly well deserved, and is starkly illustrated by the fact that at the election held on 2 July, almost a quarter of voters cast a ballot for candidates other than the major parties in the lower house. In the Senate, the figure was 35%.

Quite aside from ALP recalcitrance in the Senate — the masquerade of “principle” that is really a fulsome expression of contempt for Australia’s national interest and the betterment of the people who live in it — there are all sorts of other things Labor has done, now and in the past, that feed into the numbers Morrison has released today.

The “booby-trapping” of the federal budget, for instance: a reprehensible scheme cooked up on Julia Gillard’s watch as Prime Minister to load the federal budget up with so much new recurrent spending as to render the budget unmanageable, and that wouldn’t appear on the books until Labor was safely out of office and able to cast indignantly righteous stones at the Liberal Party.

Or the final year of the so-called Gonski education money, which was set to exponentially inflate the Commonwealth’s obligations to the states and which was (rightly) abandoned by the Coalition under Tony Abbott.

Or — with an eye on economic growth figures that are now decidedly treacle-sluggish — the Fair Work regime instituted by Gillard, in payback to the unions for bankrolling the anti-WorkChoices campaign that swept Labor to power in 2007, which has introduced rigidity and inflexibility into the labour market that is now flowing through to tepid employment growth and diminished returns from the small business sector.

And all of this is before we even get to the blatant Labor lies about Medicare being privatised, which would be the most disgusting campaign tactic ever pursued in Australia were it not for other Labor schemes (such as sending fake firefighters to polling booths, and calls from “nurses” to scare hell out of people) to rival it.

It’s little wonder people have nothing particularly nice to say about politicians when this kind of thing is symbolic of their best performance: and whilst the blame in this case lies at Labor’s door, the average voter simply dismisses both sides with a “pox on both your houses” mentality — and is increasingly turning away from the major parties as a consequence.

If Labor truly believes it is a force for responsible government, it has a very big opportunity now to prove it.

If the Liberal Party and its prescriptions are wrong, they will be seen to be wrong, and aggrieved voters will have another opportunity to vote them out of office at an election that could be no more than 18 months to two years away, courtesy of the double dissolution that was held in July. It isn’t as if Labor has to wait for decades for another shot at the title.

But if there is to be a clean fight, and the Liberal Party made to account for what the ALP blathers is “unfair” or “cruel” or whatever other diarrhoea Shorten cares to verbalise, Labor has to get out of the way — and allow the Coalition’s budget repair measures to pass the Senate.

Average voters, in contrast to the way Labor treats them, aren’t stupid: they are capable of making their own judgements and their own decisions, and they should be able to make decisions based on how a particular program works once implemented rather than on the basis of distorted and hysterical screeching about what might happen if the ALP wasn’t there to stop it.

And if Labor isn’t prepared to do that — to let the government pass its budget measures in full — then perhaps we are having the wrong conversation altogether; maybe we ought to be talking about how to reform the Senate in a way governments are able to actually govern once and for all.

Or if that simply proves impossible, about abolishing the Senate altogether.

 

 

Keating, GST, Spending Cuts, And A Budget Debate Worth Having

THE TARGET may be awry, but its objective is not: former Prime Minister Paul Keating yesterday said government spending could be slashed by $90bn per year — or 20% — to fix the federal budget without endlessly lifting taxes; Keating is not only right, but his words are a siren call to the spineless minnows on all sides of politics who live in perpetual fear of electoral doom, lest efforts to rein in haemorrhaging red ink produce so much as a single loser.

It really does say something — and render horrific judgement in passing on the 226 individuals sitting in elected sinecures in Canberra, along with their thousands of mostly useless advisers — that the clearest message to date on fixing the stinking mess that is the federal budget should come from a former Prime Minister booted out of office 20 years ago, and whose heyday and (deserved) reputation as a reformist Treasurer was at its zenith a decade before that, but there you have it: like him or not, Paul Keating can still cut through the bullshit.

I have been thinking about his remarks yesterday (predictably seized upon by the government and opposition in Question Time to try to bludgeon each other into submission) and they form a useful starting point not just for a debate about how to fix the budget, but also to consider additional reforms beyond that (and yes, I’m talking about lifting and broadening the GST) that keep it sustainable into the future whilst enabling massive cuts across the board in direct taxes and the elimination of some of them altogether.

And in that vein it says something, too, that what I say today will likely never form the basis of any mainstream political party’s blueprint; the ALP, Communist Party Greens, and all the other state socialists who think taxing hell out of everything in sight in order to shovel largesse out to “the underprivileged” as a way to buy elections is the way to perpetuate a “civilised” society will leap down my throat. Those on the Right (or who claim to be) will simply distance themselves from the points I make: for them, cutting into the Labor-woven social spending infrastructure is a path paved with peril, and these gutless types who are incapable of selling an idea (let alone come up with one themselves) will simply dismiss me as a crackpot.

But let’s look at a) what Keating has had to say; b) how his initial $90bn in savings could be redeployed; and c) how this could form just the first stage of a two-step process for comprehensive reform of Australia’s tax system, which is cumbersome, uncompetitive, labyrinthine, and ripe for evasion and abuse.

Keating’s central (and I would have thought, obvious) point is that “what the world pays us” — i.e. the proceeds from exporting things like mineral commodities — has fallen, which in turn is eating into both personal and company tax receipts, and that rather than simply jacking up taxes in whatever way possible to enable the shortfall to be covered, cuts in spending are the logical and requisite path to budget repair.

Too much has been said, on both sides of the political divide, about whether Australia has a “revenue problem” or a “spending problem” and it should surprise nobody that both sides are capable of producing immaculately sourced and referenced statistics, pie graphs, bar charts and other impressive-style (but worthless) paraphernalia to “prove” their case and debunk that of their opponent.

But as a small-government conservative with a philosophical distaste for the idea that government not only knows better than its citizens but that it should be the arbiter of what monies are spent and where, it is hardly a generalisation to suggest that too much of the money doled out by federal governments is tax revenue being stolen from the Australian public and abused in the form of electoral bribery that is tantamount to institutionalised corruption.

Federal governments pay for “black spot” road programs in local council areas in which they have no road funding responsibilities. They promise a few million dollars to help revamp a local sports stadium. They cough up $10,000 to first home buyers for a grant that makes minimal difference these days to the affordability of housing but which still soaks up billions in outlays. They provide funding to propaganda-peddling groups like this one that ought to be community-funded (or not exist at all, ideally). They gift money into low-income earners’ superannuation accounts, from a defunct tax that raised no money, for no other reason than to bribe to poor.

On and on it goes.

This is a problem that has existed for decades, but which has really taken on a life of its own in the past 20 years: ever since the Howard government introduced modest levels of so-called “middle class welfare” which in themselves have driven up the costs of everything they were meant to alleviate — the home owners’ grant is a case in point; the “baby bonus” is another; there are plenty of others — and all of it, all of it, is money taken from Australian residents and citizens to be arbitrarily pissed up against a post in whatever politically expedient fashion best suits the government of the day.

This country is in real — perhaps where its fiscal arrangements are concerned, existential — trouble, unless drastic steps are taken to bring the avalanche of unaffordable and unjustifiable spending to a shuddering halt; I’m politically pragmatic enough to acknowledge that there are limits to what might be done, and that any systemic program of cuts is more likely to be a process rather than some wham-bam-thank-you-ma’am king hit. But unless that process starts very soon, the prospect of fixing Australia’s debt and deficit spiral may well evaporate altogether.

But to go down the path Keating alludes to (and to which I’m a ready subscriber), whoever forms government in Canberra will need a few attributes that are conspicuously lacking at present: ideas that target the problem at its core, rather than reshuffle it and perpetuate it by creating “new” spending from “identifying savings” in a zero-sum game. The ability to communicate and sell those ideas in the form of policies to an understandably jaundiced and cynical electorate, which has rightly come to expect nothing from politicians in order to avoid disappointment. The backbone to take risks, to make decisions, and to pursue policies that are actually right in the knowledge that inevitably, some people will lose out. And above all, the intellectual honesty to concede publicly that governments of both political stripes have been playing fast and loose with taxpayer cash for decades, and to admit that the vicious spiral of largesse simply has to stop.

Keating talks of sitting in the Expenditure Review Committee for 10 hours per day for ten weeks of the year, looking for ways to cut government outlays and in the process slash government spending by 6% of GDP: this is exactly the approach that must be taken now, with spending running at or near historic highs. So much is now handed out by the federal government for no credible reason that Keating’s target of $90bn in annual savings should be a cinch: his target figure might be awry to whatever degree, but the sentiments and objectives that underpin it are not.

If it means a whole lot of people all lose a bit here and a bit there, then so be it; they will also get something back, as I will discuss shortly. But government isn’t meant to be your big brother or your nanny, who gives you cash and tells you what to buy with it, just like it shouldn’t tell you what to say or think or do. Government in Australia is guilty of doing all of these things, and it’s time it stopped.

So without bogging down in the minutiae (which in any case is impossible: I don’t have thousands of hours to go through the budget line-by-line on my own time), let’s accept the Keating figure of $90 billion per year is correct.

Remember, at this point, we’re talking about $90bn in expenditure cuts which won’t affect revenue in any meaningful sense; for the purposes of my point, we’ll divide that $90bn into three chunks.

The federal budget deficit is currently running at about $45bn per year: the first half of Keating’s $90bn in spending cuts eliminates it altogether. Hey presto, the budget is balanced, or even slightly in surplus over a four-year estimates period.

Of the remaining $45bn, half of it every year should go directly to paying down the principal component of Commonwealth debt; in 15 years’ time, the government debt pile is approaching zero (or, if it’s possible to renegotiate those obligations, combined with ongoing reductions in interest payments, it may in fact have reached zero). The progressively falling interest on the debt is a secondary source of budget savings that will grow over the 15 year period as it did during the Howard years.

My reasoning in setting this out over 15 years is simple; the debt burden we face today — accounting for inflation — is roughly double what the Howard government inherited in 1996; it stands to reason that it will take roughly double the time to get rid of it if the hard calls on cutting spending are made. Many people remain blissfully unaware that whilst the Howard government left the Commonwealth debt free, that milestone was only reached in late 2004: almost a decade after the Coalition was elected. 15 years to get rid of some $400bn in debt in today’s dollars seems a realistic timeframe.

The remaining $22.5bn should simply be handed back to where it came from: the taxpayer.

With such a large amount of money to play with, big changes that would otherwise be prohibitively expensive become possible. The tax-free threshold could be lifted from $19,200 to $25,000, for example; that $50 per fortnight everyone clamoured to have added to pensions and unemployment benefits a few years back might be possible. The PAYE tax scales could either be indexed to end the scourge of bracket creep and/or flattened, thresholds lifted, or the rates reduced. The options are almost endless. But for the whole thing to become possible, a government must first find a spine: and an opposition (in the present circumstances probably a forlorn if not utterly pointless hope) would need to behave responsibly, and desist from mindlessly opposing everything simply for the hell of it.

Yet even for those who say the number of losers would be too punitively high to make such a wholesale overhaul possible, I’d counter very strongly that most of those people would get back the money in their own pockets to make the decision to pay for whatever was taken away themselves; this is how it should be, and even if a zero sum game in the end, what we’re talking about — ultimately — is curbing the lethal culture of government being involved in things it shouldn’t be, and empowering people to make their own decisions on how to spend their money.

I would point out that for those who are wont to crap on about “Tory tax cuts for the rich” and similar melodramatic twaddle, I have included measures that would benefit the least well-off in my list of possibilities.

But once we get this far, I think there’s a strong case to go even further.

It is a fact — whether your political outlook permits you to like it or not — that taxes on consumption are more efficient, more sustainable and more straightforward than taxes on income; this is why many countries (not least the economically glittering jewel three hours’ flight east of Sydney and Melbourne) have in recent decades enacted the “tax switch.”

The application of Keating’s thesis, as I have theorised above, is just the first portion of what can and should be a two-tier process for a colossal overhaul of this country’s taxation arrangements.

If I haven’t lost readers just yet (and if people aren’t screaming at me for advocating, once again, a healthy dose of orthodox Tory finance), I disagree utterly with those who claim there is no case or reason not to lift the GST and to expand the base of goods and services it covers.

Most comment on the issue of broadening the GST base notes that healthcare and education should be exempt; I agree, and believe financial services (or at least that section of the financial services industry that applies to retail banking and consumer items like car insurance, home and contents insurance, personal loans and so forth) and residential rents should also be added to that list.

All other goods and services should be subject to GST — yes, that means food too — and as comment in the Courier-Mail observes today, the bulk of the GST burden on fresh food would disproportionately fall on wealthier consumers. There goes the “smash the poor” counterpoint, although in any case, I will deal with that, too, in a moment.

I think the rate of GST should be lifted to 15%; and as consensus seems to dictate, those changes would raise a further $35 billion in consumption tax receipts. A program of closing existing tax loopholes (I mean actual loopholes like deductions, not arbitrary imposts on “the rich” or other ideological gobbledygook) would probably push that pot of additional revenue billions higher still.

In return, the states could abolish stamp duty on residential property and/or payroll taxes; the company tax rate could be cut from 30% to perhaps 25%; PAYE scales could again be adjusted — one of the ideas I’m leaning to here is to align a 25% company tax rate with a 25% PAYE bracket that covers income up to $250,000 per year — thus eliminating the avenue for tax avoidance through incorporation; fuel excises could be slashed; another $50 per fortnight could be added to pensions…and of course, a fair chunk of the money would end up with the states, whose unfunded liabilities to provide health and education services should, finally, be resolved, although I must note that whether or not state governments behave responsibly, and not go on spending sprees with their newfound GST booty as they did in the 2000s with nothing in the end to show for it, is a question for them.

The end destination would be a debt-free federal government within ten years that does not throw money at everything in sight to buy it off: the sort of irresponsibility that will never be excised from electoral politics, I know, but which right now needs to be quite literally attacked with an axe.

It could see people earning less than $30,000 taken out of the income tax system altogether; it would realign Australia’s personal and company tax rates to make them competitive with most comparable countries; it would target more direct aid to those who most need it, whilst studding the system with incentive and reward for effort at the other end; and it could render redundant a raft of state taxes and charges that might be incremental in scale, but which all add up to overrun the capacity of the individual to make ends meet.

These do not need to be complex arguments, and if set out clearly and logically, do not need to sound the death knell for any party proposing them.

Indeed, I may have been a little muddled in recording my thoughts and I apologise: one, it’s already 3am and I’m tired; and two (and more to the point), I’m very passionate about this stuff, and the temptation to let it just to flow into print is one I have to temper with oversight of what the reader will see. Sometimes, that gets to be a difficult line to navigate.

One thing I would like to emphatically point out is that I have refrained from ripping into either major political party today, and to the extent I have criticised, both sides have received a bit of the treatment: today’s post isn’t to score political points, although it is obviously an expression of conservative economic principles. I just wanted to run with Keating’s comments, and apply them to some ideas for real tax and budget reform that are positive in outlook even if the hard political courage and determination to enact them is in short supply at present.

But were a program like this to be set out as a two-term economic reform strategy by, say, the Turnbull government — with the first stage presented to the electorate this year, and the second subject to a further mandate three years hence — and were that program explained clearly, sensibly and logically, and capably sold by the government’s communications people in the proper execution of their duties, then I think the reservoir of public support would run very deep indeed.

What do you think? I didn’t come down in the last shower, and I have been around politics long enough to comprehend just how hard this kind of fundamental change can and would be to implement.

But with one eye on the country’s problems and the other on the Senate (and how to get control of it at an election, or close enough to it to render it functional), if anything could kill both birds with the one stone, I think an integrated tax and budget management package along these lines is almost certainly it.

 

Big Labor Spend-Up From Empty Coffers On Gonski, NDIS

JUST IN TIME for an election at which bribes, fear, empty populism and reckless irresponsibility collectively offer its only viable path to victory, Labor has wheeled out a stunning double whammy of almost $100bn in uncosted, unfunded promises and the arrant stupidity of its pious, self-important, utterly useless former Treasurer Wayne Swan to sell them. Plenty of options exist for Australians to vote for. Labor does not deserve to be one of them.

Here’s a fact: there is not some bottomless well of money for governments in Australia to plumb and throw largesse from like confetti; there never was.

Here’s another fact: there is an endless list of things political parties would like to promise to give voters if they win elections, and endless lists of things voters want from governments if they do: some of these are undeniably worthy; some are dubious, designed to buy off sectional constituencies depending on political stripe; and some are simply downright ridiculous.

But the kicker in this short statement of facts is that with gross government debt now approaching half a trillion dollars — or almost 40% of GDP — over the four-year budget outlook period, this country is no longer one whose debt is “low by international standards,” as ALP politicians like to proclaim; debt at 60% of GDP reaches the lower outskirts of the structurally unsound economies in Europe, whilst debt at 80% of GDP lands squarely in Eurotrash territory that sees several of those economies unable to fund their way out of chronic debt and borrowing.

Here in Australia, we have gone from gross debt levels of -5% of GDP to almost 40% of GDP in less than a decade. It’s now just a virtual hop, skip and a jump now until we hit real trouble: the sort of Armageddon the Liberal Party warned about prior to its return to government, and was ridiculed by the ALP for its trouble.

But just in time for a federal election at which dishonest, unprincipled and magic pudding money management offer its only viable option to puncture the apparent Turnbull juggernaut, the ALP yesterday dusted off its cudgels over two of its most beloved — and least affordable — relics from the Rudd-Gillard-Rudd era, with “leader” Bill Shorten promising to sluice $37 billion in new spending around the education system over the next decade if it wins office, and its insidious, contemptible standard bearer for maladministration and unaffordable largesse getting out and about again in the form of one Wayne Maxwell Swan.

Swan — for the negligible value he represents in Australian politics beyond being a Labor machine henchman — has been spruiking the tired and deluded fantasy of his adequacy and skill as Treasurer, insisting that the National Disability Insurance Scheme (set to cost $22 billion per year within eight years) was left fully funded by the ALP in office: it wasn’t, and as this column said at the time, the “transitional” arrangements put in place were only ever enough to cover part of the start-up phase, and initially until 2018.

It took months — and a change of government — for the true eventual annual cost of the NDIS to be revealed, the original figure of $8bn declared by Swan having been comprehensively shown to be a gross understatement; so desperate was the ALP to conceal the true cost of the program before voters kicked it out of office, it was “sold” on a claim its cost was only a third of the true figure.

But Labor, despite its machismo about being responsible managers of money, was more concerned with sabotaging and booby-trapping the budget at that time to render it completely unmanageable by an incoming Liberal government than it was by any genuine regard for the lot of disabled people.

You’d have to say that that dubious project, against a backdrop of entrenched $50bn annual deficits, was an unqualified success. But remember, Swan was the man who, in tandem with former Prime Minister Julia Gillard, was party to no fewer than 600 solemn pledges of a budget in surplus under Labor, even going so far in 2012 to talk in Parliament of “the four years of surpluses I announce tonight.”

Needless to say, no surplus ever materialised.

But just like a solitary swallow well before the Spring, Swan has decided to emerge from whatever hole he has spent three years skulking in to proclaim that NDIS costs were covered for an initial ten years when he was Treasurer, despite independent Treasury advice to the government that from this year it would be forced to find an extra $5bn per year to cover them over and above the funding already legislated, rising to $11bn per year by 2022.

The pot of money that was supposed to pay for the NDIS until 2018 is already exhausted, which is no surprise given the growth in people accessing welfare provisions for disability has continued to balloon under the Coalition, which — remember — has been prevented by a ragtag assortment of ALP, Communist Greens, Palmer (and subsequent stand-alone troublemakers) and other crossbench Senators from passing almost every budget saving it has tried to legislate in a desperate (if to date misdirected) attempt to push public finances back onto a sustainable footing.

In other words, the NDIS wasn’t fully funded when Labor left office, a situation compounded by the fact that measures attempted by the Liberals that might have made it so now have been relentlessly voted down in the Senate. Rises in the Medicare levy to 2% and then to 2.5% were only ever a fig leaf (and I said that at the time, too).

But this doesn’t bother Labor, which credits average voters with such absolute stupidity as to be queueing up to bombard them anew with — you guessed it — more unfunded, unaffordable spending measures, with solemn (albeit meaningless) statements of fiscal rectitude and promises that every cent of the proposed new money is paid for.

Warming to this irresponsible agenda, Shorten recommitted the ALP this week to fully funding not just the final two years of spending contained in the Gonski report commissioned by Gillard — which Labor failed to legislate, and which the Coalition was upfront about its refusal to pay for before the last election — but to go further, committing the ALP to $37bn in new education funding over a 10-year period in the unlikely event it wins government later this year.

According to Shorten, the outlay on education was “in the black” on account of increased taxes on tobacco consumption, increased taxes on superannuation, increased taxes on multinational companies, and abolishing the (unexpectedly successful) Coalition policy on Direct Action to combat emissions growth.

Taxes on tobacco are likely to impede Labor’s ability to win an election, disproportionately impacting its own lower-class electoral bedrock as they do; taxes on superannuation will push more self-funded retirees onto at least partial pensions as their ability to support themselves in retirement is eroded, wiping out any savings this red herring might deliver; and taxes on multinationals is a hoax currently being used by left-wing parties not currently in government everywhere in the Western world to hoodwink voters into believing there is something grievously amiss with the sector that provides hundreds of thousands of jobs. There isn’t.

Just this week, ultra-socialist British Labour leader Jeremy Corbyn was singing from the same vinegar-stained songbook about Google in the House of Commons as Shorten does in Australia; no concrete details of how this purported crackdown might be effected were given, of course — because it never will be — and no explanation for why, when Labour held office in the UK for 13 years until 2010, no attempt to fix the “problem” was made in government.

New Canadian Prime Minister Justin Trudeau used the same tactic ahead of his election win late last year but of course, now ensconced in office, any mention of “forcing multinational companies to pay their own share” has predictably evaporated.

And so it is with Australian Labor, which didn’t do anything to remedy this alleged outrage of public administration of the business sector — under the astute and competent stewardship of the nation’s finances by Swan, no less — and won’t if, God forbid, it should ever win another election in this country.

But the grab bag of taxes doesn’t end there, with Labor committed to reintroducing not one carbon tax, but two, if restored to office: and with its flat refusal to countenance the cutting of so much as a cent from lavish social expenditure programs that might or might not be worthy, but which simply can’t be justified at a time the budget is haemorrhaging red ink in the tens of billions of dollars per annum, only a fool should believe that a Labor government would usher in anything less than unprecedented, massive, and crippling new taxation measures to pay for it if it makes any attempt at all to balance the budget.

Which, of course, it won’t: responsible economic management, with the partial exception of the Hawke-Keating years, simply isn’t the Labor way.

And anyone who believes Shorten’s latest protestations to fiscal prudence — based on the extremely dodgy nature of his “revenue” measures and on his party’s record in office — should seek urgent psychiatric assessment: the re-emergence of Swan to help hammer out the Labor message in this regard merely underlines the point.

I have been attacked, viciously, for merely suggesting in this column a re-examination of the arrangements for the NDIS and a recosting of the program to look for efficiencies whilst not compromising service delivery; any single social spending program whose first-up slated operating costs are $22 billion annually simply must be capable of yielding several billions of dollars in annual fat without compromising its objectives. But even the mention of looking for savings in a scheme that is a Labor sacred cow is jumped on and disgracefully attacked as somehow an attempt to cast disabled people into abject poverty.

Those attacks, of course, are horse shit, to use the vernacular: but it’s as bad as that when any fair consideration of Labor’s economic responsibility is considered; you can’t even look for ways to deliver the same outcomes for less money without being screamed down as a nasty bastard.

As for education — which isn’t a federal responsibility anyway — the problem far transcends the want of some $37 billion magic pudding handout, and goes to the heart of Labor’s sheer ineptitude in a portfolio it arrogantly and misguidedly insists it owns.

Labor was in office in every state and federally in the late 1980s and early 1990s when the university entry requirements for teachers’ courses were drastically lowered, admitting an army of candidates with severe deficiencies in literacy, numeracy, and critical reasoning to what used to be a noble profession.

I’d say the role of universities is not to teach kids how to think, but the various “education” faculties across the country seem to do a fine job churning out rounded little socialists on a mission to brainwash upcoming generations with their insidious socialist pedagogy.

Once ensconced in classrooms, these teachers — not all of them, mind, for one of the travesties of Labor’s education legacy is that the reputation of good teachers is sullied by the ranks of the incompetents infecting their midst — have presided over the steady fall in educational outcomes that has seen Australia’s international standing as an education nation slip from among the world’s best to the middle of the pack. and have directly facilitated an entire generation of kids that is mostly defective in reading, writing and basic arithmetic: not coincidentally, the same defects as those who should never have been admitted to tertiary teacher training courses to begin with.

Because of the diminished calibre of teachers in the overall pool, it is difficult to justify the continuing employment of a rising number of them on the grounds of merit, performance or outcomes: and also not coincidentally, this has seen teacher unions grow in relevance to the point it’s difficult not to rank them among the nation’s most powerful, if not the most powerful.

Simply throwing money at this problem, in the bucketloads of billions, isn’t going to redress the real problem behind education in Australia: the standard of people entering teaching, overall, is very poor indeed compared to 30 or 40 years ago.

Labor’s education policies are to blame for this — and have created a generation of union-dependent mediocrity that makes it impossible for the best teachers to be paid what they are worth, as the teacher unions insist on equal outcomes for all their members, and which perpetuates an undercurrent of uselessness whose end destination is the generation of Australian kids who simply aren’t equipped by their flawed teachers to face the world when they leave school.

It’s little wonder, when I hear stories of the better state teachers I have known over the years, that so many of them have left the industry, retired early, gone to private schools that pay more for quality hires, or are running specialist and/or remedial private sector educational enterprises based mostly on fixing the faults of state-provided “learning.”

The problem is even further complicated by the fact that to criticise the poor teachers who unfairly sully the fine reputation of the best is to invite abuse from Labor and teacher unions that to criticise the poor is to criticise them all: and this renders the problem impossible to fix. The unions use their muscle to destroy Liberal state governments who try to fix it. Labor state governments, of course, fiddle, but have neither the interest in nor the stomach for slaying the beast their own policies created.

If Shorten, and Labor, wanted to preside over a true “Education Revolution,” biting the bullet and overseeing a root and branch overhaul of the entire Education monolith would be a far better way of doing it than simply throwing money around.

But that’s all Labor knows; tax, spend, tax, spend, borrow, borrow, tax, spend.

In 2016, Shorten Labor is no different, and already, the shamefully irresponsible bribes that only Labor maintains are affordable are already being thrown around, with nary a care as to whether they bankrupt the country, or compromise the living standards of future generations to the point Australia begins to rocket backwards in coming decades relative to comparable Western countries.

Just today, Reserve Bank governor John Fraser has sounded the warning that without budget redress and a hefty cut in the bloated expenditures of the Commonwealth, Australia faces the loss of its AAA credit rating; the consequences of that is that interest on the half-trillion of government debt would rocket, as lending to Australian governments becomes more expensive as global money markets factor in premiums for the risk of default.

There may be a case to argue both Labor and the Coalition are responsible for the mess that must be fixed, but on account of the appearance of $300bn of debt on its watch in government where none existed previously, and more debt-fuelled recurrent spending legislated prior to its defeat — coupled with its stout refusal to allow the Coalition’s savings measures to pass the Senate, content to let the budget haemorrhage, believing this opens opportunities for political attack — Labor is far, far more heavily culpable than anyone could credibly accuse the Coalition.

Some additional material on these themes is available to readers here and here, and it should be noted that — as usual — these articles all come from the Murdoch press simply because the Fairfax titles have published little to nothing where any serious attempt to hold the ALP to account over its incompetence with money is concerned.

There are plenty of options at the looming election for people to vote for; true to type, the Labor offering seems increasingly certain to feature taxes that are either fairy stories or inflict unmanageable burdens on ordinary Australians, whilst promising tens (or hundreds) of billions in bribes that will either never be delivered or which will bankrupt the country.

For those people who actually care about whether the Australia remains a great country in future decades, the ALP is not an option that should seriously be considered as they mark their ballot papers; the risks are simply too great.

And whilst this might mean certain programs are either not delivered or are cut back to make them affordable — even if those programs are, on the face of it, worthy — then that’s the way it must be; the bucket of largesse isn’t bottomless, and there is increasing evidence that it no longer even exists. If it ever did.

Next time Bill Shorten and/or his cronies are in your face promising extravagant spending with supposedly little pain associated with its delivery, readers would do well to bear the points we have covered this morning in mind.

 

Endless Debt Disaster: It’s Time To Hit The NDIS

THE NATIONAL SHAME of a debt peak of $647bn within four years — confirmed by Treasurer Scott Morrison in this week’s Mid-Year Economic and Fiscal Outlook — proves, despite the mixed messages of the Abbott/Hockey era and the inconsequential blather about “fairness” from Labor, that drastic action is needed to stop Australia’s debt crisis becoming a permanent mire. Sacred cows, hitherto regarded as untouchable, must be carved up.

This morning’s post will be a relatively straightforward one, on the run today as I am; in any case, I’m sure the Mid-Year Economic and Fiscal Outlook (MYEFO) delivered by Treasurer Scott Morrison is something we will be discussing, directly and indirectly, at great length over the silly season and early next year, so it’s hardly a subject that needs to be knocked over in one go.

I have been reading David Crowe’s piece in The Australian this morning, and we’re looking at it and linking to it this morning because in my view, so rare are voices of common sense and sanity in the mainstream press where the true state of Australia’s books are concerned that when someone tries to communicate some insight and reality on a mass basis, those efforts should be amplified and reinforced.

It is an indictment that much of the delusional denial and opportunistic deceit the ALP has spent the entire time since its thumping election defeat two years ago is enthusiastically picked up and cheered on by not just the usual suspects at the ABC and Fairfax, but even some at the Murdoch press — slated viciously by Labor and its fellow travellers as some kind of de facto Coalition communications unit — but as MYEFO showed rather starkly, the warnings about a “debt and deficit disaster” and similar formulations that were routinely propagated by Tony Abbott and Joe Hockey were no joke, and no exaggeration.

Make no mistake, it is an indictment not just that Labor was able to spend (borrowed) money hand over fist whilst in office and to legislate tens of billions of dollars of new recurrent expenditure before it was thrown out, but it’s an almost criminal dereliction of responsibility that the Coalition — and the press community — have all but allowed the ALP to escape responsibility for its handiwork.

To be sure, the fairy story fashioned by Bill Shorten and his henchmen — that the ballooning mountain of Commonwealth debt is the fault and product of two years of Liberal governance — has taken root and been allowed to gain traction, and it is to be hoped that Morrison’s tepid effort this week is followed by a more concerted, robust endeavour to sheet the blame home to the ALP, where it belongs, and to till the ground of public opinion to make the tough remedial action that is urgently required acceptable, if not perhaps particularly palatable.

On this count, we will wait and see.

But the point I want to make today is that one sacred cow in particular — the National Disability Insurance Scheme — has hitherto been excluded from any attempt to rein in government spending, and given the relatively piecemeal measures the government announced this week are likely to be jumped all over anyway by a cynical but ruthlessly opportunistic opposition, Malcolm Turnbull and Scott Morrison might as well look at the gold-plated scheme that Julia Gillard and Wayne Swan sucked the Abbott-led Liberal Party into and take careful aim at sustainably scaling it back.

After all, Labor’s own figures suggest this behemoth will add $24bn to budget outgoings per year, every year, once it is fully operational after 2022: this sort of largesse might play well with those attuned to Labor’s smash-and-grab approach to the politics of big spending announcements, but it doesn’t augur well where responsibility, accountability and the efficient expenditure of public monies are concerned.

To date, no meaningful attempt has been made to revisit the NDIS, which in itself is a dereliction of responsibility: the only group anywhere in this country that believes the scheme is fully funded is the ALP.

Anyone who takes Labor Party pronouncements at face value where the expenditure of monies is concerned is, I am sorry to say, a mental case.

And in any case, the booby-trapped budget was an open secret before the ALP left office, so trusting it — and over a colossal sum of money every year, no less — requires the kind of leap of faith that motivates lemmings to jump off cliffs.

In other words, $24bn annually might even be a conservative figure.

There will no doubt be those who think I am heartless for putting the NDIS on the table in the context of budget cuts; as this column repeatedly noted at the time, it’s not the soundness of the concept I question, but the cost — and whether it can be justified.

Labor pilloried Tony Abbott’s own “rolled gold” scheme — universal maternity leave pay — and created so much grief for the Liberals that Abbott was forced first to water it down, and then abandon it altogether.

But the NDIS is off limits. Even just the fact it seems to be “untouchable” is a cause for unease given the vast sums of money in question.

I don”t advocate abolishing the NDIS, although I will reiterate the point that such a grandiose package wasn’t affordable when Gillard and Swan cooked it up, and is even less affordable now.

Yet with the annual budget deficit now effectively running at $40bn per year (and seemingly set to stay there for some years) surely some efficiencies might be squeezed from the NDIS?

Surely some of the gilt edges and gold plating could be prised away without compromising the core objectives of the scheme?

And having pilloried Abbott’s “gold-plated” maternity leave scheme (which in any case was fully funded by a levy on businesses, the merits of that put aside for now) to the point it was dumped, the only discernible argument for the NDIS to be quarantined from savings seems to be that Labor set it up rather than the Liberals.

Oh, and that the Liberals allowed themselves to get sucked into the trap, which — empty blather and bullshit about “compassion” aside — was a very big part of the game Gillard and Swan were playing.

We will, as I said, talk a great deal more about the budget in the coming days and weeks, but the point is that unaffordable adventures — irrespective of how worthy — are a luxury this country simply can’t afford as it haemorrhages red ink as far as the eye can see.

Surely some kind of paring back of the NDIS — either through direct cuts or a savage focus on efficiencies (not creating as many richly remunerated, Labor-aligned public servants to administer it, for example) could leave a scheme that still consumes $12-$15 billion per year, but also tips the better part of $10bn per annum  — or a quarter of the entire budget deficit — back onto the books in one fell swoop.

Fixing the problem of the deficit and the mountain of debt that is accruing will take time. There are no easy options. Nobody likes having their cut of government largesse reduced or eliminated. Yet unless some tough action is taken now, in not much more than another decade, Australia will be as good as bankrupt.

I just wonder, with his mangled rhetoric about “fairness” and the utter shamelessness with which he helped create this problem as a minister in the last Labor government, what Bill Shorten might say by way of atonement to the Australian public if that nightmare scenario should ever come to pass.

The answer, of course, is nothing, for Shorten and his cronies will be long gone.

Such is the opportunity cost for unprincipled wreckers who would mortgage this country’s future for their own political benefit, then skip off into the sunset leaving someone else to carry the can — and yet, reprehensibly, refuse to allow them to fix the problem they had themselves created in the first place.

 

Election 2016: Reprehensible Ineptitude v Criminal Megalomania

WHILST neither is perfect, Australia’s major parties boast rich recent records in government: viewed through this prism, the Abbott government insults the Howard years; the offence given to the Hawke-Keating legacy by Labor — an injury allowed to fester for years — is worse. Election 2016 looms as a contest between the useless and the power-mad lawless. True reform has never been more urgent at a time neither party can propose, sell or enact it.

So it comes to this: a vacant Liberal seat in Western Australia, occasioned by the death of a popular but outspoken MP, has become a de facto referendum on the future of Tony Abbott as Prime Minister; observers on all sides of politics agree that if the Liberal Party loses Canning (or even gets run close in a swing falling just short of the 11.2% needed for Labor to win), then Abbott, in all probability, will be finished.

If it came to pass, would anything change?

I want to talk simply today, without links to external resources, about the fraught state into which Australian politics has degenerated since the Howard government was defeated by union muscle, union money, and a set of tacky slogans in 2007; it’s not unreasonable to wonder whether the Howard government will prove in hindsight to have been the last genuinely competent government ever elected in this country, for the present incarnation of the Liberals in office is dreadful: and any switch to the ALP would prove far, far worse.

As things stand, next year’s election is shaping as one of the most abysmal contests for office Australia has ever seen.

In the blue corner sits the Liberal Party: nominally the party of free enterprise, small business, families, individual opportunity and reward for effort — whilst looking after the needy, and protecting traditional institutions and maintaining strong national defences — the Abbott government has proven simply hopeless, and whilst some of the obstacles it faces (hostile Senate, belligerent unions, and a class-obsessed ALP led by a confessed liar) could be overcome or ameliorated by concerted hard work and properly directed strategies, for a raft of reasons it has opted not to do so.

In the red corner sits the Labor Party: supposedly the defender of workers’ welfare, the ALP long ago was hijacked by a bizarre amalgam of compassion-babbling, bleeding heart, anti-Australian socialist chardonnay drunks in the inner cities and an overriding contingent of militant, lawless, violent unions that dictates the party’s every move and utterance; obsessed with power above all other things and to the cost of sound governance, probity in public office, rigorous policy or the sustainability of living standards for those it purports to represent, Labor today is prepared to trash anything or anyone standing in its way of simply winning power for its own (and the unions’) sake.

As things stand, Labor is likely to win office next year; this is not some short-sighted read of a temporary blip in opinion polling but the end consequence of a Liberal government that has chosen to calibrate itself in a way counter to acting in the interests of those by whom it was elected. The Abbott government, if the ALP returns to power, will be largely responsible for allowing such an outcome to materialise. But the storyline will not end there, for Labor will prove even less conducive to capable government than the Abbott Liberals have over the past two years.

Over the past two years, to continue that thread, the Abbott government has racked up two substantial achievements — the abolition of the carbon tax and “stopping the boats,” both of which fulfilled key election promises (Bill Shorten, take note) — but beyond that, there is little to recommend the government’s record.

It has proven utterly incapable of managing a hostile Senate — to be sure, perhaps the most hostile Senate faced by any government in 40 years, if ever — with no evidence that “strategies” and “tactics” deployed to this end are effective in any way other than the superficial.

It has chosen to negotiate with Clive Palmer — an individual sworn to the destruction of the Liberal and National parties — at the cost of billions of dollars to a budget bottom line that, whilst haemorrhaging, formed one of the unquestionable items the Coalition was elected to fix in 2013.

It opted to introduce a budget to that end in 2014 that deliberately and disproportionately targeted its own supporters, and floating Coalition voters in marginal seats in particular; it followed that endeavour up in May with a small business bonanza that proclaimed the “hard” work of budget repair was over despite most of the previous year’s savings being bogged in the Senate.

It promised moderate labour market reform based on recommendations from the (impartial) Productivity Commission, but ran away from such an endeavour at the first sign of obstruction from Labor and the unions.

It promised to develop options for taxation reform, but squibbed that too, preferring instead to handball the logical solution of GST reform to state Premiers where agreement was almost certain not to be forthcoming (and in the end, wasn’t). But it has acceded to a key Labor demand that the GST exemption for online purchases be cut from $1,000 to zero, despite the move set to cost billions more to administer than it will collect in additional GST receipts.

The federal Coalition appears to suffer from an acute case of “David Cameron Syndrome” — that malaise personified by the British Prime Minister when he was leader of the opposition, and whose attempts to be all things to all people (and refusal to take a firm stance on issues identified as most concern to UK voters) resulted in the failure of the Conservative Party to win a majority in that country in 2010, forcing it into a five-year Coalition with the Liberal Democrats.

As we all know, those who try to be all things to all people (and who seek not to offend anyone) end up pleasing nobody: so it is with the Abbott government.

Its ability to communicate with, or sell anything to, a cynical and weary electorate is virtually non-existent.

As for its legislative program, most insiders I know point to the fact Parliament “has passed x number of bills” and is therefore functioning well; the problem is that average voters couldn’t care less about “functionality” — all they see is a distinct lack of tangible outcomes, and certainly this is the case where anything meaningful is concerned.

And functionality is one thing, but strategy is another: faced with such an obstructive Senate, the Abbott government should have been repeatedly introducing key measures twice — with the objective of having them voted down twice — to accrue a plethora of double dissolution triggers that could form a potent policy suite to be passed at a joint sitting following an election for both Houses of Parliament. Instead, it has just one such trigger (the abolition of the Clean Energy Finance Corporation). It’s just not good enough.

All of this has contrived to see the Coalition trail in every published opinion poll for 15 months — a trend that easily negates any statistical flutter from survey to survey — and whilst Labor leads after preferences were at first built on a low primary vote and a ridiculous dependence on preference flows, the ALP vote now has increased to sit, on average, just below 40%.

In other words, the threat to the Coalition isn’t just theoretical any more, for — even if harvested from a backlash — Labor appears to have rebuilt its support base.

Readers know I have been a persistent critic of the Abbott government: not from sour grapes because I didn’t get a staffing role in it (although that certainly grates) but because it is so frustrating to be forced to watch from the sidelines as basic mistakes are incessantly made, and whilst a solid win in 2013 appears increasingly likely to be superseded by defeat after a single term in office.

But only a sycophant could make the case that this government is travelling well, or that it deserves re-election as it stands: it doesn’t. If “friendly fire” backed by sound political judgement — a commodity in sadly short supply in government ranks — can’t influence outcomes for the better, then such assistance is scarcely going to be offered by its opponents.

Yet unbelievably, the “alternative” is far, far worse than the “best” efforts of the Abbott government.

Labor’s only policy interests are those that either pander to the Green fringe and the lunar Left — 50% RET, double-whammy carbon tax, watering down controls on asylum seeker arrivals — or are driven by class hatred and resentment of success (higher taxes for middle Australia, punitive superannuation changes for self-funded retirees, abolishing the private health insurance rebate).

It remains wedded to authoritarian measures such as media “regulation” (read: state control and censorship) and takes a completely illiberal approach to issues such as same-sex marriage, for which it would ram through legislation with cavalier disregard for public opinion or the conscience positions of elected MPs.

It perpetuates the lie that rampant social spending — even on items like welfare payments, Medicare and pharmaceutical benefits — is sustainable on current trajectories when it patently, and clearly, is not.

It refuses to acknowledge fault for plunging the country into some $350 billion of debt in its last period in office when none existed beforehand, and compounds its culpability by now seeking to hold the Coalition — despite Labor’s Senate obstructionism blocking bill after bill of savings measures — responsible for its own management failures.

It shows unprecedented interest in legislating away freedom of speech and even freedom of thought, whilst stifling and sabotaging debate that features dissenting opinions or ideas — from climate change to asylum seekers and from taxation to welfare, the only permitted voice is the one advocating the plunder of Australia’s economic security to facilitate Labor’s short-term political ends.

It is run, funded and dictated to by the union movement, which now represents less than 15% (or one in seven) of all working Australians — hardly a representative movement at all — and is blinded utterly to the requirement of fidelity in government by the political and social objectives of the unions.

Labor seeks to have a Royal Commission into the unions shut down; it apologises for and dismisses violent and criminal conduct by union personnel; it refuses to allow unions to be subjected to reasonable standards of regulation faced by business; and it justifies extortionate and lawless behaviour by unions on the basis they “represent workers” which — broadly — they do not.

It is “led” by a smarmy, sleazy, two-faced unionist who evaded rape charges on the spurious technicality of the lack of admissible evidence, and who has publicly admitted to lying to cover his dishonest, disloyal, treacherous pursuit of his own petty ambitions.

I don’t want to hear about how Labor’s hit list of chip-on-shoulder “initiatives” amounts to “reform,” because it doesn’t, just as I’m not interested in the raw number of bills enacted being held up as proof that the Abbott government is a good government. It’s not.

On the one hand sits an entity that is crazed by a lust for power for power’s sake; determined to be in charge for the explicit benefit of the thugs at Trades Hall, Labor’s only real election offering is the perpetuation of social spending and bribes to entrench cultures of entitlement, dependency and obligation (and the inclination to vote Labor): I’m not talking about basic services or legitimate welfare needs but the vast extravagances either legislated by the ALP before 2013 or committed to now that are unaffordable even if, like the NDIS (with a $22 billion price tag per year) the fundamental idea is worthy enough.

Prepared to say and/or do anything to anyone to just get into power again, Labor has no moral fibre whatsoever; it excuses illegal actions; it doesn’t care whether or not it lies to the Australian public to achieve that end; and most (if not all) of its zingers and ranting about things that are “unfair” are contrived not in the interests of what is right but solely with an eye to what it thinks will enable it to hoodwink voters and win an election.

On the other hand sits a government that cannot implement its programme, cannot or will not respond to a hostile Senate or an opposition (including the unions) that is lawless, immune to the strictures of competence in government, and out of control; it is stewarded by a cabal of utterly useless advisors whose counsel seems destined to cost the Coalition government; and whose machinations stink of either booting undesired issues down the road and out of sight rather than dealing with them, or the total inability to mount any sort of case to carry debate on the reform agenda that is so critical to Australia’s future — but which has been treated as expedient, secondary, and jettisoned because it is all too hard.

Now, the Abbott government is fighting a by-election in Canning at which it is certain to suffer a large swing against it: the only questions are how big it is and whether it’s enough to tip the result Labor’s way.

If the Liberal Party wins, Abbott could be gone within days anyway; if the ALP wins, it will crap on about the result pointing to the “national embrace” of Bill Shorten and Labor when, even if Labor wins the election next year, it will be an endorsement provided through clenched teeth and with a peg on voters’ noses, and not made from any sense of affection or excitement.

But if Abbott is replaced, the Coalition now faces another potentially mortal threat — time — and the fact that its supply of this commodity isn’t just beginning to run short with an election due in one year, but that it has squandered through inability and ineptitude two-thirds of a three-year term already.

The price of misguided loyalty — which is the root cause of the Liberal Party’s political troubles — could be a high one indeed. The virtual uselessness of the Prime Minister’s Office as a political spearhead is something we have assessed repeatedly over the past year. Another sign of it emerged this week, with the spectacular fall from grace of a key member of the insiderish cabal that runs the party, who was hand-picked and backed by the party’s federal director, Brian Loughnane. These are not accidental coincidences. The Liberal Party is little better than dysfunctional.

Any new leader would have to use his or her authority to quickly instigate a root and branch overhaul of executive party structures and the inner citadels of the government: something time may conspire to prevent even if institutionalised resistance from vested interests and hacks did not.

And then there’s the issue of likely replacements.

Would Malcolm Turnbull restore the government’s fortunes? Polls heralding the sort of stratospheric numbers enjoyed by Kevin Rudd during his exile should be treated with the utmost caution. At a minimum, for every vote Turnbull attracted on the Liberals’ left or moderate flank, another could be expected to disappear to its right. At best, Turnbull is a zero-sum game. At worst, he is an electoral disaster in the offing.

Julie Bishop? Who knows. Nobody doubts her ability. Nobody knows if she would be effective. Coupled with an astutely selected deputy she is likely the Liberals’ best option if Abbott falls under the bus. But that in itself is no guarantee of the retrieval of the party’s fortunes, even if she makes a reasonable fist of the Prime Ministership.

Scott Morrison? With just eight years in Parliament and two as a minister, Morrison isn’t ready. I think he will be Prime Minister one day. But to risk him now, whilst still largely untested — and with the spectre of electoral defeat looming daily larger — the Liberals could throw away their best longer-term leadership prospect by elevating him now.

On the Labor side, Tanya Plibersek is representative of the chardonnay-swilling elitism that puts the ALP at odds with the silent majority in middle Australia; Anthony Albanese is an amiable (and agreeable) boofhead, but not a serious candidate for the Prime Ministership; Chris Bowen is a regurgitator of vacuous slogans in the Kevin Rudd mould; and beyond that, the ALP’s prospects for getting rid of Shorten are as threadbare as those of the Liberals.

The point of today’s article isn’t to prescribe solutions, or to advocate in favour of specific people, measures and/or ideas; rather, it is intended to reflect just how bereft of credibility, plausibility or even so much as a fucking clue at all our major parties — both of them — have become.

The Hawke-Keating legacy was sullied by the concealed mountain of debt bequeathed by Keating and his Treasurer, Ralph Willis; a permanent mark rests on the Howard government’s record in the form of an industrial relations package introduced after winning an unexpected Senate majority despite not having been first placed before the electorate.

Now, Labor is again a culprit for plunging the country into debt — more than three times as much as Keating did — with the difference the hole feeding that debt pile is structural; no bridge appears able to be flung across that chasm, in no small part due to its own unforgivable behaviour in the Senate. Meanwhile, Labor is gearing up to fight a fourth consecutive election over WorkChoices: and the Liberal Party seems unwilling to combat or incapable of neutralising what has become a ridiculous line of attack.

Meanwhile, the things Australia badly needs from its government, whoever forms it — taxation reform, structural budget reform, sensible labour market reforms, and in view of the mess it has become (in part because of the 1984 Labor reforms that were designed to rig it) Senate reform, and an overhaul of the electoral system — go untouched, largely undiscussed, and are written off by all sides for divergent reasons as all too hard.

I would never advocate for a vote for minor parties, although it’s not difficult to see how even the most lunatic entities that are springing up — to say nothing of a growing band of high-profile independents — are attracting slowly but constantly rising levels of support from an understandably jaded and disgusted voting public.

But in the overwhelming majority of electorates, the system that both forces people to vote and to allocate preferences against every candidate’s name (both of which requirements I believe should be abolished) means that voters are also forced, ultimately, to choose either the Coalition or Labor ahead of the other.

Partly through political preference against the ALP and partly on account of a deep-seated dislike for, antipathy toward and hostility to the union movement, I don’t really care if Labor ever resolves the challenges all of this face it with.

But where the Liberal Party is concerned, I do care — and I know, from private conversations with members across the country and including most of the states, that there is a swelling tide of resentment (and barely concealed rebellion) against the way the party is being run.

I’m going to leave it there for today, because my intention in posting this is more to provoke discussion and thought among readers than to put solutions on the table, although my door is always open when it comes to Liberals who are serious about fixing the party up and changing the way things are done.

As things stand, though, the Abbott government is an insult to the fine legacy of the Howard years, and it is disingenuous in the extreme that Abbott and those around him ever dared to hold themselves up as offering a return to the best aspects of that excellent administration.

Similarly, Labor — which has never had a shred of economic credibility before or since the Hawke-Keating years — seems determined not to merely trash the praiseworthy record it achieved in the 1980s, but to kick the living shit out of that credibility altogether: far be it for the ALP to attempt to even pose as responsible or capable when there are union criminals to do the bidding of.

And so the imminent election — irrespective of who leads the parties — looms as an insidious spat between a reprehensible degree of amateurish ineptitude on the one hand, and an almost pathological, criminal mindset of megalomania on the other. What a choice. Australia will be far the poorer for the charade soon to be played out under the guise of an election campaign.

It makes the by-election in Canning look to be both small bier and a pivotal moment in the country’s political history all at once: and whatever follows, if not informed by change and any meaningful attempt at reform on any level, can only diminish the regard in which politics and politicians are already held — and that is low enough as it is.

As a final thought, I remind readers that I have always identified as politically conservative first and a Liberal Party man second, although I concede that despite my (justified) penchant for criticising the party in recent years, I remain just as rusted onto it as those who run it, dominate it and seem determined to wreck it.

Should subterranean mutterings of a new conservative party to replace the Coalition come to anything however — a properly constituted, mainstream, broadly based party, catering to urban and regional conservatives, and with broad support from business, industry and the wider community, rather than the sort of half-baked crap served up by Palmer, Jacqui Lambie, fringe groups like Family First, or anything remotely like them — I know an awful lot of people who would at least stop to take a look, if not put their hands up to help get it going.

If the Liberals do lose next year — and if the same failed coterie that runs it now continues to do so, even after the humiliation of a first term election loss — then I, too, would be open to at least having a look.

Politics is everywhere; it influences and shapes everything we do. It should be a noble undertaking, not the debased vocation it has become. Serious change is crucial. For it is not just the fortunes of the major parties that are at stake, but the welfare of the country in the long term.

Even some in the ALP must acknowledge, in their private moments, that no good can come from their silly antics.

Two Things To Build Support For Budget Fix

WITH THE 2014 FEDERAL BUDGET less than two weeks away, political discourse — predictably enough — is focused on what’s to be included, and what isn’t. Obviously, this is going to be a tough financial blueprint, as the reckless and profligate spending spree of six years of Labor government (and the rocketing resultant commonwealth debt) is brought to an involuntary halt. Here are two things Tony Abbott can do to get the public onside.

Make no mistake, the Prime Minister retains my support as he and Treasurer Joe Hockey go about finalising what should be the toughest budget to be delivered in this country since at least 1996, despite my open criticism of the apparent decision to include a so-called “deficit tax” in it; from a wholistic perspective the tough medicine and surgery simply must be administered, for whilst Australia might not yet be experiencing the symptoms of the ague the ALP has infected it with, if treatment is deferred or abandoned, the patient will end up on life support.

Deficit tax or not, there is going to be tens of billions of dollars stripped out of recurrent federal government expenditures next week, and this is as it should be: readers know I flatly reject the notion that government should be charged with providing services in response to literally every problem in society, and I am resolutely and bitterly opposed to the idea that the appropriate role for government is that of a provider funded by high real taxes that dispenses services skewed to the lower economic classes with the restriction (or destruction) of choice for everyone else that is demanded as a result.

I don’t think there is a group in this country who won’t be affected, with the exception of those who are already so ludicrously wealthy as to not feel the effects of policy initiatives that restrict net income flows — the people, in short, who have no need of any further income at all. I don’t begrudge this group their wealth; they already pay a greater share of the tax burden as it is, and only the resentfully jealous would argue that those more successful than them lack the entitlement to enjoy what they have worked harder, or longer, or smarter than others to secure.

The point is that everyone — as Hockey has rightly argued — is going to have to carry part of the burden to aright the budget. After all, much of the damage inflicted by the Rudd-Gillard government was never voted on at the ballot box, and those parts of it that actually did receive a mandate were hopelessly mismanaged.

If we are to have the right to democratic government, we must accept the responsibility that this sometimes requires; and the defective handiwork of the most incompetent government in decades (if not ever) falls to the rest of us to take a hand in remedying.

In this sense, there are two initiatives that must be included when Hockey rises in the House of Representatives on the evening of 13 May.

The first is foreign aid: at a time when Australia is staring down the barrel of a $670 billion debt bill (46% of GDP) within ten years and worse again if nothing is done, this country cannot afford the luxury of handing out billions of dollars in aid money like confetti.

There are those who will argue that the recent purchase of fighter aircraft by the Abbott government renders my argument moot, to which I would simply say that maintaining Australia’s national defences are a far more legitimate expenditure of commonwealth revenue than a lot of the rubbish “aid” money has been frittered away upon.

Kevin Rudd — who actually legislated to double Australia’s foreign aid allocations (to comply with some resolution or other of the United Nations) — was a shocking miscreant in this regard, doling out, for example, several billion dollars in a single weekend last year in furtherance of his prospects as the next Secretary-General of the UN.

There are obviously some allocations in the aid budget that nobody would advocate dispensing with: those most directly linked to living conditions in third world countries are the kind of thing I’m talking about. But should we be providing foreign aid to China? No. Should we be providing aid to regimes that are militarising and maintaining/developing arsenals of weaponry of mass destruction? No. And even where the deserving causes are concerned, it is not Australia’s responsibility to be the lone saviour in a forest of wolves.

I’m acutely aware that the “stop foreign aid” bandwagon is one held very dear to the redneck Right, as well as by others whose engagement with politics is at the most elementary level. What I am suggesting is not a complete abandonment of this country’s activities as an aid giver, and thus I do not suggest pandering to such views.

But a “sacrifice shared by all” must include a stocktake of the billions of dollars shelled out abroad in the name of feelgood causes; if Australia is already borrowing a billion dollars every week just to keep the mechanism of government functioning, it makes simple, logical common sense that those billions of annual aid dollars need to be pruned — at the minimum.

The other thing Hockey must do is to announce the details of a crackdown — and wholesale cutback — of post-retirement perquisites for politicians.

It needs to be explained to the public (because it never has been in the past) that those members of Parliament elected prior to 2004 are substantially those who enjoy (or will enjoy) the kind of perks that so enrage average voters, and the populist stirrers who like to whip them into a fury: lifetime, indexed, tax-free parliamentary pensions that were standard for parliamentarians, the size of which essentially ballooned the longer the MP served in Parliament.

There is nothing to be done about such entitlements because, very simply, these were standard employment conditions that went with the turf at the time these MPs were elected; they can no more be abolished now than the standard employment terms contained in other employment contracts in Australia can be retrospectively dispensed with.

As the next 10 or 20 years pass, headlines about politicians walking away with million dollar handouts will become less and less commonplace, and will disappear altogether as the pre-2004 group works its way through the system and leaves office.

Those elected from 2004 onwards — due to action taken by the Howard government, largely driven by Mark Latham — will get the standard 9% superannuation arrangements with the same optional top-ups applicable to the rest of the population.

But other perks should, for the most part, be abolished altogether: and should Hockey do so, he will at least win some plaudits for including the governing group in the sharing of the sacrifice.

There is a valid argument for a former Prime Minister, or a state Premier, or a Governor-General, being provided with resources in their retirement from public life.

After all, and in a sense, such figures seldom really retire at all: these are the people who have been elevated to the pinnacle of national leadership, and for whom their counsel and views — to say nothing of their presence — will continue to be keenly sought many years after they leave office, both at home and abroad.

And for this reason, I disagree completely with the argument that they should not be provided with an office, skeleton staff, and arrangements for free travel.

For all other former politicians, however, any “right” to free travel (which of course is paid for by taxpayers) should simply be abolished: no “gold passes,” no spousal or family travel, no airfares, no rail fares, no Cabcharges, no ComCars. Nothing.

Such perks run into the hundreds of millions of dollars to provide as it is; and away from MPs I know who make a case for their retention I’m yet to find a single individual who thinks they’re a fair and reasonable thing to give former politicians once the period of their servitude has ended.

For different reasons, including these things in his budget will win Hockey at least grudging admiration; nobody finds the idea of taking money out of the pockets of workers or families pleasant. Even so, there’s an argument that much of what is set to be taken back should never have been handed out in the first place — even if, like the NDIS, some of the most expensive handouts of the lot are not going to be abolished when common sense dictates they should be the first to go.

Spread the pain around indeed: stop throwing money overseas when we need it here, and end the cosy sinecure of post-retirement perks for politicians, and the argument might find that bit more acceptance among the electorate at large.

 

 

Cut Spending To Fix Budget, Not Hike Taxes

I’VE BEEN HORRIFIED this week to read that a so-called “deficit tax” is a key measure to fix the state the ALP left the federal budget in; that urgent and drastic action is needed is beyond question, but introducing “a great big new tax” is no way to take it. The political ramifications of such a measure threaten to be existential, and are an affront to millions of Australians who want government out of their lives rather than cement its centrality to them.

If Australians were genuinely committed to profligate government spending — underpinned by a tax-and-spend mentality — the Rudd government would have been re-elected last September.

The fact it wasn’t derives from many factors, of course, but two of the big reasons the Liberal Party won the election were a) it persuaded a clear majority of voters that the mess the country’s financial affairs were in was genuine, and needed harsh remedial action, and b) because resentment over Labor’s “great big new taxes” — Tony Abbott’s own phrase — cut deep.

The last thing the Liberal Party can afford to do — for so many reasons — is to start slugging all and sundry with hefty new taxes instead of squibbing what should be a straightforward, if brutal, process of spending cuts.

Last week in this column I posed the rhetorical question, in an article: what is government even for? Government in my view has a clearly defined role to play in the administration of various functions of state and to collect and distribute revenue to fund them, but there are some things government simply should not be involved in, and regrettably the fingers of the state have slid further and further into people’s pockets to fund an increasing array of indulgences that are further and further removed from its proper place in everyday life.

Faced with a budget haemorrhaging $50 billion or so per year, and with debt having gone from -15% of GDP in 2007 to 25% now, and set to peak at 46% in a few years’ time if the rot isn’t stopped, it should be obvious that the primary targets ought to be extravagant spending packages designed to buy off various constituencies rather than taxing the living daylights out of all and sundry to retain them.

This column has been supportive of plans to implement a $6 co-payment on GP visits, in part because it fits sensibly within the government’s mantra that it will “spread the pain fairly” in fixing the budget, and because the ballooning public health system requires something to help rein in costs: if such a charge deters people with itchy fingernails and minor sniffles from wasting the time and resources of GP clinics and public hospitals unnecessarily at public expense, so much the better.

But I cannot and I will not support or defend — even in the name of loyalty to the Liberal Party — the plan to jack up income taxes for anyone earning more than $80,000 per annum in the name of a so-called “deficit tax.”

One of the happy consequences of the golden years of the Howard government is that incomes in this country have grown almost exponentially; even in 1996, $80,000 was the sort of salary relatively few employees commanded, and even politicians weren’t paid much more. Today, it’s not much more than the average income.

It’s been reported that anyone earning more than $80,000 will face an increase of one percentage point in tax on every dollar above that level; for those earning more than $180,000, the increase is 2%.

In other words, this won’t just hit a few rich toffs, it will hit will hit hundreds of thousands — if not millions — of people.

It might not sound like much of an impost, but the measure will directly and disproportionately target Coalition voters: even in spite of the fragmentation that has occurred in recent decades in the correlation between incomes and political allegiance, those on higher incomes are still far more inclined to support the Liberal Party.

Prime Minister Tony Abbott is apparently referring to the planned impost as a “temporary levy” and claiming, as such, that it is not a tax: this kind of argument might fly in selling a tweak to the Medicare levy to cover Ansett entitlements, or even to a $6 co-payment to see a doctor. But it doesn’t cut it when it comes to what is, in brutal clarity, an income tax hike.

This measure directly contravenes the most explicit election promise Abbott made: that there would be “no surprises.” Having campaigned against “great big new taxes” in the carbon tax and the mining tax, he is apparently readying to inflict one of his own.

It is beyond question that savage action is required to haul the federal budget back into shape. People expect that. In fact, there is a compelling argument that to a great extent, Abbott and his colleagues were elected to do precisely that.

But to do so whilst putting a huge additional impost on people’s incomes — whilst nonetheless taking the axe to significant spending that will also affect the same group of people adversely — is akin to committing political seppuku.

Make no mistake, there is much that can — and should — be cut.

“Ending the age of entitlement” is the government’s creed, and to date has attracted it nasty headlines and outraged noise from the Left over everything from lifting the pension age to slicing family tax benefits to reforming the disability support pension. Even so, such measures — whilst painful — are urgently required.

In fixing the budget it is inevitable that a lot of people will be worse off. Tough questions, after all — as Andrew Peacock was once wont to say — demand tough answers.

But from the standpoint of political saleability, the Liberals’ own election campaign was prosecuted in such a way as to ensure that whilst cutting popular spending programs would certainly hurt, there should be no reason doing so would endanger its hold on government provided the budget was properly managed and sold.

That caveat, clearly, does not extend to a rise in income tax when (from a budget savings perspective) there is plenty of low-hanging fruit apparently to be left to flourish on the vine.

Expensive utopian fancies such as the National Disability Insurance Scheme: set to cost $22 billion dollars a year once fully operational, this program — whilst based on a worthy enough idea — is so patently unaffordable it should have been the first thing to be axed.

Labor’s payoff to the teacher unions, the Gonski package — which, in short, throws up a huge pool of additional education funding with no caveats insofar as educational outcomes are concerned — should have been the next. Putting an $8 billion pool of money in front of education unions which will do no more than fund annual pay rises for teachers is foolhardy, and when the same teachers are turning out illiterate kids doesn’t even address the problem it claims to resource schools to resolve.

Certainly, family tax benefits and the like should not be immune; I’m a dad of two little kids and it would hurt my family as much as the next guy’s. But I accept the idea of spreading the sacrifice, and a few dollars less each week seems a reasonable ask.

But not — not — by taking them out of my pay just to fund the kind of extravagances, with price tags running into the tens of billions of dollars, that are set to escape the cull.

I’ve suggested before that the First Home Buyers’ Scheme is past its use-by date: the cost of housing is now so ridiculously inflated that the handout this program offers won’t help a First Home Buyer to buy anything. The historical effects of this very program are partly to blame for this. Yet it still accounts for about $4 billion every year in government outlays. It is time to scrap it.

In fact — from the top of the tree with the NDIS, down through every level of government and encompassing handouts huge, middling and petty (like the one we looked at last year) — there is an awful lot of money gushing like a torrent out of Treasury coffers that shouldn’t be spent at all. The targets for Abbott and Treasurer Joe Hockey to slash at are plentiful indeed.

Abbott and Hockey are axing, rightly, billions of dollars in allegedly Green spending that the carbon tax was to fund; yet another brown Labor paper bag full of money, this time to buy off the Communist Party Greens. The programs should go: all they are, as a British political figure recently described such measures, is “green bullshit” that forces up the cost of essential services.

But it is one expenditure cut that has been confirmed amid a mountain of others that should have been as high on the list, if not higher, that will be left untouched.

In that context, raising income tax to pay for them is unjustifiable. It is inexcusable. And any conservative government advocating income tax hikes before all available options for spending cuts have been exhausted is, quite frankly, pandering to the wrong constituency.

I hope this dumb measure is abandoned, and quickly.

Because if it isn’t, this will be the issue that costs Abbott government: not after multiple terms in office, but in 2016.

I am amazed that a government led by such an intelligent individual, surrounded by a competent team of ministers and having won office in the backwash of perhaps the most incompetent government in the country’s history, could be so appallingly stupid as to even contemplate the gamble with its very existence the “deficit tax” represents.

The budget shortly due to be delivered by Joe Hockey ought to be the proof of this government’s economic management credentials, and it should — in the ordinary course of events — lead to a trim, tight ship based on lower taxes and lower — properly and efficiently targeted — government spending.

If it includes the “deficit tax,” it could well prove instead to be the government’s suicide note.

It doesn’t matter what you cut: someone, somewhere, is going to be pissed off — and very noisily so. But the Abbott government has a mandate to “eliminate waste and get government spending under control.”

It does not have a mandate for this.

Abbott and Hockey should unilaterally rule out a “deficit tax” once and for all, and get back to cutting out the kind of programs that should never have been legislated in the first place.