Perceptions are everything


Those who know me are aware that I do a fair bit of travel around my home state for my employer. As my home state is Queensland, a considerable component of that is air travel as, for example, Brisbane to Cairns or Mt Isa is around the same flight time and distance as Brisbane to Melbourne in a 737. (As a side note – it’s actually a bit sad when you and your colleagues at work sit around at lunch time and knowledgably discuss which Queensland airports have the best cafes, or the smaller hire car queues!)

Sitting in yet another regional airport terminal recently waiting for yet another delayed plane got me to thinking about perceptions. Don’t get me wrong, I would much prefer a plane to be late so the ‘issue’ can be fixed. If nothing else, it increases the chances of me as a passenger falling to the ground in a controlled manner at the hoped-for destination where there are things like stairs to get me out of the metal tube, as well as amenities, somewhere to buy a coffee, connections with ground transport and so on. I’m equally happy when the pilot tells me that the landing is going to be delayed due to fog or other aircraft in the area – I’d much rather the pilot being able to see the runway they are planning to use and not hit another plane on the way down.

The other day, the plane was delayed about one and a half hours with no real explanation why the plane was late except ‘an engineering issue’ and ‘late arrival of the operating aircraft’ (after a half hour delay on the way there the previous morning was due to fog) and while most of those waiting had a conversation with someone on the other end of a mobile phone about delays, there was no real anger or adverse comment made by or to those around me in the airport waiting area.

The next morning, I went into the office on the local bus service. The bus was a few minutes late, which caused considerably more adverse comment than the plane delays I had encountered the previous few days. Obviously, there are certainly more buses on the roads in Brisbane than planes owned by both Virgin Australia and Qantas. As a result, there is a greater chance that the bus will be late than the plane. But the perception is that airline delays are forgivable (if not expected) while your local commuter transport service; be it a bus, train or ferry, has to be there on time every time.

Admittedly, keeping a plane in the air probably requires greater technical skill than keeping a bus on the road (although with the state of some Brisbane roads you would wonder how a bus wouldn’t shake itself apart), but in the case of the bus, the delay was only a couple of minutes and even in the worst case, there would have been another bus trundling past sometime in the next 15 to 30 minutes.

Drawing the relative perceptions out a bit more, most public transport delays are in reality safety issues. The service providers don’t make money if their vehicles are sitting in the depot, regardless of the vehicle being a 737, a suburban train or a commuter bus. Yet, if an airline service runs late or is cancelled there is little real concern as there is clearly a safety issue. If a bus or train is cancelled or doesn’t run, it is a competence issue. Just as I would prefer to fall out of the sky in a controlled manner at the pre-planned arrival point, I would prefer not to be on a bus that loses a wheel on the highway at 100kph or a commuter train where the external doors won’t open and shut on command.

It’s the same with Treasurer Morrison’s ‘good’ debt and ‘bad’ debt. It’s a perception thing. At least the Abbott era ‘all debt is bad’ argument seems to have been taken down a dark alley and quietly disposed of, but the current framing of the discussion is not much better.

While Morrison and others call funding welfare payments through debt as ‘bad’, if you were the recipient of a welfare payment funded through debt, you would probably consider it to be ‘good’, as at least you would have some funding to keep body and soul together. If you don’t need welfare payments and have little regard for those who do, you could argue that welfare payments shouldn’t be funded by borrowings (if indeed they are).

By the same token, those who believe that any government funding of infrastructure is a ‘good’ thing will support the government borrowing money to build a 400km (or thereabouts) rail line from the Galilee Basin to Abbott Point in Queensland so that Adani can ship it’s coal out of the country (assuming the mine is ever built). Those who believe that the proposed Galilee Basin mine is too big, greenhouse intense and supporting a dying industry would tell you that the proposed funding of the rail line is ‘bad’ as the money could be better used to fund renewable energy investments or other income producing infrastructure.

As Jessica Irvine points out in the article linked above,
the idea of distinguishing between "good" debt and "bad" debt is silly for several reasons, the primary one being that it's impossible.

If you think for even a moment about how taxes are collected and spent in this country, it's immediately apparent that all taxes get poured into the same bucket, from which they are spend [sic] on different things.

No taxpayer is given the option, when filling out their tax return, to assign a particular dollar of tax to a particular purpose, be it welfare to support fellow Australians or building railways.

It all goes into the same pot.
Irvine goes on to give her perception of ‘good’ and ‘bad’ debt
In reality, whether infrastructure spending is good or bad depends entirely on whether it's spent on productivity-enhancing investments, like a much-needed railway which relieves congestion on roads, or wasted on pork barrelling in marginal electorates.

Similarly, spending on education can be either good or bad, depending on whether it goes on things that genuinely enhance learning outcomes, or things that don't, like reducing class sizes beyond a certain point.
If there is a shortfall in the funds available for such work, clearly the government is not charging enough tax, the mechanism it uses to gain money from its citizens.

However, Modern Monetary Theory (MMT) would suggest the Australian Government has no debt anyway as it can issue as much money as it needs to pay for all goods and services it consumes. Before celebrating the potential for no taxes should MMT be introduced, The Washington Post (link at the beginning of this paragraph) suggests
This doesn’t mean that taxes are unnecessary. Taxes, in fact, are key to making the whole system work. The need to pay taxes compels people to use the currency printed by the government. Taxes are also sometimes necessary to prevent the economy from overheating. If consumer demand outpaces the supply of available goods, prices will jump, resulting in inflation (where prices rise even as buying power falls). In this case, taxes can tamp down spending and keep prices low.

But if the theory is correct, there is no reason the amount of money the government takes in needs to match up with the amount it spends. Indeed, its followers call for massive tax cuts and deficit spending during recessions.
While a currency issuing government (in our case the federal government – not state or local governments) can issue more currency to fund the difference between income and expenditure, households and business cannot. Households have all their financial eggs in one basket, have beliefs, wants, needs and cultural norms, and make decisions on spending and borrowing according to those criteria. While you may consider borrowing money to go on a holiday is a ‘bad’ choice, your neighbour may decide it is a ‘good’ choice that warrants adding to their debt. Neither you or your neighbour are necessarily right or wrong, you just have different perceptions. However, if a household or business continually spends more than it earns, sooner or later they will face bankruptcy as households and businesses cannot issue currency (unless they want to be convicted of fraud).

Treasurers back to Costello have played with people’s perceptions to make the claim that the government bank account is just like a household bank account claiming that the federal government also needs to be spending less than it earns while conversely offering tax cuts to various groups of people.

Morrison’s claim that there is ‘good’ and ‘bad’ debt is just another attempt to justify social engineering to benefit the LNP’s core constituency while penalising the less well off. It is perception management, pure and simple. And, as we are talking about perceptions, your value judgement of the government’s ‘good’ debt expenditure is probably different to mine, despite the expenditure coming out of the same ‘bucket of money’ as the ‘bad’ debt we are continually conditioned to despise.

What do you think?
Let us know in comments below.

Recent Posts
100 days of President Trump
Ad astra, 4 May 2017
It feels much longer, doesn’t it? He seems to have been in our face for eons. Of course he has been. As he relentlessly plied his way from rank outsider to winner of the presidential race, there never has been a candidate in recent history that has been thrust at us so disturbingly for so long. There has never …
More...
Peas in a pod
2353NM, 7 May 2017
Amongst the day to day news of who is going to challenge for the dubious honour of leading a political party, stories of government inaction, fires, pestilence and so on, you might have missed the March for Science; held the weekend before Anzac Day in up to 54 countries across the world. As reported on Fairfax websites
More...
Turnbull applauds Obamacare repeal - what's next?
Ad astra, 11 May 2017
First an awkward handshake, having been stood up for three hours in New York by Donald John Trump while he celebrated his great ‘victory’ in the House with the passage of an Obamacare repeal Bill and its replacement with the American Health Care Act, then wearing …
More...

Turnbull applauds Obamacare repeal - what's next?



First an awkward handshake, having been stood up for three hours in New York by Donald John Trump while he celebrated his great ‘victory’ in the House with the passage of an Obamacare repeal Bill and its replacement with the American Health Care Act, then wearing a rictus grin that bespoke obsequiousness writ large, our Prime Minister applauded Trump with: ”Well done” and "It's always good to win a vote in the Congress, or the parliament as we call it, I've got to say, it's always satisfying to win a vote when people predict you’re not going to win it too. So keep at it, it's great."

Of course Turnbull apologists, such as Michael Stutchbury on this week’s Insiders, played down Turnbull’s remarks as a reflex response that carried no sinister implications. But Turnbull could have said: “You must be relieved”, or “It’s taken a long while”, or even “Sometimes passing legislation can be difficult”, but no, he congratulated him, as if he had done something praiseworthy.

Tweeter John Wren said it all with this acerbic tweet:

Behaving like a lapdog of the US President is undignified and unworthy of a representative of this nation. Trump’s demeanour is more deserving of the proverbial ‘bird’.

It was not just Turnbull’s obsequiousness that offended, it was his tacit acknowledgement of Trump's 'victory' in destroying healthcare for millions of Americans, as if that was a fine accomplishment.

The changes passed by the House are complicated to describe, but here’s an attempt. What follows are abridged abstracts from an article by Ross Barkan, a journalist who contributes to several US publications, titled: America's healthcare being driven off a cliff by nihilists published in the 5 May issue of The Guardian:
Ryan’s Republican Congress, after trying and failing to hold a vote on a repeal of the Affordable Care Act (AKA Obamacare) in March, has rounded up the votes to pass the American Health Care Act, perhaps the worst piece of life-altering legislation to ever see the light of day.

This bill won over a few so-called moderate Republicans because it now includes an amendment that would allow states to waive an ACA rule that forbids charging sick people higher insurance prices, as long as the states set up a special insurance pool for those people. The amount of money allocated for this? A paltry $8bn.

A quick recap: Ryan’s legislation (calling it ‘Donald Trump’s bill’ gives too much credit to a man wholly disinterested in anything that smells of policy) will scrap the ACA’s mandate to buy health insurance, substantially cut Medicaid, and hope somehow this doesn’t cause premiums to skyrocket.

The nonpartisan Congressional Budget Office (CBO) found that 24 million Americans would lose their health insurance under a version of the legislation considered in March. The CBO hasn’t had the time to score this bill. Republicans aren’t interested in finding out just how much of a disaster they’re going to inflict on regular people. They have a campaign pledge to fulfill, after all.

Were an alien to wander down to Earth and examine the functionality of American democracy in 2017, it would find an intellectual graveyard.

Lawmakers tasked with carefully considering remarkably complex legislation with the potential to significantly alter the lives of millions of people are instead rushing to vote for a bill that they know almost nothing about and that no outside expert has had the time to seriously assess. This is insanity.

The healthcare bill will funnel $100bn to states over a decade to stabilize what are sure to be markets wracked by chaos, assuming this legislation survives intact to Trump’s desk. Amendments provide another $30bn to states with few strings attached. If somehow all of this money is used just for the high-risk pools, it will come out to $138bn, which sounds impressive enough. But most healthcare researchers believe a competently run national high-risk pool would cost much more.

Factoring in lifetime caps on coverage and longer waiting periods, one 2010 estimate from two conservative health economists found such a pool would cost $150bn-$200bn over a decade. Other recent estimates believe the price tag to be much higher.
If you are keen to study the stark differences between Trump’s and Obama’s Healthcare Bill, read freelance journalist Joanna Walter’s account of them in 4 May issue of The Guardian: Obamacare v the revised Republican healthcare bill: the key differences.

I trust the above account of Trump’s American Healthcare Act is sufficient to appraise you of the devastating affects of repealing Obamacare in favour of this one: millions disenfranchised, and an estimate that many thousands will die as a result. An article in Vox is headed: The GOP plan for Obamacare could kill more people each year than gun homicides, and sub-headed: If 24 million people lose insurance, we'll see more than 24,000 extra deaths per year. The headings tell us plenty, but if you want the gory details, click here.

However, the Senate may prove to be a much bigger hurdle for Trump, who may find his ‘victory’ celebrations premature. Major changes to the Bill are predicted, months of delay are anticipated, and failure to pass ‘Trumpcare’ may be the eventual outcome.

Trump, in his usual careless style, added complexity to an already convoluted debate by saying: “We have failing health care. I shouldn’t say this to our great gentleman and my friend from Australia. You have better health care than we do.”

That was enough for Bernie Sanders to chortle on television: “Let us move to a Medicare-for-all system”, and then he tweeted: “Thank you Mr. Trump for admitting that universal health care is the better way to go. I’ll be sure to quote you on the floor of the Senate.” Again, Trump had put his foot in it to the chagrin of his Republican colleagues, who sought quickly to counter any suggestion that America could benefit from an Aussie Medicare system!

Let’s now get to the nub of this piece – ‘what’s next?’

We already know Turnbull’s sensitivity to any suggestion that he would tinker with our Medicare. Remember how outraged he was at Labor’s ‘Mediscare’ during the last election campaign, so much so that it was the centrepiece of his ‘victory’ speech. His complaint sounded like “The lady doth protest too much, methinks” from Shakespeare’s Hamlet.

Turnbull’s apologists will argue that his New York comments were innocent, if not very prudent throw away lines, but his opponents will have it confirmed in their minds that Turnbull would like to rein in our universal healthcare scheme, which Australians value so much. Words seemingly said in jest often portray a deeper belief.

The cost of Medicare is one that Treasurer Morrison would dearly love to slash. The Medicare freeze they put in place was designed to cut costs by blocking the usual adjustment to Medicare rebates. To remind you of the nature of the freeze, initially from July 2014 and extended to 2020, here are some details from Helen Dickinson, Associate Professor, Public Governance, University of Melbourne, in The Conversation:
The extended freeze means GPs and other medical specialists will be reimbursed the same amount for delivering health services in 2020 as they were in 2014. Doctors will pay more for their practices, staff, medical products, utilities and just about anything else that goes into running a medical practice. But the amount paid for medical services will remain static.
Clearly the doctors were and still are the losers, not the Commonwealth. Labor vows it will lift the freeze completely. The recent Budget featured a glacial easing of the freeze over the coming two years, as documented in the Budget Papers
This will commence with General Practitioner (GP) bulk billing incentives from 1 July 2017, to ensure that GPs are incentivised to bulk bill children under the age of 16 and concession card holders.

From 1 July 2018, GP and specialist consultation items will be indexed, increasing the Government’s contribution to the cost of important health care services.

From 1 July 2019, specialist procedure and allied health items will be indexed and from 1 July 2020 certain diagnostic imaging items will be indexed for the first time since 2004.

In addition, the Government will maintain the bulk billing incentives for pathology and diagnostic imaging services, including for blood tests, x-rays and scans.
The net outcome is that the Medicare freeze will continue until 2020, gradually easing in the meantime, hardly an enthusiastic endorsement of Medicare by the Coalition.

Because Turnbull is petrified of another Mediscare, the Budget has built in a ‘Medicare Guarantee Fund' in the following terms:
Guaranteeing Medicare
In this Budget the Government is guaranteeing and strengthening Medicare so that all Australians can continue to access timely and affordable health care.

Medicare Guarantee Fund
The Government will establish the Medicare Guarantee Fund to secure the ongoing funding of the Medicare Benefits Schedule and the Pharmaceutical Benefits Scheme into the future.
The Fund seems to be no more than a holding account from which MBS and PBS costs are covered. How it will be used is not explained in the Budget Papers which simply say: The Government will establish a Medicare Guarantee Fund from 1 July 2017 to secure the ongoing funding of the Medicare Benefits Schedule and the Pharmaceutical Benefits Scheme, guaranteeing Australians’ access to these services and affordable medicines into the future.

Writing in The Conversation, Michelle Grattan says: Proceeds from part of the Medicare levy plus the amount of other income tax revenue needed to cover the costs will be paid into the fund. It’s more of a gesture than a real “guarantee”, but it reflects how frightened the government still is about last election’s “Mediscare”.

It looks to be no more than a paltry facade to counter any future Mediscare.

If you need any more evidence about the Coalition’s intentions with Medicare, reflect on these ill-fated reforms:
  • a A$7 co-payment for GP, pathology and imaging services that would offset a A$5 reduction in Medicare rebates
  • a ten-minute minimum for standard GP consultations
  • a A$5 reduction in the Medicare rebate for “common GP consultations”.
The Coalition has proclaimed them, in Abbott-speak, as ‘Dead, buried, and cremated’, but anyone who believes that is naive.

Turnbull’s inadvertent, carelessly fashioned comments in New York reflect a deep conviction that Medicare needs pruning. Trump’s American Health Care Act, that Turnbull has seen fit to applaud, would be a horrifying template for our country.

So after Turnbull’s adulation, it is essential to ask ‘What’s next’. Let’s hope that in Turnbull’s mind it’s nothing like ‘Trumpcare’!



Here's that awkward handshake that speaks volumes about Turnbull's fawning attitude to Trump, and Trump's indifference. Here is what body language experts say.

What is your opinion?
Let us know in comments below.

Recent Posts
The report card
2353NM, 23 April 2017
Former minister and Liberal Party director Andrew Robb recently completed an investigation into the poor performance of the Liberal Party in the 2016 federal election. Yes, they won by a whisker, but losing 14 seats is a drubbing. Former PM Abbott’s chief of staff, Peta Credlin, writing for the Daily Telegraph has her …
More...
The face of wilful ignorance
Ad astra, 30 April 2017
To whom do you believe I’m referring? There are no prizes for the correct answer!

I’m referring to someone who I believe is guilty of criminal ignorance. His actions have the potential to destroy our civilization, not today or next week, but in the foreseeable future – we don’t know …
More...
100 days of President Trump
Ad astra, 4 May 2017
It feels much longer, doesn’t it? He seems to have been in our face for eons. Of course he has been. As he relentlessly plied his way from rank outsider to winner of the presidential race, there never has been a candidate in recent history that has been thrust at us so disturbingly for so long. There has never …
More...