Economic geniuses perform epic back flip

The sheer effrontery of our politicians never ceases to astonish me. To them black can be white, and in an instant white can be black. It is not just the monumental back flip that such a change of language involves that astonishes me, it is the bald-faced nerve they exhibit when they change course to the opposite direction, as if nothing had happened! The 2017 Budget starkly exemplifies this.

So burned into our neural networks are the slogans, the mantras, and the catchphrases of past eras that no change of heart, no change of language, no denial of history can ever erase them. Check your memory of the Abbott epoch to see if I’m right.

You will remember the Coalition’s sarcastic description of Labor’s economic team as being quite unsuited for the complex task of managing the economy during the Global Financial Crisis. It insisted they should stand aside and let the adults, the superior economic brains in the Coalition, the geniuses at economic management, take over. Labor’s team was depicted as kids playing games in a sandpit.

Let’s go back then to the time of the GFC, an emergency that threatened economies the world over.

You will remember that at that time the advice of Treasury Secretary Ken Henry to PM Kevin Rudd and Treasurer Wayne Swan was to provide economic stimulus, (which was plainly Keynesian) and to “go hard, go early, go households”.

They did, with cash handouts and infrastructure projects. The Rudd/Swan response was a spectacular policy success, tarnished only by poor implementation of the so-called ‘Pink Batts’ program by the Department of the Environment, during which the lives of four workers were tragically lost.

You will recall that while the Coalition supported the initial stimulus, although castigating the government for sending cheques overseas and to some deceased people, it reneged on supporting the second tranche – the bulk of the infrastructure stimulus. Prominent in that tranche was Julia Gillard’s ‘Building the Education Revolution’ that involved the construction of new and refurbished school halls, libraries and classrooms, science laboratories and language learning centres, covered outdoor learning areas, shade structures, sporting facilities and other environmental programs.

You will remember the sarcasm that the Coalition heaped on these infrastructure projects, not only criticising elements of them, their suitability and their cost, but pouring contempt on the concept of infrastructure spending, which Tony Abbott and his Shadow Treasurer Joe Hockey deemed a waste of money. Malcolm Turnbull too chipped in with his two-penneth. Yet that infrastructure endeavour not only gifted thousands of schools with much-needed amenities and facilities, which now enhance them splendidly, but it also gave local builders work and hardware suppliers business. It kept many a small town going at a time when many businesses were threatened with closure, and many workers were facing unemployment.

Now, in 2017, suddenly Treasurer Scott Morrison tells us that spending on infrastructure is fine as it accumulates ‘Good Debt’. To confirm his newfound belief in the value of infrastructure spending, his Budget features a plethora of such projects: road, rail, airport, hydro, and energy infrastructure, many with timelines stretching into the distant future. While there will be debate about the merits of some and their timing, Labor is not condemning them as a waste of money, as it has always appreciated what Morrison has just awoken to, that infrastructure spending, especially when interest rates are low, is good for the economy.

Here then is the first example of how the Coalition’s economic geniuses, after all their previous scathing condemnation of infrastructure spending, have finally had the scales fall from their eyes, have seen its value, and have endorsed it extravagantly. But have they acknowledged their epiphany? Of course not!

Debt and deficit
Next, let’s reflect on the ‘debt and deficit disaster’. Remember how almost daily newspaper headlines trumpeted: ‘Labor’s financial mismanagement’, ‘Debt spiralling out of control’, ‘Budget in freefall’ and ‘Labor's debt time bomb’. There was even a truck doing the rounds with ‘Labor’s Debt’ festooned on placards.

Joe Hockey was sarcastically indignant about budget ‘blowouts’ and revenue shortfalls. He revelled in lampooning a mining tax that raised no revenue. He insisted that a Labor government would never achieve a budget surplus. “It was not in their DNA”, he asserted. But of course it was in the Coalition’s DNA. It knew what to do. But as we know it didn’t. Year after year it showed it had no idea how to achieve a surplus! Now Morrison thinks he’s found the magic formula.

Scared of a downgrade by the rating agencies, Morrison’s magic formula for a surplus in the 2017 Budget curiously still includes a corporate tax cut for big businesses and multinationals, no longer costing $50 billion, but now $65 billion, still predicated on a mythical trickle down benefit for those at the bottom of the heap. Surprisingly, while he gives with one hand he takes away with the other by imposing a new tax on the five big banks, levied on various types of borrowing that banks use to fund their lending, including corporate bonds and large deposits. Good luck with that one!

Here is Alan Austin’s assessment of Rudd/Swan period in his October 2016 article in Independent Australia: Australia’s debt mismanagement under Turnbull: It’s worse than you think. 
Over the entire period of the first Kevin Rudd Government, debt was added at the rate of $2.85 billion per month. This was required to deal with the early onset of the global meltdown. This rate of borrowing increased slightly through Julia Gillard’s term until the GFC was over in early 2013. Through her last eight months, the gross debt added each month averaged just $1.02 billion. For Labor’s entire duration, the monthly increase averaged $3.06 billion.

Then came the appalling maladministration of Tony Abbott, during which $4.75 billion was added each month, without any justification related to global conditions. This resulted from wasteful spending on a colossal scale and refusal to collect taxes from the rich.
Further on, Austin writes:
Malcolm Turnbull then successfully challenged Tony Abbott for the prime ministership primarily because Abbott had “... not been capable of providing the economic leadership our nation needs.”

So what happened thereafter? Did the new regime start to repay the debt, as it had been promising to do for years? Not at all! Further fresh debt was added in Turnbull’s early months at a rate just below Abbott’s figure. That has since blown out disastrously, with more than $8.5 billion borrowed per month over the first four months of this financial year. Turnbull’s total rate has been $4.78 billion per month.

Gross debt is now $450.79 billion. This is $173.4 billion higher than the $277.4 billion Labor left in September 2013, up 62.5%. Net debt has also risen alarmingly. We only have the figures until the end of August, but these reveal a rise of $15.9 billion just since June, up 5.35% in two months to $312.3 billion. This is $137.7 billion above Labor’s $174.6 billion legacy, up 78.9%.
This was written six months ago. The situation is even worse now. The adults, the economic geniuses, have produced the situation reflected in their latest Budget.

“We don’t have a revenue problem; only a spending one”: Morrison
For as good an analysis of the Budget as you could wish for, and a scathing assessment of Morrison’s mantra, do read Greg Jericho’s article in The Guardian: Federal budget 2017: the 10 graphs you need to see: 
There was a revenue problem after all!
After nearly a decade of saying the problem was all on the spending side, the 2017-18 budget is where the Liberal party has finally admitted that there is a revenue problem.

The 2017-18 budget estimates that by 2020-21 the budget will be firmly back in surplus, and it does it mostly off the back of government revenue returning to the level it was during the surplus years of the Howard government.

In the 11 years prior to the GFC, when the budget was either in surplus or balance, government revenue averaged 25.1% of GDP. In the nine years since the GFC, the highest it has been is 23.4%, and this year it was just 23.1%.

To give some context, 2% of GDP is around $34bn, so it’s a fair gap. But that gap is about to be reduced.

The budget predicts that by 2019-20 government revenue will reach 25.1% of GDP and in the following year a very healthy 25.4%. The last time we saw revenue at that level was in 2005-06.

To get there the budget anticipates revenue growing over the next 4 years by around 4.4% in real terms. That growth was not uncommon during the mining boom years, but has been reached only once in the past nine years.

And what is the revenue that is growing? Income tax.
In other words – revenue was a problem after all! The economic geniuses were wrong, again.

Morrison has now predicted that the long-wished-for surplus will first appear in 2019/20, four years from now! Let’s see if this prediction, based on very optimistic assumptions, is any better than his other predictions.

There it is. For years, the Coalition boasted about its prowess in economic management and denigrated Labor’s. For years, the Coalition decried infrastructure spending. For years the Coalition trumpeted the ‘debt and deficit disaster’, which it insisted that Labor created and turned into a ‘budget emergency’. For years the Coalition was adamant that it did not have a revenue problem, only a spending one.

Only now, with the 2017 Budget, has the Coalition and its financial geniuses tacitly admitted that infrastructure spending is ‘good debt’, that it has been even less effective at reducing debt and deficit than Labor, that it will not produce a surplus until 2019/20, and then only if its heroic assumptions come true, and that indeed it does have a spending problem, which it intends to solve with higher taxes on everyone.

It’s taken only four years to awaken to the bleeding obvious and back flip spectacularly. That’s real genius!

How much longer will it take these geniuses to wake up to the error of giving large tax cuts to the big end of town? How long will it be before they cotton onto what has been known for decades, namely that such largesse does not and never has trickled down to the masses?

How much longer though will it take for Morrison, Cormann, Turnbull, Abbott, Hockey and Co. to say: “We were wrong, very wrong”?

Don’t hold your breath!

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

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How are the ‘adults’ managing our economy?

Who will ever forget the insults, the slurs, and the slander that the Coalition heaped upon Kevin Rudd, Julia Gillard and Wayne Swan as they managed the economy through the Global Financial Crisis and beyond? They were depicted as children playing games in their political sandpit with no idea of what they were doing, making one catastrophic mistake after another.

Remember how the Coalition boasted that the children should get out of the way and let the adults take over, insisting as they did that they were the experts at economic management. So convincing was the rhetoric that the electorate believed them and has consistently rated them as superior to Labor in economic management in opinion polls.

Recall the ‘debt and deficit disaster’, a mantra with which they assailed Labor for years. Remember the ‘intergenerational debt’ they accused Labor of accumulating.

Since their election in 2013 they have had their chance to show their much-vaunted expertise under the skilled management of Tony Abbott and Joe Hockey, and then Malcolm Turnbull and Scott Morrison, with Mathias Cormann a consistent shadowy presence. How have they done?

I am indebted to one of our most astute political commentators, Bernard Keane, Crikey politics editor, for the best analysis I have read of the Coalition’s economic performance over the last four years. You can read it in its entirety in his article in the April 3 edition of Crikey: How the deficit was blown: The Coalition’s $100 billion bill.

I have drawn heavily on Keane’s analysis and have quoted from it substantially. Here is an abbreviated version of it. Sit down before you read it, and have a tranquillizer handy.

Keane begins:
”Since its election in 2013, the Coalition has given away $46 billion in political decisions, and signed the Commonwealth up to $50-60 billion in long-term spending that will hammer the federal budget for decades to come. (My emphasis.)

“The 2013 Pre-Election Fiscal Outlook, produced independently by Treasury and Finance, forecast a return to surplus this financial year and net debt peaking last year at $219 billion.

“The Coalition’s first budget forecast a return to surplus in 2018-19 and net debt peaking at $264 billion.

In MYEFO at the end of 2016, the budget was forecast to be still $10 billion in deficit in 2019-20, when net debt would be $364 billion.
Can you believe that after their promise to return the budget to surplus this year, and their assurance that net debt would be confined to $219 billion last year, the ‘adults’ subsequently told us that the budget would not return to surplus until 2018/19, and later that in 2019/20 we would still have a $10 billion deficit and that net debt would balloon to $364 billion, twice as high as Labor’s deficit ever was! No wonder the ratings agencies are breathing down their necks! And they still claim that the situation would have been much worse had Labor still been in government!

While Keane acknowledges that much of the spectacular deterioration of the budget under the Coalition is due to revenue write-downs, he asserts that “the government has worsened its own position through a series of political and ideological decisions that give the lie to its claims to be the victim of an irresponsible Senate”. He details the substance of those decisions as follows:
  • an $8.8 billion gift to the Reserve Bank to make the 2013-14 budget deficit look worse, and earn future dividends for the government.
  • Repeal of the carbon price cost the Commonwealth around $12.5 billion in lost revenue over the forward estimates and at least $1.8 billion per annum beyond that (based on a conservative estimate by the Climate Institute, lower than the government’s own estimate)
  • The government’s company tax cuts agreed last week will cost $5.2 billion over the forward estimates.
  • Repeal of the mining tax – despite the government’s claims that it raised no money – cost it $3.5 billion over the forward estimates, according to budget papers.
  • The reversal of Labor’s changes to Fringe Benefits Tax reporting requirements to end the rorting of novated leases cost, by its own admission, $1.8 billion over the forward estimates.
  • Income tax cuts for middle- and high-income earners cost $3.8 billion.
  • The ineffective Emissions Reduction Fund so far is costing $2.55 billion, although the government has decided no further funding will be wasted on it.
  • A Northern Australia Infrastructure Fund, established with no effective oversight, assessment or evaluation mechanisms and flagged as a funding source for unviable coal mining projects, will cost $5 billion.
  • A National Water Infrastructure Development Fund established as a funding source for Barnaby Joyce’s obsession with building more dams, is costing $0.5 billion.
  • A scheme to prop up dairy farmers threatening to desert the National Party, via the discredited means of concessional loans, is costing $0.55 billion.
  • Australia’s continuing participation in Middle East military ventures has so far cost $0.72 billion since Tony Abbott sent Australian forces back to Iraq in the name of fighting the “existential threat” of ISIS.
  • The government is spending $0.24 billion on a school chaplains program, although further funding has been halted for now.
  • Nick Xenophon extracted an additional $0.37 billion worth of conditions as price for his support for company tax cuts last week.
Keane lists several significant costs beyond the forward estimates from a number of other government measures:
  • The disastrous F-35 joint strike fighter program will cost taxpayers at least $17 billion over the period to 2023. There are new problems with the aircraft that are not being addressed or are worsening, and with no guarantees the cost will not escalate further.
  • The government’s decision to reverse the Abbott government’s approach and construct the new generation of Royal Australian Navy submarines in Australia is expected to add up to 30% to the $50 billion cost of the program in order to provide less than 3000 jobs in South Australia.
  • The company tax cuts agreed last week will cost $25 billion over ten years, although the government remains hopeful it can increase that cost to $50 billion! although there remains no evidence from anywhere in the world of any economic benefit from company tax cuts. (My emphasis)
  • The continuing fiscal impact of some of the above measures beyond the forward estimates will cost the budget, on a conservative estimate, $6 billion per annum (unindexed)
  • .
Although some of the decisions were backed by Labor such as the submarines decision, which will cost the taxpayers many billions of dollars, the F-35 purchase, and the income tax cuts, “these decisions are in defiance of evidence, represent the triumph of ideology over reason, and in many cases were rankly political." (My emphasis)

Worse, some of them are likely to generate new waves of spending: the removal of an effective, cheap carbon price in 2014 created an energy policy vacuum that led directly to the current energy crisis and proposals from the government to spend billions of dollars re-entering the power generation industry.

Our military involvement in the Middle East looks set to increase, not decrease, in coming years.

The cost of poor decision-making will be borne by taxpayers for years, even decades, to come.” (My emphasis)
It would be hard to imagine a more condemnatory account of the Coalition’s ‘adult’ management of the nation’s economy in the four years since 2013. Its predictions have all been wrong. The ‘adults’ have steadily worsened the nation’s fiscal situation. The 2019-20 budget is projected to still be $10 billion in deficit, the promised surplus is nowhere in sight, and the nation’s net debt is projected to be $364 billion, twice as high as it ever was under Labor!

In an update in Crikey Weekender: Seven new terrible economic records ScoMo set in March - Scott Morrison has some new records to add to his quest to be known as Australia's worst treasurer reads: "The Office of Financial Management released figures last week showing gross borrowings at $484.6 billion. Of this, $58 billion is residue from the Howard government or its predecessors. Labor increased it by $212 billion. Another $214.6 billion has been added since the 2013 election. Hence the Coalition has now more than doubled Labor’s gross debt, in three years and six months. It doubled Labor’s net debt in January."

The unavoidable conclusion is that this ‘adult’ government is economically incompetent, driven by its conservative rump, quite unable to see its way through the nation’s economic difficulties, incapable of analyzing the economic situation, inept at deriving solutions, bereft of planning ability, and hog-tied by ideological constraints. Moreover, it is so unutterably arrogant that it cannot see its ineptitude. And even if it could, would it be capable of doing anything about it?

As a substitute for informed opinions, all we get is self aggrandizement and platitudes from Turnbull, and a torrent of meaningless drivel from the Coalition's two motor-mouthed financial Daleks: Morrison and Cormann.

How has it come to this with the adults in charge?

What do you think?
What is your assessment of Scott Morrison as Treasurer?

Should he be replaced?

If he needs to be replaced because of incompetence, who should replace him?

Let us know in comments below.

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Bring out your debt

After a year of saying that he could get the Federal Budget back into surplus, seemingly by just cutting support to the less well off in our society, Treasurer Scott Morrison finally realised something any school child who has started business studies classes would be well aware of — a balance sheet comprises debits and credits.

Morrison was speaking to the Bloomberg Economic Summit in Sydney last week. Apart from the usual claims of deliberate obstruction from the Opposition, there was an acknowledgement that ‘Deficits have proven difficult to shift in recent years, despite applying significant expenditure controls’. Taxing more, which is apparently different from ‘protect[ing] the revenue base from structural weakness’, has been ruled out. That still allows measures such as enforcing GST payments on low value imports (such as the shopping you and I do over the internet), attempting (apparently again) to ensure that multi-nationals pay tax before shipping profits overseas and looking at ‘the way generous tax concessions are provided in the superannuation system’.

We even got a new (sort of) three-word slogan to illustrate how serious Morrison is: the ‘taxed and the taxed-nots’. Morrison correctly makes the claim that a lot of Australians have not experienced a recession in their adult lives or unemployment rates of over 10%. The jury is still out on the effectiveness of the ‘taxed and taxed-nots’. Probably the gold standard here is now Ambassador Joe Hockey’s ‘lifters and leaners’: while it was an effective slogan as people remember it, Hockey’s period as treasurer was noted only for an increase in the government’s debt and the infamous 2014 budget which still hasn’t passed parliament in its entirety.

Hockey and Morrison point the finger at the ALP for holding up savings measures in the Parliament. Most of the measures held up in the Parliament are spending measures because as Peter Martin reported:
As he [Morrison] puts it, "you don't encourage growth by taxing it more". Of course, withdrawing spending doesn't help much either, but to him it's a lesser evil.

Of the $40 billion in budget measures yet to be passed, more than 60 per cent constrain spending. Only a third, $15 billion, boost revenue.
The two big claims are that more Australians receive more in government benefits than they pay in tax and Australia (the government) will owe $1trillion to others in the near term should action not be taken immediately. Let’s look at the claims.

It’s probably a fair statement to suggest that about half of the population pay no nett tax. At least it was a couple of years ago. The architect of the current taxation and welfare systems, Howard era treasurer Peter Costello wrote an opinion piece in the Daily Telegraph a year or so ago which to an extent justifies his reasons:
Sometimes tax reforms involved lower income earners paying more — like the introduction of the GST — but we were always clear that the welfare system could be used to compensate for that. The welfare system is the way to redistribute income. That is not the role of the tax system. The tax system is there to raise revenue at the lowest cost in the most efficient way doing the least damage to the economy.

If you try to use both the tax and the welfare system to redistribute income you get punishing rates of income withdrawal as a person’s income rises. This is called the effective marginal tax rate (EMTR). As people lose benefits and pay higher taxes they can lose 60, 70 per cent, sometimes 100 per cent of every extra dollar they earn. This creates a huge disincentive to work. It creates poverty traps. And, it heightens the incentive to “hide” additional income.
And Costello has a point — the tax system is there to raise revenue at the lowest cost and do the least damage to the economy. If there is a need to return funds to a section of the community due to adverse circumstances, it is far easier to do so using targeted welfare, rather than arranging for exemptions and conditions in the taxation system. We could discuss the inequity in Costello’s targeting until next week if we wanted to but the professionals, such as The Australia Institute might have a better understanding.

According to The Australia Institute, Peter Costello’s actions during the ‘once in a lifetime’ mining boom was to:
… cut taxes so far and so fast that they forced the Reserve Bank of Australia to rapidly increase interest rates.

While countries like Norway took the benefits of resource price booms and banked them in their sovereign wealth fund, Peter Costello chose to cut taxes for the wealthy instead. He knew at the time that his populist generosity to the highest income earners would force future treasurers to choose between budget deficits or cutting spending on the sick, the poor and elderly. No prizes for guessing which our former treasurer prefers.

The only thing Peter Costello hates more than budget deficits is collecting the revenue needed to fix them. Just as his government did nothing about the long term challenge of climate change, his government did nothing to set up Australia's long term public finances.
If you want to, you can wade through the IMF’s report of government waste and profligacy released in January 2013 here or you can just take The Saturday Paper’s word for it that generally Australia was judged well except for four periods — the two largest under the stewardship of Howard as prime minister and Costello as treasurer (partial paywall). Howard and Costello were buying votes. It’s an easy sell to suggest that if you support my re-election campaign, I’ll give you money back in additional benefits or reduced taxes. As The Australia Institute suggests:
For the record, here are 5 of Treasurer Peter Costello’s most ‘profligate’ and inequitable decisions, which created the structural deficit inherited by his successors;

1. Income tax cuts, primarily for the rich, during the boom. Worth $37.6 billion or $26.4 billion if you exclude bracket creep in 2011-12

2. Capital gains tax discount. Worth $5.8 billion in 2014-15

3. Got rid of fuel excise indexation. Worth $5.5 billion in 2013-14

4. Superannuation tax cuts. Worth $2.5 billion in 2009-10

5. The decision to convert 'franking credits' into cash refunds for shareholders
They have given an explanation why each of the cuts has been incredibly bad value to the economy — go to the article to see them.

In some ways it is a delightful irony that the Coalition treasurers of the ‘twenty teens’ are having difficulty in politically justifying the spending cuts they believe are necessary to achieve their economic aim. Which leads us on to ‘message two’ as recently promoted by Morrison — Australia’s debt will hit a $1 trillion if nothing is done. breathlessly reported last week that Morrison’s statement to the Bloomberg Economic Summit would blow out to $1 trillion within the next 10 years if the government doesn’t get its budget savings through the parliament. Of course, according to Morrison anyway, this is the ALP’s fault and, while it is admitted that the figure is the ‘worst case scenario’, the implication is that Keating’s ‘Banana Republic’ would have nothing on the resulting recession.

Apparently, a trillion looks like this; 1,000,000,000,000. Australia’s annual GDP (our income before expenses) is currently around $893billion (or $893,000,000,000) according to the Parliament of Australia’s website. While all debt does have to be repaid at some point there is bad debt and good debt — a nuance that seems to be lacking in the current political debate.

Bad debt in the case of the government is where they are borrowing money to pay for recurrent items such as wages, the cost of stationery or similar items. To bring it back to a domestic level, if you were to go to the supermarket and petrol station each week and get your groceries and fuel on the credit card while only repaying the minimum amount due, two things would eventually happen: the first is that you would hit the credit limit of the card and the retailers would not accept any further charges; and two, the cost of the groceries and fuel you had already consumed would rise exorbitantly as the usually high interest on the purchases made on a credit card would continue until the debt was repaid in full (together with the interest).

Good debt is something else again. Governments borrow money for capital works and long term investments. Again bringing it down to a domestic level, if you borrow money to purchase a home to live in, depending where you live in Australia you are entering a contract with a financial institution for them to loan you considerably more than you can possibly earn in a year. Here’s an example using Westpac’s ‘How much can I borrow’ calculator for a couple with two dependent children.

Borrower 1 earns around $60,000 per annum and Borrower 2 earns around $45,000 per annum and they have some expenses. If you assume that they have a 20% deposit they would probably be in the market for a property priced around $800,000 to $900,000. To save time, we’ll leave the discussion on what they can/should buy and where to the property websites and TV shows. The point here is that between our two borrowers, their joint income is around $100,000 per annum. The Westpac borrowing calculation is really saying that to purchase a home, they can borrow about seven times their annual income and in parts of Australia, they will need every cent of it.

If our mythical borrowers were contemplating borrowing up to seven times their annual income no one would blink an eyelid, as buying a home is ‘good debt’ and the ratio of around 7 to 1 hasn’t changed for decades.

What we have yet to establish is if the potential government $1 trillion debt is good debt or bad debt. Last Sunday on our website we observed that of the $37 billion in additional debt Australia had placed in the 2016 budget, $36 billion of it was for capital works. Generally capital works are an improvement to a particular site that generates income in some way — either directly (say the construction of a new factory to house a production process) or indirectly (improving people’s quality of life by putting a roof over their head for the long term). Just like buying a home, capital works is generally good debt for government, provided we can meet the repayments, as it improves the amenity of our society through more efficient transport connections, better communications or increased services to the community.

Morrison’s recent speeches on debt and disaster therefore are duplicitous on two levels: while the ALP certainly didn’t clean up the overly generous welfare system, neither did they create it (if anything the ALP and the Greens are trying to inject some fairness into the changes blocked in the 2014 and subsequent budgets so the better off ‘feel the pain’ as well); and if a bank will lend our hypothetical ‘borrower 1’ and ‘borrower 2’ nearly seven times their annual income to purchase a capital item (a home to live in), why is there so much concern about Australia’s borrowings potentially getting to a value slightly over one year’s income or GDP (prior to deductions) in around 10 years’ time?

The problem with all this is that Morrison is claiming a debt of $1 trillion will send this country into a recession like we have never seen before. Who knows, it may — but the chances are pretty remote. The more probable alternative is that our society shares the output from the borrowing by our government and the resultant economic benefits. The economic benefits of the better road, rail line or telecommunications infrastructure makes money for the businesses and individuals who use it, who then earn more and pay more tax giving the government the resources to repay the original debt.

Morrison is half way on his ‘road to Damascus’ in that it recently seems to have ‘clicked’ that alterations to the revenue side of the Australian budget are just as necessary as his and his immediate predecessor’s fixation with the expense side of the ledger to the detriment to those on lower incomes. Now he just needs to understand that there are different types of debt; and some of them are actually good for our society.

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

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