Debt crisis — what debt crisis?


Let’s face it; the Australian public has been bashed around the ears for years by the LNP about the level of government debt. Some economists would contend that Australia doesn’t have any debt — and certainly not a debt problem.

Unfortunately, this piece has to contain some history and economics to illustrate the point.

Australia started issuing currency in its own name in 1910: previously each bank issued its own currency (banknotes). In general, banknotes had a promise to pay the denomination in gold coins at a fixed rate should the bearer deliver the note to the issuing banking institution. The first ‘Australian’ currency was the private bank issued banknotes overprinted with ‘Australian Note’, followed in 1913 by the first government issued ten shilling note. Other denominations soon followed. Australian Government notes could be converted into gold coins at the head office of the ‘Commonwealth Treasury’ — the government body responsible for issuing the notes. Effectively, early banknotes in Australia and around the world were freely convertible for gold.

Countries also operated on a similar basis. An agreement between a number of countries in the early 1900’s (as represented by the USA’s Gold Standard Act) meant that gold was the world currency and that countries had to have sufficient gold in their reserves to ensure prompt payment should every banknote holder decide at the one time to convert their banknotes to gold. While a number of countries banned the holding of gold by their citizens during the period between World War 1 and World War 2, the Breton-Woods Agreement reinforced the ‘gold standard’ between countries from the conclusion of World War 2.

The Breton Woods Agreement meant that signatory countries could convert their gold to US currency at a rate of USD35 per ounce of gold, and the exchange rates between signatory countries’ currencies were fixed in advance. While countries could change the exchange rate between their own and other currencies, changes were infrequent and certainly were not quoted in the media on a daily basis. President Nixon removed the USD35 per ounce trading in gold in 1971.

Following the repeal of ‘the gold standard’ by the US, Australia fixed its currency to the Trade Weighted Index, prior to Hawke and Keating ‘floating’ the currency in 1983. Greg Jericho does a much better job than I can of explaining the whys and wherefores of fixed versus floating currencies here.

Now the history is over, we’ll start the economics. Economists will tell you that all the actions you take today will be made with an economic intent. Should you choose to purchase some milk, the rationale is that the milk is available at a price you consider to be reasonable for your purposes — whether it be to make your coffee taste better or to give nourishment to a child. You will purchase the milk knowing that your $1 per litre could be put to other purposes, say a few apples, but the ‘need’ for the apples does not rate as highly as your ‘need’ for milk.

For the milk to get to your refrigerator, there are a number of economic decisions made: including the farmer raising cows rather than say sheep; the processor deciding to purchase raw milk from the farmer; and the supermarket choosing to purchase milk from the processor. The entire production chain relies on people making a ‘rational’ (and this word is important later) decision that the milk production, retailing and consumption is the best possible use for the money expended in the exercise of getting milk into a cup of coffee.

Economists will tell you that ‘the market’ has full knowledge and is always rational. To an extent it is. If Australians suddenly developed a love of the coffee creamer powders so loved by those on the other side of the Pacific, it stands to reason that there would be a lessening demand for milk — meaning that the farmer would lower his price in an attempt to supply the same amount to the processor. If, on the other hand, in 2015 Australia sold twice as much powdered milk to the US to make additional coffee creamer than we did in 2014, the demand for raw milk would increase, ensuring our farmer better prices for his product.

So how does a discussion on banknotes and coffee creamer relate to Australia’s debt level? Glad you asked – here we go.

Under the gold standard banks needed to have sufficient reserves of gold to pay out anyone that presented a banknote to them in exchange. This process finished prior to World War 2. People still trusted banknotes after the abolition of the ability to hold a private stock of gold, even though the banknote (and coins) used as legal tender were only backed by a government promise rather than a token of some real value. There was a rational belief that sufficient reserves were available to exchange the tokens (banknotes) for intrinsic value at a rate set by the government of the day — even though it was probably illegal to have the intrinsic value in your possession. To this day, we all have sufficient trust in the economic system to accept that the $50 note we receive from the ATM will be accepted by the shop to buy the milk and, as milk costs $1 a litre, we will get some other readily acceptable tokens of value back to make up the difference between the value of the milk and the $50 note (token) we gave the shop. This system is known as fiat money.

Definition: Fiat money is money that is intrinsically useless; is used only as a medium of exchange.

In 2011, the Reserve Bank requested the scrapping of the 5 cent coin, as it cost more than 5 cents to make the coin. It stands to reason that it costs considerably less than the face value to make the rest of our currency tokens.

We still have a rational belief that the currency we use has a value, even though the tokens — plastic banknotes or metal coins — are clearly not worth the face value attached to them and there is no implied promise of backing by intrinsic value.

There is a worldwide demand for currency to pay for imports and exports — and some currencies have greater acceptance for this purpose. In essence, there is also a supply and demand for currency, similar to the discussion on milk prices above. Where there is a market for a commodity, there are also people who will speculate on the ongoing supply and demand of the item. So in addition to the use of a currency for the payment of goods and services, there is also a speculation market for currency, just as there used to be for pork bellies, an indicator of pork production — apparently! Both systems rely on trust and a rational belief that the currency they purchase today will have a value tomorrow — of course, the speculator hopes the value is higher!

Australia has a Council of Financial Regulators (more detail here) that:

… is a non-statutory body whose role is to contribute to the efficiency and effectiveness of financial regulation and to promote stability of the Australian financial system.

Effectively it monitors the health of Australia’s financial system; there is no overarching reference to an external value base or agreement as there was until the 1980’s.

Following conventional economic theory, the value of the Australian Dollar since 1983 has not been tied to the value of a gold brick but whatever the market decides is the correct price at the time of the transaction. In effect, while the Reserve Bank does buy and sell currency in foreign markets to ‘manage the currency’, it is not the final arbitrator of the value of the dollar in relation to other currencies.

The US Federal Reserve and the Bank of England have been using a policy of ‘quantitative easing’ to generate some life into their respective economies for the past few years, following the GFC (‘Global Financial Crisis’) of 2008. The US Federal Reserve has at times effectively printed USD40 Billion per month, after trying a number of more ‘conventional’ strategies such as reducing interest rates (which failed to achieve the desired results) in order to generate spending in the community.

L. Randall Wray is a Professor of Economics at the University of Missouri, Kansas City, and Senior Scholar at the Levy Economics Institute of Bard College, New York. His full biography is here. He writes a blog Great Leap Forward and explains a concept called Modern Monetary Theory here. Very briefly, the theory suggests that while most will pay taxes to the Government and rely on others to provide them with a source of income (salary, wages, welfare, dividends and so on), Governments are the source of money and can clearly manage the supply and demand for money to suit their own purposes. Bill Mitchell, the Professor of Economics at Charles Darwin University has a blog site where he frequently writes about Modern Monetary Theory and argues that poor economic choices, such as austerity (frequently used as an economic tool to ‘pay back debt’), contribute to social problems.

While countries as far back as Germany, in the period between the World Wars, and more recently Zimbabwe and Japan, have attempted to print their way out of economic recession and failed, the US and UK have maintained the confidence of the financial markets. They are issuing the money by way of issuing securities to financial intermediaries and claiming they are producing assets, not currency. The financial intermediaries then profit from the interest paid by the government ‘borrower’. It is worth mentioning here that while the UK and USA were printing money and remaining ‘solvent’, the so-called ‘PIGS’ of Europe (Portugal, Ireland, Greece and Spain) didn’t have the option as they use the European Community currency known as the Euro. It was impossible for the “PIGS’ to print their way out of trouble as they couldn’t manufacture the underlying ‘security’ as well as control the issue of the currency — Euros are not country specific.

Rudd’s $900 cheques issued to a majority of Australians during 2008/9 was another method of ensuring there was a significant input of money into the economy. It really doesn’t matter how much of the money was used for ‘useful’ endeavour or spent at the TAB, the spending of the money keeps people employed, and they then go and spend money and so on.

John Kelly, writing on the Australian Independent Media Network website claims there is a Ridiculous Debt and Deficit Scam where 90% of us pay to benefit the remaining 10%. Basically we all pay taxes which go to the government — the government then pays interest on debt over securities it created and borrowed against in the first place in the commercial money market. The lenders in the commercial money market include those same financial institutions that collectively report billions in profit each year.

So while most of us have three options to ensure we have sufficient income to pay our debts — receive a higher income, reduce expenditure or win the lottery — governments have a far ‘better’ option: they can make more currency by issuing intangible assets, borrow on them and then pay interest to the finance industry.

Evidence of the reality of Australia’s debt crisis is the country’s current credit rating which is a reflection of how concerned lenders would be if approached by Australia for a loan. Issuing intangible debt will not work forever as there has to be an element of trust to a rational person that the currency does represent something, and the US and UK seem to understand this.

However, if the current Australian Government’s low percentage of debt to GDP suggests we have a ‘debt crisis’, why isn’t there continual coverage on when the US or UK economies will collapse, causing a global financial depression greater than the GFC and Great Depression combined, together with ‘experts’, time clocks and the usual level of media hyping. Could it be that Australia’s debt crisis is politically motivated rather than a reflection of the current global perception of our ‘national debt’?

Is the current rhetoric to repay debt necessary?

Should the Australian Government be attempting to improve the wealth of all Australians rather than reducing expenditure?

What do you think?

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TPS Team

10/08/2014This week 2353 takes us back to things economic, providing a very good background to how macroeconomic theories got to be where they are today. He then poses some interesting questions - is the debt and deficit rhetoric we hear from the government just meaningless noise? How should governments of whatever flavour approach economics in the 21st century? Let us know what you think in comments.

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10/08/20142353 What an interesting history you have given us of the way in which currency has evolved over the years. Thank you. You mention Modern Monetary Theory. This concept is well explained in Warren Mosler’s fascinating book [i]The 7 Deadly Innocent Frauds of Economic Policy (MMT – Modern Monetary Theory)[/i] to which totaram drew my attention recently. The ‘Deadly Frauds of Economic Policy’ Mosler lists are: - The government must raise funds through taxation or borrowing in order to spend. In other words, government spending is limited by its ability to tax or borrow. - With government deficits, we are leaving our debt burden to our children. - Government budget deficits take away savings. - Social Security is broken. - The trade deficit is an unsustainable imbalance that takes away jobs and output. - We need savings to provide the funds for investment. - It’s a bad thing that higher deficits today mean higher taxes tomorrow. Readers will recognize that these frauds are the very ones that Joe Hockey and Mathias Cormann have propagated, frauds dutifully echoed by economic dilettante Tony Abbott. The frauds were meant to convince the people that we have a ‘debt crisis’, a ‘budgetary emergency’ that required immediate, urgent, and drastic budgetary action. Fortunately, economists, and more and more ordinary people, have picked these assertions as frauds, to the chagrin and dismay of Hockey and Co, who now have a serious and widening credibility gap. Mosler shows how these ‘frauds’ are named appropriately. His book of 117 pages is obtainable by download onto Kindle from Amazon for $1.04. It is well worth that modest price. Like your account, 2353, it takes the readers by the hand and walks them at an easy pace through the complexity of the applicable economics. http://www.amazon.com.au/Deadly-Innocent-Frauds-Economic-Policy-ebook/dp/B00BGWOXEK Thank you 2353 for an interesting walk through monetary history.

Michael

11/08/2014Saw Joe Hockey on ABC News24 today, and I'm sorry, folks, he convinced me with his every word that there IS a "debt crisis". The debt of smashed truth he owes us all is growing every day, and is well beyond 'crisis'.

Michael

11/08/2014While the practice described in this article from The Guardian http://www.theguardian.com/world/2014/aug/10/abbott-lies-web-domain-names-registered-in-liberal-party-name is far from unusual, the fact that the Liberal Party registered a website with "Abbott Lies" in the name on the very night that the first Budget was delivered tells us virtually the whole story. The phrase itself (technically a clause for the grammarians), sums up The Abbott Error to a 't'.

Ken

11/08/20142353 Fascinating piece not only for the absence of a genuine debt crisis, but regarding the whole economic system. It makes one wonder why it works at all and why the 'finance' industry has become so large in the UK, the US, Oz and many other countries. I read recently that the finance services sector in the US had increased from 10% of the value of the economy in the 1960/70s to 30% before the GFC. And they are making super profits trading in something that has no intrinsic value. Something doesn't add up!

DMW

11/08/2014Ken the system can be summed up with two words: [i]Ticket Clipping[/i]

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12/08/2014Folks I have just now spoken with Casablanca. She is taking a break while Federal Parliament is on its mid-winter break. She will be back later. Watch this space!

Ken

13/08/2014Don't you just love ordinary Joe! Poor people don't drive as much as rich people, according to our Treasurer. Which planet does he live on? Cigar smoking and completely out of touch with ordinary people.

Jason

13/08/2014Ken, Yet our "infrastructure" Prime Minister wants to build the roads of the 21st century WHY?

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13/08/2014Ken Smoking' Joe is meandering further and further from reality. His 'poor people don't drive' quip was stupid and thoughtless. Yes they do drive Joe - they drive their battered Kingswoods. Jason Abbott's roads of the 21st Century are for those which do drive - those with a BMW, a Merc or a Maserati - the real people, people of class.

Catching up

13/08/2014Joe should shut up for a few hours. The more he speaks, the bigger the hole gets. Abbott not doing much better in London.

Ken

13/08/2014Catching up This whole so-called government needs to stop and think before shooting off their mouths. As everyone knows I am not an LNP person but for Australia's sake, we need someone who can actually say something intelligent, who actually manages a thought process before speaking. And then Joe tries to justify it with some stats. Like any single set of stats, they don't tell the whole story. Could it be that poor people (the bottom decile) spend less on petrol because they can't afford to spend more. Der!

Catching up

13/08/2014Ken twitter is having fun with Joe. I think after today, he might be finished. What can we expect next. I am going for massive reshuffle. Abbot will show loyalty to none. Could Mr Murdoch be in London?

Neale

14/08/2014Bill Mitchell should be required reading for those who attempt economic "commentary" in Australia. As for Zimbabwe, read this one from Bill in 2009 (Zimbabwe for Hyperventilators: http://bilbo.economicoutlook.net/blog/?p=3773

Casablanca

14/08/2014Catching up, You ask if Murdoch is in London. He could be there but something that did emerge yesterday is that PM David Cameron was not there. Abbott actually said in his London presser that he had spoken by phone with his UK opposite number. Unless it has been picked up on Twitter, no one in the MSM has queried why Abbott had to go to London to speak to David Cameron by phone. I know that Abbott is no techo but surely he knows that Australia and the UK are connected by telecommunications!

Ken

14/08/2014Casablanca Or was it just that Cameron has more sense than to be seen with Abbott.

Casablanca

14/08/2014[b]As the blunders grow in number, can anyone actually challenge Abbott?[/b] Bruce Haigh. 14 August, 2014 Over the next couple of years, the composition of the Senate will see some of Abbott’s sillier legislation defeated. But that will not change the character and style of his team. The prime minister has indicated he is incapable of learning. He governs like a student politician. He appears to have no capacity for introspection or even to listen to the words he utters. For instance, he says Australia is assisting with humanitarian assistance in Iraq because we are a caring nation, at the same time as he lets distressed men, women and children – many of them Iraqis – lose their minds in detention. His predilection for playing fast and loose with the truth, occasionally contradicting his own statements within days or even hours, indicates a degree of immaturity not seen in an Australian prime minister since Billy McMahon. Does any prime minister have a “mandate” to be so careless while implementing an agenda this ideological, wrecking what had been long-term, middle of the road policies, perfectly workable and fair, which enjoyed broad community support? http://www.theguardian.com/commentisfree/2014/aug/14/as-the-blunders-grow-in-number-can-anyone-actually-challenge-abbott?CMP=ema_632

Catching up

14/08/2014Billy McMahon was never this bad. Abbott is in class of his own.

Casablanca

14/08/2014Joe Hockey is still standing by his comments about poor people and their cars. Naturally he is saying that the criticism is hysterical and comes from Labor and the Greens. But Cory Bernardi has just added his voice to the growing chorus from within the government. [b]'Poorest people don't have cars': Joe Hockey shrugs off criticism over fuel excise comments[/b] Karen Barlow and Louise Yaxley 14 August 2014 ..the Parliamentary Library found in 2001 that raising the fuel excise would be regressive, because low-income earners paid a higher proportion of their income on the tax than higher earners using the same amount of fuel. http://www.abc.net.au/news/2014-08-14/hockey-under-pressure-over-petrol-excise/5669570 [b]Joe Hockey's comments on poor not driving cars sparks Twitter storm on #OtherThingsThePoorDontDo[/b] Lucy Cormack. 14 August, 2014 From "write a thank you note for a bottle of Grange" to "arrange 60K scholarships with nil-HECS for their kids", the growing list of "other things poor people don’t do" is a blunt response to Mr Hockey’s efforts to justify the government’s proposed increase in fuel excise. http://www.canberratimes.com.au/federal-politics/political-news/joe-hockeys-comments-on-poor-not-driving-cars-sparks-twitter-storm-on-otherthingsthepoordontdo-20140814-103v9u.html

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14/08/2014[b]Heil the adult government! A play in several parts[/b] [i]Prologue. A herald addresses the audience:[/i] [i]Recall how many times Tony Abbott promised us that if elected he would head an ‘adult government’, one that would contrast starkly with the immature, incompetent, chaotic Gillard and Rudd governments? Can you remember hearing that haughty promise over and again? Recall how he painted Labor as a gaggle of kids, squabbling as they played at being a government, pretending, as kids do, but not really knowing what they were about. Six hundred pieces of legislation, passed despite vitriolic, hostile opposition, were never allowed to accrue to Labor’s credit. In Abbott’s eyes they remained a mob incapable of adult behaviour. All the adults were on the opposition benches – all the maturity, knowledge, experience and expertise was there. Recall how when playing make-believe, kids use their imagination; trying to simulate the real situation, to act like grown-ups. We are still waiting for the Abbott government to show if it really is adult. The signs are not encouraging.[/i] Senior ministers are taken one by one and given the ‘adult test’. [b]‘Adult-in-chief’, Prime Minister Abbott [/b] [i]Act 1 Scene 1[/i] [b]Abbott – The Big Man![/b] Abbott seeks to emulate Putin, that bare-chested, horse-riding macho man. He realizes that he is but a child-like shadow of the Russian dictator, but nevertheless puffs out his hairy chest, accuses him of being behind the MH 17 atrocity, talks daringly and pointedly about bringing the perpetrators (the Russians) to justice, labels him as a ‘baddie’, calls him a bully, threatens him with trade sanctions, and then some more, accuses him of subterfuge when sending a convoy of aid to east Ukraine, (as does Julie Bishop, who cops a Russian backhander for her trouble), and leaves Putin’s attendance at the G20 summit hanging in the air. There he is, just like a kid, hands on hips, jaw jutting, acting out his tough guy stance in the schoolyard for the benefit of his toadies, with his Foreign Minister standing just behind him, thumbing her nose. He’s playing to a domestic audience hoping to hear ‘good onya Tony’ reverberating from the boys at the front bar, clutching their ice-cold schooners of VB. He hopes his tough talk will give him a boost with his sycophants, and indeed he has had some success. His dignity and apparent compassion for MH 17 victims, which certainly did earn him some kudos, faded though as his attention reverted to tough macho man talk, and as he conflated the MH 17 tragedy with Islamic extremism which he painted as the threat to our way of life that needed drastic action. The schoolyard loudmouth could not resist the chance to big talk himself. He played the protector. The game plan was to first scare the chooks so that they ran around squawking in terror, but then promise to look after them, so they would lamely fall into line, quivering. Abbott the kid, the Big Man, was on full parade. Very little adult to be seen there! So much of the time Abbott looks like a kid play-acting the hairy-chested tough man, often with unseemly condescension. His gentler moments stand out in stark contrast to his bullyboy demeanour. We know he’s been a pugilist from his university days; how much has he grown up since then? [i]Act 1 Scene 2[/i] [b]Abbott – The Slogan Man[/b] Kids love smart slogans, a few clever words they can use to berate their enemies, to humiliate and bully the little kids, and most of all to look awfully smart. Abbott is this country’s three-word supremo. ‘Stop the boats’, ‘axe the tax’, ‘repay the debt’ still ring in our ears. Now we have a couple of new ones: ‘Operation Sovereign Borders’, and more recently ‘Operation Bring Them Home.’ Presumably, he believes that such superficial mantras are effective, and he’s probably right for some of his supporters. But he really is treating the electorate like children as he continues to assail us with such trivial representations of complex issues. When he throws his slogans around, he sounds like the schoolyard loudmouth he is. Now we have ‘Team Australia’. All of us had better join Team Australia or we will be not be seen as team members, but as traitors. Again, his use of the term is childish, immature, and offensive to any who by implication don’t belong. Such as Muslims with extreme views! When will he grow up? Can he? Abbott, the slogan-mouthing kid, is there for all to see. [i]Act 1 Scene 3[/i] [b]Abbott – The Liar[/b] There are lies, more and more lies; there is no need to catalogue them. Habitual and unashamed lying is not necessarily a childish attribute – adults do pretty well in the lying stakes – but when he bald-facedly tells his astonished Party Room that he has kept [b]every[/b] election promise, is that adult behaviour? A kid might think he could get away with such a mendacious claim, but what mature adult would so think? Writing in [i]The Guardian[/i], Bruce Haigh writes: “[i]His predilection for playing fast and loose with the truth, occasionally contradicting his own statements within days or even hours, indicates a degree of immaturity not seen in an Australian prime minister since Billy McMahon.”[/i] http://www.theguardian.com/commentisfree/2014/aug/14/as-the-blunders-grow-in-number-can-anyone-actually-challenge-abbott We agree. With an immature leader like Abbott, what better can we expect from the rest? The child within Abbott keeps popping up like a creepy clown in the box. Only blind-sided sycophants can’t see the clown. Glimpses of any adult within are elusive. [b]The Abbott government is a gift that keeps on giving. So there’s more to come – lots more in Heil the adult government![/b]

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14/08/2014[b]Heil the adult government! A play in several parts[/b] [b]George Brandis Attorney General[/b] [i]Act 2 Scene 1[/i] [b]The ideologically driven law man[/b] Second in rank only to the PM in the Federal Executive Council, what ought we to expect from such a senior officer holding such an important post? How adult is he? In his efforts to convince public opinion of the validity of his proposed watering down of s18 of the Racial Discrimination Act, he has managed to alienate almost every ethnic group with his ideologically-driven exclamation: “We all have the right to be a bigot”. He has been harping on the ‘free speech’ theme for ages, determined to mount a defence for Andrew Bolt, convicted of criminal disregard for the Racial Discrimination Act. In the process he has single-handledly put offside the very groups that he needed to convince. How adult was that? That one utterance killed stone dead his intention to revise s 18c. His colleagues know this all too well. His performance in the Senate was classic bullyboy. Plethoric and spluttering with fury, he harassed us all with his learned opinion, never stopping for a moment to ask: “What do you think?” His hypertrophied ego led him to believe that anyone who did not go along with his views was an ignoramus. And he persisted with his views even as criticism of his attitude mounted and mounted. He argued that he was right even as contrary views assailed him. He assumed he was right, that he [b]must[/b] be right. Although Abbott decided to call it quits and shelve changes to s 18c as a lost cause, Brandis still petulantly insisted they ought to be addressed. How smart, how ‘adult’, how grown up was his performance in this matter? He behaved like a rank amateur, not the mature experienced behaviour we expect from someone as senior as the first law officer. [i]Act 2 Scene 2[/i] [b]The confused minister[/b] As if this was not enough of a display of immaturity, even those who still supported him gave up when he tied himself in knots in an interview with David Spears about ‘metadata’. While it was in his bailiwick to attend to matters of national security, while it was reasonable for him to respond to requests from ASIO and the AFP for more consistent collection of metadata, he showed immaturity and poor judgement when he went into an interview where the issue of metadata was bound to be raised without being a full bottle on what it was, or at least being prepared to deflect questions about metadata to someone who did understand the concept, such as Malcolm Turnbull, the Communications Minister, who subsequently was able to explain it in understandable terms. Instead, he left Turnbull altogether out of the ministerial discussion of the matter in a petulant display of ‘Let’s not give Turnbull a leg up’. It would have been so easy for Brandis to enter the interview ready to explain the security issues for which he is responsible, but equally ready to say: “The one to explain the concept of metadata and how it might affect the man in the street is our Communications Minister, Malcolm Turnbull. I’ll leave the technicalities to him”. That would have been acceptable to the viewers, would have go him off the hook, and would have circumvented the most stumbling, confused, incoherent, embarrassing interview that Brandis has ever given; indeed it ranks as a strong contestant for the award of the most incompetent interview from a government minister ever. Why did he do it? Ego? Arrogance? Immaturity? In these two stark episodes, George Brandis has shown that he has not yet grown up. His over-active ego has led him to believe in his own omnipotence, his omniscience. Like Abbott, his belief in himself has exceeded his competence – a sign of immaturity. So here is the number two minister failing the adult test. [b]There’s lots more to come in Heil the adult government.[/b]

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14/08/2014Neale If you haven't been here before, welcome to The Political Sword. Do come again. Joe Hockey and all his economic advisers should read Bill Mitchell's piece. Indeed anyone, politicians, journalists and others who comment on national economics ought to familiarize themselves with the intricacies of all aspects of economic thought and practice, rather than push their favourite model, so often chosen because it suits their ideological position. Honesty and rational discourse is too often missing, to often irresponsibly absent.

TalkTurkey

14/08/2014Good Evening Comrades, I must say, at the moment, I'm finding it hard to find anything singular about which to write. 2353 though, thank you for your lead article, I think I understood most of it but what I experienced as I read it was a fond memory of the prettiness and charm of silver coins, Edwardian ones of which would wear smooth, and which would ring when you dropped them. The last silver coin was the round 50c, after the introduction of Dismal Guernsey of course, a big coin, same size as the rather useless dodecagonal coin what we got now. The round one wasn't bad, but the value in silver was more than the face value - and they disappeared almost overnight, I'm told Chinese dealers bought them up. Now our cupro-nickel coins are pretty dull and they sure don't ring. They don't even clink. They just klk. They might as well be Kiwi currency! :) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ There are just so many things that make my blood boil these days, I really can't keep up writing it all down. Whether it's incarceration rates of indigenous people cf whites, or the bombing of Gaza, or Abborrrtt's latest posturings in wherever, or channels for coal vessels through the Great Barrier Reef, or the Media's treatment of Craig Thomson and Peter Slipper or people shooting Koalas with slug guns, or Morriscum's criminal treatment of Asylum Seekers, or whatever it is, there's so much to bring me to fury or to fight against now! It's everywhere! Well ... Well ... That's how it is. As someone said, hilariously, on the #ICAC twitter site today, It definitely isn't Kansas. So ... We fight on. All we can do. AND - We're winning, on this island anyway. I've been following #ICAC, and it is wonderful watching the ninepins fall. Yes NINE! Crookedness is rife in the Liberal Party, from bribery and hegemony, through perjury and slander, to conspiracy to pervert the course of justice in matters of great moment. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Me Mighty Mate Jason Obelix & I went to hear Tony Burke in a local pub a couple of nights ago. Oooh he's so nice. All smiles, softly spoken, excellent raconteur, everybody got to meet him and I got a nice couple of 3D photos of Jason with him. Jason will appreciate those photos when he grows up. And dam, Tony's funny - gee we need humour, I've always said so. Bon soir mes camarades.

Bacchus

15/08/2014You're on fire Ad! Love your [i]play in several parts[/i]! Enough material there for a couple of full-sized articles? ;-)

Casablanca

15/08/2014[b]FULL COFFERS: INSIDE JOE HOCKEY'S PROPERTY PORTFOLIO[/b] The treasurer and his wife own four properties with an estimated total value of more than $10 million. They include: . Five bedroom, turn-of-the-century mansion in Hunters Hill, one of Sydney's most expensive suburbs . 200-hectare cattle farm in Queensland, with a homestead . Six-bedroom holiday house with 180-degree water views in Stanwell Park, one hour south of Sydney . Residence in Forrest, one of the most elite suburbs of Canberra http://www.dailymail.co.uk/news/article-2724463/nside-privileged-life-Joe-Hockey-doesnt-think-poor-people-drive-cars.html#ixzz3AQ2quV7V

2353

15/08/2014Casablanca - if the UK Daily Mail is listing Hockey's property interests and implicitly inviting criticism; things are certainly not going his way.

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15/08/2014Bacchus Thank you for your kind remarks. There's more to come. The Abbott government is a gift that keeps on giving.

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15/08/2014Casablanca Joe clearly does not fit the category of a 'poor' person. It is pleasing to see that he'll be able to manage the costs of fuel indexation.

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15/08/20142353 The media is beginning to laugh at Joe Hockey. Now that has started, he is being seen as fair game for unpleasant exposure. His immaturity is being revealed almost every day. His embarrassment has begun, as we saw today with.his grovelling apology.

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15/08/2014[b]Heil the adult government! A play in several parts[/b] [b]Eric Abetz, Leader of the Government in the Senate, Employment Minister [/b] [i]Act 3 Scene 1[/i] [b]The job application charade[/b] George Brandis can’t have it all his own way. Eric Abetz is now breathing down his neck for the accolade of the government’s most inept senior minister. He has a couple of mega bloopers to his discredit. First, as Employment Minister he came up with the brilliant idea of punishing the unemployed, those bludging leaners who sleep in, then sit around all day watching TV and boozing, by proposing that to occupy their lazy hours they must apply for a job every morning and another in the afternoon to gain or retain benefits. As they would be allowed to take weekends off, this amounts to only 40 applications per month, a task Abetz feels would be reasonable for anyone with nothing to do: “[i]We undertook what we believed would be a fair consideration of an application of a job every morning and every afternoon - that should not be too onerous,"[/i] he said. [i]“There doesn't seem to be a community complaint with the cut-off of 20 job applications per month, so one assumes one might be able to increase that without too much extra community concern.”[/i] How much adult thinking went into that conclusion? In a stunning exhibition of immaturity and naïveté, Abetz continued to argue the merit of his scheme despite the incredulity of businessmen, colleagues, opposition politicians, the unemployed themselves, and the public generally. He puts out a scheme that all except a few colleagues think is crazy, Assistant Employment Minister Luke Hartsuyker excepted, and argues its merit as if the brickbats hurled at him from every direction did not exist. There were 756,700 unemployed persons in July. At 40 job applications per month that amounts to a total of over 30 million job applications per month directed to those who advertise jobs and to any others the unemployed can target. Imagine that! Businessmen did. They was horrified. A software developer proposes to develop an App to facilitate job applications, with an option to copy Eric Abetz with each application – a threat of 10,000 emails a day in the Abetz Inbox! Christine Milne said [i]"I just can't help but think that people sitting in Canberra, on a deck chair outside smoking a cigar, telling a young unemployed person in Burnie, Tasmania, 'You apply for 40 jobs'... Where? Then Eric Abetz telling them 'Go to Melbourne and get a job'. Where are they going to live?"[/i] On [i]Lateline[/i] in response to Emma Alberici’s comment about jobs being sparse, he responded: “[i]When jobs are sparse, it means that you've got to apply for more jobs to get a job.”[/i] Can you believe that he actually said that? Here’s the link to that awful interview: http://www.abc.net.au/lateline/content/2014/s4055837.htm Milne suggested the Newstart Allowance be increased by $50 a week so jobseekers have enough money to be able "to eat, clothe themselves and be in a jobs-ready position." One could add: ‘and have enough money to prepare job applications, dispatch them and travel to interviews’. There is no need to labour the point that Abetz, despite his seniority, despite his long experience, despite his having been a member of that supremely adult government, the Howard Government, simply had not thought this idea through to its natural conclusion, one even high school students could have arrived at after a few minutes of discussion. Abetz allowed his neoliberal ideological stance, and his disdain for the unemployed to overrule his common sense. Instead of insisting on a mature debate, he shot from the hip and looked foolish in the process. There are now signs that at last he may be preparing to back down. It is hardly adult to go off so half-cocked, to propose a policy so poorly thought through, and to do so without careful consultation with the many stakeholders. [b]Heil another celebrity in the adult Abbott government![/b] [i]Act 3 Scene 2[/i] [b]The abortion blooper[/b] As if one gross blooper, as if one display of immature behaviour was not enough, Abetz was soon back on the job making another extraordinary statement that managed to upset women generally, particularly those who have had an abortion, and especially those who subsequently developed breast cancer. It cut a damaging swathe. It all occurred in an edition of Channel Ten’s [i]The Project[/i] that focused on the US-based anti-homosexuality [i]World Congress of Families[/i] that was about to be held in Melbourne. When asked if he believed the "factually incorrect" statement that abortion leads to breast cancer, Abetz replied: [i]"I think the studies, and I think they date back from the 1950s, assert that there is a link between abortion and breast cancer.”[/i] You can read the whole sorry story here: http://www.smh.com.au/federal-politics/political-news/eric-abetz-draws-link-between-abortion-and-breast-cancer-before-world-congress-of-families-20140807-101p60.html#ixzz3ARlxZbCq Since then, Abetz has tried to squeeze out of his blooper, insisting that he was ‘interrupted’ in his reply and therefore misrepresented. The question is: ‘Why did he go into that territory at all, given that he knew full well it was contentious?’ I suspect it was because he has sympathy with that view, one held by the Congress organizers, and could not resist the bait that was so obviously thrown to him. The upshot was a strong reaction from women, women’s groups, and men who saw the remark as insensitive, hurtful, and potentially anxiety provoking for any woman who had had an abortion. It was childish in the extreme, not one that one would expect from a senior member of an adult government. To add insult to injury, another senior minister, Kevin Andrews, is an ‘ambassador’ to the Congress. What sort of message does this give to women? What next can we expect from the sanctimonious Abetz, who seems so readily able to put his foot in it. [b]Heil the adult government.[/b] You know there is still more to come!

Casablanca

16/08/2014Ad Love your [i]Heil the adult government! A play in several parts[/i] and I eagerly await further installments. Meanwhile, over at satirical site 'The Shovel' are the following items which complement your piece on [i]Erica[/i] beautifully. [b]Link Found Between Eric Abetz And Total Stupidity[/b] Scientists have discovered a link between Employment Minister Eric Abetz and total fucking stupidity. The link was first identified in the late 1950s, but was confirmed with overwhelming evidence in a comprehensive study undertaken this week.“We’d always suspected there was an association between the two. But this latest study puts the question beyond doubt,” the study’s lead scientist said today. www.theshovel.com.au/.../ [b]Work For Dole: Unemployed To Spend 25 Hours A Week Helping Companies Sift Through Job Applications[/b] Asking unemployed Australians to “apply for a job of a morning, and sort through a pile of poorly-thought out, templated job applications of an afternoon”, Employment Minister Eric Abetz today announced further detail about the Coalition’s new Work For The Dole scheme. Mr Abetz said there was simply no other way companies will be able to cope with the influx of job applications they are likely to receive when changes to employment benefit rules come into force. “What we have here is an available, underutilised resource that we can put to good use. It’s a chance for jobless Australians to contribute, and also for them to learn valuable administrative skills,” he said. The job application assignments will work in tandem with a range of other placements. www.theshovel.com.au/.../ [b]Work For Dole: Jobless To Spend 25 Hours A Week Building New Bookshelf For George Brandis[/b] Australians who receive unemployment benefits will be required to work up to 25 hours each week on the construction of a new bookshelf for Coalition senator George Brandis, under sweeping changes to the Work For The Dole scheme announced today. Describing the program as “nation building”, Employment Minister Eric Abetz said it was an opportunity for unemployed people to contribute to an important Australian institution. “If someone is receiving unemployment benefits, it is fair and reasonable to expect that they give back in some way. Here is a chance to put in an honest day’s work and gain some building and manufacturing skills at the same time”. While conceding the work would be hard at times, Mr Abetz said it was a rare opportunity for Australians to see one of the country’s largest literary collections. “Workers won’t be able to touch the books of course, but they will be able to view them from a distance, which I think is only reasonable” he said. As many as 15,000 of Australia’s unemployed will be assigned to the construction site at any given time. www.theshovel.com.au/.../

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16/08/2014Casablanca Thank you for your kind comment and the links to 'The Shovel' website. Each time I attempted to access the links you left, I got the message: [i]Not Acceptable! An appropriate representation of the requested resource could not be found on this server. This error was generated by Mod_Security.[/i] I wonder what's going on! Anyway, I was able to enjoy reading the words from the three pieces that you posted.

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16/08/2014Folks We are not the only ones astonished by the naiveté and infantile idiocy of two senior members of the 'adult' Abbott government, George Brandis and Eric Abetz. I came across this piece in [i]The Guardian[/i] in a segment title [i]Australia Culture Blog[/i]: http://www.theguardian.com/tv-and-radio/australia-culture-blog/2014/aug/11/eric-abetz-and-george-brandis-give-the-bachelor-a-run-for-idiocy You will enjoy the humour.

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16/08/2014Folks There has been a lot of talk recently about inequality. Some of you will have seen some more discussion of this last night on [i]Lateline[/i] when Steve Cannane interviewed billionaire venture capitalist Nick Hanauer who recently wrote an essay for [i]Politico[/i] magazine titled [i]The Pitchforks are Coming For Us Plutocrats[/i]. Hanauer described a trend in the US thus: "[i]...a polarising trend where wealth and political and economic enfranchisement is accumulating at the very tippy top and everybody else is falling farther behind, and my point is simply this, that if this trend continues, there is simply no doubt that... that will result either in a police state or an uprising, that there just aren't any examples in human history where you could concentrate wealth and power at the very tippy top that didn't eventually end badly for everybody."[/i] Later he said: "[i]...the top one per cent of Americans shared about eight per cent of national income 30 years ago. Today, we share over 20 per cent, while the bottom 50 per cent of Americans share of income has fallen from 18 to about 12 or 13. If the trend continues, the top one per cent of Americans will share over 30 per cent of national income, while the bottom 50 will share just six, and that is a recipe for disaster."[/i] If you missed [i]Lateline[/i] last night, these quotes will give you a taste of what was an absorbing interview. You might be surprised at some of his recommendations. You can see it and the transcript here: http://www.abc.net.au/lateline/content/2014/s4068402.htm

Michael

16/08/2014"Well, plainly I wouldn't say that" said Abbott of Hockey's 'poor people and their cars' imbroglio. Plainly the PM's office white-anting of Hockey (not that Peta has had to try hard) is maturing ready to burst. Hockey will be gone, either throwing his humiliated handbag down, or tossed by a regretful PM whenever Sloppy Joe next screws up, and that leaves Abbott untouchable at the apex of the Liberal Party in Parliament... according to apparent Peta-thinking. Unfortunately for Peta and Abbott, the "apex of the Liberal Party in Parliament" is tissue-thin and flat as an empty A4 page on a desktop. Empty A4 pages are perfect for resignation letters, PM. End The Abbott Error now.

Michael

16/08/2014More beating up of the unemployed to come: http://www.theaustralian.com.au/national-affairs/tough-new-job-interview-rules-for-unemployed/story-fn59niix-1227026239488?from=google_rss&google_editors_picks=true ...with this weasel government requiring that job agencies do the 'beating up'.

Michael

16/08/2014The link to The Australian above worked for originally but not clicking through from here, so... Here's the story (and another disgusting indictment of The Abbott Error is is). Even if a job seeker has literally been beaten up, and consequently fails to attend a job service interview, they'll be punished! The Australian newspaper: UNEMPLOYED people who miss an appointment with their job provider without an “extreme” excuse will be docked welfare payments until they attend a new appointment, under a dramatic strengthening of dole requirements. The Weekend Australian has obtained a letter sent from the Employment Department’s deputy secretary Jennifer Taylor to job providers which outlines how the tough new rules will work, including the possibility that those who miss an appointment may not have their payments backpaid when they start attending appointments again. In an unprecedented move that is alarming job agencies, the new rules strip Centrelink of the power to make decisions and give job agencies unprecedented powers. Under the changes, the allowance for “reasonable excuses” for not attending appointments will be changed to “extreme” reasons. Welfare groups and job agencies will urge Labor, the Greens and crossbenchers to disallow the legislative instrument that is already before parliament to toughen the “reasonable excuse” provisions. The previous Labor government sought to change the “reasonable excuse” rules in 2011, but was forced to back down. Groups including the Australian Council of Social Service and Welfare Rights will on Monday tell a Senate inquiry they will fiercely oppose the changes. The instrument before the parliament provides examples of what would no longer count as a reasonable excuse for not going to appointments. It says a person who was “subject to an assault a week before their failure would not have a reasonable excuse” because it would not “directly prevent them from meeting their requirement (unless they were still incapacitated as a consequence of the assault)”. “However, if the assault had occurred the day before their failure, they may still be sufficiently traumatised by the incident to prevent them from complying,” it says. Under the changes, illnesses must directly affect a person’s ability to attend an appointment, so people will no longer be able to say that an ongoing mental illness was the reason for missing appointments, for instance. The changes come on top of a suite of welfare reforms that include taking unemployed people under 30 off the dole for six months at a time if they are not in work or studying, and requiring the jobless to apply for 40 jobs a month. Assistant Employment Minister Luke Hartsuyker said he was committed to ensuring jobseekers did the “right thing” and met their mutual obligation requirements, such as attending scheduled appointments with their employment service provider. “Most jobseekers do the right thing,” Mr Hartsuyker said. “Unfortunately there are some jobseekers who are intent on flouting the rules. “Missed appointments are a significant waste of taxpayers’ money and employment service provider resources. The government’s changes will provide a stronger incentive for people to do the right thing.” The letter sent to job agencies reveals that a new “streamlined non-attendance reporting process” will be introduced to replace the “current complex connection failure and contact request process”. All jobseekers, including those with a “vulnerability indicator”, including homeless people, will have their income support payment immediately suspended if their provider decided to report the non-attendance to the Department of Human Services. The “reasonable excuses” jobseekers can use will be tightened from July 1 next year. “The government considers jobseekers need to be proactive in meeting their requirements and informing their provider beforehand when they are unable to do so and held responsible when they fail to meet their requirements,” the letter says. Providers will decide whether to deny people back payment if they fail to attend an interview, even if they attend the rescheduled meeting. Under current rules, backpay of suspended payments is automatic if people attend a rescheduled appointment, with the rules focused on re-engaging the jobseeker rather than punishment. The letter says the government is “serious about reducing red tape for employment services providers” and expects that the significant reduction in time associated with the changes for reporting non-attendance at provider appointments will more than offset the additional responsibility placed on providers to book new appointments (from September) and make determinations on their excuses (from January). Maree O’Halloran from the National Welfare Rights Network said that if the changes went ahead, they would mean increased financial hardship for people living on $36 a day and more red tape for thousands of employment service providers. “If employment providers assume responsibility for decisions to deny income support payments for people missing regular appointments we fear that this will fundamentally alter the nature of their relationship with jobseekers,” Ms O’Halloran said. “Under these reforms, employment providers will be required to become instant experts on complex social security rules. “This is unlikely and unrealistic.” Jobs Australia chief executive David Thompson said the changes were unprecedented. “It represents a significant shift of responsibility from government to contracted providers and is a matter of very grave concern to mission and values centred non-profit services from a moral point of view,” Mr Thompson said. “On a practical level it will make it hard to establish effective helping relationships with the unemployed because job agencies will become the enforcer. This is quite unprecedented.”

Bacchus

16/08/2014"[i]A software developer proposes to develop an App to facilitate job applications, with an option to copy Eric Abetz with each application – a threat of 10,000 emails a day in the Abetz Inbox[/i]!" Something similar already exists Ad: http://applyforthedole.com.au/dolebludger-app "[i]The DoleBludger app serves one simple purpose - it allows you, the dole bludger, to apply for jobs in as little as 60 seconds! Fulfil your meaningless 10-jobs-per-week quota with a few simple taps. Your resume will be forwarded to the politicians of your choosing, because who better than to help you gain employment than the very people who are cutting your benefits and expecting Australia's near 800,000+ unemployed to send 380,000,000 (that is 380 Million if you can't count) applications per year.[/i]"

Ken

16/08/2014Bacchus The figures (which I think you have mentioned before) show that this 40 jobs per month thing won't last. When businesses start getting heaps of applications from people not really suited for the advertised job, but just sending applications to make up their numbers, they will soon increase their complaints to government about the resources required to deal with the applications and the colossal waste of their time. For a government supposedly committed to reducing red tape for businesses, they sertainly seem to be increasing it at every turn (and I include the information from Michael's comment in that assessment).

Bacchus

16/08/2014For sure Ken - if LNP members start getting applications generated by that app, they'll become some of the main critics! ;-)

Bacchus

16/08/2014Links to Casablanca's 'The Shovel' articles: http://www.theshovel.com.au/2014/08/08/link-found-between-eric-abetz-and-totally-stupidity/ http://www.theshovel.com.au/2014/07/31/work-for-dole-job-applications/ http://www.theshovel.com.au/2014/07/30/work-for-dole-unemployed-george-brandis-bookshelf/

Casablanca

16/08/2014Bacchus Damn that metadata gremlin! Thanks for re-posting the links to The Shovel. I should have mentioned that I provided the whole text of each article above.

Casablanca

16/08/2014[b]Corruption's stench pervades both sides of politics[/b] Jack Waterford, August 15, 2014 Clive Palmer this week accused Tony Abbott of "deserting Australia" on an unwarranted overseas trip, and of abandoning Joe Hockey in his struggle to produce any sort of a budget that can get through the senate. [b]Perhaps instead Abbott and Hockey were putting on an act to distract attention from the systemic mess that is now the Liberal Party of NSW.[/b] It's a mess that has, so far, enveloped only state ministers, but can it be long before the whiff is discernible in Canberra?...For a good many NSW federal politicians, there is no immediate upside to being with those who want a reasonably pure and transparent party system, and plenty of obvious downside. But that is serious short-term thinking, because the public is getting sick of all of the sleaze. And, every now and again, unpredictable things occur, and careers and reputations, and, probably, positions and pensions are suddenly out the door. [b]It's hardly a surprise that an Abbott, or any other politician, will claim to have been looking the other way at the time, or away on urgent national business thanking hearse drivers in Holland.[/b] http://www.canberratimes.com.au/federal-politics/political-opinion/corruptions-stench-pervades-both-sides-of-politics-20140815-104fbk.html

Ken

17/08/2014Abbott now thinks he is being so successful with all this 'foreign affairs' and diplomatic stuff that he can tell the Scots how to vote in the independence referendum. He just can't keep his foot out of his mouth.

TalkTurkey

17/08/2014Heil Ad astra! I've been writing here for nearly 4 years now and you still ASTOUND me! Your Play in more-to-come parts is unlike anything I've seen from you before. (Well of course the material didn't exist before this dreadful Government. The play really deserves to be collected & printed in hard copy for the full impact, and I wonder how it will play out.) Abborrrtt's persona puts me in mind of that line from Macbeth, Act V, Scene 5 : Life's but a walking shadow, A poor player, that struts and frets his hour upon the stage, And then is heard no more: it is a tale Told by an idiot, full of sound and fury, Signifying nothing... Casablanca I never did find out if you went to Burning Man or what happened. What happened? Michael You paint a doleful horizon for the poorer, less educated citizens amongst us. The poorer and more desperate people are, the more they turn to crime, and so the bigger grows the *Corrections* industry. The steel-fisted Americanisation of penal institutions is what these Abborrrttians want. Forced-labor camps are already here, they're called HM Prisons, highly inefficient and hugely expensive but extremely profitable for those who profit: they get free labor, they provide minimum conditions, and are heavily subsidised by the State. I hate the way this country is headed. Can we still turn it around? Come on Labor. Fire up the belly boiler. David Marr called for a Federal #ICAC on Lopsiders today. What's the chances eh?

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17/08/2014Heil TT You are always so generous with your comments. Thank you. There's another part of the ongoing play 'Heil the adult government' coming soon. It's taken a while to compose because there are many scenes. You can guess who it's about. I'm working out how to retain the full play in an accessible form.

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17/08/2014[b]Heil the adult government! A play in several parts[/b] [b]Joe Hockey, Federal Treasurer[/b] There are few in government more senior than the Treasurer; many see him as second only to the Prime Minister. Such seniority ought to attract people of maturity, gifted with a profound knowledge of economics and national finances, free from the iron grip of ideological shackles, open-minded, circumspect, reasonable, competent, and above all ‘adult’. This is no game for kids. Yet sadly for this nation the current incumbent exhibits the converse. Let’s follow his trail of missteps, mistakes, faulty judgement and loud bellowing. [i]Prologue:[/i] Joe Hockey enjoyed being the jovial man; in a comical way his rounded frame added to the aura of good-naturedness. He was a hit when he appeared regularly with Kevin Rudd on morning TV. He was ‘hail fellow, well met’. As the opportunity approached for him to affirm his role as Treasurer, he became more verbose, more assertive, more sure of himself, more convinced of his ability to do the job. His bellowing in the House amplified as he targeted the enemy, the profligate spenders opposite whom he insisted had no idea of how to manage money let alone a 1.3 trillion dollar economy, who, like drunken sailors, perpetually spent and lived well beyond their means. [b]He[/b] was the one who should be doing the job. [b]He[/b] was the one who could drag the nation out of the financial mess that he insisted Labor had created. Over the months before the election he set the scene: a budget disaster of Labor’s making was imminent, one that he could and would fix. Hockey was right to expect he would be Treasurer. [i]Act 4 Scene 1[/i] [b]The debt crisis sham[/b] The Abbott government assumed power and soon the annual federal budget was looming. But our big man was not satisfied that he has sufficiently terrified the people that our nation was in crisis, that it had an unsustainable debt ‘stretching as far as the eye can see’, and getting worse. So he concocted a ‘debt crisis’, and for good measure, a ‘budget emergency’. Maybe because Australia has three triple A ratings and our debt to GDP ratio is so low, he decided that he must ramp up the rhetoric to utterly convince the electorate that our nation’s financial position was dire, and therefore in need of radical repair. The only economists who were of like mind were those at the IPA and a few News Limited sycophants. All the others wondered what Hockey was on about. Hockey was smart enough though to realize that it was not the economists but the ordinary people he had to convince, those who he was going to strike down in his budget. The debt crisis and the budget emergency were a sham from the outset as the current [i]TPS[/i] piece by 2353 [i]Debt Crisis – what debt crisis[/i] shows. Hockey played games with the people, needlessly frightening them. Why did he? Was he afraid that if they were not sufficiently scared he could not bring down the nasty budget he planned? If that were so, that was disingenuousness writ large. But if he really believed his own rhetoric, that was worse – incompetence writ large. Take your pick. Whatever the answer, his behaviour as a member of an ‘adult’ government was childish. [i]Act 4 Scene 2[/i] [b]The budget bomb[/b] We may never know what it was that propelled Hockey to bring down the punitive budget he did, to bring down a budget that disproportionately penalized lower income earners and let the high flyers off the hook. Was it political or economic ideology, or sheer Abbott-induced cussedness? The next piece: [i]What is the Hockey budget all about?[/i] explores these possibilities. Whatever the reasons, Hockey was immensely proud of his budget, so proud that in celebration he smoked a fat cigar with his Assistant Treasurer, the loquacious Mathias Cormann, in full view of prying media lenses – a childish mistake that has forever earned him the irreverent moniker of ‘smokin’ Joe’. Hockey behaved childishly when someone as senior as he ought to have been in adult mode. We expected the man in charge of our large economy to be very adult, just as his boss promised all his ministers would be. All who understand economics and the Australian economy acknowledge that there are longstanding structural defects in our budget, ones that derive from long past decisions about superannuation such as the perks enjoyed by the wealthy, negative gearing and capital gains tax concessions that favour the well-off, and tax cuts and welfare handouts to those who did not need them. These [b]do[/b] need correcting to enable the nation to provide to its people the services a growing and ageing population needs in the decades ahead. But they do not need correcting in one fell swoop, in one harsh, punitive and grossly unfair budget. Adjustments need to be made gradually so that all affected have time to adjust, adjustments that should occur steadily over the next decade or two. But our Treasurer could not, or was not permitted by his masters, to take this approach. He was a man in a hurry who needed to act immediately, and with a heavy hand. Whatever the real reason behind the Hockey budget, the skeptics reasonably asked why a mature man would behave in this way – needlessly panicking the people, just as bullyboys scare the wits out of the little kids in the schoolyard to assert their authority and show their intent. And why would he bring down a budget that was so manifestly unfair? The one feature of the budget about which there is almost universal consensus is that it is grossly unfair. In a very large online poll, nine out of ten respondents rated it unfair; almost every commentator agrees. In presenting his budget Hockey failed the ‘adult test’. And he still fails. Months after its presentation his budget remains largely unlegislated. It has turned out to be a bomb, one still in the process of exploding. His critics are many. Even his traditional allies have distanced themselves. The crossbenchers, whose support he needs, remain firmly opposed. Hockey’s reaction to his opponents was to whine about being unfairly treated. ‘Nobody likes me’ he wailed. ‘I’m the most unpopular man’. Even his traditional allies: business and the media deserted him. The rotund man needed cuddles but none were forthcoming. All he got were hollow reassurances from his front bench that he was doing a great job, a job the nation desperately needed. [i]Act 4 Scene 3[/i] [b]Budget bombast – Poor people don’t drive…[/b] Time dragged on. Hockey eventually realized he would need to consult with those on the crossbenches whose vote he needed to pass his budget measures. All the time his bombast was on show. He was confident these Senators would ‘come to their senses’ eventually. Slowly it began to dawn on him that he would have to do better, would have to be more convincing. His focus fell on the mooted changes to the fuel excise. He felt the need to rebut all the whingeing he had heard about the adverse effects on low-income families of indexing the excise. So he drew some statistics from the ABS, which he used selectively. In pushing the line that it was the wealthy who have the highest fuel costs and therefore pay more excise, he made the extraordinary announcement: “[i]The poorest people either don't have cars or actually don't drive very far in many cases.”[/i]. Even a schoolchild could have nutted out that the fuel bill of the wealthy would be high. With a Merc sedan in their inner city garage alongside the boat, a BMW RV in the driveway, and a beach home they visit most weekends, of course their fuel bill would be high. What Hockey failed to reveal, either deliberately or in ignorance, was that as a proportion of their weekly income poorer people spent more on fuel. An ABC [i]Fact Check[/i] showed that fuel costs “[i]…ate up 4.5 per cent of the incomes of low-income households, but only 1.4 per cent of the incomes of high-income households.”[/i] http://www.abc.net.au/news/2014-08-15/joe-hockey-poor-people-cars-claim-misleading/5671168 Moreover, it found that almost 90% of the lowest income families [b]did[/b] in fact own a car. Another quoted study showed that the average travel distances for people who live on the urban fringe of Melbourne (where many of the poorer people live) was 16.4 kilometres each trip. For inner area residents, which are typically higher income, it was 6.4 kilometres per trip. Motoring Enthusiasts Senator Ricky Muir pointed out that poor people often have old cars with poor economy and no public transport when living out of town. He quipped that they can’t ride a cow to work. He could have added: ‘How many wealthy put only $20 of fuel in at a time to ensure there is enough money left over for food?’ The [i]Fact Check[/i] concluded: “[i]Census data and research from independent experts shows that people on lower incomes have enough cars and drive far enough to feel the impact of raising the fuel tax more than those on higher incomes. "Mr Hockey's statement is misleading.”[/i] So our adult Treasurer, in charge of our 1.3 trillion dollar economy, was wrong on almost every count. The only thing he got right was that the wealthy had higher fuel costs – a fact that hardly required a Rhodes Scholar to discover. [i]Act 4 Scene 4[/i] [b]The Apology![/b] A disturbing aspect of this saga was the persistence that Hockey exhibited in pursuing his spurious case that it was the wealthy who would be bearing the burden of the excise hike, and his argument that the excise was therefore a progressive tax, a claim that the [i]Fact Check[/i] rebutted. For days his denial of what almost everyone was telling him went on. His tin ear was stone deaf. He seemed unable to accept that his words were insensitive, hurtful, politically alienating, stupid, and misleading to boot. He denied being pushed to apologize, but when deserted by both Abbott and Pyne who declined to support his ‘poor people don’t drive’ banter, even the tactless Joe must have seen the writing on the wall. So days later than it should have been, we saw the groveling apology on commercial radio, after which observers debated how many times he said ‘sorry’. It was as humiliating as it was avoidable. Had he apologized days earlier, it would not need to have been so profuse. If you missed it, you can see the sorry saga here: http://www.smh.com.au/federal-politics/political-news/im-very-sorry-joe-hockey-apologises-for-comments-about-poorer-people-not-driving-cars-20140815-3drpn.html In an online poll of over eleven thousand, 86% voted his apology as ‘too little, to late’. So here is a very senior minister in this ‘adult’ government, who may have been genuine when he claimed in his apology that he did not wish to hurt anyone and that he was always supportive of those in need, totally unable to perceive his lack of commonsense, and the political stupidity of his original outburst, and for so long! He has done serious, perhaps irreparable damage to his image, to his political credibility, and to any aura of economic expertise that he professed to have. Can he survive as Treasurer? Can Abbott afford to sack his Treasurer? What do his colleagues think of him? Some of their comments to date are unflattering. Whatever else one can say about Hockey’s performance since the beginning of the budget story, there would be little argument that it has been incompetent, disingenuous, belittling for him and the government, childish, and above all not what we deserve from a senior minister of an ‘adult’ government. [b]Heil, the adult government![/b]
What does two plus 1 equal?