Australia also has a debt ceiling

[doctorj]

I didn't realise it, but Australia has a debt ceiling just like the US and dear Joe Hockey wants to increase it.

http://www.smh.com.au/federal-polit...o-increase-to-500-billion-20131022-2vyog.html

The Abbott government will significantly increase the debt ceiling from $300 billion to $500 billion, with Treasurer Joe Hockey saying he wanted a higher limit to prevent a situation like in the United States where the government was brought to a near standstill.

Mr Hockey, who has long accused Labor of reckless spending and mounting debts, said the federal government expected to reach the existing debt limit of $300 billion around December 2013 and that “peak debt” would now exceed $400 billion.

 

[McLovin]

With a fused executive and legislature, it's not really worth the paper its written on.

 

[Whiskers]

With a still hostile senate until next July, could we be seeing a modern reincarnation of the Whitlam loans affair... or at least the electoral consequences for the unexplained reasons for such a large increase!?

I'm peeved that they choose to raise the limit, rather than do a bit of the Newman thing (but not quite so severely) here in Qld, to promptly start to cull some excess waste and public servants.

 

[robusta]

I didn't realise it, but Australia has a debt ceiling just like the US and dear Joe Hockey wants to increase it.

http://www.smh.com.au/federal-polit...o-increase-to-500-billion-20131022-2vyog.html

Sooooo I listened during the election, Labor were spending like drunken sailors and Liberal were bringing us back to surplus, balancing the books blah blah.

Not sure who said it but "don't listen to what politicians saw watch what they do". It still surprises me how they say one thing while doing the opposite.

 

[sydboy007]

I can understand an increase to say $360B to cover any increases in debt required fo rthe next year or 2, but when the L+NP made so much about the budget CRISIS for the last few years, it's rank hypocrisy that the crisis magically disappeared last September.

Throw in the fact they're blaming the Labor budget forecasts, and it's like saying i took control and have 3 years to turn things around, but it's all their fault since they forecast it would be so bad.

I think Hockey Ponzinomics is starting to realise that with per capita GDP heading negative, debt levels still uncomfortably high in the private sector, unemployment slowly increasing since new jobs are not forming faster enough for the high immigration and population growth, the magic pudding the Howard Govt had is not available to him.

There's plenty of middle class welfare to be trimmed, NG can be easily reforemd for billions in savings, and removing the sacred cow of the tax free shelter called the primary residence is there as well, but since the L+NP spent 5 years being so populist it's hard to see how they will be able to make any tough decisions.

 

[McLovin]

There's plenty of middle class welfare to be trimmed, NG can be easily reforemd for billions in savings, and removing the sacred cow of the tax free shelter called the primary residence is there as well, but since the L+NP spent 5 years being so populist it's hard to see how they will be able to make any tough decisions.

What's wrong with making the primary residence exempt from CGT? Surely if the Productivity Commission found that the current system of stamp duties is lowering Australia's productivity because it discourages labour force mobility then introducing CGT on a primary residence would do even more harm than stamp duty. I'm far more interested in a US style annual land tax, even though I just paid nearly $57k in stamp duty, than scrapping the CGT discount.

 

[Smurf1976]

Why should I pay a tax on inflation?

The primary driver of house price increases is the printing of money and this already constitutes an effective tax on bank deposits etc which lose their real value over time.

There should be no CGT on the primary residence, and all GCT should be reduced by the amount of inflation (as measured by the money supply not fudged CPI figures) over that time. To do otherwise is simply applying a tax on a tax, inflation being the government's creation in the first place.

If they're going to tax, then do it openly an honestly rather than by hidden means such as inflation (itself a defacto tax) then taxing the effects as well.

 

[wayneL]

and removing the sacred cow of the tax free shelter called the primary residence is there as well,

So you want a relocation tax? In addition to the above points, If one needs to sell up to move, for work or whatever, that there will now be a deficit of funds available, to the tune of a CGT, to purchase say an equivalent property?

wayneL's Law certainly in evidence here.

 

[pixel]

In case you've been wondering what all the fuss is about, here is an easy-to-understand explanation.
It's based on the US federal debt, translated to a typical family, with a few zeroes knocked off, so the Trillions become Thousands for easier comprehension.

http://www.youtube.com/watch?v=Li0no7O9zmE

(It's still beyond comprehension though, if you ask me...)

 

[Knobby22]

The thing about the USA is that everyone knows they could start paying back the debt if they wanted to.

 

[pixel]

The thing about the USA is that everyone knows they could start paying back the debt if they wanted to.

How would they do that? Their debt is several times GDP; their federal tax revenue can't even pay the interest.

 

[McLovin]

their federal tax revenue can't even pay the interest.

It can't?

 

[Knobby22]

It would involve reducing defence spending and reducing tax loopholes.

 

[pixel]

It would involve reducing defence spending and reducing tax loopholes.

... and THAT is unlikely to get past the Republican and Tea Parties.

 

[darkhorse70]

haha that video was a crack up.

 

[Smurf1976]

It seems fairly clear that most Western governments currently have expenditure which exceeds taxation revenue, and in most cases there is a substantial debt too.

So what is the solution?

Cut spending? If so, what should be cut?

Raise taxes? Which taxes?

Just run up debt and inflate the problem away?

My own view is that I'd like to see better value in spending firstly. Having worked in the public service (admittedly that was state public service not Commonwealth but I'd expect it's pretty much the same) I'd say there are plenty of opportunities to deliver services more economically. The problem isn't with stereotypical "lazy" public servants, there are a few here and there but you find that in most large organisations, but rather with how things are done in the first place. In short, most "front line" workers do work reasonably hard, at least the ones I encountered did, but they do so under incredibly bureaucratic rules which cause much unnecessary effort and expense to be incurred.

Worst of all is how government buys (or "procures" as they like to call it) things from the private sector. In short, a minefield of bureaucracy overrides commonsense and results in unnecessary expense in terms of both the "how / who" and even moreso the "what" is being done. In short, governments are outright gullible as a customer and business takes advantage of it 9 times out of 10. That's how we end up with things like the insulation fiasco and a myriad of smaller ones that get less attention.

So I'd like to see more efficient delivery of services. In practice that would mean fewer bureaucrats making up silly rules, less use of external "providers" who charge top $ for average (or worse) services, and a greater focus on front line workers just getting on with it. We'd save a fortune this way right across government.

On the taxation side, I think that much could be achieved by simplifying it all. Income is income based on basic principles, a profit is a profit, a loss is a loss and so on. Something is seriously wrong when I need to read 30+ pages of small print to work out what I'm supposed to do with my shareholding in xyz which merged with another company, only to find out the end result could have been explained in a single paragraph. Likewise just about every other tax law seems unnecessarily complex which results in unintended consequences from even the slightest adjustment to taxation rates.

So simplify the laws and close the loopholes. That alone would bring in additional revenue whilst also fairly distributing any increase in taxes.

Downsizing government itself is another key thing. We have an awful lot of taking with one hand, giving back with the other going on. Rather than handing out baby bonuses, this bonus, that payment and some other allowance to people who are themselves paying tax, it would be far simpler to scrap the payments and cut the taxes accordingly. We save all those administrative costs, and keep government further away from the productive economy as a bonus.

Thoughts? All this debt, budget deficits etc will have to be resolved somehow......

 

[robusta]

All too difficult for most politicians whose main priority is to win the next election. Look at the Americans, the can only just manage to kick the can down the road.

 

[Sdajii]

I think you're pretty spot on there, Smurf. Tax dollars being squandered on wastage and inefficiency (as opposed to the wrong things) is a very obvious problem. It just doesn't seem to be a priority to streamline and optimise spending.

Another thing I question is making it too easy for people to take advantage of free services. Free medical care is in some ways a good thing, but it has been taken too far. Too many dole bludgers with too little money to entertain themselves and too little initiative to do anything productive go down to the doctor whenever they are bored. They pretend to have some illness or exaggerate a cold or other trivial issue. They get seen by a professional, feel cared for and important, and often use faked medical issues as an excuse to their friends and family for not doing anything productive with their lives. We should at the very least charge $5 or some other trivial amount of money to see a physician. It's not enough to be a problem to anyone who actually needs one and it would be enough of a deterrent for most of those who was simply abusing the system for lack of anything better to do. The bleeding hearts say that some people might be too stingy to look after themselves if they have a real issue, but a lot more harm is done to everyone, including the poor sickly dole bludgers if the entire economy is failing. In any case, every time some idiot goes to the quack for a free medical session it costs us, the tax payers, a lot of money.

By charging a small fee to see a quack we would prevent so many from wasting everyone's time and money, and with the extra tax dollars we could afford to give dole bludgers enough extra money to put into their genuine doctor visits, and those not wasting resources would be better off. The tax payer wins, the dole bludgers not abusing the system win, and even the abusive bludgers come out without losing.