Liberal or Labor

wayneL said:

One would presume the coalition to have superior eco skills, and that indeed has usually been the case.

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Howard was arguably the worst post-war federal Treasurer, under Malcolm Fraser's stewardship. Fraser's economic credentials were nothing to write home about.
Apart from the Whitlam years, labor's post-war economic performance in government have been exemplarary.
So bad was Menzies initially that he passed the batten to Forde (Country Party) in 1941, and Fadden was defeated on the floor of the House several months later by Curtin.
When Menzies was returned to power in 1949 the nation rode on the the sheeps back till the 60s. Menzies is mostly remembered for how long he remained in office, rather than anything he achieved (the Snowy Mountain Scheme was conceived under Labor and completed under Labor).
Post Menzies only McMahon had a clue economically and he played second fiddle to his wife.
The notion that the Coalition has better economic credentials than Labor has a 3-year window in the period from 1939 - not very convincing.

rederob the State Labor govts economic management especially in the 1980s has probably given Federal ALP a bum rap....in answer to the original post I would vote Liberal (and usually do) at the moment the Opposition is a rabble which is not good for the country regardless of political preferences.

I think Costello has done a fine job guiding us safely through many crises - eg Asian financial crisis of late 1990s, and slump after September 11, and has done well to reduce the government's debt. But the government's debt was the size of a gnat on the elephant's rump of our private national debt....what has the Coalition done to boost national savings and channel our funds into productive assets rather than residential property? We run massive current account deficits month after month financed by selling off long term strategic assets or going into hoc with China et al. One day those debts will be called in.

What has the government done to boost R&D and innovation, it bleeds dry CSIRO and other research organisations and politicizes them+ R&D and developing intellectual property is important for our future standard of living, we cannot always rely on digging more out of the ground, yet science is treated as a whipping boy in successive federal (and state) budgets.

I will vote the Coalition despite their astounding arrogance and cynicism, misleading the electorate or just treating us with contempt, but the Coalition can be thankful the alternative is just not viable at the moment. I look forward to a changing of the guard within the government, I think Costello will make a fine PM.

rederob said:

Yep
They did it with a GST yet are still trying to sell the farm (and Medicare).

On a more sobering note, apart from unnecessary labour reforms (because Australian productivity standards are already high - just like our comparative labour costs), the federal coalition has been bereft of "nation building" policies at a time when we deserve our place in the sun.
National infrastructue projects to support our extractive industries include???
Our national water policy is ???
We are tackling high fuel costs by ???
Remote Australia accesses the internet and phone services by ???
We have a free trade ageement with the USA that excludes us accessing lucrative markets that the US props up via farm subsidies.
We have a foreign affairs policy that means ???

Fortunately we have a public service second to none: Their ability to teflon coat Ministers of the Crown is exemplary.

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I don't understand why people bag the GST. it isnt a bad thing all peter did was consolidate all taxes into one tax. it makes it more easy to understand and even cut out some taxes which we had. he also has lowered the tax rates oon shares. now we are all happy with that arent we?

I must correct my statement about Forde, above, as it was clearly Fadden I meant that took the reins from Menzies in 1941.
Forde served only 8 days before handing over to Ben Chifley in July 1845. Though Forde served the shortest period of any PM, when he died at age 92 he was also the longest lived - perhaps suggesting that highest office and longevity are negatively correlated?

bullmarket said:

For me personally, I still remember mortgage rates were around 17% and inflation around 10% under Labor and I'm not convinced Labor has policies that will ensure rates won't go back to those levels over time if they were in government.

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Interest rates are ultimately set by markets rather than governments.

That said, have you done the maths on this popular Coalition claim about low interest rates? A combination of low rates and low inflation is the worst possible combination for home buyers.

Why? Because with low interest rates you'll pay an absolute fortune for the house, your deposit being a mere drop in the ocean. A recent study (published 2006) from international consultants Demographia ranks Sydney as the 7th LEAST affordable housing market in the countries studied (Australia, USA, Canada, Ireland, New Zealand, UK - 99 cities in total). Even Hobart comes in 15th.

Low interest rates have not helped home buyers, to the contrary and the evidence backs it up. Buying an average house, once considered a right even with high interest rates, is now out of reach even for many average income earners.

Compounding the problem is low inflation meaning that, unlike in the past, the massive debts required to purchase a property are not eroded by wage rises but rather, must be paid back the hard way over many years. When household income is $61,000 and the house costs $520,000 (Sydney) the last thing you want is low inflation meaning that you have to pay the mortgage with, at best, a slowly rising income.

But I don't blame Howard. As I said, his government has basically nothing to do with interest rates. They are small fish compared to the central banks and bond markets. At most, the Australian Government can influence the overall economy and trade position (the latter being something of a disaster now just as it was under Labor) and the gap between overseas and Australian interest rates. But they don't have actual control, at least not in the long term, by any means. As Howard will likely find out, it's not wise to claim credit for things that you have little control over, especially when they start moving against you as seems to be happening right now (the upwards trend in world interest rates). Rising rates, low inflation and ridiculously high mortgages are not a good combination...

twojacks28 said:

I don't understand why people bag the GST. it isnt a bad thing all peter did was consolidate all taxes into one tax. it makes it more easy to understand and even cut out some taxes which we had. he also has lowered the tax rates oon shares. now we are all happy with that arent we?

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The GST certainly gets rid of quite a few distortions that the old multi-rate taxing system had so I don't have a problem with it.

Some of the outcomes of the old system were somewhat perverse. For example you paid tax on a heat pump (which saves energy) but no tax on the electricity you otherwise wasted. A ridiculous situation given greenhouse etc. So there's even a "green" side to the GST.

As for the tax on shares, I'm a little bit cynical that the real intent is to discourage "mum and dad" investors from selling either shares or investment property and thus keep the market pumped up. You don't get the tax reduction if you hold the investment for less than 12 months which IMO encourages the "buy and hold" approach rather than active trading thus removing a few sellers from the market during a slump. Stability maybe but a distortion nonetheless and it provides a help for professional investors (good high earning Coalition voters ) to sell with the masses happy to stay holding.

twojacks28 said:

I don't understand why people bag the GST. it isnt a bad thing all peter did was consolidate all taxes into one tax. it makes it more easy to understand and even cut out some taxes which we had. he also has lowered the tax rates oon shares. now we are all happy with that arent we?

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A principal aim of the GST was to ensure there was no "black economy" avoiding taxes.
Since the GST was introduced the number of people asking to be paid cash has amazed me.
Government did not have to create a GST to equalise the tax rates - they had this power without it.
The GST has turned all businesses into tax collectors, thereby saving them a lot of work.
States still have rights to tax, and the GST has slowly removed some of these: Had the Commonwealth been smarter with its tax distribution to States they would all play ball, but the Commonwealth still prefers to play politics.
My children now have to pay a GST on sports club fees, and the Canteen profits are reduced by GST payments - profits which we use to help reduce the fees they pay in the first place.
The work I do attracts a GST because I am engaged under a contract. If the companies I work to paid me as a casual there would be no GST payment involved.
The GST costs me significantly on compliance costs that I never incurred prior to a GST.
The fact that we have got used to it always being there does not mean it is a good tax!

Hi Smurf1976

yes I agree that interest rates are ultimately set by markets, Reserve Banks or whatever and not the government

But there is no way you're going to convince me that the thinking behind the markets' and RBA's decisions re interest rates is not influenced by the consequences of government policies that have been put in place to either stimulate or slow down an economy by whatever means.

Don't get me wrong - I'm not trying to persuade anyone to change the way they vote because to be honest, for me personally at this stage of my life it doesn't really matter who is in government. My earlier posts were just explaining how I would vote now and the reasons behind it and I'm not going to enter into a potential endless loop of chatroom tennis 'discussing' the pros and cons of Liberal v Labor today :

Happy Easter

bullmarket

Smurf1976 said:

Interest rates are ultimately set by markets rather than governments.

That said, have you done the maths on this popular Coalition claim about low interest rates? A combination of low rates and low inflation is the worst possible combination for home buyers.

Why? Because with low interest rates you'll pay an absolute fortune for the house, your deposit being a mere drop in the ocean. A recent study (published 2006) from international consultants Demographia ranks Sydney as the 7th LEAST affordable housing market in the countries studied (Australia, USA, Canada, Ireland, New Zealand, UK - 99 cities in total). Even Hobart comes in 15th.

Low interest rates have not helped home buyers, to the contrary and the evidence backs it up. Buying an average house, once considered a right even with high interest rates, is now out of reach even for many average income earners.

Compounding the problem is low inflation meaning that, unlike in the past, the massive debts required to purchase a property are not eroded by wage rises but rather, must be paid back the hard way over many years. When household income is $61,000 and the house costs $520,000 (Sydney) the last thing you want is low inflation meaning that you have to pay the mortgage with, at best, a slowly rising income.

...

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Back in 1989 (just before the Recession we had to have) my wife and I did a daily trip of about five to six km's during which we used to count numbers of houses for sale. This was a period of double digit inflation, whilst the interest rates were about 12%. The usual count of houses for sale was about half a dozen. As the inflation kept going upwards Hawke and Keating jacked the interest rates up, business rates hitting upwards of 24%. Immediately that count of houses for sale on that same trip went up to over 26.

The high interest / high inflation regime hurt those that bought houses for owner occupation or as investment. Investors lost interest in houses and earned more just by putting their money on fixed deposits.


The other aspect of high interest rates is the effect they have on businesses. During the above period many businesses went bankrupt and lot of people lost their jobs. There were reports in the media that many sacked workers didn't have the heart to tell their families that they lost jobs. They would leave home in the morning and spend their days wondering around, sitting on the park benches..

Some time later Bob Hawke apologised to Australia for what his government had done. Keating hadn't.


I am not convinced that higher interest rates and higher inflation are good for the nation. They may be good for investors, but certainly not for people starting families.


anon

Agreed absolutely that high interest rates are a disaster for existing house buyers with a large mortgage at a variable rate. I do not wish to see ordinary families forced to sell their homes due to such a situation but IMO it is a foreseeable outcome given that many recent home buyers have taken on very large debts relative to their income and in view of the global trend towards higher interest rates.

It is no secret that a great many, if not most, first home buyers start with the question "how much can I borrow?". Indeed that is the advice given by commentators, real estate agents and banks. If interest rates are near a peak to start with then this poses little risk provided that income is at least maintained in nominal terms. If inflation is also high then rapidly rising income quickly erodes the real value of the debt and the mortgage repayment becomes a relatively trivial expense. This has been the experience of many of the parents of recent first home buyers (and others of similar age) and no doubt explains the belief that "you can't go wrong with property". They bought when both rates and inflation were high and watched as the value of their debt virtually disappeared due to wage inflation and the value of their property increased accordingly. They couldn't lose.

But with low interest rates and relatively low wage inflation the situation is very different. Even a slight rise in interest rates inflicts real pain on those heavily in debt. And with relatively slow income growth the mortgage remains a major expense for many years. In the event that interest rates meaningfully rise, and even 0.25% is a substantial rise when coming from a low base, such borrowers can find themselves in real trouble.

The situation as it stands now is that recent first home buyers typically have massive debt relative to their income. Typical house prices are in the order of 6.5 times household income in most Australian cities (source Demographia report 2006). This ratio has risen sharply in recent times enabled by lenders' willingness to lend at high income multiples in a low interest rate environment. This is a tolerable situation only whilst interest rates do not rise faster than incomes. Just one 0.25% rise on a 7% mortgage rate is a 3.5% rise in actual interest costs - around 1 years wage growth.

So it is a question of risk. If you have any one expense taking a large portion of your income then you are seriously exposed in the event that that expense rises relative to your income. That applies whether the expense is a mortgage, petrol, medical costs, drug addiction or whatever. If you spend 1% of your income on something then price movements are of little concern. But buying an average house on an average income (or a cheaper house on a lower income) with a 10% typical first home buyer's deposit already takes about 40% of household income just to pay the interest (calculated from the Demographia report figures). Add in all fixed costs such as rates, insurance, food, utilities, transport and so on (not to mention actually repaying the debt) and it doesn't take much of a rise in interest rates to completely screw the household finances.

What's this got to do with Liberal or Labor? Not a lot given that it is the market which created the situation but IMO Howard's repeated promise of low interest rates has encouraged ordinary Australians, many of whom have little knowledge on financial matters, to take on unnecessarily large risks both through very large borrowings and opting to not fix the interest rate on the assumption that rates will never be much above where they are now, or at least not by more than 0.25% a year in line with income growth. A dangerous gamble with the homes of ordinary people IMO that, apart from political gain, there has been no reason to take. Mr Howard could equally have reminded people of past experiences with high interest rates and suggested that fixed rate mortgages would be a sensible choice for anyone borrowing a large amount. But doing so would have removed the political usefulness and credibility of promising ongoing low interest rates and thus removed a key plank of the Coalition's re-election strategy.

In effect, the promise of low interest rates exchanged the risk of the government not being re-elected for the risk of financial difficulties for ordinary people. That interest rates are a mainstream issue and credibly promising to keep them low is a clear vote winner is proof enough IMO that there are a sufficient number of voters with large debts at variable rates to justify my concern as to the consequences of this ultimately unnecessary gamble. That said, I doubt that Labor would have done any differently as politicans of all persuasions will usually take advantage of whatever opportunities for political gain present themselves at the time.

Agreed that high interest rate are bad news for most businesses (though inflation can be profitable depending on the nature of the business). My point is more about the political aspects (given the thread title) and they're overwhelmingly focused (by the politicians) on home buyers with large mortgages at variable rates. It would be a nice change to hear a bit more about the needs of productive enterprise from our "leaders". Just imagine if all that borrowed money had been channeled into business targeting export markets rather than inflating domestic asset prices. We'd be a lot better off as a nation but politically it's harder to sell due to lack of short term gains for voters.

Hi smurf1976

I agree that inflation reduces the debt:equity ratio in a family home due to the rising value of the home but it doesn't actually reduce the debt.

The monthly or whatever payments still remain the same and those just barely making the 17% interest payments back in the late 80's still had to come up with the repayments. Watching their home values rise certainly would have helped put a light at the end of the tunnel though

There were a lot of people back in the 80's kept out of home ownership because they couldn't afford the 17% interest.

I prefer low interest rates and low inflation to high interest rates and high inflation any day

cheers

bullmarket

Without rapidly increasing nominal income, you are absolutely at the mercy of interest rates as far as being able to meet future loan repayments. That so many are in this exact situation is very convenient as a means by which a government can do virtually anything and still be re-elected provided that they maintain credibility on the interest rates issue.

Get them up to their eyeballs in debt, convince them that fixed rates are a waste of time and then do as you wish because they will not, can not, afford to argue with the master who promises cheap credit. Just like a drug addict is at the mercy of their dealer.

Hi smurf1976

Smurf1976 said:

Without rapidly increasing nominal income, you are absolutely at the mercy of interest rates as far as being able to meet future loan repayments........................

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I think that is a far too general comment.

Imo that might only be the case where people have borrowed to the eye-balls at variable rates and either can't or won't refinance.

I have always advised when taking out a loan especially at a variable rate to build in at least a 1-2% buffer into the current interest rates when calculating the maximum you can borrow. If you don't you are taking a punt on interest rates not going up significantly and so the consequences of such a punt are at your own peril

People also have the option to take out fixed interest rate or a fixed/variable combo to suit their situations. Sure, fixed rates might be a little higher initially but at least your repayments are fixed for the duration of the fixed rate.

Basically the ease with which borrowers end up repaying loans boils down to thorough planning for different potential scenarios and number crunching prior to taking out the loan and the number crunching involved is not rocket science

cheers

bullmarket

and I think we are drifting :topic now

from the original liberal v labor theme

cheers

bullmarket

twojacks28 said:

hi folks

just wondering what the preference is with the two major parties at the moment. give a reason why you would or wouldnt vote for one of the parties.

thanks

twojacks28

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OOOOH' How can anyone even contemplate electing anyone or anything in the present government. IT SUX, The whole system is currupt and built on the basis of dramma queens and commonwealth consperitors. That is why I don't enjoy living in Australia and I've been hear all my life. Not my real choice of a second brief of wind!

Don't vote Labour thier all Boogn's
Don't vote Liberal thier all Drama queens/ homo's :swear:
Don't vote National or greens thier all gretens working for Labour and Liberal, working hard to keep the pair looking good when it all stuffs up!

Personally sack the whole lot of them, bring in a whole new body and purpuse call it the Rebublician Party running entotally on true Australian views and the Australian people. Not the Commonwealth Republic. And just for that note, change the Australian title and Flag (Burn it) to be ride of the present commonwealth view and all it's homo's, and boogn's.

Create a patition!

Thank-you very much!

STOCK'ie'BAILZ

You are kidding .GREED IS GOOD> ask alexander and mark.

StockyBailz said:

OOOOH' How can anyone even contemplate electing anyone or anything in the present government. IT SUX, The whole system is currupt and built on the basis of dramma queens and commonwealth consperitors. That is why I don't enjoy living in Australia and I've been hear all my life. Not my real choice of a second brief of wind!

Don't vote Labour thier all Boogn's
Don't vote Liberal thier all Drama queens/ homo's :swear:
Don't vote National or greens thier all gretens working for Labour and Liberal, working hard to keep the pair looking good when it all stuffs up!

Personally sack the whole lot of them, bring in a whole new body and purpuse call it the Rebublician Party running entotally on true Australian views and the Australian people. Not the Commonwealth Republic. And just for that note, change the Australian title and Flag (Burn it) to be ride of the present commonwealth view and all it's homo's, and boogn's.

Create a patition!

Thank-you very much!

STOCK'ie'BAILZ

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I didn't think I'd see this, but at last here is someone with a lot of common sense. Yes indeed, let's sack the bloody lot of them and get someone who is intelligent and would be dedicated to promoting all what we stand for. Seeing we are not racist anymore let's go out to the world and hire or highjack some of the outstanding ex-leaders and install them as our supreme directors of public purse and public morals.

Boris Yeltzin is still about, I believe, and he might even jump at the opportunity to get away from freezing Moscow. He might even get to like our beer. Just think of the advertizing value - "why the bloody hell aren't you drinking Foster's" sort of thing.

If Boris is not prepared to come over then there is Jaque Chirac who will soon be out of a job. He might be a little bit harder to convince to be our next great leader, and all because he hates the English language.

With luck Saddam Hussein might get off with a light sentence and will be looking for a job consistent with his experience. We could probably get to like him.

Should Saddam be unlucky we could try for an ayatolla from Iran. He might enjoy changing our morals back a few centuries.


Well, it's all a pipedream. The reality is that we are one of the best countries in the world. Let's not stuff it up.


anon

hahaha that is a stupid thing to say "sack them all"!!!! the current government is doing a fine job with the country as it is. and if you have a problem with that then vote against them. now it seems to me you must be in a small minority as the government has been relected several times. it is also interesting to add that the labor party in melbourne has just copied the liberal governments policy on revealing where the speed cameras are! cant they come up without stealing policies from other parties!

look at this for an interesting read. And no it isnt made up!

http://www.bracksbrokenpromises.com.au

StockyBailz said:

OOOOH' How can anyone even contemplate electing anyone or anything in the present government. IT SUX, The whole system is currupt and built on the basis of dramma queens and commonwealth consperitors. That is why I don't enjoy living in Australia and I've been hear all my life. Not my real choice of a second brief of wind!

Don't vote Labour thier all Boogn's
Don't vote Liberal thier all Drama queens/ homo's :swear:
Don't vote National or greens thier all gretens working for Labour and Liberal, working hard to keep the pair looking good when it all stuffs up!

Personally sack the whole lot of them, bring in a whole new body and purpuse call it the Rebublician Party running entotally on true Australian views and the Australian people. Not the Commonwealth Republic. And just for that note, change the Australian title and Flag (Burn it) to be ride of the present commonwealth view and all it's homo's, and boogn's.

Create a patition!

Thank-you very much!

STOCK'ie'BAILZ

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Exactly how much rum did you consume before typing that?
Are boogn's the same as bogans? Why are you so homophobic? If you don't like Australia, why are you still here?
What on earth does "Not my real choice of a second brief of wind!"mean?

That is one post that raises more questions than answers.


FWIW I only vote for a minor party in the senate as I loathe the idea of one of the major parties having the balance of power in the senate. Vote independant in the house of reps, but only after checking their preferences of course

Slightly off topic. but how's this for world class diplomacy...




ROTFLMAO