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The Abbott Government

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IFocus said:
Think you have missed the point by a country mile time to take those Coalition rose tinted, blinkered, Zaphod Beeblebrox (Coalition branded), short sighted glasses off
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That would be a betrayal of resolve me thinks. You'll just have to wear the "mindless waffle" type insults.
 

To fix our situation the welfare system has to be sorted, it all sounds wonderfull just keep giving, but it isn't sustainable. As you know another sector has to pay for it, then when that sector is crippled, what you just tax another sector? Both the tax and welfare systems need to be made more aligned with our economy and what it can sustain.

http://www.afr.com/p/national/reserve_bank_boss_warns_leadership_vzs90YwwWOqkEWXW5FV2gP

Glenn Stevens has issued a blistering challenge to all federal politicians that they need to “get real” about fixing medium-term budget difficulties by having a serious discussion that avoids simplistic “slogans and name-calling.”

He indicated that failure to fix the budget within the next five years could result in Australia potentially losing its AAA credit rating – and see the nation forced into European-style austerity measures against its wishes.

Some $28 billion in measures from the 2014-15 budget have yet to be passed by the Senate and there is no clear date when the budget will return to surplus.

Strong leadership, “not just from the government, but from other political parties and individuals who claim to be serious” would be needed to fix the budget over the medium term, he said.

“You have to have a serious conversation about this stuff and not get into slogans and name-calling. The serious issue is that five-year horizon.

“We’re not going to have a surplus any time soon, are we? But the real question is do we have a sustainable fiscal position over the medium term?”

But Mr Stevens did not believe there needed to be sharp cuts in spending in next week’s mid-year budget update in response to lower tax revenue from falling iron ore, oil and coal prices.

“You wouldn’t do that unless you really did have such poor credibility in capital markets that you couldn’t sustain a bit of extra borrowing,” he said. “We have strong credibility in capital markets, so we don’t need to do that.”

In some of his most blunt public remarks, Mr Stevens lamented how the past two years had confirmed how difficult fixing the budget had become – a dispiriting trend he blamed on an “over-simplification” of the fiscal debate.

POLITICIANS NEED TO CHANGE
His comments seem to be critical of both the previous Labor government and its failed attempts to restore a surplus and the Coalition for encouraging in the lead up to last year’s federal election the simplistic notion that all debt and deficits are bad.

He also referred to the ongoing obstructionism in the Senate, including by figures such as Palmer United leader Clive Palmer and former PUP senator Jacqui Lambie, who has declared she will not vote for any government legislation unless it gives bigger pay rises to the Australian Defence Force.

Mr Stevens said much of the debate in Canberra appeared to have missed the reality that over the past five years Australians had “voted for good things to be given to us by the government, or done for us, [without voting] for the revenue that pays for it”.

“Much of the public debate about the fiscal position, still, is carried on as though that reality isn’t actually real. But it is real.”
It was vital the budget was fixed “so that we don’t ever get into the position of losing credibility in capital markets and then be forced to be much more pro-cyclical with our policies,” he said.

The remark points to what has happened in Europe since the 2008 crisis, where bond markets worried about widening government deficits drove up sovereign borrowing costs, forcing countries such as Greece, Spain and Ireland to slash public spending.

This in turn led to widespread recession in Europe.

A key problem was a tendency to revert back to a simplistic idea that surpluses are always good and deficits are always bad.

“Well, actually it matters how you got the surplus; it matters what you did with it,” Mr Stevens said, asking whether a country that was debt free but with no public assets was the right model to follow. “Think about what the debt is for. Is it for infrastructure? Or is it for paying pensions? It matters which of those it is.”

He suggested Australian leaders have failed over the past decade to “build a platform of public understanding” of budget problems”.

“Maybe we didn’t do that quite as much as we could have, and so the legacy of that is that now that we need this nuance, it’s very hard to do it,” he said.
 

I don't think anyone is saying the welfare system doesn't need fixed, but you can't tell the under 30s to wait 6 months for the dole, you can't whack the generally poorer with a GP tax when their health says they need more help, while at the same time leaving holes in the budget leaking billions on negative gearing, billions more on super, a pension system more likely to bankrupt the country than welfare to the young or families, and championing a PPL programme that costs billions and wont achieve the state goal of increasing female workforce participation.

But you don't face up to the fact that Abbott's cutting of taxes has in no way helped the welfare system, it has not made it easier to balance the budget, it has in fact narrowed the tax base. The broadening of revenue is the fuel excise increase, but it pales against the tax revenues the Govt has willingly given up.

With the carbon tax repealed why didn't Abbott cut the increase in welfare payments that Labor made to compensate for it? I'd argue that is an easier welfare reform strategy to make the case for. The carbon tax costs are gone, so the compensation is no longer required. The GP tax isn't welfare reform, and I've not seen any modelling as to just how much money it will actually save, nor how much they've taken into consideration the increased costs will be when people postpone treatment and end up sicker.

Maybe a simple change would have been to do a deal with the Pharmacy Guild to allow them to write medical certificates of a few days. I find it ludicrous I have to see a doctor for an MC if I have 2 or more days off work due to illness - company policy or they can mark me as leave without pay. It's a cold, so not much a GP visit will accomplish besides cost $65 with medicare paying about half of it. Provide a financial incentive for Pharmacists to do this, and combine it will further cuts to the massive amounts of PBS support that Pharmacists get and you could save hundreds of millions in the health system. This Govt doesn't seem to be able to think outside the box though.

As for Glen Stevens comments, tell him he's dreaming. He's up there with Pascoe and Adam Carr believing in the confidence fairy, or Joe "swipe that credit card a few more times to keep Santa happy" Hockey. If Stevens is this deluded he needs to step down and let someone more competent try to guide us through the most difficult transformation of the economy in over a generation.

Some things Stevens needs to understand:

  • 25 Quarters after the GFC commenced in mid-2008, real GDP per capita has increased by only 4.4%. This compares very poorly against the 8.5% growth after the mid-1970s recession, the 11.2% growth after the 1980s recession, and 9.6% growth after the early-1990s recession.
  • Better measures of living standards are much worse for the typical Australian. Since December 2011, national disposable income (NDI) per capita has fallen by 3.3%, versus 2.0% growth in per capita real GDP.
  • Per capita household disposable income has also fallen by 1.1% since June 2012
  • Per capita gross national expenditure, which measures “the total expenditure within a given period by Australian residents on final goods and services (i.e. excluding goods and services used up during the period in the process of production)”, and Domestic final demand, which measures the sum of “government final consumption expenditure, household final consumption expenditure, private gross fixed capital formation and the gross fixed capital formation of public corporations and general government”, have also been falling since late 2012

What the above data on incomes and domestic expenditure/demand shows is that it is the big expansion in commodity export volumes that is supporting headline real GDP, along with strong immigration. Removing these distortions reveals that the domestic economy is essentially experiencing a recession in per capita terms – exactly what the so called income ‘recessionistas’ have been arguing for the last couple of years.

Stevens’ comments on employment are also dubious. Sure, Australian employment is growing, but it is nowhere near enough to soak-up the strong population growth (mostly via immigration). This is why unemployment is now at the highest level since August 2002 in trend terms, despite falling participation. It is also why labour underutilisation is 14.8% nationally in trend terms – the highest level since November 1997.

Youth unemployment is now 14.1% and has had negative since the the GFC. It's not even an issue on the current political agenda. Over 17% of the youth working part time would like more hours. Moreover, when the number of unemployed and underemployed youth are added together, underutilisation amongst Australia’s 15 to 24 year-olds is a whopping 31.6% – the highest level on record, even beating the early-1990s recession.

All the above is happening when the biggest resource CAPEX boom has barely started to fall off the cliff, the car manufacturer job losses have yet to occur.

I don't believe this Government has the ticker for the true political and economic leadership required to make appropriate cuts to welfare, without leaving the poor in a US style food stamps poverty, while also taking on the very powerful vested interests they cheered on in opposition to cut down on the tax expenditures around negative gearing and super, car FBT, and tax trusts.

You only have to look at Hockey's reaction to the Murray report into the Financial System to see this Govt has no reform zeal in it. He's certainly not owning the report when he comes out and says it was a report to the Government, not by the Government. Talk about a damp squib.
 
sydboy007 said:
I don't think anyone is saying the welfare system doesn't need fixed, but you can't tell the under 30s to wait 6 months for the dole,
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You are perpetuating the myth. No one will be without the dole as long as they are - if not employed - engaged in some form of training
you can't whack the generally poorer with a GP tax when their health says they need more help,
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Of course you omit mention of the reality that in the original policy it was capped at just $70 per year. No such thing as someone who cannot afford that. To suggest people will fail to go to the doctor for the sake of $7 (now $5) is just silly. A pensioner gets about $22,000 p.a. $70 out of that maximum?

With the carbon tax repealed why didn't Abbott cut the increase in welfare payments that Labor made to compensate for it? I'd argue that is an easier welfare reform strategy to make the case for.
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Yes, agree on this.

Pharmacists are not trained to diagnose disease. What might appear as a simple cold could be something quite different, particularly when other disorders only the doctor is aware of are taken into account.


As for Glen Stevens comments, tell him he's dreaming.
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What he says sounds realistic enough to me. But, hell, if you think you can do better than the governor of the Reserve Bank, write to him with your advice.
 
sydboy007 said:
With the carbon tax repealed why didn't Abbott cut the increase in welfare payments that Labor made to compensate for it? I'd argue that is an easier welfare reform strategy to make the case for.
.
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I'd agree with you, and that was meant to happen.

Didn't Palmer and Labor make it a condition of passing the repeal, that the compensation couldn't be removed?
 

It will be interesting to hear Labors answers, they certainly didn't enact much the last two terms.
 

The problem with the co payment as originally designed was that it asked pensioners to pay more for no benefit to themselves. The money would be stashed away for 6 years, then distributed for research, and when any results from that research were forthcoming most of the pensioners who contributed to it would have passed on. That's just not a fair ask.

Increasing health costs is more likely to be the result of more tests and treatments becoming available and the propensity of doctors to order tests to cover their own backsides and obviously their desire to do as much for their patients as they can.

I wonder how many conditions would go away naturally given time without doctors feeling they have to prescribe medicines to justify their positions and maintain their god like status with their patients.

Patients don't know whether they have a minor condition or not, so they shouldn't be pressured not to see a doctor if they are unsure. Doctors do know whether a condition is likely to be major, and the pressure should be put on them not to prescribe expensive tests or medicines unless necessary.
 
SirRumpole said:
The problem with the co payment as originally designed was that it asked pensioners to pay more for no benefit to themselves.
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So? Are you actually saying that we should only be prepared to pay any tax/co-payment/charge if we directly benefit ourselves ?

Plenty of people pay the Medicare levy who might never see a doctor.

It's all part of participating in a society - we all contribute.

Can you say where you derive the conviction that doctors order too many tests etc?
That hasn't been my experience, either personally, or when running a medical centre.

I do agree, though, that more and more investigatory procedures are becoming available. That's a good thing as long as wisely used.
 
Logique said:
The minute the going get's tough...it's misogyny says the PM. And who fed him that line. A very poor reflection on both of them. Where's the accountability.
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The power and influence of the Prime Minister's chief of staff has been a hot potato topic this week, with some government MPs complaining Credlin is out of control.
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Who are these gutless MPs? They know she cannot publicly reply. They should tell her to her face. If I were she I would walk out on this whinging bunch. I'm sure there would be no shortage of job offers.
 
Julia said:
So? Are you actually saying that we should only be prepared to pay any tax/co-payment/charge if we directly benefit ourselves ?

.
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If that is the attitude, then just increase the Medicare levy.

I'm sure you wouldn't mind doing your bit even if it doesn't directly benefit you.
 
Calliope said:
Who are these gutless MPs? They know she cannot publicly reply. They should tell her to her face. If I were she I would walk out on this whinging bunch. I'm sure there would be no shortage of job offers.
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Seems to be a fairfax push of bull$hit reporting. Looks to be a big push the last couple of days too with articles popping up every hour.Best way to take down a government is through instilling disunity and looks like this is their best bet. Fairfax is just pizzed at Hockey sticking it up them.
 
SirRumpole said:
If that is the attitude, then just increase the Medicare levy.

I'm sure you wouldn't mind doing your bit even if it doesn't directly benefit you.
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People abuse free medical. Increasing the medicare levy wont have the same results.
 
moXJO said:
People abuse free medical. Increasing the medicare levy wont have the same results.
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Where is the evidence of abuse ?

Do people really want to waste their time at the doctor's for no reason ?

I think it's more likely to be new and costly treatments that put up the cost of health care rather than abuse by individuals, and maybe some fraud and over servicing by doctors.
 
sptrawler said:
I'd agree with you, and that was meant to happen.

Didn't Palmer and Labor make it a condition of passing the repeal, that the compensation couldn't be removed?
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Isn't the policy as is what was accepted by the Govt, so to have done the tax cut without appropriate sources of revenue has to be owned by the Govt.
 
Julia said:
Pharmacists are not trained to diagnose disease. What might appear as a simple cold could be something quite different, particularly when other disorders only the doctor is aware of are taken into account.
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At least make it an option. I would argue a significant % of those going to a doctor for an MC of a few days have a cold or some mild illness that going to a GP will prvodie no benefit for.

The other option is to bring in a system where an MC is not required so much by employers. It's a costly requirement. When I pickd up a cold on my last trip to Bali - literally kiked in at the airport on the way home - I had to go to the emergency department to get an MC because I couldn't get an appointment at my local doctor, then I had to go later in the week to get some more leave. Not sure what all that cost the medical system, but multiply that by tens of thousands of visits a year and the cost must be considerable.

Julia said:
What he says sounds realistic enough to me. But, hell, if you think you can do better than the governor of the Reserve Bank, write to him with your advice.
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We've had around 30 years of economic mismanagement in this country where export incoem from resources is geared up into housing consumption.

Steven's goes on about how any future interest rates would need to be part of a positive economic narrative. What's he smoking. That may be what he's wishing for, but the economic reality facing the country is anything but positive. None of the current economic readings look good, and we've yet to see the full impact of the ToT income shock, nor the massive job loses from the closing of the car manufactures and resource construction jobs. The LNG terminals in QLD are set to see over 30K in job loses by the end of next year. Aggregate hours worked fell over 4M in the latest ABS release. Real incomes still falling, with a lot further to go, and they have to as one of the main ways to regaining any form of international competitiveness.

So the source of the income to gear up is pretty much on the way down due to over supply, and the property market is pretty much at saturation point because house hold debt is over 160% and pretty much can't go any higher. So lower interest rates don't provide much bang for buck any more because you can't force people to borrow.

Stevens needs to stop talking about repairing confidence, which treats our current malaise as a cyclical issue, and he needs to start talking about true micro and macro economic reform, along with significant tax reform to cut into our world beating tax expenditures. He;s basically setting himself up as the dupe who has to resolve the stagnating economy by lowering interest rates, but as has been shown around the world, that's not a path to a bright economic future.

His comments about not lowering interest rates has seen the market discount the probability significantly for the first half of next year - markets immediately moved to lower the probabilities of a rate cut in February to an insignificant 16% and a cut by March to 50%, which makes it that much more difficult to get the AUD down to where he believes it should be. Talk about shooting yourself in the foot.
 
sydboy007 said:
Isn't the policy as is what was accepted by the Govt, so to have done the tax cut without appropriate sources of revenue has to be owned by the Govt.
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As I've said Abbott, lost the plot the minute he started negotiating with minority parties, the exact problem that unravelled Labor.
That was the very thing he said he would avoid, it will be his undoing, exactly as it was for Labor.

The problem is, too many politicians are putting there jobs, before their duty, and Australia is suffering.
Unpopular decissions are required whether people like it or not, it's just the politicians are scared to make them, for fear of losing their job.

Well I think people know the severity of the situation, that is why retail has been struggling for the past 5 years.

If Abbott doesn't stand up and grow a pair, he will be dumped.
Maybe he isn't the headbanger, mad monk, attack dog that the press made him out to be, because that's what he was voted in for.IMO

Labor rolled over and peed on themselves for the Greens, now Abbott is doing the same with Palmer. It isn't what the electorate wanted.IMO
It just further erodes the confidence of the masses, they want to see a strong government with a viable plan to halt our slide.
Concocting half @rsed outcomes with loonies, doesn't inspire confidence.
 

Don't you think the reason you have to get a doctors note, for more than two days absence, is to stop workers abusing the system and having a week off?
The very reason you have to fork out $65 and go to a doctor is a deterent, if you could just go to a chemist, Australias productivity would plummet.
The only other deterent that works, is to pay employees for a proportion of unused sickies when they leave. The unions are not in favour of this approach, they say it discourages workers from taking sick leave when sick.

Actually it works a bit like the doctor co payment was meant to.

When the person on free medical, decides they have a bit of a sore throat, they then have to choose, if it's bad enough to warrant missing out on a latte and scone. If it is then they go to the doctor, if it isn't that bad they spend it on something else.

At the moment, they just drop in and see the doctor anyway and might as well stock up un some cheap prescriptions as well, on the way.
 
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