The Abbott Government

[craft]

Politics aside (both Labor and Liberal do much the same in this regard) I fail to see how selling assets which are profitable, or at least self sustaining, brings about an "improvement" in finances.

It's like saying that a landlord with $5 million worth of properties and $2.5 million worth of debt should sell half their properties and repay the debt. That only makes sense if the return on the recoverable value of those assets is less than the interest on the debt which, given current low interest rates, would not generally be the case with public assets held by governments.

There's also the broader economic consequences. Ports, rail, electricity etc in public ownership will usually have a broader focus on economic development and facilitating business. Put them in private ownership and that disappears - it then becomes all about profit maximisation for the asset owner and to hell with the broader economic consequences.

Then there's the inevitable running down of the infrastructure itself, to the point that a government bailout may be required in order to avoid broader economic impacts at a future date.

The railways in Tasmania are perhaps the best (worst) Australian example - run into the ground under private ownership to the point that it became impossible to simply move a train from one end of Australia's smallest state to the other without it literally coming off the tracks and ending up in a paddock lying on its' side with whatever it was carrying strewn over the surrounding area. Even at snail's pace they couldn't make them run, such was the extent to which the system was run down as profits were stripped out. The state government ended up buying the whole thing back for a small amount (few $ million since that's all it was really worth) and then spent a fortune fixing tracks, rolling stock and locomotives simply so as to have a working rail freight system. Not that they could afford to fix it properly up front - but trains running at 40 km/h and actually getting from A to B is at least better than trains falling off the tracks on a regular basis. Pump in more money each year and eventually they'll get them up to a decent speed - currently they're buying some new locomotives, the track itself having been the first priority.

Trains in Tas are just one example. Much has been said about power generation in recent times, especially the emissions from certain old power plants. The harsh reality is that most electricity in Victoria still comes form the exact same power stations it came from 20 years ago and which were built by the former SECV. The only thing that's changed is a cut in maintenance, less technically efficient operation and a big increase in unplanned mishaps. Piling up shipping containers inside a power station as a "blast wall" in case a faulty turbine ***** itself and flies to pieces at 3000 RPM complete with superheated steam going everywhere is truly Third World stuff (to say the least). Then there's that nice "new" plant just down the road - actually it's simply a relocation of a plant built in the 1960's in NZ which that country subsequently scrapped as obsolete. They'd have relocated another old clunker from India too, if the EPA hadn't stepped in amidst concerns about filling the air with fumes not far from Melbourne itself.

I'm not against private enterprise, not at all, but I don't see that transferring the ownership of infrastructure from government to private owners is really achieving a benefit. Government gets some cash today but loses forever an ongoing revenue stream and also the ability to influence broader economic and social outcomes. In return, government still carries the risk if the private owners choose to walk away or otherwise mess things up. It's not like a small shop going broke or even the likes of a car manufacturer. If the owners of a port, major power station, transport system etc walk away then there's really no option other than for government to either find a buyer immediately or (more likely) resume ownership and spend a fortune fixing it up and making it work. So as taxpayers, we're privatising the profits but retaining virtually all the risks in public hands.

ASF needs a thumbs up function for posts like this. Great Job Smurf.

Sad as the TasRail story is I will wager that it will be privatised again one day.

 

[drsmith]

So another brilliant policy from the Coalition.

I wish you'd post links to your rants.

It might then be easier to verify and consider the substance in the appropriate context.

 

[Whiskers]

Smurf, I'll buy into the Debt, asset and resource issue. Again I agree with your rationale.

There is a litany of conservative and Labor governments who have sold off, even squandered assets to either make up a revenue over expenditure shortfall like Labor under Bligh in Qld, or like Howard to beat his chest about how good a financial manager he was to get back to surplus asap... but people forget how significant the sale of assets including Telstra, arguable too cheap for the second tranche, was to achieving that.

I also believe they both did it for the wrong reasons. People often believed Howard was also one of the most efficient or lowest spending governments. They would be wrong.

AAA rating (for what it's worth, given the credibility of the credit rating agencies) is not the exclusive province of the conservative side of politics... and even if it was, I agree with Smurfs rationale, it's not sensible to have a pure economic criteria as a hard and fast criteria to judge the merits of our country, it's social standing and overall prosperity without the context of future needs and standards of living.

Have a look at the IMF report that Rudd could have used to far greater politicial effect if he was not so full of his own importance.

Also, while Clive Palmer has some unusual ways of expressing himself I've seen signs he is also critical of the pure financial goals as the most important short term considerations.

Tony would be wise to lay off the frugality claim to fame... that's not the main reason why he was probationed into PM, it was about stability and predictability of government, stupid!... and focus more on the needs of the social and economic fabric to transition back to a more manufacturing and or scientific research base for our longer term strength.

http://www.smh.com.au/federal-polit...oward-era-finds-imf-study-20130110-2cj38.html

 

[drsmith]

Coalition goverments manage money better.........ops

State Govt eyes port sales after ratings cut

http://au.news.yahoo.com/thewest/a/-/newshome/19007307/state-govt-eyes-port-sales-after-ratings-cut/

I don't think you'll find too many defending the current WA state government at the present time.

They've got themselves into a serious pickle with the state's finances with the only thing being on their side now is time before the next election. Even that though may not be enough.

On another topic, I guess it's back to Gaia for uncle Tim.

http://www.abc.net.au/news/2013-09-19/federal-government-scraps-climate-commission/4968816

 

[Whiskers]

Re: dreaded high government spending.

It's not necessarily a bad thing.

The IMF study mirrors findings in a 2008 Australian Treasury study that found real government spending grew faster in the final four years of the Howard government than in any four-year period since the 1990s recession.

Read more: http://www.smh.com.au/federal-polit...s-imf-study-20130110-2cj38.html#ixzz2fKlLhnKU

It would be hard to find much criticism of the Howard spending... well maybe the baby bonus.

While the Rudd Labor spending copped a bit of flack for some degree of spending inefficiency, mainly blown a bit out of proportion in the cool of hindsight, many economists consider it wasn't all that bad, all things considered. Even if the costs were a bit higher from a wider economic assessment, it kept the cash circulating maintaining a bit more employment as opposed to paying more unproductive unemployment in the economy and if the costs and consequently profits were higher, recouped more back in business and personal tax revenue anyway.

The common theme was to improve the socioeconomic standards of subjects, albeit in different circumstances and points in time.

 

[Whiskers]

Two things that I hope Abbott gets done before he's gone, is dumping of the carbon tax and if possible removal of gay marriage laws. I've previously been a bit partial to civil unions, but upon considerable meditation, their rights are fully met as with defacto relationships.

The former is an indictment on our common intelligence, the latter on our common morality, well maybe more specifically, equity (at law)

If I may rant on about logical reasoning again, the places who have endorsed gay marriage laws, argue the fact that gay (and lesbion) people continue to migrate there to get married is evidence it should be adopted by everywhere else. That's as sound, DUMB... as legalising drug use because people travel out of state to drug havens to buy their drugs.

Whooah, there... before you start flooding me with your emotional wrath... consider the formation of civilisation in the long run. Do we really want to lower moral standards back to the level of Roman times including orgies!

I'm happy to challenge gay marriage on the law of equity as opposed to the illogical nonsense of consensus.

For the uninitiated, Equity Law emerged from Common Law... the unwritten laws (precedents of Court) developing the moral and ethical society that you try to sway a consensus of bleeding hearts and political opportunists for an orgy of you scratch my back, I'll scratch yours.

I might take up the cause in the Gay Marriage thread again.

 

[Smurf1976]

and focus more on the needs of the social and economic fabric to transition back to a more manufacturing and or scientific research base for our longer term strength.

Australia's future must be in something other than mining for the simple reason that, with compound growth, we'll have extracted most of the valuable minerals (possible exception of iron ore) a lot faster than most seem to be expecting.

Take a resource, for example black coal, with a supposedly 200 year reserve or close to it. Now add in compounding growth in production and it gets scary. In 2017, just 4 years from now, the industry projects that we'll be down to 100 years' of reserves. Assuming a continuation of recent growth, that becomes just 28 years by 2027. So in the space of 10 years, reserve life drops from 100 years to just 28 if recent production growth continues. You don't need a degree in mathematics to understand that recent production growth won't actually be sustained beyond the end of this decade. And all of that is, of course, assuming that the somebody actually wants to buy all this coal in the first place.

Mining is undoubtedly an industry of key importance both economically and strategically at present and in the near term future. But recent growth just can't continue forever, so we need to plan for a future that doesn't rely on growing volumes of mineral exports. Unfortunately the new government seems determined to do the opposite - encouraging miners to get it out of the ground as fast as possible whilst turning our backs on science and technology. That ought to boost short term economic growth for sure, but there's a big price to pay not far into the future.

We're on a path that could best be summed up as "strength through exhaustion". Production is up, GDP looks good. But we're selling off public assets and extracting minerals at an alarming rate to keep the game going. What happens once everything's sold or dug up? Then we're stuffed.....

 

[Whiskers]

Smurf, the other point it appears we should be paying more attention to in the rush to dig it up and sell it mentality, is there are other countries including China and even the USA who seem to appreciate the future need for resources more than we do and have kept significant amounts of oil, gas and some rare earths under wraps in their own country and buy up cheaply offshore while they can.

Especially China is also tying up availability of offshore resources with strategic alliances for future needs. The USA has potentially huge oil and gas reserves around its shores presently under protection, but available for exploitation if the need arises... presumably, when it's political and military clout wanes and looses strategic middle east sources.

I'm afraid we've become too much of the classic lazy price-taker. I note (for what it's worth) Palmer is advocating more value adding on shore before rushing too sell the stuff. I'd be happier to see some of the cash squandered on trying to fight climate change, to subsiding or even more straight out grants to develop more value adding which would also feed into my belief that Abbott needs to focus more on promoting science and manufacturing.

Also on your project resource life concerns, I have to keep harking about the wisdom, NOT... of unregulated CSG mining where the projected well life is typically 10 to 30 years.

It's got to be socially economic madness to risk chemical ruination of substantial tracks of good arable land and water reserves for a quick buck and a pat on the back for getting some financial numbers to line up the way you want for political and ideological expediency.

 

[sydboy007]

Syd,

What would you like me to endorse about the last government? Straw man misogyny rants? Pink bats? Massive increase in people smuggling? Blown out deficit? Carbon Tax? Worst of all, dividing this country like never before?

Give me something positive to cling to.....apart from them losing the election.

* Lowest level of work place deaths n a couple of decades (note there was a slight increase after work chouices was introduced)

* No technical recession

* Trend growth for the last 6 years, chieved with an over vaued AUD for much of that time.

* Inflation contained - certainly a lot better than it was under Howard.

* Unemloyment never went above 6% during the GFC - far better performance that pretty much any other rich country.

A combination of Abbott CRISIS and Labors internal fighting has hidden the fact we've done pretty well the last 6 years.

If you could trade Australia's economic performance under Labor for another country that we usually compare ourselves to, would you? USA, no thanks. Europe, pass. Canada, maybe though their household debt to GDP has shot up to even higher levels than ours. NZ, don't think so.

 

[sydboy007]

I wish you'd post links to your rants.

It might then be easier to verify and consider the substance in the appropriate context.

So criticising the Coalition is "ranting" eh. What do you call it when criticising one of the other political parties?

http://www.businessspectator.com.au/article/2013/9/19/solar-energy/hunts-dumb-solar-rebate

 

[wayneL]

* Lowest level of work place deaths n a couple of decades (note there was a slight increase after work chouices was introduced)

* No technical recession

* Trend growth for the last 6 years, chieved with an over vaued AUD for much of that time.

* Inflation contained - certainly a lot better than it was under Howard.

* Unemloyment never went above 6% during the GFC - far better performance that pretty much any other rich country.

A combination of Abbott CRISIS and Labors internal fighting has hidden the fact we've done pretty well the last 6 years.

If you could trade Australia's economic performance under Labor for another country that we usually compare ourselves to, would you? USA, no thanks. Europe, pass. Canada, maybe though their household debt to GDP has shot up to even higher levels than ours. NZ, don't think so.

Take away China and the resources boom Syd and even you would have to admit the picture would be different... don't forget much angst over the resources investment boom coming to an end because of Labor's admin... which now seems more positive that their gone.

Oh, and all those unnecessarily squandered BILLIONS in stimulus that never needed to be blown.

Your points are mostly due to external factors.

 

[sydboy007]

Take away China and the resources boom Syd and even you would have to admit the picture would be different... don't forget much angst over the resources investment boom coming to an end because of Labor's admin... which now seems more positive that their gone.

Oh, and all those unnecessarily squandered BILLIONS in stimulus that never needed to be blown.

Your points are mostly due to external factors.

Very true, but why are these points never mentioned about Howards economic management skills?

Between the Resource Boom MK I and asset sales he wasn't much of a saver.

Could it be our politicans like to pretend they have more of an effect on the economy that is reality?

Though I will say people seem so much happier since Abbott stopped trash talking the economy. Imagine how things might have been if we hadn't been in the Abbott CRISIS for the last 3 years. An extra 0.5-1% p.a of economic growth and we mightn't have much fo a budget deficit at all.

 

[Whiskers]

Can one of you over in the west get around to Barnett's office with a decent sort of a sock... before he torpedoes LNP and Abbotts credibility and snaps the tiny 1.9% swing thread holding him in office!

 

[Knobby22]

Good work by Tony Abbott..maybe he will be one of our better Prime Ministers?

Prime Minister Tony Abbott has triggered a reshuffle within the state executive of the New South Wales Liberal Party after declaring party members should no longer work as lobbyists.

Two of the state's most powerful conservative lobbyists Michael Photios and Joe Tannous resigned from their party roles just hours after the announcement.

"I am determined to ensure that as far as the new Coalition government in Canberra is concerned that not only is it clean and fair, but it's seen to be clean and fair," he said.

"That's why I'm determined to ensure you can either be a powerbroker or a lobbyist but you can't be both."

http://www.abc.net.au/news/2013-09-...t27s-lobbyist-integrity-call-prompts-/4969650

 

[drsmith]

So criticising the Coalition is "ranting" eh. What do you call it when criticising one of the other political parties?

http://www.businessspectator.com.au/article/2013/9/19/solar-energy/hunts-dumb-solar-rebate

I can't find any further information on this beyond the above link to see how it fits in overall Coalition policy, but as a matter of general principal, I don't agree with that specific policy. I'm of the view that instillation rebates for solar panels should be reduced rather than increased. The Libs should take a look at what's happening in Europe with solar panels.

I don't agree though with the Green Energy Finance Corporation and the carbon tax that Labor introduced and these are far bigger policy sins in my view.

 

[drsmith]

The $500 rebate for solar panels and solar hot water is part of the Coalition's $2.9bn direct action policy.

Their earlier policy position on this was a $1000 rebate.

http://www.abc.net.au/news/2013-09-...ct-action-policy-cut-by-24300-million/4952002

An interesting point also in the detail (Climate Spectator link),

The $500 rebate will be capped at 100,000 installs per year for 10 years, if I have understood the sketchy details of the policy correctly. This compares to annual installation volumes of about 250,000 PV systems and 50,000 solar hot water systems in Australia.

I'll be very surprised if this rebate lasts anywhere near 10 years.

 

[overhang]

I don't agree though with the Green Energy Finance Corporation and the carbon tax that Labor introduced and these are far bigger policy sins in my view.

Just curious why you don't support the Green Energy Finance Corporation? Even if one doesn't support the notion of climate change surely you can still see the benefit of using cleaner energy sources that lower pollution and decrease our dependency on fossil fuels and will one day pose sovereignty issues if alternative sources aren't found. Giving the private sector the incentive and security to invest in clean energy seems practical.
For the record I don't support the ETS.

 

[drsmith]

Just curious why you don't support the Green Energy Finance Corporation? Even if one doesn't support the notion of climate change surely you can still see the benefit of using cleaner energy sources that lower pollution and decrease our dependency on fossil fuels and will one day pose sovereignty issues if alternative sources aren't found. Giving the private sector the incentive and security to invest in clean energy seems practical.
For the record I don't support the ETS.

A lot of taxpayer money has been wasted by governments pouring large sums of money into various private sector support schemes over the years. Home insulation and forestry are two classic example and solar panels I feel will ultimately be judged in the same light.

IIRC, the Clean Energy Finance Corporation (I did mean Clean, not Green) was born as part of Labor's Alliance with the Greens for office after the 2010 election. The Greens would like to have seen an increase the guaranteed funding for the CEFC from $10 billion over five years to $30 billion over ten. Fortunately, only $225m was lent by the Corporation before the Labor Government went into caretaker mode.

http://en.wikipedia.org/wiki/Clean_Energy_Finance_Corporation

Lending for this sort of stuff is best left to the private sector.

 

[pixel]

Lending for this sort of stuff is best left to the private sector.

The private sector is interested in making money. Lots of it and in the shortest possible time.
Unless a forward-planning Government sets targets and legislates direction, the environment will be wrecked.
Conceded that taxpayer-funded "incentives" leave much room for rorts and stuff-ups, I don't believe that the private sector is sufficiently altruistic to forego the easy money, nb: burn coal and gas; increase consumption, no matter how irreplaceable and wasteful!
The example set by axing the CEFC is IMHO tantamount to environmental vandalism.

 

[Boggo]

Can one of you over in the west get around to Barnett's office with a decent sort of a sock... before he torpedoes LNP and Abbotts credibility and snaps the tiny 1.9% swing thread holding him in office!

I think that Pickering accurately sums up the problems in the west...

“SORRY TONY, I STUFFED UP!”

WA Premier, Colin Barnett, made the same mistake as the Rudd/Gillard/Rudd Government; he believed the mining bubble would never burst and spent accordingly.

A savage S&P credit write-down was due to a ballooning $18 billion in debt (heading for $26 billion) and Mr Barnett believes Abbott will now have to revisit the GST.

Sorry Colin, there is more chance of me turning poofter and marrying a bloke in Canberra this weekend, with my golfing mates as bridesmaids.

Abbott will not do a Gillard and reverse a solemn pre-election commitment for the sake of a Barnett mess of his own making.

Not that Tony could do that, even if he wanted to, because the GST is a States’ tax and all States would have to agree. Not likely with elections looming.

Abbott is preoccupied with Federal cuts and there is still $40 billion of fat still on the bone. But that won’t help Barnett, not without a substantial State’s grant and even that won’t decrease the Premier’s debt.

The perennial headache with Howard’s GST is the carve-up... there is only one cake (with unequal slices) and Barnett wants one of the bigger slices. That can only happen at the expense of other hungry Premiers.

If Abbott either increases or broadens the base of the GST without first taking that proposal to an election, he will become the same subject of ridicule as Gillard and her, “There will be no carbon tax...”.

No, Mr Barnett, you will have to stew in your own mess for a while yet.

The modern economic climate is far too fluid to base infrastructure spending on four-year forward estimates.

Better pray that God looks kindly on China.