Which political side manages money well

[tom32]

That's the problem. It's not so much the amount of money being spent, but what it is being spent on.

Keynesian stimulus spending, in theory is a good idea IMO. However, the stimulus spending employed by the Rudd/Gillard government over the last few years has just been wasteful really.

Agree 100%

I can still recall my excitement in 2008 when they announced the first round of stimulous spending.

I thought, are we going to get a second crossing to Sydney Harbour. Maybe enough green energy to make certain our carbon footprint only shrinks from here at the same time lowering our power bills, maybe a new port for Sydney or a second airport. Perhaps a partnership with business for a new port in South Australia.

No we got, school halls and cash handouts and a measley 700million to local councils for infrastructure....

I was aghast as I read it. I would sooner see a real labor man like Chifley who might be nearly communist, wanting to nationalise banks due to their importance to the economy amoung other things, but at least he knew what was worth investing in.

Maybe less recent history always looks better than more recent.

What I do know however is that Keynes himself would be turning in his grave to hear that our stimulous was called Keynesian. His deliberately farcical example of burying bottles of money to dig them up again to create jobs was put to shame by our labor government who just handed the cash out and saved digging it up! I guess they thought Australians likely too lazy to actually bother digging it up. I guess we can be thankfull that at least they did not go for his (Keynes) other deliberately very farcical example of building pyramids. We could have ended up with a good local tourist attraction with the pyramid I guess which is more than we got for the 20bn in cash handouts. People always attribute these ideas to Keynes but one must remember he was making the point that surely modern society can come up with better things to do with their money.

Clearly not in Australia...

 

[StefanA]

What I want to know is, when does Keynesian stimulus end and sovereign debt crisis begin? If Keynes was still alive, he should tell the Greeks.

 

[tom32]

What I want to know is, when does Keynesian stimulus end and sovereign debt crisis begin? If Keynes was still alive, he should tell the Greeks.

Well proper keynesian stimulous is government investment in a way that returns revenue in future years or at the very least equips your economy with productivity improving infrastructure to assist businesses maintain competitiveness.

It is similar to businesses investing however is done at times when the private sector is not investing so that you get both; better value and create work when there is less of it.

As ridiculous as it sounds a 500bn investment is sustainable if as a result the government reaps a further 50bn per annum of tax revenue from it. I don't care how much they spend I care about what it is on and will vote on who I think has more of a clue. On this I think Malcolm Turnbull should be the net prime minister, but I suspect I am dreaming as Australians do not understand anything more complex than total tax v total spend. If they get $1000.00 cash back all the better.

Basically a 40bn investment in cash handouts and school halls cannot be compared with keynesian stimulous. Where is the economic, social or even stretching things the environmental dividend? Just because it is government expenditure does not mean it has to be wastefull.

It is like a business when it is getting into trouble because it is falling behind its more productive peers saying in stead of buying this piece of plant my competitors have I am giving the staff a $1000.00 bonus.

 

[willair]

It is like a business when it is getting into trouble because it is falling behind its more productive peers saying in stead of buying this piece of plant my competitors have I am giving the staff a $1000.00 bonus.

That's what Labor can't understand,you can only buy so many votes before it starts to hit everyone in the back pocket..what's a big mack deal worth these days compared to 2 years ago.

http://www.abc.net.au/news/stories/2011/05/23/3224845.htm?section=justin

 

[wisty]

It is like a business when it is getting into trouble because it is falling behind its more productive peers saying in stead of buying this piece of plant my competitors have I am giving the staff a $1000.00 bonus.

I don't think it's quite like that. The cash handouts served the same purpose as a bank bailout, without as much moral hazard.

But the timing was bad. They should have waited for a crisis to bite, so that people actually learnt their lesson.

 

[tom32]

I don't think it's quite like that. The cash handouts served the same purpose as a bank bailout, without as much moral hazard.

But the timing was bad. They should have waited for a crisis to bite, so that people actually learnt their lesson.

I guess part of my gripe was that they called it Keynesian when it was not. They tried to lend it some authority when there was none for it. This then led many to say Keynes was a goose, when in reality what we did was even more ridiculous than even Keynes was suggesting to mobilise unused resources in the economy when the private sector was failing to do so.

I suspect also now that you need 17 useless tickets just to get on a construction site they thought it is no longer an industry that can sap up spare resources in a time of crisis. The unemployed would likely be finishing their training on writing JSA's just when the next boom was getting started...

 

[pennyk]

Dear me pennyk, we really do see what we want to see, don't we......if that's your reality then run with it. It's off in fairyland, but never mind.

I also had a quick 10 minute skim, looking at the Ministers really, cos they are the top dogs and whose names were familiar to me....this is what I found ;

Come on pennyk, you can delude yourself, but don't try and pull the wool over people's eyes.

Nothing is wild, and nothing is unsubstantiated. Labor pollies have a very strong reputation from coming from Union backgrounds for a very good reason - they do !!

The policies you speak of come directly from their days in the Union, and the backing that got them into Parliament in the first place.

Like I said, I only looked at 10 or 12 people, in alphabetical order.. I never said there werent union people, just that they are not "all union people who have never worked a day in their life", which was the unsubstantiated and untrue claim. I also didnt make any comment about their policies, apart from the fact that attention should be focused on attacking policy rather than people.

You may remember that I was one of the only people to accurately predict that Labor would get into government when it was clear it was a hung parliament. Based on the numbers, the Libs should absolutely have gotten into government. I think the only reason they didnt was that Tony Abbott took an aggressive, arrogant approach towards Labor and independents, criticised everyone, acted like he "deserved" to get in. It backfired on him, and I think it will continue to backfire, despite the govts bungling. I dont understand why Lib supporters continue to use the same approach of slagging the govt. It just makes them seem like spoiled children.
I think if both the Opposition and their supporters took a more balanced approach (critising when needed and backing off when the govt suggests something reasonable) and had some clear positive policies, they would have no trouble getting back into govt next time.
So, perhaps the Coalition are better at managing money, but I dont think they are better at managing negotiations or people. and until they get that sorted out, they are likely to stay in opposition for a while longer. If they do get it sorted, Labor stand no chance.......

 

[tom32]

You may remember that I was one of the only people to accurately predict that Labor would get into government when it was clear it was a hung parliament. Based on the numbers, the Libs should absolutely have gotten into government. I think the only reason they didnt was that Tony Abbott took an aggressive, arrogant approach towards Labor and independents, criticised everyone, acted like he "deserved" to get in. It backfired on him, and I think it will continue to backfire, despite the govts bungling. I dont understand why Lib supporters continue to use the same approach of slagging the govt. It just makes them seem like spoiled children.

I reckon he (Tony Abbot) now wishes he had taken an even more arrogant approach. He really should have said I am not going to let my party be held to ransom by some independents. The pork barreling going on now would have seemed more obscene if we had known the Libs would never have done it...

Things like the billion dollar hospital promise etc made the libs stink even when they were the losing side. Gotta give it to Wilkie he might be a pr*** but he is a clever one at that.

 

[wisty]

I guess part of my gripe was that they called it Keynesian when it was not. They tried to lend it some authority when there was none for it. This then led many to say Keynes was a goose, when in reality what we did was even more ridiculous than even Keynes was suggesting to mobilise unused resources in the economy when the private sector was failing to do so.

I suspect also now that you need 17 useless tickets just to get on a construction site they thought it is no longer an industry that can sap up spare resources in a time of crisis. The unemployed would likely be finishing their training on writing JSA's just when the next boom was getting started...

And many of the fast trains that China built (as a Keynesian response) are operational. The subways should be up in a year or two. But my understanding is that they had them on the drawing board for quite some time, but were knocking them back due to the pre-GFC cost benefit analysis not looking too favorable.

Imagine that - having nation building projects planned out, but not approved because they were too expensive!

 

[tom32]

And many of the fast trains that China built (as a Keynesian response) are operational. The subways should be up in a year or two. But my understanding is that they had them on the drawing board for quite some time, but were knocking them back due to the pre-GFC cost benefit analysis not looking too favorable.

Imagine that - having nation building projects planned out, but not approved because they were too expensive!

Ironic that the chinese centrally planned economy is the one most closely following Keynes ideas.

Anyway we don't even do cost benifit analysis on our biggest jobs. We just build a broadband system and say it will be like the Snowy Hydro scheme when it is nothing like it...

If the government said we are investing 45bn in power infrastructure to give Australians the cheapest power supply in the world I would say bravo something to make everything this country produces more competitive, I can see how that would drive our terms of trade and even governmetn revenue. I cannot however think how superfast broadband will effect any business more than in a superficial way, assuming you are not in a captital city and already have it anyway? (Of course IT companies will be effected more but is this worth 45bn?)

 

[wisty]

45 billion ... it really boggles the mind, doesn't it? Especially when just about everyone non-technical I know thinks that broadband = 3G.

 

[tom32]

45 billion ... it really boggles the mind, doesn't it? Especially when just about everyone non-technical I know thinks that broadband = 3G.

How I describe it to people is that it is $2000.00 for every man woman and child in this country.

Per fulltime worker it is a copious amount of money I prefer to not even think about.

But for my 5 person family it is $10,000.00

$10,000.00 so we can download a porn vid in just 12seconds or save us the trip up the video store. Yeh, set Australia on the path to prosperity through faster downloads.

Whats worse is IT companies I would have thought can congregate around capitals where they already have super fast broadband anyway? It's not like they are out in the industrial zones working in factories, are they? Same for big teaching hospitals. Perhaps hey should be hooked up, but this does not mean every house in the country needs to be, does it?

 

[tcocaro]

Ill probably get shot down for this but here goes...

Those that do nothing spend nothing...

Unfortunately what has occured is that we the people (probably rightly) know that government (regardless of which side) are so useless we prefer them NOT spending rather than spending because what usually transpires is massive waste.

In this country we need to increase our debt not reduce. We should build major infrastructure and when I say major I dont mean a stupid road tolls but instead connecting major cities with high speed train links, new airports, ports etc.

We should be investing in our country much the same way everyone on this forum does for themselves. When we want to buy an investment property do we save money until we can pay 80% of the property value then borrow the last 20%? Then why is Australia any different?

The propblem is we have no faith in our governments ability to invest and therefore prefer them to do nothing and atleast save our money so we have a warm fuzzy feeling that we are in surplus.

I detest the idiotic economic logic that prevails today, debt and deficit being repeated daily etc. This is not to say I support Labor particularly given they are so clearly useless and are Labor by name only because they dont even know who they are anymore themselves.

The truth is we need debt but we need to spend it on projects that will render a return, expand domestic production and improve our lives. Instead we waste our money in wars, half measures and white elephants.

We have become a nation of half measures. The cost of doing whats needed is so much we look for the 2nd or 3rd of 4th best option so we can "stay in surplus".

Labor understands to win the argument of good economic managers they need to show a surplus regardless of the cost and irrespective of whether thats what we even need.

I stress I am not liberal or labor I am a disolusioned voter who feels there is no point on which way I vote the outcome will be the same.

This says it all for me....not much point debating which side, Labor or Liberal manages the economy well after viewing this graph.

Of course, anyone can sprout that they are an "economic conservative".....but the financial history picture is plain to see.

That small blue blip under the line is the reason Rudd's Govt sailed through 2008 during the GFC unscathed, and it had nothing to do with Rudd at all.

Anyone disagree ??

 

[dan c]

Ill probably get shot down for this but here goes...

Those that do nothing spend nothing...

Unfortunately what has occured is that we the people (probably rightly) know that government (regardless of which side) are so useless we prefer them NOT spending rather than spending because what usually transpires is massive waste.

In this country we need to increase our debt not reduce. We should build major infrastructure and when I say major I dont mean a stupid road tolls but instead connecting major cities with high speed train links, new airports, ports etc.

We should be investing in our country much the same way everyone on this forum does for themselves. When we want to buy an investment property do we save money until we can pay 80% of the property value then borrow the last 20%? Then why is Australia any different?

The propblem is we have no faith in our governments ability to invest and therefore prefer them to do nothing and atleast save our money so we have a warm fuzzy feeling that we are in surplus.

I detest the idiotic economic logic that prevails today, debt and deficit being repeated daily etc. This is not to say I support Labor particularly given they are so clearly useless and are Labor by name only because they dont even know who they are anymore themselves.

The truth is we need debt but we need to spend it on projects that will render a return, expand domestic production and improve our lives. Instead we waste our money in wars, half measures and white elephants.

We have become a nation of half measures. The cost of doing whats needed is so much we look for the 2nd or 3rd of 4th best option so we can "stay in surplus".

Labor understands to win the argument of good economic managers they need to show a surplus regardless of the cost and irrespective of whether thats what we even need.

I stress I am not liberal or labor I am a disolusioned voter who feels there is no point on which way I vote the outcome will be the same.

I agree with most of that, but I'd add we should have been investing in infrastructure when we had all the money rolling in, in the boom times. Instead, a lot was handed back to taxpayers in one form or another, increasing spending power, inflation and interest rates. A lot was wasted, and precious little was invested in infrastructure.

To those saying Labor have wasted money, I agree 100%. But I'd also say to go back and have a look at Howard's spending during the second half of his time in office. A lot of waste there, too.

 

[tcocaro]

I agree and this was the message I was trying to express in my post that both sides of the political divide are as hopeless as one another.

You cannot simply start major projects at will they need to be planned. The liberals did nothing in way of planning for anything (sorry but they didnt) so when Labor came in they too didnt bother reversing this trend. When the GFC hit all we could do was inject money into the economy in the form of short term boosts and nothing in way of infrastructure unlike say what China did. All they did was bring forward "planned" projects and turbo charge them.

We are more interested in rebuilding afghanistan than we are our own nation.

I agree with most of that, but I'd add we should have been investing in infrastructure when we had all the money rolling in, in the boom times. Instead, a lot was handed back to taxpayers in one form or another, increasing spending power, inflation and interest rates. A lot was wasted, and precious little was invested in infrastructure.

To those saying Labor have wasted money, I agree 100%. But I'd also say to go back and have a look at Howard's spending during the second half of his time in office. A lot of waste there, too.

 

[tom32]

I agree with most of that, but I'd add we should have been investing in infrastructure when we had all the money rolling in, in the boom times. Instead, a lot was handed back to taxpayers in one form or another, increasing spending power, inflation and interest rates. A lot was wasted, and precious little was invested in infrastructure.

To those saying Labor have wasted money, I agree 100%. But I'd also say to go back and have a look at Howard's spending during the second half of his time in office. A lot of waste there, too.

Well even better rather than giving us much of our tax back the Howard government should have saved more than 20bn each year and set up a sovereign wealth fund.

Like other mineral rich nations who know that it is only a matter of time till the river of gold stops we would then have had a fund capable of deployment into infrastructure when the going got tough.

It is the tough times when infrastructure can be built cheaply not the thick of a private sector investment boom as we are entering now and were in during the latter part of the howard years.

They have to do a bit for crucial projects sure but the basic premise is government save when privatesector spends and spend when private sector saves. To be clear Keynes spoke about using savings to fund infrastructure projects not run a borderline surplus during the good years and a deficit in the bad. Over th ecycle the governments position should be about neutral.

We are in the thick of a terms of trade boom and are running a deficit. I'd hate to think where we will be in 2013 (forget a surplus!) if the minerals price boom ends. I am not saying it will in 2013, but it will around 2013. Prices are not sustainable at this price, evidenced by the amount of investment currently in those commodities. Why is Australia not preparing?

 

[Dazz]

Well even better rather than giving us much of our tax back the Howard government should have saved more than 20bn each year and set up a sovereign wealth fund.

Che ?? They did !!!


In 1996, they got lumped with a $ 96 Billion Labor debt, and then went about studiously paying it off by 2005/6, wacking 10 Billion off the national credit card each year.


Once unencumbered by foreign debt, they then studiously went about whacking 20 Billion per year in the last two years of their term, such that come election time when everyone got bored with a steady hand at the rudder...and apparently they wanted to see a bit of flair - they had 42 Billion in the fund.


They did set up a sovereign wealth fund !!!


Trouble was, within one year of Labor, it was completely gone - vamoos !! How's that for a bit of Labor flair !! You asked for it, you got it. Just three short years down the track, we are back to over 110 Billion of debt again, far more than when Keating got kicked out.


Seriously, what you are all asking for regarding infrastructure building simply cannot be done if you can't manage money well - there isn't any wriggle room in the Budget if you run massive deficits. There is only competing choices, not nice choices.


Hmmmm, Costello or Swan as Federal Treasurer....now there's a stark choice.

 

[Francesco]

I wouldn't say that Howard wasted a lot of money in the last days of its government. What it saved, it gave back to the people and believed that they can contribute efficiently to the country. However, individuals' priorities do not necessary coincide with the priorities of the nation as individuals do not have the wider responsibility of the government.

I think the tiers of governments in this country retard the ability of the federal government to do something for the whole country. Anything that is interstate meets with so many argy bargy.

There is some semblance of glacial progress on the nations network of roads. NBN is an attempt in the audio-visual communication area. Perhaps it is over prioritised and capitalised for a window of opportunity in nation building? What about other areas left lagging behind?

A great port in each costal state? Whose responsibility? Interstate rail? At least 3 governments must agree. China wins out in putting in a superfast rail system anywhere in its vast country without internal impediments such as exist in Australia.


Why can't we solve problem concertedly? Put in infrastructure one by one. Priority, one by one.

We need drinking water. Build dams, pipelines - interconnect state system.

We need electricity. More grids, interconnect state systems, support green sources to consumers.

We need to cater for population growth? Are the other infrastructure aspects coming together consistently?

Is there a nation building authority? We have an annual summit of Australian governments. The financial pie is divided and State governments return to largely spend as they like.

 

[tcocaro]

Trying to fix labors debt isnt an excuse for doing nothing themselves. They were in power for a long while they could have invested in something.

Swan isnt a treasurer he is a politician acting as treasurer. I died a little inside when Lindsey Tanner resigned he would have made a good Treasurer.

But compare say Costello with Keating (get over the keating bashing) theres no comparison there either.

The problem is your idea of steady hand simply means balancing the books, the libs were in power for a long run they could have spent some dollars on something other than cutting taxes but nothing wins votes like cutting taxes.

So lets not be naive into thinking either party are good economic managers.

The libs justify doing nothing thinking the market will prevail... this is just theoretical fantasy land. And labor tries to invest but fails to plan or tries to fit it into a single election cycle and realise hmmm that means it has to be cheap and nasty and come up with stuff like insulation schemes etc.

Either way we dont get whats needed the only difference people have linked saving like squirrels as superior economic management. In my view it simply means doing nothing there is very little skill in that.

Che ?? They did !!!


In 1996, they got lumped with a $ 96 Billion Labor debt, and then went about studiously paying it off by 2005/6, wacking 10 Billion off the national credit card each year.


Once unencumbered by foreign debt, they then studiously went about whacking 20 Billion per year in the last two years of their term, such that come election time when everyone got bored with a steady hand at the rudder...and apparently they wanted to see a bit of flair - they had 42 Billion in the fund.


They did set up a sovereign wealth fund !!!


Trouble was, within one year of Labor, it was completely gone - vamoos !! How's that for a bit of Labor flair !! You asked for it, you got it. Just three short years down the track, we are back to over 110 Billion of debt again, far more than when Keating got kicked out.


Seriously, what you are all asking for regarding infrastructure building simply cannot be done if you can't manage money well - there isn't any wriggle room in the Budget if you run massive deficits. There is only competing choices, not nice choices.


Hmmmm, Costello or Swan as Federal Treasurer....now there's a stark choice.

 

[Francesco]

...
So lets not be naive into thinking either party are good economic managers.

The libs justify doing nothing thinking the market will prevail... this is just theoretical fantasy land. And labor tries to invest but fails to plan or tries to fit it into a single election cycle and realise hmmm that means it has to be cheap and nasty and come up with stuff like insulation schemes etc.

Either way we dont get whats needed the only difference people have linked saving like squirrels as superior economic management. In my view it simply means doing nothing there is very little skill in that.

I know 'cheap and nasty' is a cliche. But there is nothing financially 'cheap' about the insulation scheme. There is no lacking in financial wastage libido. For example, the Couriermail 25 March 2010 reported:

"UP to $58 million of taxpayers' funds may have been spent on substandard Chinese insulation that failed its performance claims, new figures suggest.
An Australian insulation industry body has told a Senate inquiry into the Rudd Government's insulation debacle that up to 35,200 homes could have Chinese batts in their roofs which failed thermal tests.

Yesterday's Senate hearing in Canberra also heard the number of roof fires linked to the bungled $2.45 billion scheme has reached 120, including 19 in Queensland."

I am not sure whether the above budget figure includes the cost of audit (about $50m), any compensation and cost of removal of the batts (up to $450m by an insulation association). This is textbook financial kamikaze on behalf of indulgent Australians. If Labor contributed necessary GDP growth during the GFC by fiscal laxity, it should at least be doing it without literally human sacrifice through fire and electrocution.