Which political side manages money well

[Aaron Sice]

. 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.

if you understood true sacrificial rite and ritual, you would know that the ultimate sacrifice is human blood.

voodoo works with animal blood and has some marginal effect, but it was only the groups that sacrificed humans that attained true power status.

group, cult, Labor....whatever.....

 

[tcocaro]

When I say cheap and nasty I compare it to saying building a high speed rail network. Insultation scheme is CHEAPPPPP compared to 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.

 

[tom32]

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

Yes they saved 20bn per annum in those last years after paying off the debt. I am saying they should have saved more in stead of the tax cuts. They cut taxes to the point that we had a structural deficit excluding our terms of trade boost from mineral prices that are nearly certainly unsustainable in the long run.

I guess in fairness to the liberals they probably knew if they had given Australia and by extension labor who would eventually get voted in over, what would seem misers, in those circumstances, saving our dollars for us, a sovereign wealth fund in the hundreds of billions labor would spend it in a few terms anyway and be nearly unstoppable politically as they went around pork barreling ruining the liberals unpopular work. Might as well hand it out in tax cuts make Labors job more difficult I guess...

Don't know how countries like Finland can politically handle having such large savings each year during the commodities boom? It must be supported by all sides of the politicial spectrum I guess?

I am starting to realise why those nations (not finland) with large sovereign wealth funds are run by a monarch.

All that aside if Australians collectively saved our tax cuts through this period one could argue our polulation is more equipped to deal with a downturn. A country like Japan has massive sovereign debt but large private savings, hence sovereign risk is still seen as palitable as the perception is taxes can be raised if necessary. In Australia we have both a stretched private sector and a stretched public sector and we are living through an historic commodities boom. Imagine if the government had to raise top marginal tax rate 10% after the outcry over a budget that just tweaked their benifits a little.

 

[Dazz]

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.

Ummm....perhaps you are being glib and simplifying things far too much. With over 11 years in Govt, I'm sure many people could point to a few things that they enabled. How about I start off with just two things they did - in the very last week of their Govt before Labor got in ;

1. Approved the Gorgon project - Australia's largest ever project

2. Approved the Pluto project - another massive project with 100% Ozzie content.

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

Dunno 'bout you, but balancing the books is one thing. Producing a massive surplus to pay off the expensive debt is another. I know as a start, it's a damn sight better than plunging into massive debt for frivolous frup.

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

Yeah - well, that's right up there with and intelligent as "all politicians suck". It means nothing and has no basis. In this country you only have a choice between two.

The libs justify doing nothing thinking the market will prevail... this is just theoretical fantasy land.

No - there policy is to minimise Govt intervention as much as possible, and to simply provide a conducive environment to allow private enterprise to thrive, without getting involved and put public funds at risk. See WA Inc by Labor in the late 80's.....it doesn't work.

 

[Francesco]

if you understood true sacrificial rite and ritual, you would know that the ultimate sacrifice is human blood.

voodoo works with animal blood and has some marginal effect, but it was only the groups that sacrificed humans that attained true power status.

group, cult, Labor....whatever.....

I got it - Apocalypto.

A good show, a parable for modern democracy.

"As the Mayan kingdom faces its decline, the rulers insist the key to prosperity is to build more temples and offer human sacrifices. Jaguar Paw, a young man captured for sacrifice, flees to avoid his fate."

 

[dan c]

Dunno 'bout you, but balancing the books is one thing. Producing a massive surplus to pay off the expensive debt is another. I know as a start, it's a damn sight better than plunging into massive debt for frivolous frup.

For the first six years I'd agree. Paid off debt, cut spending, introduced tax reform, cleaned up a big mess.

But then they INCREASED spending on pet causes, rather than investing for the future. They could have done so much more, because of the huge amounts of money they had flowing into the government coffers, but they didn't. They instead opted to hand out Baby Bonuses, Family Tax Benefit Part B, (which encouraged able bodied, potential workers to stay at home when industry was crying out for workers) and the ridiculous Mature Age Workers Offset.

 

[topcropper]

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 agree completely.

Prices are not sustainable at this price, evidenced by the amount of investment currently in those commodities. Why is Australia not preparing?

What is unsustainable about current commodity prices?

Coal is still the cheapest form of power by a long way. Coal is also used to make steel, and steel is an essential component of society, as is iron ore. I don't see people not using steel because it's too expensive. Oil? How is it too expensive? It can't be, as I drive where I want, as does everyone else. Vegetables and fruit gets shipped all over the world rather than grown where it's used. People still fly in areoplanes all over the world and air fares are cheaper than ever. Oil could quadruple in price yet, it's still cheap as chips. Gas? Same as oil.

Wheat is worth 30 cents a kilo and it's doubled in value in a few years. There is about 15 cents worth of wheat in a loaf of bread now instead of 7 cents a few years ago. A dairy farmer gets bugger all for milk, and it's cheaper than water in the supermarket. Meat? I'm getting $2.20 a kilo for beef cattle on a good day, and that's great prices now. Fruit and vege's? Hell, they are so cheap it's getting hard for anyone to grow the stuff here anymore, so it's getting shipped in from overseas now because, yes, because oil is still so cheap. Food has never been cheaper as a percentage of income and is now down to about 15% of household expenditure.



I think anyone who thinks current commodity prices are steep have a big shock coming in the decades ahead. Ten years ago most commodities were at give away prices. It was ridiculous. It's good to see commodities are now priced at sensible levels that encourage humans not to waste them like has happened in the past.


See ya's.

 

[tcocaro]

Dazz, funny the two big projects that you can give me for 11 years of govt are two resource projects fundamentally privately funded\run with (I havent checked) but I assume a much smaller contribution by the government simply to facilitate the deal. Where the major benefit is to shareholders and nationally the benefit is "spin-off" rather than direct, i.e. taxes, jobs etc.

This is miles away from the projects I am suggesting such as railway links, airports etc where the beneift is direct for all.

I said balancing the books because all they did was put aside the resource boom rather than spend it. They didnt make things more efficient and more productive and hence "made money" they simply put aside money that came their way via the resource boom.

I dont think all politicians suck. I think our political system sucks, voters wanting quick fixes that can be easily understood has dumbed down policy to the extent that nothing meaningful can be acheived by any party. The solution isnt policies in my view its looking and debating the system itself. I am not sure if longer terms is the answer but something has to be done.

I know the libs see the role of government being as small as possible as the way to go but there are projects the private sector just wont touch just look at all the failed tunnels etc brisbane and sydney. There is a place for the private sector and public sector, ppp projects were an attempt to bridge this gap and is probably still the solution but much more governement involvment is needed obviously from the disasterous results we have seen so far.

I will happily go into debt if I knew it would result in Sydney having a second airport, sydney having a rail link that umm "linked" etc etc and the same goes for each state.

However every level of government has gone bananas in an attempt to show a surplus and as a result the poor infrastructure we currently have will continue to turn to dust and what we need will continue being just a dream to have sometime in the future.

Ummm....perhaps you are being glib and simplifying things far too much. With over 11 years in Govt, I'm sure many people could point to a few things that they enabled. How about I start off with just two things they did - in the very last week of their Govt before Labor got in ;

1. Approved the Gorgon project - Australia's largest ever project

2. Approved the Pluto project - another massive project with 100% Ozzie content.






Dunno 'bout you, but balancing the books is one thing. Producing a massive surplus to pay off the expensive debt is another. I know as a start, it's a damn sight better than plunging into massive debt for frivolous frup.






Yeah - well, that's right up there with and intelligent as "all politicians suck". It means nothing and has no basis. In this country you only have a choice between two.




No - there policy is to minimise Govt intervention as much as possible, and to simply provide a conducive environment to allow private enterprise to thrive, without getting involved and put public funds at risk. See WA Inc by Labor in the late 80's.....it doesn't work.

 

[Dazz]

Dazz, funny the two big projects that you can give me for 11 years of govt are two resource projects fundamentally privately funded\run with (I havent checked) but I assume a much smaller contribution by the government simply to facilitate the deal. Where the major benefit is to shareholders and nationally the benefit is "spin-off" rather than direct, i.e. taxes, jobs etc.

No, you've conveniently clipped my comments to suit your argument. I did not say that was it for 11 years of Govt. I said those two projects were approved in the last WEEK of their Govt.....for obvious reasons. Howard knew that if he didn't approve them, then they'd never get up off the ground under Labor.


Yes - small contribution from the Govt - for the largest project ever undertaken in Australia. In my eyes a sterling outcome. Nationally we get ;

• A massive amount of upfront construction jobs
• A steady but smaller amount of operational jobs.....all of which have salaries thru the roof.
• Royalties thru the roof
• Company taxes thru the roof
• Big take up of industrial, commercial and residential space to house the projects
• All minor contractors feeding off the major players
• 30 and 40 year long term contracts to supply signed

All with minimal Govt risk and small outlay. Yep - sounds dreadful.


Now, where are do we start to look at everything they did in the other 10 years and 51 weeks ??

 

[Token Funder]

Dazz, funny the two big projects that you can give me for 11 years of govt are two resource projects fundamentally privately funded\run with (I havent checked) but I assume a much smaller contribution by the government simply to facilitate the deal. Where the major benefit is to shareholders and nationally the benefit is "spin-off" rather than direct, i.e. taxes, jobs etc.

This is miles away from the projects I am suggesting such as railway links, airports etc where the beneift is direct for all.

I said balancing the books because all they did was put aside the resource boom rather than spend it. They didnt make things more efficient and more productive and hence "made money" they simply put aside money that came their way via the resource boom.

I dont think all politicians suck. I think our political system sucks, voters wanting quick fixes that can be easily understood has dumbed down policy to the extent that nothing meaningful can be acheived by any party. The solution isnt policies in my view its looking and debating the system itself. I am not sure if longer terms is the answer but something has to be done.

I know the libs see the role of government being as small as possible as the way to go but there are projects the private sector just wont touch just look at all the failed tunnels etc brisbane and sydney. There is a place for the private sector and public sector, ppp projects were an attempt to bridge this gap and is probably still the solution but much more governement involvment is needed obviously from the disasterous results we have seen so far.

I will happily go into debt if I knew it would result in Sydney having a second airport, sydney having a rail link that umm "linked" etc etc and the same goes for each state.

However every level of government has gone bananas in an attempt to show a surplus and as a result the poor infrastructure we currently have will continue to turn to dust and what we need will continue being just a dream to have sometime in the future.

If granting approval for mining projects 30 years in the making allows a govt to claim credit for same, then given Garret approved the Barrow Island project, presumably he's on Dazz's list of go-getters.

I imagine this would not sit comfortably with either of them.

The challenge for all governments is that crucial supporting infrastructure is generally expensive, long-tail and un-exciting. It is too easy and too tempting to leave it for subsequent governments to address down the track when it gets to the stage that it can no longer be ignored.

Water and power infrastrucutre in capital cities are classic examples. One is rarely elected on the promise of digging up water mains as a preventative maintenance measure but everyone screams when inevitably they blow a hole in the street. It's easier to take a punt and hope that the obvious implications of under investment occur on somebody else's watch.

Fundamental economic reform is harder still.

Longer parliamentary terms may assist in that they give governments reasonable time between ever-shortening campaign cycles to focus on the long-term. That said, ultimately it needs to be about elevating the debate and asking people to think in 20 year horizons and to being prepared to taking the proceeds from today's boom and applying them to tomorrow's needs.

 

[tom32]

What is unsustainable about current commodity prices?

Coal is still the cheapest form of power by a long way. Coal is also used to make steel, and steel is an essential component of society, as is iron ore. I don't see people not using steel because it's too expensive. Oil? How is it too expensive? It can't be, as I drive where I want, as does everyone else. Vegetables and fruit gets shipped all over the world rather than grown where it's used. People still fly in areoplanes all over the world and air fares are cheaper than ever. Oil could quadruple in price yet, it's still cheap as chips. Gas? Same as oil.

Wheat is worth 30 cents a kilo and it's doubled in value in a few years. There is about 15 cents worth of wheat in a loaf of bread now instead of 7 cents a few years ago. A dairy farmer gets bugger all for milk, and it's cheaper than water in the supermarket. Meat? I'm getting $2.20 a kilo for beef cattle on a good day, and that's great prices now. Fruit and vege's? Hell, they are so cheap it's getting hard for anyone to grow the stuff here anymore, so it's getting shipped in from overseas now because, yes, because oil is still so cheap. Food has never been cheaper as a percentage of income and is now down to about 15% of household expenditure.



I think anyone who thinks current commodity prices are steep have a big shock coming in the decades ahead. Ten years ago most commodities were at give away prices. It was ridiculous. It's good to see commodities are now priced at sensible levels that encourage humans not to waste them like has happened in the past.


See ya's.

Topcropper.

Commodity prices are not sustainable because they are too epensive relative to costs of production. I have no issue that demand will not be there for them, though the perception will be that demand fades it will be supply that over reaches.

The reason commodities were at give away prices last decade is that the last commodities boom and the rush of investment into said commodities inevitably leads to a capacity overhang.

The problem with long lead time commodities is that the capacity overhang lasts much longer than the boom. Yes the boom lasts about 1.5 times longer than the lead time in increasing capacity in the commodity but it does not help when once on line the mines just chug away for years potentially under costs of production if you are including investment capital return.

It is known as an industrial cycle and it is true in all things manufactured or produced where further capacity has a lead time. The market never gets it precisely right. They under respond, you get a price spike, you then get an investment boom and a capacity overhang. This has been life in commodities and manufactured goods for 200 years it is not going to change this time.

The only caveats are if the commodity is running out or getting ever more expensive to extract. If you can see costs of production ramping up along with price then this can be sustainable. This is not what is occuring. Companies are making bumper profits and making massive investments into their capacity.

[Edit: sorry another caveat, a cartel like OPEC can deliberately restrain the supply response. If Australia had a monopoly over ore production I would have been all for a mining tax or even a doubling of royalties, but alas us inccreasing our production costs will only see investment go to one of a pack of producing countries or potential producing countries. ]

What is most frustrating is that our government will say when this one ends; "wow that was unexpected an unprecedented crash in commodities prices", but how can this level of investment in a commodity in all commodity eporting countries be sustainable? It never has been before? We don't need china to just keep growing we will need them to keep growing and at ever faster rates to sustain current prices and the level of investment in minerals extraction. It actually has less to do with demand and everything to do with supply. It is overinvestment that brings most price breakouts back to earth.

Granted the GFC might have actually been a good thing for Australia in that investment was put on hold allowing the good times to roll on for a few more years after a hiccup. I know this much though, like the low prices below costs for many producers in iron ore in 1999 - 2000 were unsustainable and this was the time to buy low cost producers like North Ltd and Rio so to are the high prices now unsustainable. Neither situation can persist in the long term and Australia needs to plan now for it.

 

[tcocaro]

Given our past stoushes I thought I would simply give kudos on this post... agree totally.

If granting approval for mining projects 30 years in the making allows a govt to claim credit for same, then given Garret approved the Barrow Island project, presumably he's on Dazz's list of go-getters.

I imagine this would not sit comfortably with either of them.

The challenge for all governments is that crucial supporting infrastructure is generally expensive, long-tail and un-exciting. It is too easy and too tempting to leave it for subsequent governments to address down the track when it gets to the stage that it can no longer be ignored.

Water and power infrastrucutre in capital cities are classic examples. One is rarely elected on the promise of digging up water mains as a preventative maintenance measure but everyone screams when inevitably they blow a hole in the street. It's easier to take a punt and hope that the obvious implications of under investment occur on somebody else's watch.

Fundamental economic reform is harder still.

Longer parliamentary terms may assist in that they give governments reasonable time between ever-shortening campaign cycles to focus on the long-term. That said, ultimately it needs to be about elevating the debate and asking people to think in 20 year horizons and to being prepared to taking the proceeds from today's boom and applying them to tomorrow's needs.

 

[tcocaro]

I wake up everyday thankful those two projects got off the ground. I have a lot of time to give thanks, the 1+ hour drive to work/office, the time I spend wishing there was a train station within a 30 minutes drive from where I live, the 1+ hour drive to the airport, the t-way that goes anywhere but where I need to go but thank god we have those two projects just look at all the services and infrastructure we now have as a result.

No, you've conveniently clipped my comments to suit your argument. I did not say that was it for 11 years of Govt. I said those two projects were approved in the last WEEK of their Govt.....for obvious reasons. Howard knew that if he didn't approve them, then they'd never get up off the ground under Labor.


Yes - small contribution from the Govt - for the largest project ever undertaken in Australia. In my eyes a sterling outcome. Nationally we get ;

• A massive amount of upfront construction jobs
• A steady but smaller amount of operational jobs.....all of which have salaries thru the roof.
• Royalties thru the roof
• Company taxes thru the roof
• Big take up of industrial, commercial and residential space to house the projects
• All minor contractors feeding off the major players
• 30 and 40 year long term contracts to supply signed

All with minimal Govt risk and small outlay. Yep - sounds dreadful.


Now, where are do we start to look at everything they did in the other 10 years and 51 weeks ??

 

[Dazz]

I have a lot of time to give thanks, the 1+ hour drive to work/office, the time I spend wishing there was a train station within a 30 minutes drive from where I live, the 1+ hour drive to the airport, the t-way that goes anywhere but where I need to go

It's easy to see why politicians get jack of you whining self centred bar stewards. You're a pack of optometrists the lot of ya. A bunch of "I" specialists.

• I want a bus
• I want a train
• It doesn't go where I want it to go
• I want a bridge
• I want a tunnel
• I want to live closer to work

Care factor zero.


Obviously the old maxim of "ask not what your country can do for you, but ask what you may do for your country" has gone right out the window in this new age of "me me me...WIIFM". Gimme gimme gimme.

 

[tcocaro]

hahahahaha what a load of load of rubbish! hahahaah oh this post killed me... I am a developer not a centrelink line warmer thinking the world owes me a favor.

I dont want anything beyond seeing this country take a risk on itself. We keep talking about the snowy river project as a large project, as a project to be proud of.. umm how long ago was this done? To me this project highlights how laid back we have become and how complacent we are preferring to spend money on hornetts from a country whose own idiotic economic policies are eating itself from within.

This post trully made me laugh. Perhaps your patiently waiting for the private sector to build that bus, that train, that bridge or that tunnel. Dont hold your breath dazz or else you might faint be rushed to the closest hospital which might be public and then you will be adding a point to that list "[*] I want a bed".

It's easy to see why politicians get jack of you whining self centred bar stewards. You're a pack of optometrists the lot of ya. A bunch of "I" specialists.

• I want a bus
• I want a train
• It doesn't go where I want it to go
• I want a bridge
• I want a tunnel
• I want to live closer to work

Care factor zero.


Obviously the old maxim of "ask not what your country can do for you, but ask what you may do for your country" has gone right out the window in this new age of "me me me...WIIFM". Gimme gimme gimme.

 

[wisty]

topcropper, commodities are, well commodities.

A retailer marks non-commodity stuff up 140%. Why? Because some people really like that *specific* t-shirt, and it would be too much trouble to find a similar one online.

But petrol stations have a low mark-up, because you can drive to the next one and get exactly the same petrol at a lower price (unless mark-ups are already rock-bottom). Unless there is a shortage, and then they can jack prices up the wazoo.

Commodities generally drop down to the cost of production (due to fierce competition between virtually identical players), unless there is a shortage.

 

[lizzie]

I wake up everyday thankful those two projects got off the ground. I have a lot of time to give thanks, the 1+ hour drive to work/office, the time I spend wishing there was a train station within a 30 minutes drive from where I live, the 1+ hour drive to the airport, the t-way that goes anywhere but where I need to go but thank god we have those two projects just look at all the services and infrastructure we now have as a result.

then you are giving thanks to the state labor government that has recently been ousted.

they are the drivers of infrastructure work - even that which the federal government pays for (although most of what you mentioned falls clearly under state funding and planning).

 

[Deltaberry]

Probably not a big difference. The only good thing about the Coalition is it doens't have to buy union votes.

 

[tcocaro]

Lizzie I know the division and I couldnt care less for it to be honest. I mentioned several times in this thread links between major cities (which would be federal) regardless the so called division between state and federal is a joke and a non issue.

If I tell you that its your responsability to pay for roads and give you just $1 to do it who really stopped the road from going ahead? The state? building the rd or the federal? for paying for it? or both?

In short the fact our infrastructure is the way it is thanks to all levels of government and both sides.

then you are giving thanks to the state labor government that has recently been ousted.

they are the drivers of infrastructure work - even that which the federal government pays for (although most of what you mentioned falls clearly under state funding and planning).