EYE-BALL’s Herman on – Federal Economic Update – A conjuror’s spin –
|Links to Previous ‘Herman’ Posts:
– 17th July – Constitutional Reform – This time it is recognising Local Council.
– 5th July – Gone – Ski Part II (Gone is Gonski)
– 27th June – Gone-Ski: Prime Minister Julia Gillard –
– 24th June – The Ashes –
– 21st June – The Senate –
– 5th June – Zombies –
– 1st June – Canberra – and black holes –
-30th May – What is an adequate Contrition? –
– 24th May – Simplex –
– 19th May – The Tears of a Prime Minister –
– 24th Mar – An Example of bureaucracy gone mad –
– 10th Mar – The Carbon Tax – Post Election …
– 7th Mar – Wayne Swan – Please Stop
28th Feb – The Australian Labor Party View
– 6th Feb – Corruption
– 25th Jan – Anti Discrimination –
– 17th Jan 2013 – Atheism –
– 12th Nov – Hegemony
– 2nd Nov – A March early Federal election –
To see more EYE-BALL ‘Herman’ posts:
– Federal Economic Update –
– A conjuror’s spin –
| Author: EYE-BALL’s Herman O’Hermitage | 2nd Aug 2013 |
|Some have termed it a mini-budget. Unless it is debated on the floor of parliament it is not that. It will not be passed into law until after the election. It contains updated Treasury estimates. The deficit trajectory is now for a fiscal deficit of A$30.1bn in 2013/14.
It is yet another ALP policy statement. Everything that has occurred since Rudd ascended back to the lodge, is another roll of the dice, attempting to reverse the contrarian opinion polls since early 2010. Virtually nothing has received scrutiny through parliamentary processes only trial by media. Each roll of the dice is asking us the electorate to give them another chance. Given the tardiness or lack of merit of the opposition we continue to grasp at any other alternative.
That is particularly what the opinion polls are saying. There is no realistic choice.
When the budget was passed down in May, I was deeply shocked to find a structural deficit approaching $20bn. I expected a deficit approaching 10bn. Gillard has gone, Swan is gone and so on but Swan is standing again for Lilley, and more. Wong switched camps, and Dreyfus and Burke (it all doesn’t really matter). Hey Bob Carr appointed by Gillard switched horses mid race.
The real problem was how do you reverse the structural deficit when GDP is under immense pressure, where cutting government consumption will make things worse? The deficit and government debt prior to last May (at that stage of the economic cycle) was totally inappropriate. Stimulus was required rather than cutting federal government spending.
Anyone who said the bleeding obvious, that a recession by 2015/16 is becoming more probable is guilty of talking down confidence. But should you quietly speculate on this bleak outlook, then that is OK because that is called free markets. Not predatory behaviour.
Costello did well to put a surcharge on superannuation drawing from future spending rather than current spending in the late 1990’s but it came at a cost. The cost of reversing the policy and compensating in time for the cost, the desecration. Some might even argue the reversal was the seeds of part of today’s problems but I see that as part of the overall stresses created by the ensuing mining boom.
There was a major economic policy shift in November 2007 and from there onward. Australia started running substantial fiscal deficits. With every turn of the page, government ramped up consumption.
The package today at 1pm AEST is currently all about bank’s deposit insurance and tobacco excise. Each are worthy of careful scrutiny but they are also a major smokescreen.
Unemployment has risen. Volumes to export for the major miners are up in coal. A glimmer of hope has appeared for the live cattle trade, with prices stabilising. The AUD has fallen to just below 90, to assist terms of trade. Several sectors of the broader economic spectrum are doing well, as measured through ASX performance. But WA property prices are weak, the mining services sector is sick, the signs are mixed. The problems of major sectors like SPC Ardmona in the Shephardon and Goulbourn valleys are insignificant compared to those like the car industry.
On Wednesday morning local radio featured a story of Mark who is sleeping rough on the steps of Parramatta Town Hall. He had a job once , but when he was made redundant he sooner or later found himself on the street. When you couch surf, sooner or later you burn your friends. You outstay your welcome. Surviving on $220 a week is impossible. You can’t afford rent. You can’t save a deposit bond, or an electricity deposit. Vagabonds drift towards Parramatta because of the meal van each night at Prince Alfred Park. Sooner or later all your worldly possessions are moved around in a shopping trolley. The fridge and TV and stereo were hocked to pay bills a long time ago. There is a core group of men sleeping rough in the Parramatta precinct of 40. The aid services are stretched. No one would consider hiring you or giving you a job. You are sleeping rough, and generally considered to be of poor mental health. Definitely dishevelled unwashed and unkempt.
Mark was very well spoken, and it was radio, so I can only wonder was it all a political beat up?
But the story is indicative of what is really happening out there, of the long term unemployed, how it breeds mental health issues, of those struggling to find hope. Those who know of a better world, but are on the outside looking in. Too often cold and hungry.
So today while we speculate on the price of tobacco and the efficacy of bank deposit insurance, both designed to distract from the real issue ie the fall in government incomes (taxes) and the excesses of federal parliamentarians, do we spare a thought for Mark or Mary (the single Mum) or Ralph (the alcoholic) or Beryl (the broken grandma – who hasn’t seen her grandchildren in over a decade for whatever reason).
The more I dwell on it, the more I dwell on the speech I made at 7.45am on election day 3 years ago. In 15 minutes those doors will open and we will go into a working frenzy. We will assist the little fella to play his part in our democracy. We are the servants of democracy. Today we are expected to help those little people cast 4000 votes. Each polling assistant is expected to serve 600 local electors, and each declaration officer is expected to help cast 100 votes. Today is the one day in the 3 year electoral cycle when we get to hear from them. We have heard enough of the politicians and all their promises. Today it is the little persons turn. The ones who to get to have their say every 1100 days. We will treat them as the voice of democracy. Etcetra.
Within a fortnight of that day as the counting was pointing to a hung parliament, the media was in their speculative frenzy, could we have true bi-partisan cabinet, should we go back to the polls, the futility, the chaos and now nearly 1100 days later, just the void.
Today as the Australian Bankers Association threatens how if a deposit insurance tax is not implemented properly, it could jeopardise the core strength of the banking sector – that is a euphemism for the banks who each make roughly 6bn per annum will pass it on to the mortgage sector.
0.05% deposit insurance can be passed onto term deposit rates, but can it be passed on to savings accounts where nominal interest is 0.10% (before outrageous fees).
Without going on to tobacco excise, Canberra misses the point. When they talk of Public Service productivity savings of 2.25% (having risen from 1.25% last May – in the forward estimates) it is hollow – it is rhetoric, it is pyrrhic. As a financial planner you talk about discretionary spending.
If Canberra be serious about cutting discretionary spending they might start in their own backyard. During this parliament Canberra (the Productivity Commission) awarded themselves pay rises of 30% (according to some 40%). Only weeks ago they were discussing new electoral funding measures.
How about cutting parliamentary wages by 10% (make that 20%) and cap parliamentary expenses for the next term at 80% of parliamentary expenses for the current term (about to expire). The flow on to senior civil servants will start a meaningful dialogue. That will really affect discretionary spending.
Nextly get tough with the banks. WE ALL DRINK from the same well. Your sector’s health is not beyond that of the household sector or small business. Any bank paying any executive million $ bonuses we are watching! We have levers we will use to curtail your excesses! Why do you charge the destitute silly fees (without decency – yet encourage this deregulated nonsense)?
Then comes real change with the public service. This word we use called Productivity is becoming an oxy moron. It is mixed up and abused, with regulation, green or environmental and culminates in red tape. All projects will be affordable. Cost benefit will become a core value embodied in all mission statements. Transport will be affordable and efficient. Taxes and charges must be justified, or eliminated. All types of cash splash will not fall on the household sector or small business. There will be no new taxes in the next 3 years.
And it will go on.
Don’t forget -This will be implemented by Christmas.
Everything we are currently hearing is nothing but spin. The spin of the conjuror. It is that stage of the electoral cycle. It is time to hear from the little fella. But he has no idea what to think.
What might I say on election day this year.
Believing in sanity, is itself insanity.
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EYE-BALL’s ‘Herman’ …