Bickering hides our resource failure
Posted
Both sides of politics have played a direct role in the demise of Australian industry and have wasted the proceeds of the resources boom, writes Ian Verrender.
What a spectacle: The self-righteous fury and finger pointing on both sides of the political spectrum that has greeted the long, slow and ultimately unavoidable death of the domestic auto industry.
Who is to blame? Who cares?
The simple fact is that the hollowing out of the Australian economy is gathering pace while our bickering leaders thrash about with no plan on how to arrest the decline of manufacturing and precious little understanding of why it has occurred.
Of even more concern, neither side will acknowledge the direct role they have played in the demise of Australian industry. Nor will they admit to squandering the proceeds of the resources boom, cynically opting to enhance their electoral prospects by delivering instant gratification to taxpayers rather than formulate any long-term plan to enrich the nation.
Economists often refer to the forces wreaking havoc across our economy as Dutch Disease, a term coined by The Economist newspaper back in the late 1970s when North Sea oil discoveries radically transformed the Netherlands economy, squeezing out manufacturing.
In fact, an Australian economist, former Reserve Bank board member and Australian National University academic, Bob Gregory, pioneered the theory years earlier in a seminal work that became known as the Gregory Thesis.
It is no longer a theory as thousands of Australians are discovering to their horror. Our manufacturing industries now contribute just 7 per cent to our economic output, the lowest in the developed world, and falling. In 2004, it stood at 12.5 per cent.
How did we get to this, and how could it have been avoided? It is certainly true the strength of the Australian dollar has been the blunt weapon that has laid waste to vast swathes of Australian industry, rendering it uncompetitive.
But government policy failures throughout the first decade of the new millennium have been a major contributing factor.
Rather than quarantine the windfall gains generated during the early years of the resources boom, the Howard government, swamped by a huge and unexpected lift in company tax, instead chose to lower personal tax rates. The Kevin 07 juggernaut not only endorsed the policy, it went one further.
Returning that cash to taxpayers boosted consumption, fuelled a borrowing binge, lifted inflation and elevated interest rates, making Australia a very expensive country in which to do business.
That was exacerbated by a currency surging on the back of the vast capital inflows required for new mine construction and expansion.
The first public recognition that this was less than ideal came from Ken Henry's review of the tax system, which, as its centrepiece, advocated the introduction of a resources rent tax.
Under Henry's model, the resources tax would have funded a cut to company tax, an idea that was broadly embraced by big business but viewed with alarm by a heavily armed mining industry that broke out the big guns on the issue.
What followed was one of the greatest triumphs of vested interest over public policy.
Having botched the introduction of the tax, the Labor government's response to the industry's $28 million media blitz was to dump a sitting prime minister and capitulate to the miners' demands, introducing a neutered tax regime that barely raised a cent.
So toxic was the tax concept to the electorate, the Coalition elevated its removal as a major plank in its stunning election win despite holding no real ideological objection to an extra tax on non-renewable resources.
State governments for generations have been collecting mining royalties and Coalition-led states in Western Australia, Queensland and NSW raised their royalties during the Labor years. The Abbott government, meanwhile, since has applied a new resources tax to onshore oil and gas.
But the tax alone was not a panacea. The more important issue, and a possible solution to the grave situation now emerging in the economy, was what the revenue could have delivered.
Resource rich nations from the Middle East for decades have squirreled petrodollars into sovereign wealth funds that have invested across the globe, preparing themselves for the day when the wells finally run dry.
Norway has stashed $800 billion of oil proceeds into its fund while provincial Canadian governments now are scrambling to build their own funds.
How could such a fund have helped us? By investing offshore, it could have helped stabilise the currency, partially offsetting the dollar-boosting effect of a resources boom, thereby easing pressure on our manufacturing and services industries.
The investment phase of the resources boom rapidly is coming to an end. As mining construction winds down, employment prospects are dwindling. Modern mining is a highly mechanised endeavour.
We now are entering the production phase of the boom as all those new mines begin exporting iron ore. Ordinarily, that should benefit the nation.
The problem is, a large proportion of the proceeds will end up flowing offshore given all our big miners – BHP and Rio Tinto included – mostly are owned by foreign investors.
So here we sit, largely reliant on one market for the export of an unprocessed raw material, a yawning federal budget deficit, an ageing population and a conga line of distressed manufacturers crying out for assistance that in most cases will never arrive.
This is the first of a weekly column by Ian Verrender - the ABC's business editor. View his full profile here.
Topics: manufacturing, business-economics-and-finance, government-and-politics, industry
Comments (285)
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Whitey:
17 Feb 2014 6:50:49am
Not much to disagree with here. Our mining boom has been a disaster to all the other sectors of our economy, not just manufacturing. Our farmers are broke, tourism is struggling, the airline industry is terminal. It is late in the day to blame the Abbott government though. There were signs under Howard, and was absolutely obvious for most of the term of Labor. Any one who had the temerity to point this out, were simply told it was all the GFC. Now our economy is seriously ill, and the sectors like manufacturing and agriculture are dying. The decline of Agriculture is not about the drought, we've had droughts before, it's about the low prices farmers have recorded for a decade, and the death of the car industry has nothing to do with this governments decision to not prop up an industry already dead, the signs have been obvious since well before the exit of Mitsubishi, no money to retool,exacerbated by workers expecting mining rates, and in a featherbedded industry. Anyone who thinks any government can turn our economy around without pain is delusional.
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BkDw:
17 Feb 2014 9:14:19am
In the latest round of ineptitude, Hockey and Abbott want to take the sovereign wealth that made it into our super funds. They want the only enduring evidence of the mining boom to be invested in unprofitable Australian Government owned infastructure so the LNP can invest in pork barreling the electorate.
Ironically, Abbott wants to build new roads for all the imported automobiles.
The lessons are not being learned.
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Colmery:
17 Feb 2014 11:18:20am
International experience shows that Pork barrelling is what all politicians do to gain or retain power. If you think it's wrong then you should be seeking checks and balances in our system of government to combat it.
Thing is, politics as far as media consumers are concerned is just bickering in slogans that produces all the deliberated reason of a footy crowd. We seem to enjoy the bickering so much that even thinking about tweaking the system is off the agenda.
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LeftRightOut:
17 Feb 2014 2:04:22pm
Pork barrelling exists because of self interest - both the politicians seeking re-election, and an electorate that focuses on individual gain rather than community benefit.
The media supports this through the manner in which it undertakes reviews and publishing "what's in it for me" pieces.
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mortan:
17 Feb 2014 11:20:36am
I don't believe that's true it was Gillard and Swan who wanted the superannuation.If things go really bad super will be used for welfare regardless of who is in power.
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JohnC:
17 Feb 2014 10:21:50am
Unfortunately there has always been a tendency by governments of both persuasions to believe that Australia will always be "the lucky country". The mining boom is a case in point. Powerful companies, mostly with majority overseas ownership, who dominated the sector exercised their power to ensure that revenue from the spoils of our nations mineral resources flowed to the few and not to the many. In achieving this outcome they were aided by our federation structure which allowed the states to control the only key to stopping the pillaging of these resources, ROYALTIES. If this power had been vested in the commonwealth then a totally different outcome could have been achieved. The states instead frittered away this once only national treasure trove and we are all collectively the poorer as a result. But its not all bad news, the "Gnomes of Zurich" are celebrating long and hard at the stupidity of their naive australian cousins.
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RobP:
17 Feb 2014 10:47:47am
"... the "Gnomes of Zurich" are celebrating long and hard at the stupidity of their naive australian cousins."
Sounds like what the world needs is a modern-day Pizarro to plunder and lay waste to these guys and their influence.
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Bulldust:
17 Feb 2014 11:30:52am
A lot of disingenuous commentary here (I am being polite). A few basic points to realise about royalties:
1) They belong to the states in which the minerals occur (if they are on state crown land).
2) The states therefore have the sole right to levy royalties - as correctly pointed out.
3) Points 1) and 2) are essentially moot because the royalties are indirectly shared with all the other states and territories through the GST redistribution mechanism. Browse to the CGC web site if you are not familiar with this process.
So when WA raises iron ore royalties, all other states and territories benefit far more than WA.
Also, given the extreme vertical fiscal balance that exists in Australia, the last thing states need is more legislation to further exacerbate the imbalance. Might as well get rid of State Governments altogether. But then that has always been the agenda in Canberra, no? under that scenario WA would be royally shafted... out of sight, out of mind.
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Sydney Bob:
17 Feb 2014 12:58:28pm
Having worked in the mining industry I can tell you how this works. The mining companies play one state off against another. Not only are royalties lower that they might have been. mining companies also get reduce charges for things like rail and port access.
Clearly Australia would have been better off if the Commonwealth held all the mining rights.
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GS:
17 Feb 2014 1:35:11pm
I too work in the mining industry and I can assure you that this is completely incorrect.
For several years now state royalties have been multiples of the profits made by mining companies on a per tonne basis.
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Veganpuncher:
17 Feb 2014 2:23:02pm
I have not worked in the mines, but I have seen this dynamic in play. Royalties are not redistributed through the FGC or through Fiscal Equalisation although there is some redistribution through GST calculations. The mining companies play the states off against one another until they find one which is so weak that they affectively pay no tax.
As for the minerals being property of the States, there is no mention of this in the Constitution, it was decided in a NSW legislation in 1851 that all minerals were the property of the Crown administered by the State governors. No Federal government has had the will to challenge it since.
The most successful resource economy - Norway - centralised its extraction chain processes right at the beginning and developed a highly advanced manufacturing, processing and financing industry. In addition, they demanded that companies operating in and off Norway must sign up to a social contract that obliged them to base there up and down stream activities in Norway and use Norwegian labour. Norwegians have the highest standard of living in the world because of it. In contrast, our politicians have chosen to piss the money up against the wall and allowed imported labour and offshore high-value processing and upstream activities to leave us with a bunch of holes in the ground and a destroyed manufacturing industry.
A generation from now, Australians will look back and realise why their standards of living have decreased so much.
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Bulldust:
17 Feb 2014 6:25:26pm
As the Constitution is silent on minerals, therefore the Federal Government has no rights legally regarding said minerals on State lands. It has nothing to do with making a grab for them or not. Besides, as I stated clearly, vertical fiscal imbalance is already huge in favour of the Feds, so why make it worse? Makes no sense on any level.
If you spend a little time reading the reviews of the GST resitribution at the CGC site, which I have at length, you will realise that the biggest item (by a huge stretch) in determining redistribution of GST is the WA royalties. Other states are already getting a fair (in the socialist sense) share of WA royalties through redistribution of GST funds.
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JohnC:
17 Feb 2014 1:16:03pm
Disingenuous commentary? The whole point about state governments is that it is a tier of government that we could well do without. The large mining corporations slather at the prospects of divide and rule through these political minions rather than be forced to negotiate with a strong central government. Might as well get rid of state governments altogether? Agree absolutely.
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Bulldust:
17 Feb 2014 6:41:07pm
This is rather amusing. The Feds were haggled down from the RSPT to the MRRT which raised next to nothing from all coal, iron ore and petroleum producers in the country.
Little WA meanwhile raised iron ore fines royalties and raised well in excess of another billion per year.
Seems to me the states are more effective at extracting royalties from the mining companies than the Feds, based on recent experience. So methinks mining companies have had far more success haggling the Feds down on royalties (yes, the MRRT was just another form of royalty) than the states.
Argument meets fail...
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GS:
17 Feb 2014 1:33:21pm
Absolutely incorrect.
State governments have been getting multiples of the profits generated by the mining companies for quite a few years now.
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WAussie:
17 Feb 2014 5:25:34pm
Classic discussion. The reality is that the Federal Gov exceeds its jurisdiction on just about everything. As a West Aussie I think the other States should stop trashing WA and contribute to their own income. John Forrest eluded to a Federal Gov wanting to milk WA dry back in 1900, he could see it back then.
Get rid of the Federal Gov, they have been proving for 100 years that they can't govern from 3000 klms away!
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SgtBenton:
17 Feb 2014 6:17:15pm
+1
No, +1.0e500
Anyone who has starry eyes when it comes to the federal government's ability to govern in place of the state governments is just living in fairyland with the rainbow piskies.
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Blzbob:
17 Feb 2014 4:29:29pm
How stupid would a farmer be if the decided there was money to be made by selling all his topsoil?
leaving himself with no resources to draw a living from after some time.
This is what we are doing by selling off all our resources and not value adding.
once all the best resources are gone we will have no mining or manufacturing to fall back on.
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bulldust:
17 Feb 2014 6:55:16pm
Value adding is generally desirable, but an uphill battle at times. Case in point is the recent closure of the Gove alumina refinery. The WA refineries are still running, and both alumina producers in the state are forced to produce alumina from the bauxite they mine through these much maligned constructs we call State Agreements.
Funny thing is, many people (especially the Labor side of politics) rail against the State Agreements. Most had a value-adding cluase, but very few went so far as to force the proponents to value add (alumina being the clear case of this). This is why we saw the HISmelt and Boodarie adventures in iron ore. Some have worked, some not so much.
Value adding sounds great at the BBQ, but oft withers under the accountant's steely gaze.
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Maynard:
17 Feb 2014 12:11:38pm
And there is half a billion dollars of debt to pay of & no plan to pay it off.f.
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luke warm:
17 Feb 2014 1:04:09pm
There was about 270 Billion of debt when the current govt took office - they have since told us it will double that under their watch. And it does seem they have no plan to pay it back, as they have now abolished the debt ceiling
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Ravensclaw:
17 Feb 2014 6:53:02am
A poor opinion essay.
The decline of our manufacturing occurred in the 1970's and early 80's. This was due to many factors, but predominately it was due to militant unionism and unsustainable wage rises i.e. wage explosions. Blame John Halfpenny and his vile ilk.
The mining boom has not caused an imbalance of trade where our exports far exceed our imports. Our current trade position is one of a "small" deficit. Balanced trade has been a goal of government for 40 years. Balanced trade does not cause Dutch Disease.
The mining tax was never a fair tax both in its original and modified form. Miners pay company tax, same as other companies. On top of that many miners pay royalties and other levies. As mining companies expand they are also subject to other taxes e.g. payroll tax. Envy is not a substitute for fairness.
Howard founded the Future Fund as a similar program to Norway (where was Norway's Dutch disease LOL). Kevin Rudd and Julia Gillard squandered it 12 months later, and then some.
Foreign investors in mining didn't get their status as foreign investors for free. They paid their way in Capital, which lined the pockets of investors, employees and government alike. Even socialists agree (when it is their own money), that no one invests money with the intent to lose money.
Ian Verrender needs to get out more.
Cheers
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Dez Paul:
17 Feb 2014 8:32:28am
A poor comment. Howard funded the future fund from the Telstra Sale. It was created to cover public servants unfunded superannuation. The sale of a public asset, dressed up as a bulwark, was classic Howard smoke and mirrors.
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mortan:
17 Feb 2014 11:22:25am
There are a lot of public servants very lucky he did it and they voted him out of office. LOL
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luke warm:
17 Feb 2014 1:07:37pm
There are also lots of future taxpayers with reason to be glad that he did it, as otherwise they would be funding the PS superannuation entitlements. Which were accrued under successive Liberal and Labor governments.
And I doubt that there are enough public servants in Howards electorate to have voted him out - even if there were, we have secret ballots so you cannot know how they voted.
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Alan:
17 Feb 2014 1:38:37pm
I always find it amusing that the reason given is unfunded super for the PS.
From 1967 on I contributed a % of my salary to a super fund. Every now and then I would be told I had x amount earning y interest, even more occasionally i would get a distribution of funds left over from members dying and thus not claimed. It seemed to me then and now that it was a profitable fund.
Over the years it has chnaged is shape and form but Public servants paid into a fund mostly at the rate of 5% and seemed to get a reurn on it of abt 8%.
Howard and Co decided to legislate so any excess was not paid to the members but into consolidated revenue. I recall that at one time the fund as a shareholder in most of the major shopping centres until it sold its share to some company.
Whilst the future fund is a great idea and should have happened earlier perhaps it reasons for being created aren't what we are lead to believe but something else!
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Stuffed Olive:
17 Feb 2014 8:50:53am
I used to read Verrender in the SMH and found him to be pretty spot on every time. Your rebuttal of his article is full of holes. Biggest one being the fact that the Future Fund not only remains untouched but it has been added to and has grown. Defending the mining companies as you have ignores the reality of the argument which is opportunity squandered.
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Larry:
17 Feb 2014 9:26:44am
The only reason that the Fund has grown can be attributed to sound investment - interest on capital. You say "...it has been added to.." and that is not true. Labor in Government over 6 years did not add to the Fund. Remember, they did not have any surplus budgets.
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Stuffed Olive:
17 Feb 2014 11:54:56am
My first reply still not up. Labor added the Building Fund which was over $9Billion and is now $4.2Billion. Plonking the sale of Telstra in the Fund was just because they didn't know what to do with the money. Should never have been sold.
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Larry:
17 Feb 2014 12:28:02pm
When did they add to the Future Fund ?
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Stuffed Olive:
17 Feb 2014 12:50:32pm
The Nation Building fund was established on the 1st January 2009.
I can't find the info I need for the Education one which had a previous life and I also can't find the info I need for the Health fund. The Ed one currently has $6.49B and the Health one $4.8B.
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Dazza:
17 Feb 2014 12:42:56pm
Too right it should never have been sold.
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Bush Dweller:
17 Feb 2014 1:24:14pm
Stuffed Olive :
You must be too young to remember the financial mess of the old PMG department. The combination of the phone and mail "enterprise." At least they are now privatised and extreemly profitable, they like the Commonwealth Bank and all State Banks.
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Stuffed Olive:
17 Feb 2014 1:38:50pm
I'm old enough to remember having to have a 'party line' phone in North Balwyn, Victoria, because there was more demand than there were lines! Post war housing boom via cheap loans for returned soldiers. Selling Telstra saw the loss of annual income for a one off profit. Not good. The profits were there long before it was sold. You're rewriting history.
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LeftRightOut:
17 Feb 2014 2:16:33pm
Actually, only one stream has been fully privatised. Post is still a government owned corporation - for the moment.
Aus Post still remains profitable. Recently the revenue from postage has been insufficient to cover costs for this part of the business due to reduced use of services.
Privatising the mail distribution will impact most strongly on rural services. if you are a Bush Dweller then your local community will most likely suffer as has been the case with telecommunications. Geographically, the majority of Australia only has access to one provider - Telstra. Therefore the less densely populated areas do not get the benefit of competition that city folk get. But privatisation is a good thing because it allows the owners to make money - who cares about equitable service provision.
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virgil:
17 Feb 2014 8:57:41am
Is the Future Fund all gone? What's Peter Costello going to do then?
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OUB :
17 Feb 2014 12:09:19pm
I expect Ravensclaw was refering to $2 billion or so the Howard government socked away with the Future Fund folk supposedly to fund education in perpetuity. That money we looted in short order by Rudd et al. We were told about it after the event. Oh well, only money. Etc.
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Stuffed Olive:
17 Feb 2014 12:52:50pm
You are twisting the facts. The Education fund history shows it now has $6.49B in it. It and the Building fund are not locked up as is the one for Public Servant Super. Stop promoting lies.
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don't believe the media:
17 Feb 2014 2:36:53pm
An understanding of the prevailing economic conditions both at the time of the Howard government and that of the Rudd government would do you a great service. One was internationally recognised as one of the worst profligate spending, highest taxing and infrastructure ignoring governments in history and the other was internationally lauded as a clever and responsible government which invested in industry and the economy to achieve the world's best performing economy in one of its worst ever periods.
Your shock jocks work for the former.
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DaveS:
17 Feb 2014 9:15:02am
Chinas manufacturing is decreasing is that militant unions fault too?
The US has declined , unions again I presume.
European manufacturing is in decline .... well Im sure you can see the pattern emerging here ravensclaw.
We could always discuss the fact that half of Norways employees are in Unions too if you like.
Maybe you should consider writing an essay for The Drum as obviously they are in need of people like yourself who get out more.... ;)
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Tory Boy:
17 Feb 2014 9:59:24am
I would say it is very definitely the fault of the unions that in the face of declining manufacturing around the world, the Australian producers have lost out to more competitive counterparts in the US and Thailand.
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Hubert:
17 Feb 2014 10:44:56am
"More competitive" = much lower wages and conditions, correct?
Are you advocating the slashing of the minimum wage in Australia, perhaps by something like 75%?
What would this do to our standard of living?
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Peter the Lawyer:
17 Feb 2014 12:52:25pm
Yes. let's have a high minimum wage. Then no-one at the entry level jobs will be employed. But that doesn'yt matter because the government will pay you to nothing.
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Hubert:
17 Feb 2014 1:41:08pm
Peter,
We have a higher minimum wage than the US, and much lower unemployment.
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sleepykarly:
17 Feb 2014 2:25:27pm
Hubert, have you not noticed over many posts that Peter the Lawyer never lets the truth get in the way of strong advocacy for his client (i.e., Tony Abbott). Gosh he must be a good lawyer, to do it quite so brazenly!
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SgtBenton:
17 Feb 2014 6:25:06pm
And don't forget that the minimum wage in America is lower than it was in the, what was it, the 70's. Oh the numbers might be higher but if you add in the effect of inflation, minimum wage workers are significantly worse off than their fathers and grandfathers. Or so I am led to believe.
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chalkie:
17 Feb 2014 2:22:11pm
yet workers are getting less of the share of income:
"According to one Australian Bureau of Statistics (ABS) measure, the share fell by 4 percentage points from 57 per cent to 53 per cent over the first decade of the 2000s. According to other measures, the fall was even larger".
So it is the workers' fault that costs are so high even though the labour share of income dropped nearly 8%?
It seems it is capital that is greedy - funny that Abbott totally ignores this awkward truth.
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Blzbob:
17 Feb 2014 5:05:10pm
The very reason manufacturing is declining in China if that falling incomes in the west mean that the number of consumers is decreasing. unemployed and underpaid workers can not afford to buy the stuff china wants to produce.
Just how many ipads and iphones can any spoilt offspring of a mining executive actually want?
When only a minority of your population holds a majority of the wealth, it kind of constricts the customer base a little.
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Mark James:
17 Feb 2014 10:49:09am
"More competitive counterparts in the US and Thailand"?
TB, you're aware that George W. Bush signed off on $17.4 billion worth of bailouts for the US car industry at the end of 2008?
And you're aware that the Thai government subsidises its auto-industry more than we do?
Or is that what you mean by "competitive"? That the US and Thai car makers are able to compete better for government subsidies than our car makers are?
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Stuffed Olive:
17 Feb 2014 11:26:35am
Still nothing other than Liberal mantras Tory Boy. Got anything else to say other than everything is the fault of unions. God it's pathetic. Did you read this article first or just jump to inane opportunity to defend Abbott/Liberals attitudes to everything.
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Tom1:
17 Feb 2014 12:09:15pm
Tory Boy: It is probably a fair assumption that the many critics of the unionised workforce earn in comes far in excess of theirs.
Are you for example prepared to suffer a similar decline in work related remuneration, or retirement income that you demand of the workforce, in order to compete on a level playing field with our Asian neighbours.
Our politicians obviously are not. They get their kicks out of sledging, and are seldom known to have ever knocked back a pay rise.
The problem needs a nation wide solution, something that is not likely to come from an NLP Government. Workchoices was proof of that.
"The Age of entitlement" that Hockey carries on about is so evident in members of his own party, that they think they can claim travelling allowance for going to the supermarket.
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mortan:
17 Feb 2014 11:27:03am
Dave unions are costing jobs and the worker knows it. Why do you thing only 18% are in unions and many of them are no ticket no start. No job no money to buy Chinese goods.
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Stuffed Olive:
17 Feb 2014 11:58:56am
Because many were forced to become self employed.
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Peter the Lawyer:
17 Feb 2014 12:56:11pm
You say that like it is a bad thing.
Since more Australians have become self-employed they have learned how commerce really works and the risks involved in being a capitalist.
John Howard's government did well for these people by freeing up a lot of regulation and encouraging people to do the deals that would make their businesses grow.
As soon as the ALP got in, they stopped all that and made things very hard for small business.
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Stuffed Olive:
17 Feb 2014 1:43:56pm
I don't actually say it is a bad thing. It is a reason for less union membership. Whether it is now 18% (might be a bit more) it still represents 2 million workers. The self employed are not automatically 'capitalists' Peter - just self employed and have to provide their own holiday/sick leave and insurances - offloaded by companies who employ some contractors almost permanently. A bit cheeky to my mind. Being a contractor also means they are free to be exploited by some companies, especially the ones who manage to go belly up leaving contractors unpaid. It happens all too often.
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Blzbob:
17 Feb 2014 5:13:54pm
All this subbing out is a bad thing, it is how big business shakes of their responsibilities and liabilities.
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sleepykarly:
17 Feb 2014 2:32:54pm
Hi Peter!
Gosh you print some drivel! I ran my own Engineering/Architectural practice for decades, employing ten professionals at the peak. The biggest and nastiest thing that Government ever sent my way was the GST.
Sudddenly 9% of my income disappeared; that's a lot when you are working on a profit of 10% of cash flow! Plus all my costs except salaries went up by 10%; sure, I could claim this back, but I still had to cover it one quarter in advance.
Make no mistake; the GST was an absolute disaster to service industries, much worse than ANY 'Carbon Tax' or 'Mining Tax' hurt even the mining and electricity generation industry.
Thank you, Tony, for supporting the Coalition's first and greatest 'BIG NEW TAX'!
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Blzbob The Queens Council:
17 Feb 2014 5:12:10pm
The only ones who have done any good out of howards changes to the self employment situation has been lawyers.
As soon as you get an ABN, you take on all the liability and responsibility that big business has been trying to avoid for years.
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Dazza:
17 Feb 2014 1:02:52pm
Bullcrap Morton, corporate greed are costing jobs, just ask Coles and Woolworths employees.
"..and the worker knows it." You can't be much of a worker then?
"..no ticket no start." Illegal for a start. Stop trying to bring a decade old attitude to try and justify your anti-union rant, especially, as you say so yourself, that only 18% are in unions. How can you then justify that unions are costing jobs when the majority of the workforce are not even in unions?
Yep, it's funny that no one needs to join a union until their own pay and conditions come under threat and they've got nowhere else to go.
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magb1:
17 Feb 2014 1:50:22pm
Yep too true Dazza, on one hand they say that unions are irrelevant because only 18% are in one, then they say it's the unions that are costing us out of jobs! Can't have it both ways. I think they have been listening too much to Phony Tony's bogan slogans.
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olive:
17 Feb 2014 2:11:35pm
I can vouch that even LNP voters were joining union en masse in the company I used to work for before it folded as they were concerned that they wouldn't get their entitlements.
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don't believe the media:
17 Feb 2014 2:42:41pm
Mortan, how are the unions costing jobs? And are your 7 year old children working 16 hours a day in mines with zero safety controls?
If not it is thanks to the unions.
Union bashing is a fascist habit to make people like you believe that no protection, low wages, and dangerous conditions are acceptable so that the magnates can get fatter and richer all the while reducing their taxes and workforce.
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LeftRightOut:
17 Feb 2014 4:54:26pm
mortan
You do realise that people have left/not joined unions for numerous reasons. Below are some examples:
During the 90's miners were offered massive increases for short term contracts to leave the unions and award conditions (conditions which included health provisions such as maximum working hours). Once union domination was broken new recruits were offered short term contracts without award conditions.
For decades unions fought to get some basic rights such as 4 weeks annual leave, leave loading, penalty rates etc. Once these were included in base general conditions people forgot what unions were for. Now these conditions are being eroded and people don't get it.
The media (in particular Murdochs crew) has focus on a few bad apples and some nasty disputes in an attempt to create fear and loathing without letting people know what the unions actually stand for.
Unions cost jobs because employers want to undervalue their workers. If employers were more reasonable then workers wouldn't need the help of unions.
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GS:
17 Feb 2014 1:38:41pm
Chinese manufacturing is under pressure because of wages getting higher.
You are seeing lower value adding manufacturing more into South East Asian countries where wages are lower.
Chinese manufacturing is (and has been for a couple of decades now) moving to the higher value adding end of the spectrum with a lot more capital goods being produced.
Australian Treasury produced an excellent 4 part report on this last year. http://www.treasury.gov.au/PublicationsAndMedia/Publications/2012/Economic-Roundup-Issue-4/HTML/article1
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Politically Incorrect:
17 Feb 2014 9:23:40am
The mining tax was supposed to be pulling the reigns on the mining industry because it was causing a high dollar and it was that high dollar that was destroying the rest of the economy.
The high dollar more than anything has been the biggest factor for the death of the car industry.
It's not about envy it's about economic managment. Labor let the mining industry drive the dollar up in a 2 speed economy. Of course every other industry was going to suffer.
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Stuffed Olive:
17 Feb 2014 11:28:18am
Unfortunately Labor managing the GFC so well also saw the dollar rise and rise as Australia was a safe place for others to plonk their money into.
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OUB :
17 Feb 2014 12:17:49pm
There is something in that point of view but I am less charitable Olive. I saw it as the Australian dollar being forced up by debt funded stimulus. We paid for a stronger dollar if you like, and the problems (and benefits) it brought us. Don't worry, future generations will pick up the tab (exits restaurant hastily).
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Stuffed Olive:
17 Feb 2014 12:57:00pm
Ha, OUB - with the stimulus there would have been massive unemployment and more debt. The rest of the world admired Australia under the Labor government for what happened here. Unfortunately everything from now on under Abbott and his bunch of ignorant twerps will result in one big mess. Your lot don't have a damn clue, just election winning slogans and mantras. It's pathetic.
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Larry :
17 Feb 2014 2:08:16pm
A quick analysis of your point of view.
Anything Labor/Green = positive.
Anything Liberal/National = negative.
How about some objectivity.
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Stuffed Olive:
17 Feb 2014 3:00:19pm
That is because I'm right Larry. Let me guess, your view would be the complete reverse. The Liberal party will get a tick from me when it does something useful, good for everyone, not just their selected few. It is a pity that the Liberals are just the most mean spirited bunch under the sun and have gone a long way downhill since Fraser (I didn't like him much either but he had a few good points and during his prime-ministership did no harm).
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OUB :
17 Feb 2014 3:47:37pm
You are right about a jump in unemployment being certain to follow if no action was taken. Personally I think they overdid it by a substantial amount and got a poorer return than they would have if they hadn't panicked. I can't blame them for panicking, if that cheers you up. My belief, for what it is worth, is that a smaller response would have produced a larger initial drop in employment but a sharper recovery. But that will never be tested. The debt that has been accumulated will hang around our waists for many a long year, restricting us in all manner of ways.
Abbott will have to prove himself. After an awful start he seems to be getting a few things right. I expect he will find consistency too difficult.
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Stuffed Olive:
17 Feb 2014 4:27:37pm
What has he got right OUB? Don't start with stopping the boats. I hate both Labor and Liberal policy on this dreadful treatment of asylum seekers and tragically it is Labor policy which is 'working' and it is no good for anyone.
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OUB :
17 Feb 2014 4:56:29pm
I was responding to your post Olive. Sorry, once we get in the right hand gutter I should use names because it is hard to trace responses at times. The issue of asylum seekers (etc) did not occur to me.
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Tom1:
17 Feb 2014 12:18:42pm
I think that it was Labor's good management of the GFC compared to the rest of the world that drove up the Aussie dollar.
The MRRT was to only be on excessive profits, and whilst during the boom would have, if in place, resulted in extra revenue, without having a detrimental affect on mining companies.
Labor thought about it too late. It was really up to Howard to do this, but he had so much cash he did not know what to do with it, so he tried middle class welfare and got rid of it that way. And he is lauded by his present day peers. (Except Peter Costello I imagine)
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Politically Incorrect:
17 Feb 2014 1:30:50pm
The mining boom was the biggest driver of the dollar, that and the fact that the mining boom was keeping it stable while every other currency was a basket case (and still is).
Rudd didn't take into account a 2 speed economy until it became painfully obvious. Thats when Rudd answered with the super and as a result Gillard and Shorton stabbing him in the back.
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orangefox:
17 Feb 2014 5:46:46pm
PI, You forgot to mention Rudd was under extreme pressure from the mining lobby group to dump the super profits tax. Rudd's mistake was to leave it too late and then have the issue too close to an election. With Abbott and his media backers making the most of the opportunity there was little choice but dump the original tax. However perhaps Labor should have held ground and taken the chance as in the long run the country would be better off.
One thing that can be concluded though is that if Abbott was for the future good of this country he would have supported the mining super tax. However all he was intersted in was destroying the government, even if it meant damaging the economy.
He is a deplorable person and should never have been given the gift of PM.
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magb1:
17 Feb 2014 1:54:07pm
Yes Tom instead of having any vision as a PM with all that money Howard squandered it on middle class welfare to get back into power - it's Libs raison d'etre. Just spend to stay in power and help their mining and multinational buddies. What a stain on our democracy they are. We could have used that money to build a Sovereign wealth fund - too late now.
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Paul01:
17 Feb 2014 9:38:13am
Ah I see RC it is all the fault of the workers who are getting paid a fair days pay for a fair days work.
Care to explain the growing disparity between the rich and poor?
Those "militant unionists" and their "vile ilk" cant be doing a very good job if the rich keep getting a bigger portion of the pie.
What sort of wage cut do you see as equitable? 25%? 50%?
You go first.
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Bush Dweller:
17 Feb 2014 11:02:57am
"The workers getting a fair days pay, for a fair days work".
Can you explain to me :
1/. Why is an unskilled production line workers pay rate at GMH, Toyota or Ford, whose sole responsibility is to screw a couple of nuts in a component, greater than a university educated Registered Nurse with >8 years experience, A copper or a chalkie.
2/. Why is 1 union official per each 6 unskilled "workers" needed, and why does the company, have to pay em to do nothing but learn how to be a good unionist.
3/. Why did 30% of Toyota`s workforce take a sickie after Australia Day.
4/. Why did the AMWU go to the Federal court, without seeking the "workers" input, to stop Toyota renegotiating their enterprise bargaining agreement.
5/. Are you prepared to pay more tax to address the "income inequity" between the essential public servants, to nurse, to educate and to maintain public safety and the production line workers.
6/. Do you agree that all the shearers cooks in the bush should be paid the same rate as those on the boats in WA ($140,000pa).
The term "workers" is indeed an oxymoron when compared to the whole of the national workforce.
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Shell:
17 Feb 2014 12:48:08pm
I worked for Holden, and my salary was $58k. your point is incorrect
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Bush Dweller:
17 Feb 2014 1:27:32pm
Shell :
worked, seems past tense.
Only going on award conditions quoted by our ABC.
My apologies if they were not fact.
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Ann:
17 Feb 2014 1:16:34pm
If cooks in the bush are paid so much, its only because that's the market rate for a job nobody wants to do. That's market forces at work, the opposite of unionism. You can't have it both ways.
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Bush Dweller:
17 Feb 2014 2:02:16pm
Ann :
But cooks in the bush are NOT paid even a third of that much. Nowhere near it.
I have never seen an add in the national papers or internet calling for cooks on boats. Is it "market rate" or "union demand"
that determines the obscenity of a cook on $140,000.
Do you have an opinion/argument on points 1 to 5. The only way I want it is not both ways, I would just like to see essential services, all university educated, get as much as a production line worker at GMH, surely that is not too much to ask.
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Peter the Lawyer:
17 Feb 2014 1:03:53pm
The politics of envy is probably the most vile kind there is.
What does it matter if the rich are getting richer if the less well off can afford a decent standard of living? What has happened in this country is that over the last generation everyone's standard of living has risen, so that the real grinding poverty is almost a thing of the past. Most of us can afford a plethora of gadgets and goods that make our lives easier. Worrying because someone else has more than you is just silly.
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Politically Incorrect:
17 Feb 2014 1:37:05pm
Tell that to people that are still homeless and living below the poverty line. Particuarly in places like the US where over 50 million people live blow the poverty line.
The trickledown model has proven to be an absolute failure.
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Old Timer:
17 Feb 2014 2:41:25pm
And the worrying thing about the 50m US citizens who live below the poverty line? Most, if not all, of them have access to guns. Often more than one gun. And one day they will start using them.
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chalkie:
17 Feb 2014 2:27:12pm
yet if there are calls for a redistribution of wealth towards the poorest, a hue and cry is howled by the rich and their lackeys.
Only when the poorest are expected to cop worsening inequality are calls like your made.
Double standards?
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Blzbob:
17 Feb 2014 5:34:39pm
The noticeable thing about redistributing some of the rich's wealth to the poor, is that in no time the rich have worked out some scheme to cheat them out of it again, with the help of people like Peter.
The greedy can be made poor, but never stay poor for long. It is those with no greed that never become rich. The only thing they can ever hope to achieve is not to be extremely poor.
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don't believe the media:
17 Feb 2014 2:48:39pm
The more common trend these days is downward envy. I have noted it many times in these posts. Yes the upper middle class has increased, mostly thanks to tax concessions and middle class welfare, but if you think that grinding poverty is a thing of the past you really haven't taken any notice whatsoever.
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hugh mungus:
17 Feb 2014 6:19:34pm
"The politics of envy is probably the most vile kind there is."
Agreed. And it's greatest proponent was John Howard, who justified his middle class welfare on the argument that if you pay taxes you should get a handout from the government. Thus promoting the gross inefficiency of paying one lot of public servants to tax you, and another lot to hand it back. It was however spectacularly successful politically and has left us with a generation of people on above average income who believe this gross waste is smart.
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casewithscience:
17 Feb 2014 10:25:22am
Unions are rational agents in the economic environment. They seek wages at levels to support their members. It is equally arguable that employers were unprepared to share their profits with workers and preferred to off-shore jobs (see Pacific Brands, etc).
The point is that our current manufacturing malaise is not the result of a unionised workforce. As pointed out here, it is the dutch disease of all our efforts being poured into the mining income stream which caused investment in other industries to rot.
In reality, if you want to blame someone, blame the lazy investor classes that saw it was easier to make a hole in the ground than to actually produce something useful. Or blame the governments (state and Commonwealth) who just opened the taps without think about the long term.
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RobP:
17 Feb 2014 11:28:25am
Another factor that is never talked about but is so obvious is that, as a penal colony in the 1700s, Australia just doesn't have the history of business and entrepreneurship that European countries and the US have. By the time we could have come of age, the US was already the dominant economic force in the world and it likely would have been an act of self-destruction to go into direct competition with them. As a small country and middle economy - apart from Keating's economic "surge", which was a huge imbalance in its own right and has since led to the plundering of our assets by foreign entities - we've played our cards pretty sensibly given our circumstances. As the world's economy gets more diverse and with a plurality of power centres, the options for Australia will increase and the less unbalanced the financial and other flows will become, thus spreading the load and taking the acute pressure off various parts of the economy.
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Peter the Lawyer:
17 Feb 2014 1:05:14pm
At the turn of the 20th Century Australia had the world's highest living standard, because we had a great number of entrepreneurs.
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RobP:
17 Feb 2014 1:26:35pm
I've heard that Melbourne was a thriving capital city in the late 1800s, but as we aren't exactly seen that way now, it's pretty clear the entrepreneurs we had back then must have been relatively small fry (as a result of history, geography and a low population mainly).
For instance, Australia has never (manifestly) had a George Westinghouse, Nikola Tesla, Bill Gates, JP Morgan, Andrew Carnegie, Steve Jobs just to name a few of the greats in the US. With that greatness comes great power which is what we are really up against in any sort of competitive economic situation. To survive, we have had to come in under their wing to some extent.
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casewithscience:
17 Feb 2014 2:40:19pm
This is true. Our market leading products have almost exclusively been government developed (RoundUp, wireless, gardasil, etc).
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casewithscience:
17 Feb 2014 2:39:16pm
@Peter
You are going to have to qualify that statement. We certainly have a good number of wealthy citizens that have dug resources out of the ground, but "entrepreneurs" is really pushing it. Capital funding for new industries in this country is very low compared to either the US or other developed economies. It is largely foreign owned corporations (or where there is a substantial foreign % of share owners, such as Rio or BHP) that are making the profits. Largely, the entrepreneurial "spirit" in Australia is coming from overseas (and does that count?).
As has been pointed out before, we are wealthy because of the mining capex, and this has resulted in a dutch disease infecting our other industries.
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Blzbob:
17 Feb 2014 5:39:04pm
Yeah, all those lucky asbestos and coal miners huh!
All that innovation ans entrepreneurship.
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seg:
17 Feb 2014 10:48:22am
You go old son - spray that flawed ideological drivel across the page...yeeehaw!
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The Truth:
17 Feb 2014 11:40:41am
Absolutely crap comment , maybe you should research before coming up with such rubbish.
1) The structural shift in the Australian economy away from the uncompetitive manufacturing sector has been a good thing not bad thing. Australia does not have a comparative or absolute advantage in manufacturing.
No doubt unions were part of the problem , but the main problem was the tariffs and protection. Once Australia opened up to the world economy it was obvious most manufacturing firms had been protected for too long and the shift of resouerces to service sectors is more appropriate.
Balance of Trade - Your points are mostly invalid , besides the mining boom where high prices of commodities allowed our export income to exceed import income, Australia has largely relied on foreign imports for everything we can't produce.
More over Dutch Disease has nothing to do with this, but rather a two speed economy where only the mining industry in Australia is growing.
THirdly the mining tax was both fair and valid, afterall natural resources that are irreplaceble deserve to be taxed by the federeal government . Most other nations in the world have simliar taxes .
Howard's future fund was small and most of it came from sell of government entities. Most of the money was wasted on middle class welfare programs and over exorbant tax cuts leading to Australia's structural deficit in terms of revenue.
The reality is Australia's governments do not have enough money to fund all the programs everyone wants. Cutting the carbon tax and mining tax does not help.
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Peter the Lawyer:
17 Feb 2014 1:11:31pm
The problem was that the mining companies weren't being asked to pay for the resources they were removing from the ground, they were being asked to pay a higher rate of income tax than anyone else.
You might argue that the MRRT was meant as a payment for resources, but that argument carries no weight because those resources belong to the Crown in right of the States not the Commonwealth.
As to the oxymoron 'exorbitant tax cuts,' the mind boggles!
You do know that this is our money don't you? It isn't the case that all the money in the country really belongs to the government which generously allows us to keep some of it.
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Old Timer:
17 Feb 2014 2:49:09pm
Seeing as how the Goverment prints and issues the money, seems to me that they really do own it. Unless of course you are printing your own money, PtL?
We mere mortals just earn some of it by our labour, or get some in the form of social benefits, while the various State and Federal Governments do the heavy lifting in the form of roads, airports, railways, defence, trade, immigration, customs, education, hospitals and all that crap.
Anytime you'd like to secede and start you own country, PtL, feel free to leave. Make sure the door doesn't hit you in the back on the way out. :)
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don't believe the media:
17 Feb 2014 3:01:23pm
I mostly agree Truth, except to say that free trade will slaughter all but the mighty nations. Tariffs protect the weaker trader.
On manufacturing, you're correct. It is time, as a first world country we moved away from it and into more science, research and development which will see us add value to existing as well as new industries.
Unfortunately, the once clever country has been dumbed down to the point where science and research is not considered an asset by this government.
We lost the world's best solar scientists to Germany in the Howard era and we are losing more as university funding s cut again, the CSIRO is further de-funded and education is available only to the elite who are quite happy with the status quo.
While our press does what it did to Carter in the U.S when he pointed at the climate being the biggest issue of the day, (he also put solar on the White House, later to be removed by Reagan), and lauds the masters of commerce over science the lemmings will follow and fall, as will our economy and society.
As i've previously mentioned; in his 8 years Reagan took the U.S from the highest creditor nation on Earth to the highest debtor nation.
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Tom1:
17 Feb 2014 11:57:17am
Ravensclaw: Actually it is pretty difficult to find much to disagree with in this essay. However you Ravensclaw, apparently offended at the even handedness of it, in sheeting some of the blame to Howard, want to unreasonably blame the Labor movement solely.
Blind Freddy should have been able to see that it BHP, and Rio shares rose from $10 or less to the stratospheric figures they did, that Australia was sitting on a lot of wealth that should have kept us in good stead for well into the future, if not forever.
Whether the RRRT was fair or not, it should have been obvious that a tax on excess profits was justified, but this became a partisan issue, like so many others, with only the next election in mind. Both parties should have worked on something that you could call "fair"
You any other critics seem to conveniently overlook that the tax was on "Excessive profits", and should have it explained to you. That is, if you made a very good profit last year, that would not be touched, but you would be taxed on anything in excess of that. That in effect means that you can still have your good profit, and most of your excess profit. Sorry for the school lesson.
Whether Labor would have managed the economy better without the GFC is open to debate, but it is unlikely to have become as profligate as Howard who left a massive structural deficit.
Your whole attitude to foreign investors seems to be that they are doing this country a favour, and will not invest unless the profits are massive. I doubt that that is the case.
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Peter the Lawyer:
17 Feb 2014 1:16:34pm
Thus spake the marxist.
You really don't understand profit do you?
Who says what a 'super profit' is? And why should mining companies be the only ones who pay tax on 'super profits?' I bet if the ALP were still in power we would have seen the 'super profits' tax spread to other industries.
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Steve:
17 Feb 2014 2:01:44pm
Super Profit or Resource Rent Taxes are justified because a body of ore can be exploited only once. Banking can go on as long as there are customers. Sustainable fishing can go while ever we have oceans. Plantation timber and agriculture can continue while ever we keep the land in a viable state.
A iron ore mine we only get one shot at extracting value from.
The other point is that a great deal of the profits realised in the mining boom are not the result of clever, innovative practices. They are the result of the largest industrialization ever to happen creating an artificial, short term rise in the prices of basic commodities. Seems fair that the country as a whole should benefit from that. Not just those who happen to be in the right place at the right time.
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Tom1:
17 Feb 2014 2:17:52pm
Peter.
I am far from a Marxist. Just shows how wrong you are if you make those silly assumptions about people that do not share your views.
It may be too much for you, but you would think it possible for Treasury, for example to be able to reasonably determining a "Super Profit" It should go something like return on outlay, with all of the variables applicable to the particular company.
The important thing, something that has escaped you is that it should apply to those companies that exploit out natural finite resources. Not something unheard of.
Super profits on other industries would be a bit harder to sell. Take for instance the motor manufacturing industry, not a good example I know, but they actually make something from nothing, and have much more competition.
The mining industry in Australia not only mines our natural resources, but it has an advantage over our greatest competitor because of its proximity to its markets. It gets that advantage for free.
Now a tax on super profits of banks. That is a thought, and at the risk of again being called a Marxist, the Australian Government does issue banking licenses, and that is akin to a licence to print money. Banks are not exactly known to be good corporate citizens. They will lay off staff, and close branches at the drop of a hat, or at the installation of a teller machine.
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don't believe the media:
17 Feb 2014 3:02:46pm
I'll give you one glaring reason, Peter 'the Lawyer'; It's my country they're digging up and selling off for their super profits.
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Tom1:
17 Feb 2014 11:57:19am
Ravensclaw: Actually it is pretty difficult to find much to disagree with in this essay. However you Ravensclaw, apparently offended at the even handedness of it, in sheeting some of the blame to Howard, want to unreasonably blame the Labor movement solely.
Blind Freddy should have been able to see that it BHP, and Rio shares rose from $10 or less to the stratospheric figures they did, that Australia was sitting on a lot of wealth that should have kept us in good stead for well into the future, if not forever.
Whether the RRRT was fair or not, it should have been obvious that a tax on excess profits was justified, but this became a partisan issue, like so many others, with only the next election in mind. Both parties should have worked on something that you could call "fair"
You any other critics seem to conveniently overlook that the tax was on "Excessive profits", and should have it explained to you. That is, if you made a very good profit last year, that would not be touched, but you would be taxed on anything in excess of that. That in effect means that you can still have your good profit, and most of your excess profit. Sorry for the school lesson.
Whether Labor would have managed the economy better without the GFC is open to debate, but it is unlikely to have become as profligate as Howard who left a massive structural deficit.
Your whole attitude to foreign investors seems to be that they are doing this country a favour, and will not invest unless the profits are massive. I doubt that that is the case.
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nyknyk:
17 Feb 2014 12:01:52pm
This is a bi-partisan failure, both Labor and Liberal have stuffed up here, the Libs by being opportunistic, and Labor by not being resolute enough to hold out against the miners.
To try and blame one side or the other only shows your heavy bias.
You need to get out more, and listen to more opposing views.
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Mr Denmore:
17 Feb 2014 12:25:35pm
The Future Fund was not set up as a sovereign wealth fund but to fund the future liabilities of public servants' super.
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Jason:
17 Feb 2014 1:25:13pm
Oh boy, you really need to pay more attention to what was written. Had Howard & Rudd not given the tax cuts on temporary money, then the budget would not be in the terrible shape it is in at the moment. If Howard had parked the extra revenue rom the mining boom in a sovereign wealth fund we would have hundreds of billions of dollars working for us, instead of against us. Howard poured fuel on the inflationary fire, no-one can dismiss that fact. Rudd should never have matched Howard's tax cuts in 2007. We need to look back on the naughties as a completely missed opportunity for this country. It was woeful politicking that has us at this point. If the 'left wing luvvies' and the 'right wing nut jobs' took their blinkers off, we would be cursing politicians from both sides. We have been let down terribly by our politicians.
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disillusioned:
17 Feb 2014 6:53:22am
You almost sound surprised that this has all happened. Not sure why? Blind Freddy could see this coming nearly 30 years ago when tariffs were significantly reduced. As long as the muppets in government continue to pander to the greed of multi-national corporations this country will continue on this downhill slide.
The saddest part is that it could all easily have been avoided with some strong leadership and the best interests of the Australian People forefront in the decision making protest.
Now we have reduced commodity prices, no manufacturing base to secure employment and few prospects of turning things around if government fails to take a stand and make some tough choices - ones it should have made years ago.
No matter how much economists desire it Australia will never be the clever country. The education system is crumbling due to poor outcomes. Demands on welfare will continue to increase as poorly educated people will have no employment options available to them without a strong manufacturing base. Resources will reduce cutting employment in the once rich mining sector. And the sell off of public assets, particularly utilities, further undermine government revenue and place more pressure on the public due to ever increasing profit grabs.
Meanwhile not only is the Federal Government increasing debt but State Governments and Local Government are all unable to work within their income constraints and the Nations debts continue to climb. What will it take for the Australian People to wake up to the fact that we are all be played for stooges?
It took the GFC for the US to wake up to the fact that strong manufacturing underpins any economy. Now they are rushing to try and rebuild what had been lost. If the car industry is allowed to leave this will be a serious set back for Australia and its manufacturing base.
I don't care what these so called brilliant economist think. The only way to save this country is to bring back tariffs, protect our industries, raise company and personal income tax for those earning over $200k per annum. Get rid of middle class welfare (you don't need any handouts if you are earning more than $100k pa). Strengthen the education system not with money but with effective outcomes (we need clever people pushed to succeed not reduced goals so more people can pass). And stop bubble wrapping our kids. They need to learn to fail and learn that there are consequences. No, not everyone will succeed. But a dumb nation which thinks the world is all rainbow and puppy dogs is destined to fail.
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Henry the Moose:
17 Feb 2014 9:53:58am
A good comment that provides some intelligent ideas and avoids attacking individuals. A model of what discussion on the ABC should look like.
As a teacher, I agree with Disillusioned's view on education. We have eliminated competition and failure and the drive to succeed that failure, ironically, brings, with the result that students drift through the system and often emerge on the other side, blinking in the sunshine, ill-equipped for anything other than a brisk game of frisbee.
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seg:
17 Feb 2014 10:54:54am
We may also want to start valuing and respecting our teachers too, perhaps more would then want to enter the profession.
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Half Past Human:
17 Feb 2014 12:32:23pm
Of course they will blink in the sunshine when they are on the otherside!
All students should be encouraged to strive for academic excellence in their early years. Later on as they are growing up each student will find their own way to a particular profession according to their desires and abilities. Some will be engineers, some will be carpenters, some will be jewellery designers, some will be astrophysicists and some will be "teachers."
This is where the teachers play a big role - to help students to discover their abilities and limits.
I don't understand the people who talk about "competition" all the time! What do they mean? Do they mean that the students should compete with each other in the class so that those who do well academically must feel much better about themselves, and those who didn't must feel bad? Does this mean we have to concentrate on those students who are doing well and discard the rest after they grow up, to the labour market to become "unskilled workers" at the mercy of the employers in a free-market environment? ...and then complain about the so called "high wages" they earn as unskilled workers.
Forcing a marathon runner, a javelin thrower and a high jumper to compete in a hundred-meter-sprint event with other sprinters is not competition, and may I remind you ladies and gentlemen, that, it's still called Athletics.
If you want to learn about "Education" go to Finland.
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Tory Boy:
17 Feb 2014 10:00:55am
Our kids need to learn to fail so you will punish anyone who succeeds? That is pretty twisted. As for tariffs, etc, what do you think will happen to anything we try and export?
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rumpole:
17 Feb 2014 11:33:32am
" As for tariffs, etc, what do you think will happen to anything we try and export?"
====================================
We should put the same tariffs on goods from other countries that they would apply to our goods of equivalent type.
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chalkie:
17 Feb 2014 2:29:36pm
and their land ownership rules (and perhaps migration requirements?)
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Simon:
17 Feb 2014 4:21:06pm
Australia missed its opportunity in 1975 when Rex Connor was about to nationalise mining for A$5B. The US ensured this did not happen (Kem Lani affair!) supply was blocked and the opposition put in govt to ensure mining was not nationalised.
Now all we have is a banana rebulic as foretold in the late 80s.
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orangefox:
17 Feb 2014 6:12:14pm
In John Pilgers 'The secret country' he rights that Australia will one day have a dictator.
Perhaps Australia will have a second chance?
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TC:
17 Feb 2014 6:40:53pm
Economically the argument for high tariffs is nonsense. We are an incredibly properous nation and part of the reason is because we have a massive world market open to us to sell our high-quality goods and services to. Do you really think cutting ourselves off from billions of customers is the path to prosperity? If we close down our markets to others then we can't complain when they close their markets down to us and we will very quickly go bankrupt. Australia does not have the population required to make verything we want and need. We can't compete with other countries who pay their workers next to nothing to make simple things. We don't ewant to pay huge sums for simple things so that an Aussie worker can get paid a lot for making it. We need to specialise in what we do best through our people's skills and advanced technology not by having a large percentage of our workforce sitting in factories making simple things.
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Kim:
17 Feb 2014 6:55:24am
This article is right on the money. My sector (tech) started failing in Australia years ago; when my company relocated operations to London and sacked all the Australian staff, I relocated my family to the US, and quite a number of my colleagues have followed me. The ones who haven't on the whole now work for the government, or for companies who solely service the government.
As mining capital expenditure declines, and unemployment rises, persistent government deficits are going to be a big problem. Soon the only remaining industries will be digging up dirt, working for the government, and selling absurdly overpriced houses to each other. This scenario seems unsustainable.
When things change and some economic sanity is restored (especially to land prices), we may move back. If I'm wrong and things stay as they are, then frankly, I would be crazy to return; why take a 30% - 40% pay cut to live somewhere with some of the world's most overpriced housing and few opportunities? No thanks.
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rockpicker:
17 Feb 2014 7:11:36am
Exactly! The idiocy of tax cuts in a boom and the economic illiteracy of Howard, with Costello lacking the gumption to argue. I doubt the ALP could have done the job, because of the GFC and the fact that the miners wouldn't have played up on Howard. The whole resource royalty set up needs changing. A well thought out expose of typically dimwitted government. Mind you the coalition hates manufacturing. It contains unions.
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Frank O'Connor:
17 Feb 2014 7:14:55am
Mmmm ... politicians never seem to get the cyclical nature of the economy, and the fact that when one part of it booms, other parts of it bust, by simple logic.
The mining boom caused our terms of trade to go through the roof and hence the dollar to boom, stimulated massive investment in a narrow sector of the economy to the exclusion of others, contributed to credit tightening and caused a wages blow-out as they sought skilled workers that (paradoxically) the miners are complaining about now. The housing boom and other economic riptides did the rest, sucking up funds that could otherwise have been applied to more economically productive pursuits than rampant consumerism.
It also caused most of the conditions that made manufacturing (and other exporting industries - like farming, fishing, 24/7 services provision etc.) so tough over the last few years.
But, as you said, the government just sucked up the additional moolah from the sector(s) that were doing well, and distributed it as middle class welfare and other electoral largesse (further fueling housing and othe bubbles), whilst ignoring the sectors that were of necessity struggling ... and now we (naturally) find ourselves in the situation we're in.
Taking a holistic view of any given economy should be mandated for all governments, but all too often the reductionist view (that an economy is simply a sum of its particular sectors) seems to prevail - and short term thinking keeps us in the boom and bust cycle that is so destructive.
And ... as you said, given that the mining sector is largely overseas owned ... much/most of the revenue from that will be going overseas in the near future. It's nice when they are in the investment/building phase ... but much less useful to the domestic economy when they are simply in production.
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ratatat:
17 Feb 2014 9:37:18am
no government wants to see housing fail outright
but they seem to take actions that let it grow rather than stagnate, the viable alternative to failing
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Rob:
17 Feb 2014 7:17:48am
The headline says it all. Both sides have wasted the resources boom and bickered while our manufacturing industry(and jobs) die.
And the idiotic populace believes the b/s that the service industry will create the new jobs-while it is busy offshoring jobs?
There was a great article by Dan Denning in Daily Reckoning Australia on Feb 15, 20i4.
Suggest you read it. Google Daily Reckoining Australia.
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albie:
17 Feb 2014 7:18:26am
The Libs had a massive surplus, the socialists a massive deficit largely because socialists spend wastefully until they run out of other peoples money. Cant wait till their lapdogs who dwell on this site attack comment. Go free speech.
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Henry the Moose:
17 Feb 2014 9:58:47am
This tribalism is part of the reason we're in the mess we are. The political parties have divided the people, blind-sighted them with stupid rhetoric, and made them immune to the fact that we live in a two-party, one-policy state.
Economic policy is largely driven by the Treasury and the Reserve Bank, and both sides of politics agree with it.
When you start banging the drum "my side is better!" like the monkey in the toy-box, you have fallen hook, line and sinker for the emotionalism and drama of political tribalism. You, Albie, have become part of the political soap opera.
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Steve:
17 Feb 2014 10:39:57am
The Libs built up their surplus on the back of abandoning infrastructure, health and education investment during the best economic times the country has ever seen.
Labor built up a deficit undoing this neglect during the worst economic times in decades.
Go Free Speech.
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TC:
17 Feb 2014 6:43:16pm
Um what infrasctructure has been built by the last Labor government? The big deficit we now have went on handouts, insulation and overpriced school halls.
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Hubert:
17 Feb 2014 10:50:35am
Albie, if you get criticised for your comments, it is because they are factually wrong. Labor spent LESS than the Coalition as a proportion of GDP). Yes, less.
The deficits are largely due to a number of factors out of the government's control, such as the GFC.
I also get sick of hearing about Labor spending other people's money. That is what governments do. All governments. that is their job.
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OUB :
17 Feb 2014 12:47:26pm
I get confused on your first point. Did Labor spend a lower proportion of GDP or did it just budget to spend less? Because we know Labor and budgeting just didn't get a long. You should also mention the massive expansion of revenues during Labor's time.
How much of the deficit was due to the GFC and how much was due to an overreaction to GFC? Who knows? If stimulus had been less vigorous would the deficit have been greater or lesser after allowing for increased benefits? I suspect there was a tipping point in there somewhere, which Labor exceeded and got a diminished return as a result. But my politics influences my perception no doubt.
I don't mind pollies spending our money. It gets a bit disturbing when they build up an intergenerational debt in doing so though.
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luke warm:
17 Feb 2014 1:21:24pm
More stupid tribalism. Labor spent a lower porportion of GDP, they also took a lower proportion in tax in their first term. And in fact revenue contracted in real terms (adjusted for economic growth) during their first term. The 'massive expansion' you speak of is in absolute terms, not real terms.
I also think you are confusing debt and deficit. I'll assume you mean debt (the $270 Billion left by Labor). Over $200 billion of that was from declining revenues (or reduced revenue growth) caused by the GFC
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OUB :
17 Feb 2014 4:53:34pm
Luke and Hubert I should have confined the massive expansion bit to revenues from mining I admit. No Luke, I was referring to deficit. As mentioned to Olive I believe the Rudd government went overboard with poorly-targeted stimulus measures. In light of low inflation rates the difference between real and nominal would not be terribly impressive.
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Hubert:
17 Feb 2014 1:54:45pm
Hi OUB, thanks for your reply.
Here's some information on government spending as a proportion of GDP:
http://www.budget.gov.au/2012-13/content/glossy/tax_reform/html/tax_overview_02.htm
I'm not sure about a "massive expansion" of revenue during Labor's stint. I think they benefited from the mining boom when the GFC hit. The Coalition certainly benefited far more from the mining boom though.
As for intergenerational debt, I agree entirely that this is not ideal. To be fair though, Australia's debt is quite small as a % of GDP when compared to almost every other developed country.
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Homer:
17 Feb 2014 10:59:36am
*sigh* Here we go again.............
Albie - capitalism is based on debt. Debt is other peoples money. You used it to buy your house. BHP uses it to fund mining projects. The govt uses it to build roads. The US used it to bail out those paragons of capitalist virtue - the banks.
So please find something new and correct to trot out next time you have the urge to repeat someones elses neo-con propoganda.
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seg:
17 Feb 2014 11:01:11am
Hmm, try some original thought and perhaps even some analysis please. The old, 'its those dang socialists' mantra just doesn't hold weight anymore. Not when you have the economic vandalism of Howard staring back at you.
Have courage, try reality, it hurts a little at first but its well worth it!
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Poisonous Mushroom:
17 Feb 2014 2:23:04pm
Get your facts right albie. Howard and Costello left a massive structural deficit that will keep Australia in deficit for the next two decades, despite what Abbott and co are telling you. Howard was determined that if he did not win by buy votes no-one else would be able to report a surplus in the remainder of Howard's lifetime.
Abbott knows that but he is making sure no other Australians will ever be aware of the truth of the matter.
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nyknyk:
17 Feb 2014 2:40:42pm
Notice how those "lefty" ABC readers are all very quick to acknowledge the role both parties have played? Seems to be only the hard right nutters who insist on their own sides innocence.
Free speech? It would seem you only want speech which agrees with you.
Pretty clear who is unbiased and who is delusional.
Funny how the hard right constantly go on about their rights and how they are victimised yet are the ones doing the victimising and stepping all over others rights.
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NoGoodNamesLeft:
17 Feb 2014 7:25:41am
I agree that both sides are to blame in our current situation.
Labor and Liberal parties have always seemed to be different sides of the same, very dirty coin to me.
There is no "progressive" political party in Australia, only conservatives on either side of every issue.
Neither political party plans further into the future than their own political lifespan and leaves the fallout for the next person to come along.
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Fred:
17 Feb 2014 9:12:19am
Labor and the Liberals are BOTH free marketeers.
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seg:
17 Feb 2014 11:03:38am
...hilariously, the very very very right wing party and its devotees look at the pretty darned right wing party and holla, "lefties, lefties, luvvies, socialists!"
Oh its just so delicious!
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RosieA:
17 Feb 2014 7:25:52am
And, if all that is not bad enough, we now have a government that is hell-bent on destroying the climate and the environment more generally, on which we all depend. Seems Australia is not a clever country at all......
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Helvi:
17 Feb 2014 8:34:42am
RosieA, clever countries worry about having a well-educated population, they have top class public systems, so every kid has a chance. They are the ones that make the country great, clever, united and forward-looking...maybe it is already too late for Australia...
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MT_Syd:
17 Feb 2014 11:21:19am
Helvi, despite all the negative talk about our 'failing' education system, we are actually doing very well. We rank well above the US and the UK for example
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OUB :
17 Feb 2014 12:58:38pm
I do wonder whether the fact that a number of Asian countries are moving up the charts stirs up some of this disquiet, an unconscious form of racism.
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Bush Dweller:
17 Feb 2014 11:13:05am
RosieA :
Why is it that you think Australian companies should have to pay a carbon tax of more than $22.00 a ton CO2, whilst, China, Brazil Indonesia, India, USA, Canada, Thailand, Malaysia, South & North Korea, Russia and all of Africa, and with the European rate about $6.00 a ton. I reckon those countries make our emissions pale into insignificance.
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RosieA:
17 Feb 2014 2:05:40pm
In answer to your question Bush Dweller:
1. We don't have to have a set price on carbon......if we changed to an ETS it would be a floating price.
2. Climate change is making the planet uninhabitable and it affects us all; it is primarily a moral question, not an economic one......there are some conditions under which we will not survive, no matter how wealthy we are.
3. It is people who are responsible for emissions, not countries.......we cannot say we do not need to do anything because there are so few of us......that is morally bankrupt. It would be like me cheating on my income tax and saying I don't need to stop because there are so many others doing it that my being honest wouldn't make any difference and why should I disadvantage myself. We will never persuade other countries to do anything while we don't.
4. The only companies which have to pay a tax are those with high emissions. Fossil fuel companies must transition away from fossil fuels......how they deal with the costs is up to them......but there needs to be some mechanism to ensure they do. As for the rest of us and industry, solar is rapidly becoming cheaper than fossil fuel derived electricity.
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Bush Dweller:
17 Feb 2014 3:00:40pm
RosieA :
1/. Than why does Clive Palmer owe the climate mob 8.5 million, if we do not have a price. Why are electricity generators paying the same mob hundreds of millions. Why have power prices increased so much in the past 18 months.
2/. Climate change/global warming/global cooling. I just don`t know. Recently saw an article on our ABC re a "washing machine" in the Pacific. I Don`t believe the scientists, they just keep readjusting their predictions and misrepresenting their facts, based on "models". Chicken Littles all.
3/. I must be morally bankrupt. Seems only us and the Europeans believe the urgency of Flannery. Good luck convincing the other nations I mentioned. I don`t think they are listening. Irrespective of what we do, it will not make a difference to the world. Good luck with your endeavours to convince them though.
4/. We all pay the tax one way or the other. I do with my fuel, power and shopping. Can`t run a car on nuclear, solar or wind, won`t turn my water pump on. Didn`t get solar early enough. No 60c kwh here, only the rich got on at the start. Restricted as to size of panels by local electricity provider. Go figure. The sooner Abbott gets rid of it the better. If he can`t Electric Bill had better hold on, he will be sent packing. For some reason I think I am of the majority when it comes to "ditch the Tax", no doubt, time will tell.
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orangefox:
17 Feb 2014 6:34:15pm
Bush, The original plan was for an floating price ETS but it was determined from European experiences that it would be benficial for businesses to have an initial fixed price. Three years was agreed on. When the CO2 fixed price per tonne was set it was very similar to the European price per tonne.
Unfortunately the European price collapsed after the legislation was passed and a different price could not be renogatiated. Any passing of legislation is a slow process and no doubt they expected the European prices to recover.
When they did not Labor decided to bring end the fixed price sooner than originally planned.
It is also worth noting that most businesses accept an ETS.
In fact China and US are going to do something serious about reducingCO2 emmisions very soon.
I am glad Australia was a leader under the previous government. Something you should be proud of too.
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jimmy:
17 Feb 2014 7:30:18am
Great article...it just goes to show how pathetic Australian politics and media are ,and how apathetic our society in general is to do anything about these problems.We Australians will sit there and take any crap politics/media throw
at us....Wake up Australia!
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meredith:
17 Feb 2014 7:34:39am
Meanwhile Murdoch press and the Coalition attack the ABC routinely probably to ensure any factual reporting is discredited. Anybody who reads The Australian for instance would see how it is just biased opinion which of course quiets the masses. Australians need to open their eyes and do it quickly and send a strong message to politicians that they have to make some tough decisions in the national interest. Do you really think the Abbott Government has anyone's interests at heart other than to get re-elected by their corporate friends.
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Larry:
17 Feb 2014 9:33:16am
"factual reporting..." Give it a break. All my life I have considered the ABC as a biased but reliable source of information. After the last 5 - 6 years I have changed my opinion.
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seg:
17 Feb 2014 11:06:12am
Then you are so far down the path of the right-wing ideologue its too late for you, no doubt you would consider anything other than the Tea Party Weekly a left wing bias.
The ABC is not biased, it just looks like that to those who are.
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The Watcher:
17 Feb 2014 11:10:45am
All that's changed in "the last 5-6 years", Larry is your perception.
The ABC has always been factual in its reportage and unbiased and remains so.
The reason your opinion has changed is that you have fallen for the anti-Aunty propaganda
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Applaudanum:
17 Feb 2014 11:17:20am
Tell us, Larry, what has the ABC put forward as factual lately that wasn't?
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Bush Dweller:
17 Feb 2014 11:27:14am
meredith :
Re that newspaper you mentioned, (no advertising from me) In the past week I have read articles from Julia Gillard, Craig Emmerson, Phillip Adams, Barry Cohen, Mark Latham, Ross Fitzgerald. Saturdays edition contained an article, critical of Abbott by Van-Onselon. Today`s edition an article from Tony Bramston critical of Abbott, and another from Mumble, and Tim Watts. Seems you don`t read the paper of which you complain.
As for our Aunty`s bias, even I would have to say she appears to be addressing these issues of late, although Barry`s performance yesterday on insiders was a trifle sloppy, pushing substance uphill with a pointed stick trying to "unsettle" (unsuccessfully) Morrison.
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meredith:
17 Feb 2014 12:40:45pm
Some of the names you mention are not regular writers in The Australian. I grant you Craig Emmerson (a lone voice in the wilderness). Also, Peter Van Onselin is unbiased and one of the reasons I still get the Weekend Australian. Mumble as well . Philip Adams was a Rudd fan and has gone to ground since Rudd's self immolation. It is good to see some critical content against the likes of Judith Sloan, Janet Albrechtson, Greg Sheridan, Henry Ergas, Dennis Shanahan. Chris Kenny et al, who worship at the Coalition and Abbott's feet. I wouldn't mind them having a conservative view opposite to the ALP and Greens but they tie themselves in knots with favoritism.
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orangefox:
17 Feb 2014 6:46:10pm
The Australian which I read but don't buy has a consistant biased slant. 95% of the articles are spun to make Labor, Greens, Minor parties appear in a bad light. The paper runs at a losd and is only printed for propaganda purposes and to satisfy some rusted ons. I can't understand why the paper is given any authority. Once upon a time it was a good paper. The last time I read any decent article was many years ago when they had an 8 page spread championing the benifits of reducing CO2 emissions. Yes eight pages!
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OUB :
17 Feb 2014 1:04:28pm
Yeah, I don't know why the Murdoch press bothers carrying on with its feud with the ABC & Fairfax. It must be dull reading. But in its time The Drum has been a regular host of many "Rupert Murdoch is the Spawn of the Devil" opinion pieces so I don't see any of the media as blameless.
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DTripp:
17 Feb 2014 7:58:32am
When did the Rudd government only increase Howard's middle class welfare? I thought it was advised to increase government spending to head off the GFC, and then, as you say, was rolled by the mining industry with the help of Abbott.
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Leon Fairmind:
17 Feb 2014 8:00:01am
Great article Ian.
The lack of long term vision and strategy from both sides is just so frustrating, and Abbott in particular has groomed the electorate to loathe any rational discussion of hard options.
Any ideas on how to get out of this horrible mess?
Any ideas on how to get the big 3 car-makers to change their minds and continue manufacturing a better range of car in Australia?
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Disciple of Rationality:
17 Feb 2014 11:15:27am
There WAS once a long-term vision.
That's what the Henry Review and the MRRT were about but the ALP were frightened off by the campaign by the big miners and scuttled away from the path to success.
"Any ideas on how to get out of this horrible mess?"
Yes, for a start, abolish negative gearing on housing, increase taxes on the obscene profits of the banks and implement the tax provisions of the Henry Review.
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rumpole:
17 Feb 2014 8:00:01am
The stupidity of governments continues.
Giving away sources of revenue like the carbon tax and mining taxes, squandering income on luxuries like paid parental leave, and attempting to pay back debt by selling national assets is a totally flawed policy position which will lead us into ruin in the future.
The revenue net must be widened, not narrowed if we are to repay debt and have some left for essential infrastructure (which includes manufacturing industries).
This government is as short sighted as any in modern Australian history.
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Waterloo Sunset:
17 Feb 2014 8:55:52am
The way to increase revenue is the opposite of imposing taxes on sedentary money, already in the system.
That's the reason that overtime Labor arrives we go back to a rung. An MRRT that did nothing excepting chase investors off and a carbon tax, that hurts revenue collection by redistributing some money, compounded by the most ridiculous red tape in The World (which feeds the trolls and clerks, in committees and quangos ).
We need to increase foreign revenue. Tax then increases commensurately.
It's simple arithmetic.
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rumpole2:
17 Feb 2014 9:23:34am
Norway's taxes on oil profits didn't hurt their revenue stream, they now have $800 billion in the bank. What have we got ? A lot of holes in the ground.
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Waterloo Sunset:
17 Feb 2014 10:55:32am
Norway derives income from the resources that it 'owns".
Yes, they had more foresight then Australia. I am all for PPPs, if they are structured correctly.
In the UK, the private sector accounts for 80% of jobs now compared to approx 22% in the public sector (stats from April 2013).
The private sector employment jumped 1.3 million, while public declined by 423,000.
This means an increase in revenue, because the civil servants' tax is paid by the other taxpayers.
Of course the added bonus is, that people claiming job-seeker's allowance fell by 29,000: a double whammy.
it's simple arithmetic really.
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RosieA:
17 Feb 2014 9:42:06am
It's not simple arithmetic at all, because you leave out to the equation the fact that as taxable income goes up, companies and individuals find ways of spending that income so as to reduce the tax payable. This is precisely why "unavoidable" taxes like the MRRT and the carbon "tax" are not wanted by industry.
I'm sick and tired of the lies industry and wealthy individuals propagate to look after their own interests.
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RosieA:
17 Feb 2014 2:21:05pm
I'm sorry, it seems I posted this in the wrong place; it is a reply to Waterloo Sunset.
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Jay Somasundaram:
17 Feb 2014 9:09:53am
Wasn't it the unions that killed the mining tax, by getting rid of Rudd, setting up Gillard to who promptly invited the foxes into the hen-house?
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Miowarra:
17 Feb 2014 11:20:10am
No Joy, it was the miners themselves who ran the anti mining tax campaign and frightened the ALP who did not have the courage of their convictions. Then the Libs joined in.
Once the government had been frightened off, it was open slather for the self-interest groups, both miners and the unions.
At least they kept true to their anti-tobacco legislation for which our health system will be grateful in another twenty years.
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Jay Somasundaram:
17 Feb 2014 8:03:42am
Australian mining is not depleted. But the problem in our political system is the same as our economic system. Politicians and capitalists first priority is themselves. All politicians care about is winning the next election and making hay while in office.
One start would be to modernise our financial systems so that genuine progress is reported
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gbe:
17 Feb 2014 8:16:49am
Ian a long winded blame everyone and we can hide the elephant in the room.
Manufacturing began to crumble over the last thirty odd years as tariffs wound back and did we become more competitive did unions base their wage demands on worker productivity NO !
The aggregate wage and superannuation were born and workers were allowed to trade off their conditions for wage rises and a percentage of a workers pay rise was taken by the labor government for retirement.
Was any of this new industrial front funded on productivity gains NO ! And if any business complained the ACTU cracked the whip and the elephant stood up.
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DaveS:
17 Feb 2014 11:12:26am
Productivity has gone up , in both public and private sectors this is common knowledge. I wonder why some think it hasn't gone up, or that conditions or allowances havent been traded for more bucks in take home pay?
gbe are you like me and want an inquiry into CEOs and how they don't have the necessary nous to conduct a business nor negotiate with workers? I cant believe these guys and gals are given these jobs and cant negotiate or run a business..... next thing you know it will be all the unions faults when industrial disputes are at an almost all time low!
Save the CEOs!
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mortan:
17 Feb 2014 11:36:07am
DaveS: I was talking about Manufacturing that in 2008 was 12% of the economy and is now 7% how is that productivity increasing. Perhaps you referring to the few business we actually have left in manufacturing producing more.
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DaveS:
17 Feb 2014 12:30:29pm
My bad Morton. But productivity isn't measured in units of production alone , is what I was saying.
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OUB :
17 Feb 2014 1:19:20pm
Dave wasn't that Labor's big complaint about the Howard government, presiding over declining productivity rates? And for all their fine words I don't think productivity improved under Labor. A lot of that might have been to do with the heavy investment in mining over those years - I think that was Howard's excuse anyway.
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Applaudanum:
17 Feb 2014 11:26:39am
I thought productivity growth had surpassed growth in workers wages in the last 40 years. The only thing growing faster has been managemen and executive wages over that period. If wage Riss were based on oriductivity gains, it appears many workers would be earning higher wages than they do now. Now, if you think that's puzzling, here's a clue: compare the profit to income ratio of the private sector from 40 years ago to today.
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OUB :
17 Feb 2014 1:28:45pm
That 40 year period might have been carefully chosen. There would have been a wages outbreak under Whitlam and presumably a catch up by other sectors after that. And mid-70s Ron Brierley was scaring the hell out of establishment companies with lazy management, lazy balance sheets and asset values on their books that were a small fraction of market values. A real change came over the corporate sector then as it was forced to re-examine the reasons it was in business.
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RUSSELL JACKSON:
17 Feb 2014 8:19:40am
Interesting article, Ian, but you did not point to the obvious Elephant in the Room, which is Australia's 30-year adoption, practicing and spruiking of neo-liberal trade policies, particularly in a region of Asian mercantilists who correctly look after their own interests first.
Some of the internal baggage of this neo-liberal ideology is the chasing of a fantasy called ''Free Trade'' and the indifference, bordering on contempt, towards Manufacturing Industry by influential sections of the media, academe, some Government departments and lobby groups. We have had a seriously warped, short-sighted, and selfish culture in this country and now the chickens are coming home to roost.
''As ye have sown, so shall ye reap''. Poor fella, my country!
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Desert Woman:
17 Feb 2014 8:57:23am
The other related 'elephant' is the characterization of a society as individuals, isolated and unrelated in any way. This characterization is false as nobody can function for long as an isolated individual. Ignoring our interdependence on each other and our collective work and outcomes feeds into the push for us to compete for money and ignore the social and environmental consequences.
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Helvi:
17 Feb 2014 9:24:42am
Keeping the education systems two-tiered is keeping the country divided, it helps to create the them and us mentality, so prevalent in this country.
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seg:
17 Feb 2014 11:11:17am
Plus it delivers very poor broad educational outcomes at a very high price.
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seg:
17 Feb 2014 11:10:19am
Shhhhh!!
You'll have the thatcherites in apoplexy. Our health services are already under strain, it cannot take an in-flux of spoilt neo-liberal baby-boomers clogging up the system!
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Politically Incorrect:
17 Feb 2014 1:41:54pm
Running down the concept of a society as anything more than a group of indidivudals is why I am glad Margret Thatcher is dead.
Humans achieve way more in collectives, that's why theories like so called "social darwinism" is laughable.
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mortan:
17 Feb 2014 11:00:11am
You blame business but surely business must profit or there is no point and wage payments play a significant part in any business. Not mentioned the clamour for more money unions are always pushing for.
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OUB :
17 Feb 2014 1:43:11pm
An elephant you say? Is it pink?
You don't seem to understand that protectionist countries are punished by those policies. They can't grow as fast if they heavily favour their local businesses. Sure, it's great for the cronies and their pet parasite politicians but it is poisonous for their local economies.
Please explain why you believe the manufacturing sector has an inherent worth greater than other industries. If we protect and cosset it we remove any spur to encourage it to innovate and put it in a position to compete overseas. We end up with lousy local products, which we buy only because of the costs added onto imports. Think of the Australian car industry when the tariff walls were high. If the multinational car makers are going to innovate they won't do it in high cost Australia, they'll just milk what profits they can out of gutless governments and let the local industry die a lingering death.
If government policies are as ruinous and stupid as you choose to believe the Australian dollar will adjust to reflect the market's perception, buoying export-competing sectors.
Let me guess Russell, you're a Victorian aren't you? They have long argued for the rest of the country to support the industry concentrated in that state. To me that is where the selfishness you complain of is best exemplified.
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Ted:
17 Feb 2014 8:29:24am
This has been happening for 30 years as we slavishly followed outdated economic theories and pandered to big business and big consumers. The current tragedy is that our current leaders appear to have no understanding of what they and their predecessors have done and expect us to put up with more of the same. We are headed for 40% unemployment.
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DaveS:
17 Feb 2014 8:34:51am
A very good opinion essay Ian. ;)
The MRRT was a good idea that was dumbed down to stop a campaign against it and the Govt of the day butchered it.
Why not tax a non renewable material while the Sun is shining? If it was implemented properly we may have been able to cut company tax rates ect and encouraged investment in manufacturing.
No , manufacturing is not dead in Australia and has a place as Tony Abbott has stated "We believe a vibrant manufacturing sector is essential to a diversified economy, job creation, and driving innovation and economic growth." Alas it was one of the 5 pillars that wasn't as strong as the others. Attacking workers and lieing about their pay packets just show this as an ideological attack on Unions and employees and the cost is Aussie jobs..... something we all used to agree were worth fighting for. Now we get excuses , blame , fibs and outright lies.
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Steven:
17 Feb 2014 8:40:43am
A question about sovereign funds. When it comes time for the fund to bring its income back onshore, or even to repatriate some of the capital amount, won't that push up the value of the soverign currency at precisely the time the country is trying to generate replacement exports for its dying resource industry? For instance, if the Norwegians cash in American shares / bonds /property they have bought then they have buy Norwegian currency to make the cash available to the government. That will push up their exchange rate, thus hurting their exporters. Still, such a fund is probably better than squandering it on tax cuts and middle-class welfare that were used to buy widescreen TVs.
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Rae:
17 Feb 2014 5:05:30pm
Not sure Steven but could do.
If that is the case our Superannuation hundreds of billions must be adding to the problem.
I made a great deal investing overseas with a high Au$ and never even thought about the currency issue.
I was aware the Reserve kept the rates too high too long but $AU invested in overseas assets and then coming home as the boomers retire is a whole different issue.
As an aside all this talk of gloom and doom hasn't mentioned our huge financial services industry and the health of the banks.
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gerard oosterman:
17 Feb 2014 8:49:04am
The mining boom should have made us on par with Norway. Instead we have chosen the American way of allowing unbridled 'market forces' and are now paying the price. The richest 2% of individual miners in Australia owning 90% of OUR wealth and the rest up struggle street.
I can just see with the freeing up of rules giving financial advisers again a free ride to fat commissions, Australia slipping back to long queues at Salvation army soup kitchens with full house in women's refuges with drunken Friday/Sat nights and desperate pokie and betting orgies.
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Fred:
17 Feb 2014 8:57:31am
'Free' trade is a snake oil that too many have fallen for in Australia. In the second half of the 19th century, when protectionism was at its peak, Australians had the highest living standards in the world. Unfortunately our politicians and economists today are not taught economic history. Now we're turning into a third world economy.
The Reaganomics 'reforms' of the last few decades have been a disaster. We are now reaping what we have sown.
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Mark James:
17 Feb 2014 9:01:59am
Ian, I don't think the Coalition "has applied a new resources tax to onshore oil and gas", I think they've simply kept in place the one introduced by Labor at the same time as the mining tax.
Weirdly, the Coalition did not object to this super-profit tax on petroleum despite opposing the super-profts tax on mineral resources on principle.
I guess, with the Coalition, it depends on who your friends are.
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GrumpyOldMan:
17 Feb 2014 9:10:45am
I wonder which of Tony Abbott's 3 word slogans will fix this problem: 'stop the boats' or 'axe the tax'?
Or maybe ignoring the potential of renewable energy technologies just to protect the fossil fuel industry, or trying to run 21st Century businesses on corroding copper wires, or spending more and more money repairing damage caused by extreme weather events like droughts, floods and sea level rises, or loss of trade with countries in south Asia because of diplomatic stuff-ups caused by inhumane treatment of genuine refugees from the wars we helped start?
And when is some genius in the LNP or the IPA going to discover it makes sense to manufacture steel in this country rather than ship coal and iron ore to China or Korea, and then buy the steel made from Australian iron ore and coal back from them?
It all make sense to a conservative. But not to anyone else!
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mortan:
17 Feb 2014 11:06:21am
Where have you been hiding for fifty years have not heard of Whyalla or Port Kembla and of coarse Newcastle and there was even iron ingots made in Kwinana and Wundowie in WA. All went under because it's to expensive here.
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GrumpyOldMan:
17 Feb 2014 1:09:31pm
mortan, have you ever heard of the word 'innovation'? It is what intelligent people always try to do, and 'bean-counters' and conservative politicians avoid at all costs!
Was it any surprise that these early 20th Century steel plants couldn't compete with late 20th Century plants in Korea? It is an almost complete lack of innovation, long-term industry/business strategy and marketing skills amongst executives of large Australian companies, and their obsession with lowering product cost rather than increasing product quality and value, that is making Australian manufacturing uncompetitive.
Furthermore, you simply cannot keep blaming the 'workers' for wanting wages that enable them to participate in the expensive lifestyles that are constantly being projected at them from their TV sets, eg., private school education, private hospitals and health insurance, multiple home ownership, imported cars and clothes and so on and so on. These things are all completely incompatible with a low cost, equitable and contented society.
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seg:
17 Feb 2014 11:15:18am
Not so much a slogan, perhaps what is required is a speachless, shaking-fit?
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OUB :
17 Feb 2014 2:22:18pm
Just as with the automobile industry it is all a matter of scale. Asian steelmakers have scaled up to buggery while it has been uneconomic to do so in Australia because of lower demand. We can sulk about it or we can acknowledge the realities of the situation. Up to you GOM. Conservative sense or progressive sense. Please do us the courtesy of investing according to your beliefs.
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Mark James:
17 Feb 2014 3:13:35pm
"Please do us the courtesy of investing according to your beliefs"?
I thought speech was free, OUB? When did they put a price on it?
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OUB :
17 Feb 2014 4:36:00pm
GOM has previously advocated a bigger Australian steel industry while ignoring the economics of such. I'm pretty sure I hold more shares in Bluescope than GOM. Yes, speech should be free and I'd like to see a premium on empty rhetoric.
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GrumpyOldMan:
17 Feb 2014 6:33:13pm
OUB, says ... "Asian steelmakers have scaled up to buggery while it has been uneconomic to do so in Australia because of lower demand."
Do you not realise how ridiculous that statement is? You say Asian steelmakers scale up to meet a rising global demand, while Australian steelmakers scale down to meet a lower demand!
Where is the logic in that? Do try harder to stay consistent within a single sentence! You would be failed by any economics teacher for making such a silly, internally inconsistent statement.
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john r walker:
17 Feb 2014 9:11:22am
Ian
There is not much point in 'who done it' - we all did it.
What sort of things should/could we do to improve the situation?
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feedtherich:
17 Feb 2014 9:17:46am
.. the elephants in the room here are deregulation of industry and undue stimulation of the housing market .. it really is an extremely simple dynamic; you take money out of peoples pockets and hand it to a small inner circle of fly by night exploiters (Namely: Corporations, Banks and Insurance companies) then we have nothing left to spend aside from the barest essentials, My small household needs $600 per week just to pay bills before I can afford to think about buying a newspaper or a beer, the fact that most employers I speak with think $600-$700 per week is an abnormal amount of money to pay an employee for a 35-38 hour week speaks volumes. ..
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Politically Incorrect:
17 Feb 2014 9:19:55am
The decline of manufacturing (and everything else really) has been ar result of the high dollar, because Labor failed to pull the reigns in on the mining boom because of being petrified of a scare campaign by Abbott and his puppet master Gina Reinhart.
The mining tax that Gillard rolled Rudd over ended up being a toothless tiger that was set to appease the neocons and also gave the neocons a legit crticism: a tax that raised no money.
If Labor were smart, they would have let Rudd use his double disolution trigger, take the super profits tax to the election along with seeking a mandate for the ETS, the Liberals before the knifing of Rudd were still headed for a slaughter in the polls where senior Coalition members were roumered to be meeting in a cafe in Barton calculating how many seats they were going to lose.
Labor's spinelessness is what caused them to not only lose the election: but let the mining industry destroy the economy.
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RGG:
17 Feb 2014 9:20:57am
I disagree with Abbott abolishing the mining tax. It was only a tax on profits above a certain level. After all, the minerals in the ground belong to all Australians. It was a way to redistribute some of the excessive mining companies profits back to the people in the form of better schools, hospitals etc...
Maybe, it can be improved but Abbott is throwing the baby with the bath water!!!
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IanM:
17 Feb 2014 9:34:54am
Do we not have a sovereign wealth (Future) fund, set up by the Howard government, who also managed to keep Australia in surplus? Not much use though if the government after that raids it and runs up large debts. I also seem to remember that the "world's greatest treasurer" made certain assurances of consultation to the mining companies and then presented them with a fait accompli which precipitated the crisis when Wayne dropped Kevin for Julia. Breaking promises and bad faith led to the fall of both the Rudd and Gillard governments. Perhaps honouring commitments and keeping faith with the electorate would lead to a better result.
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Steve:
17 Feb 2014 10:44:49am
The Future Fund is not a true Sovereign Wealth fund because the proceeds have been earmarked to pay for public servant superannuation. It's not like the Norwegian fund where the proceeds are not attributed to a particular purpose.
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GJA:
17 Feb 2014 11:05:06am
The Future Fund is not "ours". It's a superannuation scheme for the public service.
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IanM:
17 Feb 2014 11:28:05am
So the funds in my bank account aren't mine because I have bills to pay? The liability to pay superannuation benefits is clearly "ours" through our government, so why aren't the funds we accumulate to meet that liability "ours" as well, at least until we spend them? Does it matter that we spend the funds on paying for superannuation rather than whatever the Norwegian's have in mind?
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GJA:
17 Feb 2014 12:50:50pm
A better analogy might be a trust fund you set up for your children. You can't use it to pay your household bills, and it is not, effectively, any longer your money.
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Alpo:
17 Feb 2014 9:35:21am
No matter how important the issue of manufacturing is, the true point of contention here is not so much manufacturing, but the role of Government in the economy. It is there where the clash of ideologies is unfolding. Neoliberalism (yes, even the diluted Keatingesque version of Neoliberalism) dreams of a world without the "shackles" of Government, a world set "free" to fly and soar to never seen before heights... etc, etc. Whereas a mixed-economic approach, with a Keynesian slant, sees Government as both regulator and also active co-participant in the whole economic process. When Government is actor rather than spectator, then it is compelled to watch, think and intervene to stabilise the economic process, to speed up development where development is lagging behind, to research new strategic areas of the economy, to provide the infrastructure that is the scaffolding needed to build economic development.... That's what's at stake here. Car and other kinds of manufacturing and primary production are just a "battle" of a far more important "war".
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Leon Fairmind:
17 Feb 2014 11:05:26am
Well said Alpo - always appreciate your insightful comments.
Labor too has dropped the ball in maintaining or elevating government involvement in structuring our economy properly for long term survival and communal benefit.
Liberals have strong vested interests in preventing this from happening
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gerard oosterman:
17 Feb 2014 9:38:19am
The biggest achievement that this governments seems to keep banging on about is that of 'having stopped the boats!' What a distinction for a country to have achieved.
"We have stopped the boats." "We have pushed the boats back." " We have not had a single boat arriving in Australian waters for fifty days."
All done in great secret. Not so secret now are unlimited exposures and photo scenes of our prime minister in the country gushing over how he'll save the country.
Our poor country.
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Harquebus:
17 Feb 2014 9:39:32am
More dominoes are set to fall. The decline in manufacturing is due to peaking crude oil production and the only solution is population reduction.
Our finite natural resources have been pillaged to benefit only a few and it is too late to do anything about it. The growth deadheads will sacrifice everything, including our environment, in order to facilitate their absurd pursuit of infinite growth.
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MACK1:
17 Feb 2014 9:40:46am
It'd be difficult to find a single mainstream economist to agree with this old-fashioned and discredited view. Sounds like East Germany circa 1970. Just on one point - Australia has just as much, if not more international investment than foreigners have here. Leave this stuff to the market Ian.
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Rae:
17 Feb 2014 5:23:46pm
Well said and a lot of that investment has been made with a high AUS$.
And if you any of you want to share in the mining wealth the shares can be bought on the open market.
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C N:
17 Feb 2014 9:59:08am
There seems to be some interesting conjecture on the demise of the manufacturing and its historical causes. No doubt that there has been structural adjustment and decline in the industry due to the reduction of tariffs in the 1980s and 1990s.
The mining investment boom and Australia's position as a key and heavily favoured investment market in a world of global financial flows has meant that the appreciation of the exchange rate has hurt non-mining export manufacturers. Forget the automotive sector, it is other export industries that have been significantly damaged by the rising dollar and unfavourable regulations in Australia.
It is interesting that business itself has recently acknowledged that labour issues and unionism is not to blame, a favoured argument of the blue-tie brigade. Businesses seem to be all-too-happy to increase structures and wages of middle and senior management (very low unionisation rates) whilst at the same time harp on about the cost of doing business.
As a high-income economy with a predisposition towards service-led growth, the manufacturing sector will continue to decline. The government's focus should be to encourage new niche manufacturing markets tailored for the Asian middle class and re-establishing Australia's excellence in R&D and technology development. In particular, agribusiness should be given huge support as this is likely to be one of the world's biggest growth markets over the next 20-30 years.
I enjoyed this article and look forward to the next one, Ian.
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Gordon:
17 Feb 2014 12:01:00pm
I agree. there is some deeper historical context too: a lot of aust manufacturing started during or near to wartimes, when the idea of world trade was a much shakier proposition. Business has been very slow on the R&D front. Previous efforts to encourage R&D have just been treated as a convenient tax rort. Curing that habit is going to be critical.
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Rob:
17 Feb 2014 10:00:07am
At last,a journo who is addressing the real issues.ALP please take note.History shows the manufacturing sector played a big role in getting a lot of people into the middle class. History also shows its demise kills the middle class,ala the USA. Both NLP and AlP Governments presided over debt driven economies,squandered resources income,kow towed to banks and multi nationals and set us up for servitude.Free Market economics have failed and so have FTAs.Time us adults to revolt!,
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Gordon:
17 Feb 2014 10:03:04am
Bickering is indeed a good way of hiding failure. Another is finding something suitably large and amorphous to blame. Even better if it's successful so the politics of envy work in your favour.
A bunch of people rush to Aldi in their Hyundais to buy lotto tickets & cheap Italian tomatoes but it's all BHP's fault. Please.
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The Jones Crusher:
17 Feb 2014 2:34:00pm
"A bunch of people rush to Aldi in their Hyundais to buy lotto tickets & cheap Italian tomatoes but it's all BHP's fault. Please."
Nice try, but your nation's wealth and your grand-children's inheritance is disappearing out the gate from under your feet. Unlike Norway, we are gifting that inheritance to the big miners for little or no compensation. Once it's all gone, they will pack up and leave then then what?
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Gordon:
17 Feb 2014 5:14:39pm
No, we are selling it. undiscovered, unmined, in the ground. There is a difference. We could choose to mine it ourselves of course. I love the idea of a national mining company funded by the treasury with couple of Greens on the board making sure it didn't dig any nasty holes anywhere.
We could choose to invest publically in resource ventures: which IS what the Norwegians do, then we'd get a dividend instead of just the royalty- or invest individually and forego the Lotto tickets - just sayin'
What we seem to do is nothing...and so we get the plain old royalty. If we saved it up and did something useful with it that would be nice, but saving money up conflicts with governments desires to have NBN's and NDIS's.
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Hudson Godfrey:
17 Feb 2014 10:06:54am
You'd have thought that our own History of gold rush boom times and what little is left to show for them would recommend Norway's example, but the idea that highly valued resources can be vested in a very few hands continues to vex us. Theoretically it shouldn't matter in a democracy when the wealthiest individual's vote is worth no more than the least of our fellow citizens'. The political problem in those terms seems to have less to do with the bickering we see at the surface than the money that finds its way into politics beneath.
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Bush Dweller:
17 Feb 2014 11:31:11am
Both corporate and union.
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Hudson Godfrey:
17 Feb 2014 12:27:25pm
Well no actually it's neither. Because corporations and Unions are more than one individual.
It's been a much debated problem particularly in the US that if we allow a corporation the right to be treated as a sovereign individual then they gain the ability to make political donations that are so large that they can effectively be used as bribes.
Whereas unions usually have some internal form of democracy there's no reason to suspect that like minded individuals couldn't mobilise support behind the ballot and every reason to suspect that lobbying subsumes the individuals interests that of the collective's leadership.
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Bush Dweller:
17 Feb 2014 12:48:15pm
HG :
Don`t care about the USofA (sorry the Yank)
I understand that all "political parties" get donations from Corporations/businesses. Check out donations on our ABC.
Re Unions. The union of which I am member has in the past 7 years given more than $3,000,000 to the ALP, both state (the one I`m in) and federal ALP. Not one member "on the floor" was asked their opinion. Questions from me seeking justification, both written and verbal were ignored.
Good luck with fixing the problem. I understand the the NSW O`Farrell gov was defeated in the High Court by the union movement in its quest to limit donations. Don`t know what you are talking about re unions having some internal form of democracy. Maybe they will after the RC hands down its findings, but currently, according to ALL media sources, Union and democracy is an oxymoron, or are you unaware of what is going on in the HSU,, CFMEU, AWU, AMWU, or plumbers union, pus no-doubt many others.
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Hudson Godfrey:
17 Feb 2014 1:29:30pm
You get to vote for delegates and other representative roles within most unions. That's all "some form of democracy" refers to. I think the danger in that case of the way your thinking and perhaps O'Farrell's is running is that it'd hollow out unions without doing anything to diminish corporate donations. That would create an imbalance of political influence in and of itself. Whether you call it an intended consequence or an unintended one it certainly isn't something I think we ought to entertain.
Your blithe dismissal of the debate that occurs in the US ignores the fact that much the same kind of thing is happening here, and you as an employee are the worse off for it. You have only to look at the disparity between rises in corporate profits and executive pay packets and the steady level at which workers' wages have remained over the course of the past two decades to know that unions aren't the real problem here.
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CorowaKid:
17 Feb 2014 10:25:45am
"I'm all right Jack" is where we all failed
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Hudson Godfrey:
17 Feb 2014 12:27:47pm
Totally agree!
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The Jones Crusher:
17 Feb 2014 2:30:52pm
""I'm all right Jack" is where we all failed"
we WERE all right, Jack.
Will we be all right tomorrow and the day after is the question.
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Universal Soldier 11:
17 Feb 2014 10:32:14am
Rudd's initial "Super Mineral Mining Tax" was at least moving some of the massive profits for others to use?
This industry nationalised with direct sales to China/India would have cut out the "middle-billionaires"...the labour still contracted out for Oz workers with use of "upskilling" many more Oz could have been involved in the high salaries, the use of 457's could have still been there when needed?
This issue was about national sovereignty as usual "we" were robbed of our own natural resources...the interests of the few!
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seg:
17 Feb 2014 10:36:29am
Please do yourself and your readers a service by understanding the difference between a hypothesis and a theory.
"It is no longer a theory as..."
Incorrect use of 'theory', you meant 'hypothesis'. A seemingly pedantic point but at the crux of this confusion is the basis for the layman misunderstanding of the scientific process. The laymans unfamiliarity with the philosophy of science has caused great damage to debate around core issues currently facing our civilisation.
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anote:
17 Feb 2014 10:49:05am
It was all so predictable. The lifting of tariffs was a good thing initially, but it was not managed well at later stages. It went too far in the absence of an alternative to keep a balanced economy. Free market purists are winning the day but the global economy is not such a free market.
I compare it to climate change. The Coalition claimed we would ruin our economy putting a price on carbon. Well I would agree that we should not get too far ahead of the rest of the world at our own expense but we should show leadership. The Coalition grossly exaggerated the carbon cost and do not show the same concern when it comes to free market ideology.
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OUB :
17 Feb 2014 3:09:26pm
What is the point of a 'balanced' economy if we cannot compete in some industries and outcompete in others? Is there some template we can use to implement such a marvel? Should we slam the brakes on any industry that dares to outperform others so that we can stick to this template ar should we give it its head for, what 5%, before we punish successful industries to prop up industries that serve no purpose other than as ballast?
Sorry to take a sarcastic tone but I really don't think you have thought this through. Getting down to the basics, how much more would you like to pay for local goods to protect them from overseas competition? Would 30% be enough? How would your less high-minded neighbours feel about having that proportion of their income or savings to that cause? Should we ban purchases over the internet outright? We don't want anyone cheating and buying cheap after all. What would be the reaction of local businesses to this windfall? Would they invest furiously (bearing in mind the impact on demand of increased prices) or would they succumb to complacency? Would employees be happy with their reduced share or would we see the protections quickly eroded away as they sought to regain all or most of the impact on their cost of living. Back to where we started but for the jump in inflation and action by the RBA do you reckon? How would our trading partners react? We would stuff our export markets don't you think?
Ideology or common sense, your choice. As for the world regarding us as leaders rather than idiots, what are the odds?
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anote:
17 Feb 2014 4:01:31pm
The world already has a high regard for Australia relative to population but that is being destroyed.
There is a template currently being applied and it is a simplistic 'free market' template that has done damage and is continuing to do damage.
Our trading partners already have their own protectionism.
When Australia has no industry to speak of it may be held hostage to profiteering by other countries and multinationals; like major software companies already do.
Then there is the question of security. Without any industry we could easily become entirely beholden to a specific power. In the centenary of the start of WWI, some consideration of how easily things can go wrong would not go astray.
OUB seems to belong to the extreme of free market fundamentalism end of the spectrum and does not appreciate balance or fairness. In the end trade is supposed to be a negotiated thing; not an abandonment to ideology. Australia should be negotaiting in the interests of Australia but also with consideration of reasonable fairness.
Greed and lack of enforcement of regulation resulted in the GFC.
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GraemeF:
17 Feb 2014 10:54:48am
A great big round of applause for all the right wingers whose hatred of Labor had them support the foreign mining companies and the rich Australian mining magnates over the needs and requirements of the vast majority of Australians.
Mining is capital intensive and labour poor. The high Australian dollar was partly caused by mining companies spending millions on materials and equipment from overseas suppliers and yet they claimed to be 'investing' that money in Australia.
The lie that right wingers are more economically savvy is on show so often that anyone who repeats it should be ashamed to display their ignorance in public.
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Gordon:
17 Feb 2014 11:53:25am
Please explain Oh economic savvy one, how spending money overseas on mining equipment has raised the dollar. Spending money overseas lowers the dollar.
Money coming into the country is what has raised the dollar, from mining investment and due to the reserve bank's desperate attempts to snuff out the inflation and the stupid housing boom that looms every time Australians get 2 spare scents in their pocket.
If Australians invested in their own productive industries -of all sorts- instead of expecting foreign capital to do it none of this would be happening.
You are right: mining is not labour intensive. As an advocate of labour perhaps you might reflect on whether labour has done itself any favours by demonstrating that the only successful businesses left in Australia are the ones that don't use it.
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GraemeF:
17 Feb 2014 1:35:39pm
By borrowing large amounts of money to buy foreign goods they put pressure on the Australian dollar.
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Gordon:
17 Feb 2014 5:38:50pm
so...if the investments were procurable inside Australia we wouldn't need FDI, and all that importing would be lowering the dollar nicely.
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MJLC:
17 Feb 2014 10:56:21am
For what it's worth, when it's agreed that "both sides" are to blame for something, you can actually make a productivity gain and have a brief flirtation with honesty by writing the word "we" instead.
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Gavin:
17 Feb 2014 11:04:23am
Certainly, large amounts of the proceeds from mining have been squandered on public broadcasting.
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The Jones Crusher:
17 Feb 2014 2:29:30pm
"Certainly, large amounts of the proceeds from mining have been squandered on public broadcasting."
Oh come on, Gavin, You just had a free read yourself and a chance to spout off in public!
I'm continually amazed at the number of ABC critics that post here. Why come here and read this stuff if you don't like it or disagree with it? I don't read the Murdoch press!
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Black Beard:
17 Feb 2014 11:14:09am
Despite all the 'squandering' Ian fails to mention that one side left money in the bank but the other side left a black hole that is heading towards $670Billion,
So lets face it when we are faced with a $670Billion bill I suggest that Labor needs to apologize for its super squandering that is currently costing the taxpayer some $16Billion per year to service. Money down the drain without gain...
Time for the ABC to face reality and report things as they really are...
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Shell:
17 Feb 2014 12:56:37pm
one Govt also lost an election just before revenues collapsed worldwide through the GFC.
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Black Beard:
17 Feb 2014 2:33:27pm
What $670 Billion Dollars accounted for by the GFC? Rubbish! Labor could not curb its spending even after the 'year of the promised in stone' budget.
Take a look shell the real serious part of the spending occurred after Swan, Wong, Gillard, Shorten and Co announced in 2010 that " Australia had weathered the GFC storm and good times were ahead starting with a surplus and surpluses to follow..." Instead the $300Billion deficits has now climbed to a projected $670Billion!
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Reinhard likes facts:
17 Feb 2014 5:20:54pm
From "Budget 2013: Not tough, not terrible" by Alan Kohler
"In 2010-11 and 2012-13 the Labor government will have achieved two of only five real reductions in government spending in the past 40 years (the others were in 1988-89, 1987-88 and 1986-87, also under Labor governments)."
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Reinhard likes facts:
17 Feb 2014 5:28:27pm
From "Budget 2013: Not tough, not terrible" by Alan Kohler
"In 2010-11 and 2012-13 the Labor government will have achieved two of only five real reductions in government spending in the past 40 years (the others were in 1988-89, 1987-88 and 1986-87, also under Labor governments)."
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Black Beard:
17 Feb 2014 6:16:10pm
Strange, seeing Labor was doing a great job, that there was no surplus in 2013. However Gillard, Swan, Wongm Bradbury and 7 other Labor MPS did say "We delivered a surplus and delivered in on time"! So what are the facts again?
AS reported by the SMH: Ms Gillard said she could assure every Australian that the federal budget would be back in surplus in 2013...
Gillard then went on to say that subsequent surpluses will follow!
Gillard and Labor failed miserably with the blowout in accumulated debt doubling after another/this broken promise.
Your facts are wishful thinking!
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mortan:
17 Feb 2014 11:16:18am
The penny still has not dropped with stupid Australians our standard of living has out stripped the ability to provide it.
Take out mining and Australia is a basket case we can't produce anything because it's all cheaper elsewhere because production cost is too high in Australia so Australians buy overseas goods
John Winston Howard could see this issue and tried to tackle it for his trouble he lost government and his own seat WORK CHOICES was an attempt to help business compete now there is nothing left we blame each other. DOH !!!
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omnivorr:
17 Feb 2014 11:18:37am
Now the mining cycle is reaching the production and (super-)profit phase lets get rid of the super-profits tax before it aids our repair of the structural deficit !!
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The Jones Crusher:
17 Feb 2014 2:26:30pm
"Now the mining cycle is reaching the production and (super-)profit phase lets get rid of the super-profits tax before it aids our repair of the structural deficit !!"
That's right! If Joe Hockey owes you three apples and he then releases a mining company of its obligation to pay him two apples, Joe will still be able to pay you back your three apples even though he just cut down the apple tree!
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Kali:
17 Feb 2014 11:19:24am
All those years ago, Donald Horne wrote "'Australia is a lucky country, run mainly by second-rate people who share its luck."
Nothing has changed, has it (with the exception of a decade when we has Hawke and Keating in power).
Until we are able to attract talented and competent people into politics, we are destined to be stuck in this declining groove.
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The Jones Crusher:
17 Feb 2014 2:24:05pm
"Until we are able to attract talented and competent people into politics, we are destined to be stuck in this declining groove."
Have you ever thought about it, Kali? Have you ever tried to figure out WHY somebody would go into politics when the starting remuneration is a little more than what a truck driver can earn in the Mines, and that with a whole lot less time off? WHY would somebody like Malcolm Turnbull or Kevin Rudd go after the top job when it pays a fraction of what a CEO can earn in industry?
Pay peanuts and get monkeys! Either that or get somebody on a pure power kick willing to work for next to nothing just to get a chance to exercise the highest authority in the country.
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Lozza:
17 Feb 2014 12:03:33pm
Politicians seek to attract and reward the swinging interest groups, limited only by the point at which they begin to alienate their core voters.
They are a reflection of the manufacturing industry. Consistently offer us the same disliked candidates as our choice, promise policies that seem attractive in the knowledge they will renege upon if successful.
No politician in history has resisted the honey pot. Sovereign wealth works when the control is taken out of the budget and placed in the hands of bodies insulated from politicians. That means the tenure of the boards must not coincide with the terms of Government and that appointments must pass both houses.
Unless that is the case payments will not be made into it and it will be raided when political convenience beckons.
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Reinhard:
17 Feb 2014 12:14:59pm
Mr Verrender seems to have a strangely variable concept of blame, he correctly blames the Howard Coalition govt for wasting $314b or 94% of the mining boom windfall on marginal seat pork barrelling, middle class welfare and tax breaks for the rich.
Then he "blames" Labor for capitulating to the mining industry's $22.2m (not $28m FYI) anti Rudd/Labor attack campaign.. That $22m was a pittance compared to savings from the watered down MRRT, even the most conservative estimates put it in the $billions.
The miner's "savings" were also increased when miners started hoarding $billions in tax credits, and when coalition states jacked up their mining royalties so then the miners could offset future MRRT liabilities..
So by all means blame Howard and the Coalition for their profligacy & largesse, but it's a bit rich trying to blame Gillard / Labor for being bullied into submission by miners with bottom-less pockets..
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Ethicsnow:
17 Feb 2014 12:16:38pm
Both the ALP and the LNP coalition have failed the Australian public. They will continue to do so as long as we let them. They have no vision, no ideas, no ethics and no competence. The really sad thing is they don't care, as long as they stay in parliament and or power.
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LibLab:
17 Feb 2014 1:47:28pm
The even sadder thing is that our current voting method (compulsory preferential voting) won't let us kick them hard enough to make them change, because the votes filter through all the primary votes to one or other of the major parties.
We need to change to voluntary preferential voting with only ONE preference allowed to one other candidate in the lower house and one party in the senate. THEN we could send them both a message that would hurt them enough to make them re-think.
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The Jones Crusher:
17 Feb 2014 2:19:11pm
"Both the ALP and the LNP coalition have failed the Australian public. They will continue to do so as long as we let them. They have no vision, no ideas, no ethics and no competence. The really sad thing is they don't care, as long as they stay in parliament and or power."
Agreed! There really is no choice for voters. The main menu is Global Economic Rationalism from both parties. The only difference is the garnish!
Would sir prefer some "Stop the Boats" relish with his Global Economic Rationalism, or would sir prefer a little NDIS roulade on the side?
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mahaish:
17 Feb 2014 12:25:11pm
"Resource rich nations from the Middle East for decades have squirreled petrodollars into sovereign wealth funds that have invested across the globe, preparing themselves for the day when the wells finally run dry"
this is just nonsense,
we have a sovereign wealth fund,
its called the australian dollar, and the government as the currency monopolist can issue as much of it likes to generate investment and cover any output gap.
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J.T:
17 Feb 2014 12:29:58pm
Undisputed fact that the Howard government used increased revenues to grow the size of the budget.
Because of inflated revenues he both grew the size of government and reduced income tax levels.
In retrospect, he should have reduced the size and scope of government when the times were good, we wouldn't automatically have had a budget deficit when economy slowed down as per Rudd's predicament.
A sovereign wealth fund might have helped, although its ability to move the currency markets is highly highly disputed.
More likely is they could have provided bond funding for new infrastructure or a nation building project like high speed rail.
Your article is a stretch and its conclusions ill thought through. Its the largest producer of oil and gas outside of the middle east and with only 5 million people and had more than enough industry to ride through the GFC unscathed.
Its oil and gas reserves ensure it won't have to worry about budget gaps. The wealth fund is a kicker.
I had when people use oil rich nations as examples of good government.
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Alison Cann:
17 Feb 2014 12:49:42pm
Ian,
If Labor has any connection to the demise of manufacturing then the Liberals would have put that fact in their election campaign before the September election.
The problem all belongs to the Abbott government.
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burke:
17 Feb 2014 1:25:29pm
You say that most of the "proceeds" will flow overseas. The profits earned in Australia by BHP and Rio are taxed in Australia according to normal income tax rules. You said there was a lift in tax revenues to the Howard government, so you have contradicted your self already. The remaining profit is either paid as a dividend, or reinvested. For shareholders in Australia the money remains in Australia. Much greater than the dividend, is the reinvested remainder. This stays virtually 100% in Australia. This is the main source of funding for the vast investment in iron ore and coal. It could have been invested in Olympic Dam too and probably will be at some stage. So the part going overseas is relatively minor. Most of the money stays here.
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GS:
17 Feb 2014 1:31:41pm
Well it would be nice to think that those evil nasty foreign owned mining companies are getting the best of it but there are a few other contenders who should be mentioned.
State governments are doing fabulously out of the royalty system, earning much more from each tonne than the companies who actually take the risk and invest the capital to turn our resources into actual cash.
And in the Hunter Valley, the horse studs who are entirely foreign owned, pay no company tax according to their own returns made public during PAC processes, employ people on 457 visa's (go to one of these studs and you will not hear many Australian accents) apparently have more than enough sway to sterilise billions of dollars of royalties from the sale of OUR resources.
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Rae:
17 Feb 2014 6:06:04pm
And thank goodness those horse studs did.
Take a drive from the Hunter through the middle of NSW and view the destruction.
When those mountains of tailings rise up in a strong Westerly wind and dump down upon the Hunter and Newcastle I'm sure it will be impossible to claim any compensation from the Korean Miners.
They will be long gone.
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Von:
17 Feb 2014 1:45:24pm
Another policy failure that factored in the rise in the A$ and the demise of manufacturing is the RBA steadily increasing interest rates far in access of OECD nations after the GFC. RBA is now reducing the A$ by decreasing interest rates but why did RBA increase the interest rates after the GFC in the first place? All of the 7 interest rate increases after GFC were to suppress the Housing Price Bubble! House prices driven by unprecedented demand caused by population growth, 2/3 of which caused by "invited" immigrants. Australian immigration policy has damaged our manufacturing, has made housing unaffordable for many and a generated a backlog of infrastructure of $700B. Amazingly Government has no new infrastructure budget caused by population growth. So the Gov will need to borrow and eventually increase our taxes unless of course there is another boom on the way?
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Steve:
17 Feb 2014 1:56:59pm
LOL - 'Take the risk'
They know the yields before digging.
They do not pay for their materials and get them for free.
Comedy gold or an epic troll post?
Either way - I got a great laugh - Thanks.
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Clusterpod:
17 Feb 2014 2:12:30pm
If only "both sides of the political spectrum" referred to the actual political spectrum, rather than just "right" and "further right".
Theres an awfully large amount of political thought and ideology that is outside of the extremely narrow band represented by the ALP and LNP.
Suggesting that the situation at hand is somehow the result of anything but neo-conservative, reactionary pro-corporatism is misleading and shallow.
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Abbott Voter:
17 Feb 2014 2:17:07pm
Not to worry our brilliant economist and lawyer PM, rabid Abbott, will lead us all into disaster ensuring that the one viable enterprise within the nation will be politics, maybe only neo-liberal style.
That is the rason I voted for Abbott. He is doing a great job destroying all before him. Please stop all the nasty comments about dear Abbott, why else would anyone have voted for Abbott
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John Forbes:
17 Feb 2014 2:27:12pm
Nothing to argue with in this article.
Sadly I have to agree !!
We simply keep electing political HACKS & Parties who are only interested in staying in power!!
No PLANNING at all
BUT WE KEEP DOING IT !!!!!!
SOMEONE start a POLITICAL movement to BY PASS the TWO DUDS in existence NOW!!
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NWM:
17 Feb 2014 2:28:03pm
Totally agree - we have mismanaged the resources boom. We could have had enough money to do whatever nation building projects (infrastructure and supporting new industry setup) if big business would do the right thing and pay their taxes.
Now the test is on for the Liberals - are they going to put the good of Australia before what business would like. Because they are in the position to do so - they are on the side of business, but their obligation is to do what's right for all of Australia. Business is a great servant but a bad master, and it's up to the Libs to let business know that it is there for a purpose in this country, and that is to benefit the country, not just shareholders. Why is it so hard for the Libs to see that by operating from this platform, the economy will grow, and those greedy rich will become even richer. The lack of holistic systems thinking stuns me in the conservatives - what is wrong with trying to improve the system for the benefit of Australia, and surely, with a majority in the senate from July, it would be so easy to legislate to keep profits and tax here for us to benefit from.
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OldFasioned Liberal:
17 Feb 2014 3:35:14pm
Because the Liberal Party is not liberal it's CONSERVATIVE.
Menzies very deliberately called his new party The Liberal Party and did not want his party to be taken over by the Conservatives.
In spite of John Howard insisting that The Liberal Party is a broad church it isn't!
The Liberal party was purged of it's true liberals over two decades ago, by renaming them as Wets and claiming that they (the Dries) were liberals. They were and are not! They are Conservatives.
I concede that the above is a generalisation, but it is largely true. Menzies was conservative in some of his social attitudes in today's terms, as was most of the population. However he followed very successfully Keynsian principles and was brave enough to use fiscal as well as monetary means to contain inflation and to counter downturns. He also used government borrowing successfully to fund major projects such as the Snowy Mountains scheme, several major dams etc, which are still benefitting today's populace and have paid for themselves over and over again
He would not have countenanced the widespread middle class welfare now in vogue, which has fed a middle class sense of Entitlement far more dangerous than any so-called welfare entitlement or wage entitlement that is being pilloried by Abbot/Hockey.
I think that Hockey is quite ingenuous in speaking about the Age of Entitlement, when there has always been a belief in self entitlement by the wealthy and privileged.
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Frosty:
17 Feb 2014 2:28:26pm
If you think things are bad now, wait until the Trans-Pacific Partnership (TPP) 'free trade' agreement turns Australia into a second world country.
Our own government (both Coalition and Labor can take responsibility here) is negotiating in secret to undermine our national sovereignty to sell out to trans-national corporations in the new Trans-Pacific Partnership 'free trade' agreement.
Kiss goodbye to the Lucky Country, if it ever really existed except as a transitional state steaming headlong over the precipice of globalisation and corporate rule.
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Fred:
17 Feb 2014 2:55:53pm
The TPP is terrifying.
Giving up our sovereignty, as we will be doing when we sign, is surely treason?
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don't believe the media:
17 Feb 2014 2:28:37pm
Boy, picking up where Annabel left off mr Verrender. You really need to pay attention to the state of the world when you cast such sweeping judgments.
The Howard government reigned during one of the greatest boom times in history and should have left at least 300 bn since it chose to do nothing in terms of nation building. Mr Rudd was hailed the world over for getting us through one of the greatest economic down turns in history and Labor continued the nation building plans to the end. Do i need to name all those projects the opposition and Murdoch and the screaming shock jocks criticised?
This article is another right wing attempt to blame Labor for the Libs continuing failures to build a society. You would be a better business editor if you kept your biases out of your articles and told the truth.
And no, i don't vote Labor.
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Andrew Thomas:
17 Feb 2014 2:40:52pm
"Nor will they admit to squandering the proceeds of the resources boom, cynically opting to enhance their electoral prospects by delivering instant gratification to taxpayers rather than formulate any long-term plan to enrich the nation"
This sort of crap really makes my blood boil. "They"!? Who are "They!?". If I could swear and still get posted I would. Instead I'll just shout:
IT ISN'T THE POLITICIANS WHO DID THIS. IT IS THE ELECTORATE. WANT SOMEONE TO BLAME, LOOK IN THE MIRROR!
Until the Australian people recognise their own stink, nothing will change.
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question_everything:
17 Feb 2014 5:11:54pm
But we have a 2-party monopoly system. A different hand on the same body.
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olive:
17 Feb 2014 5:03:08pm
The latest Fairfax-Nielsen opinion poll: 48% Labour vs. 52% Coallition. The Coallition regained their election numbers. As suspected, the annouced Royal Commission into Unions has born the political fruits for the LNP.
Perhaps we should abandon all of the manufacturing - lets have none. Farmers are manufacturers of sorts and at the same time in the same league as the miners (except that the farmers can leave soil enriched by using sustainable practices). Lets import just about everything since it seems that our manufacturing, farming amd mining is more expensive than elsewhere. What will AU look like then? How are we going to make living? We can't make things, we can't grow things and we can't dig things.
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Hanibal fine:
17 Feb 2014 5:08:52pm
We've been had. The metals that lie beneath our continent belong to us all. Unlike trees they dont grow back. Corporate rape of our enviroment with profits going to a few. We were fooled.
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question_everything:
17 Feb 2014 5:14:13pm
The writer who wrote this article will soon be silenced by the Rothschilds/Freemasons. I respect his bravery.
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Paul Taylor:
17 Feb 2014 5:40:06pm
I would hardly put Labor on the same level as the Coalition in their handling of the demise of the resources boom & the wasted proceeds of the mining boom: a loss of $170billion in tax revenue, primarily due to the GFC ( the greatest global recession since the Great Depression); a structural spending deficit of $50billion attributed mainly to the Howard government & not Rudd Labor); the creation of close to 1million new jobs; major reforms & funding to early childhood learning & childcare; introduction of the National Disability Scheme & a more inclusive workforce; more money spent on national infrastructure than all previous federal governments combined ( NBN, health, education, transport & disaster reconstruction etc.)....creating a position internationally where Australians were reported as having the highest median individual wealth in the world.
Sure the resources boom contributed to a $A above parity with the $US ( now at around 90 cents) but you can equally blame foreign money acquired under quantitative easing by central banks in Europe, Japan & US coupled with interest rates close to zero chasing higher rates of return in Australia & emerging economies like Brazil, India & Indonesia.
Let us not forget that a national superannuation scheme introduced by Labor in the 1990s & opposed by the Coalition now is worth in excess of $1.3billion & that investments from this fund overseas has managed to curtail the worrying rise in net foreign debt under the Howard government ( that is what governments, the business sector & private households owe foreigners minus what they owe us). How many countries can claim over the last 5 to 7 years that the private sector ( households & business), aided by the lowest interest rates on borrowing in over 50 years, have actually reduced their debt by an equivalent 15 per cent of GDP....more than their federal governments borrowed ( Australia 11 to 12 per cent)!
On 1 July 2012 when the Minerals Resource Rent Tax ( MRRT) came into play so did an extension to the Petroleum Resource Rent Tax (PRRT) to include onshore oil & gas ( not just offshore). So the Coalition want to scrap the MRRT then why not the PRRT.... it is structured along similar lines? If we are complaining about the impact of the MRRT on business profitability I would suggest the Coalition led states in Western Australia, Queensland & NSW did more damage when they raised their royalties ( based on production & not profits) during the Labor years......continued
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Paul Taylor:
17 Feb 2014 5:43:33pm
Continued....Central to the demise of the Resource Super Profits Tax (RSPT) & the impetus to removing Rudd as PM, was the fact foreign mining companies were paying an effective company tax rate of 13 per cent & Australian mining companies 17 per cent & probably still do from a neutered MRRT tax regime, impacted significantly by asset write downs, that barely raised a cent. The rates cited were from a PHd thesis written by a post graduate student, under expert supervision, from the Chicago Business School of Economics ( boasting 16 Economic Nobel Prize laureates...past & present). For some unknown reason the effective rates of tax could not be validated either by the Taxation Office/Treasury or investigative journalists in the mainstream media. The big international miners got off scot free in claiming company tax rates in excess of 40 to 50 per cent with the RSPT....a company tax rate that would supposedly kill the golden goose & hence stampeded public opinion to a conclusion that the tax concept was toxic. Then & now the big miners keep on breaking records on output. Strange how the economic experts found no trouble at putting an effective tax rate of 22.5 per cent on miners if a MRRT were introduced!
So what should the Labor or the Coalition do? My opinions with specific detail are expressed currently under The Drum Columnists in blogs by Barrie Cassidy in Getting the Message Straight & Alan Kohler on No more bailouts & in the Business Analysis section in a blog by Renai Le May in No photo op. no subsidy.....all near the bottom on reader comments.
On a second International airport for Sydney I would suggest that both major political parties, Labor & the Coalition, are thinking backwards & not to the future....rather a high tech R&D ( manufacturing & medical research) eco satellite city at Badgerys Creek & a floating international airport off Port Botany with upgraded transport infrastructure in between. For a sense of what I am talking about do a quick search on the internet of plans for the London Britannia Airport ( floating airports) as a replacement for Heathrow & read the reasons/case for its promotion by people like Boris Johnson, the current Lord Mayor of London & others.
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Paul Taylor:
17 Feb 2014 6:36:02pm
Correction: in excess of $1.3 billion should read in excess of $1.3 trillion
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GrumpiSkeptic:
17 Feb 2014 5:45:39pm
Perhaps it is best that the alarm is sounded now than much later, when most of our resources are gone. I believe our electoral system is partly contributing to such a sad scenario. Politicians are like pop stars, they wanted to be loved as well as wanted to be the top dogs. It is about the "EGO" thing !
Mind you, when you are in opposition, your salary suddenly dipped. Your daily commitments remain unchanged. Tony Abbott bemoaned the fact that he found it difficult to deal with his opposition's salary when John Howard lost to Rudd.
To be elected, voters must be convinced that they have a bunch of good blokes as "mates" in Canberra. These good blokes are there to fight for them. It is no good just to tell votes how much you care for them. Stuff all those girly "care" bullsh*t. They wanted tangible stuff...Things like benefits, like money in their pockets. So the regular menu on the Canberra "Chuck Wagon" got a clean and polish. Regular offering such as tax cuts, bonuses, rebates, special interest groups all got a hearing. Oh, jobs too.
It is rather paradoxical that on the one hand, we have tax cuts, but extra benefits are also affordable too. That magic pudding simple refuses to shrink, no matter how many times you divide it!
Perhaps now that "ADULTS" are in charge, some sensible policies are going to be implemented to tackle the resource curse.
By the way, now all the oil/gas money is now stacked away which is a sound idea, no doubt. But what will happen when there is no oil/gas to drive our industries? Surely burning money as fuel is not going to get you very far?
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OUB :
17 Feb 2014 6:53:10pm
Finger wagging at finger wagging? What next? I suppose I may as well wag my finger at journalists wagging fingers at finger wagging politicians while offering no alternatives themselves. But that is the lot of journalists I suppose, eternal frustrated critics.
Hollowed out? Please spend some time explaining why you believe a large part of the economy should be involved in manufacturing Ian. Should the average be the benchmark whatever an economy's other features may be? Otherwise complaints about Dutch Disease will look like simple gum flapping. What the hell do we need politicians to formulate grand plans for manufacturing for? You know they are incapable. Let individuals make long term plans, taking the risks that they know where the market is headed next, or some time after that. Politicians will only use the opportunity to grandstand and provide photo ops, knowing they won't be in office when grand plans come to fruition or, more likely, wither on the vine. Your faith in the abilities of government and the public service to have some god-like foresight is touching but misplaced. Surely I don't need to remind you of another administration's decision to help the Australian industry dominate the world in CD-ROMs? The hubris...
Let the market decide surely. Some decisions will turn out well, others will not. We have many listed companies working in the tech and biotech sectors and a hell of a lot more unlisted I know. A few of these bets will pay off well, most will not. Perhaps steps could be made to improve the venture capital market here but that seems to be a foreign culture. And already on this page you have people complaining about CGT concessions.
It is simplistic to point the finger at the strength of the $A and ignore the economies of scale available elsewhere but not here. Not to mention high labour costs. You claim Howard should have built up a warchest. Dumb. Labor was already complaining about overtaxation (not that the Coalition aren't opportunists). But they would just have happily made great plans to spend any savings. Rudd in particular was a fool with money. Why would Howard build up a warchest to have it used against him? Safer to return it to taxpayers in the form of cuts and, when cuts became ineffective, middleclass welfare. Let your opponents do their own dirty work. Besides what would government savings have done to the dollar? Boost it further you reckon?
Imports held the dollar down, didn't force it up. Inflation only soared when bananas got wiped out at the same time as fuel prices rose. You blame Howard for that? You know high currencies cap inflation. Do you want to cap borrowings?
Due to word limits I will, with the moderator's indulgence, reply separately on the resource rental tax rather than edit myself into incoherence.
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