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The Forum > Article Comments > What Australia should be doing to get financial and cultural benefits from the boom > Comments

What Australia should be doing to get financial and cultural benefits from the boom : Comments

By Saul Eslake, published 14/7/2011

In the midst of the largest and most prolonged commodities boom, here are a few things that governments and taxpayers could do to ensure we all benefit for generations.

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Hear, hear. The waste of the opportunity to create a genuinely long-term benefit to Asutralia is one of the most disgraceful failings of Government in living memory. The cynical vote-buying has created nothing but a vast increase in Government spending on frivolity which will be very hard for a more responsible Government to overturn in future.

Still, at least the social workers are going to get a rise, even if they don't actually produce anything except more demands for handouts.
Posted by Antiseptic, Thursday, 14 July 2011 7:05:54 AM
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I get the impression that our exported resources are more a restriction to our economy rather than a benefit, the reciprocal imports are destroying our own manufacturing industries and the coal seam gas exports, destroying much of the underground water that is needed by many farmers and grazers. The reciprocal imports of all the goods our factories had been manufacturing, do not bode well for those factories. The low price asked for our coal and other resources, does not correspond with the value of the products which are manufactured from them. We would be better off with manufacturing our own trains, Cars and trucks, and all those articles that our importers are bringing into the country destroying our own work. I admit I do not have a view of any respect of any political party, and am hoping for a party coming into the government with views and actions that I can respect.
Posted by merv09, Thursday, 14 July 2011 9:24:11 AM
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It is an insult to common sense having people who never produced any useful thing or performed any function of import in their lives telling others what to do.

This morning, every morning I see the man who collects the rubbish and I would wish so much to thank him if I could do it without distracting his concentration in timing his movements with those of the threatening road traffic. Heroes of everyday they are.

What has ever done for me a man who has no time to participate in any of the economies of a community bar that of his material wealth and that of other parasites?

Bombs in Mumbai and the condemnation of such butchery by people with big names do not open any window to the passions of the throwers nor indicate the origin or causes of those passions.

What does one who calls himself ‘economist’ know of the economy of human feelings?
Posted by skeptic, Thursday, 14 July 2011 10:15:37 AM
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So we have two economists, both of whom I respect, posting opposing views on the wealth fund debate here on OLO.

This sort of open debate on public policy by experts is something I would to see a lot more of on OLO. It's wonderful to see.
Posted by rstuart, Thursday, 14 July 2011 11:14:05 AM
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Do I recall correctly the R.B.A. Guvna stating something to the effect that his view was that the "Australian Household" should no longer be used as a primary mechanism of economic growth?

Hmmm ... here's "My 2c" visa vi the development of the consciousness of the Australian people both individually and collectively, and the development of the prevailing economic mechanism,part 1 of 2 or 3

1. Wig Parasites back onto Legal Aid, with performance based incentives for kudos and higher remuneration, such as the elimination of inconsistencies between CommonWealth and State law.

(e.g. the wanton failure of the States to appropriately seek and take "informed legal consent" from non-Australian speakers and writers. .. The "sign, sign, sign" mentality exhibited by the medical industry at large ought be an area of considerable concern.

2. The A.ustralian $M.oney$ G.rubbers association back on Medicare in toto. No, not only 75% to be paid, plus privatisation, fat cats, shareholders, gap and no insurance coverage on the worst of all of the medical parasites, that is the specialists, BUT instead everyone makes their MediCare contribution, which is invested by go hard and wise teams of performance incentive driven managers, again , with in built standards of excellence based performance bonuses based in turn on real world additional, safe, wealth generation, with distributions to be made from there on a sustainable, equitable, best practice basis.

3. Direct OnLine processes with all of the departments as an option, instead of lawyers, and agents of all manner. Real Estate agents should be regulated to being servants of people who have more money than time/sense.

4. Cull out the redundant retail mechanisms by adding OnLine direct order to enviromentally strong factory storage and distribution/tech service hubs. The factory -> wholesaler -> to retailer economic mechanism is a joke in the face of the NBN.

(My Bunnings BBQ - $AU300 - same thing from a bright light Harvey Norman bimbo - $AU800. Spare us you pathetic winging Harvey, time to change and evolve, perhaps by converting some of your non performing localities.

5. Surplus workers to "Go down the Mines."
Posted by DreamOn, Thursday, 14 July 2011 2:51:09 PM
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After that therapeutic rant, I have now taken the opportunity to read what *Saul* had to say.

..

Hmmm .. I would say off the hip that the article goes some way to provide the basis for a compelling argument for the constitution of a "Sovereign Wealth Fund."

(However, I note that Australia in my view has no sovereign .. we have but a tongue tied genocidal foreign tourist muppet guilty of manifesting laws for the forcible transferal of children from one group to another in the post WWII era. Oooo! How disgustingly awful?!)

Still, an "Australia Fund" shall we say?

..

Perhaps a consideration of the biblical parable of the poor woman who gave 2c as distinct from the rich person who gave $AU2 would partially explain what *Saul* denotes as curious, that being the donation patterns of people on incomes >$AU6,000 p.a.

..

As for my "mate" Wiggus Parasitus WilHelm (real name withheld)who specialises in a few key areas of the "Trade Practices Act" pertaining to mergers and competition, he takes great delight in donating (fully tax deductably) more than $AU100,000 per year. Of course, he is intimately familiar with the necessary legal and financial processes such to make the said practice both time efficient and legally and financially safe and sustainable.

An appropriate on line form with the tax department ought do the trick to get more of it happening, but of course, WilHelm delights in cultivating his own personal NGO beneficiaries. If this was to be done in a much greater participatory manner, I consider there would have to be some form statutory regulatory mechanism enhancements to maintain equilibrium and equitable disbursements across the eligible board in the context of general consensus objectives.

..

As I commented recently, my view is that the "Age of Reason" would be better served by teaching First Aid, the Legal & Guvment system, and beyond accounting, the "value of money" in the context of sustainable independent financially secure "Living in Australia" at High School.
Posted by DreamOn, Thursday, 14 July 2011 5:18:03 PM
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Norway is tucking away its profit from oil exports into a Future Fund. Unlike Australia, it doesn't seem to have its own Goverment undermining its resource income by wanting to close down them own. The Norwegian Fund has purchased sections of the Champs Elysee and Regent St. London as part of their property portfolio. They earn hundreds of millions a year in rent alone.

Remember Howard initiated a future fund which was subsequently raided by the Labor Party.Where are our profits going? To hair brained Labor schemes which end up in waste. Its a crime.

Why can't we be like Norway? There are too many fingers in the pie and the people are left with little in the end.
Posted by Atman, Thursday, 14 July 2011 8:55:39 PM
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RStuart, if you would be so kind, could you please point me to the other economist that opposes the SWF for now. However, if it is Andrew Leigh, nevermind, I have read that article.

My apologies to other participants but my message that follows is particularly for Saul.

Saul, if your "mining boom in full swing" is predicated upon a trade surplus leading to a Current Account surplus I am in full agreement. However that would make it like Chile and Norway. Any other type of SWF is nothing but accounting trickery. As long as we're talking AUD it is impossible to have unfunded liabilities in our free floating fiat currency. I offer these links as support http://bit.ly/oUhsov and http://bit.ly/oPoAyB to the CA surplus idea.
Posted by Senexx, Thursday, 14 July 2011 9:52:35 PM
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More smoke amd mirrors from the likes of Saul.While we let the Central Banking systems of our planet create in their computers debt to equal the increases in our productivity,then we will be no better than the serfs of the Middle Ages.

The basic question Saul Eastlake is; Who should own the increases in productivity via the toil of all Australians? No one seems to make the connection between increases in productivity and the need to increase the money supply.Those who create the money from nothing to equal our productivity own it,then have the audacity to loan it back to us as debt.

The US Constitution said that only Congress should have the power to create new money to equal the people's increase in productivity,but alas private bankers now utter currency at the stroke of a computer key to equal what is not theirs.

We would not need to flog off our resources and energy to China so cheaply if we owned our productivity.Have you reflected upon this reality Saul?
Posted by Arjay, Thursday, 14 July 2011 9:55:02 PM
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'Skeptic', you're a gutless wonder who can't do anything but hurl personal abuse from behind the pusillanimous veil of anonymity. And "Arjay", another who lacks the intestinal fortitude to give his real name, for some reason thinks I'm related to Darryl (Memo, "arjay", whoever you are, the surname is 'Eslake', not 'Eastlake'). No-one "owns" productivity, any more than anyone "owns" temperature. The dividends from greater levels of productivity, or the losses arising from lower levels of productivity, are distributed according to the interaction of 'market forces' and government interventions.
Posted by Saul Eslake, Thursday, 14 July 2011 10:25:32 PM
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'Sennexx', I respect where you're coming from (although I'd have even more respect if you wrote under your real name), and I readily acknowledge that what I am proposing for Australia is quite different from the 'sovereign' wealth funds that exist in Norway, Chile and most oil-producing nations. It wouldn't be funded out of a current account surplus, since the probability of us running one is probably smaller than that of 'Arjay' discovering some issue to which the answer isn't a "government-owned bank".

Rather, my advocacy of some kind of 'sovereign' wealth fund (or 'stabilization fund', which is the phrase that's been used by the OECD and Glenn Stevens, and which I think better captures what I am trying to say) is motivated by a desire to prevent whoever is in government in the second half of the decade from squandering whatever revenue comes its way as a result of the mining boom, in the same way that the Howard Government did in 2004-07, putting more upward pressure on demand, inflation and interest rates, and exacerbating the division between the resources and related sectors of the economy and the rest.
Posted by Saul Eslake, Thursday, 14 July 2011 10:28:19 PM
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Saul,Ross is my real name and it is about time you and other economists faced the reality of a GFC created by a Global Central Banking scam as being an abomination of all humanity.

The game of counterfeiting our money via the fractional reserve system of banking will soon be finished.Just look at Greece.The Central Banks created money from nothing and then put Greece into debt from which they cannot escape.

Why are the real names more revelant than the truth which seems to be your mantra? Due to my political activity I've had the two visits from our AFP who have tried to intimidate me into submission.So there is some method in my madness.
Posted by Arjay, Thursday, 14 July 2011 11:13:16 PM
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Ross, real names are relevant because all too many people in forums like this hurl personal abuse from behind what I call the pusillanimous veil of anonymity at people whose names (and hence occupations or affiliations) are transparently obvious, as substitute for reasoned argument - and yet readers are not able to judge, because people like you and 'Skeptic' aren't willing to identify themselves and their affiliations, whether they are any less free of vested or conflicted interest than those whom they abuse.

So, you can say "it's about time [I] and other economists faced the reality of a GFC created by a Global Central Banking scam .. etc" because you know I am an economist. So? And because you say so? With all due respect (and until you put your full name to your remarks, I think less respect is due), with what authority do you say so, other that of any other citizen?

And what do you mean by 'face the reality'? I've never run a central bank. And while I've always acknowledged that the GFC was brought on by, among other things, excessively risky practices by financial institutions (including banks) about which regulators (including central banks) did too little, I don't feel like I bear any personal responsibility for that (apart from anything else, the bank for which I used to work didn't engage to any material degree in the kind of lending practices which did contribute to the GFC).

If you've had visits from the AFP because of your 'political activity' then, in the absence of any knowledge of precisely what form that 'activity' took, you have my sympathy. But that doesn't give you the right to hurl personal abuse at people simply because of their occupation, or because of what others in similar occupations may (in your opinion) have done.
Posted by Saul Eslake, Friday, 15 July 2011 6:34:51 AM
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Saul, I take some issue with your concern about online anonymity. For example, I post quite a lot on family Law and child support matters and under the legislation governing both those areas publication of information which could lead to the identities of parties becoming known is forbidden.

Nonetheless, Graham knows my name.

As a figure who has a public profile and significant public credibility in your field of expertise, you gain from having your byline attached to your comments. Others who remain anonymous have to stand or fall based entirely on their words in the particular comment - their credibility is not established.

It cuts both ways.
Posted by Antiseptic, Friday, 15 July 2011 6:41:18 AM
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@Saul Eslake: real names are relevant because all too many people in forums like this hurl personal abuse from behind what I call the pusillanimous veil of anonymity

I've been on the internet for longer than most, on this site for a while, and in particular I work with open source which is by any measure a highly constructive activity all almost all communication is done on the internet. Highly emotive flame wars are an inevitable part of all unmoderated interaction between who haven't met face to face. It doesn't matter if everyone knows each other's real name or not, and more importantly it doesn't seem to have a huge effect on the outcome.

The raw nature of the interaction does mean you have to grow a much tougher hide. You also have to put your faith in human nature and the law of averages. In other words, you are going to have to trust an inflammatory comment aimed at you is going to be read by most people the same way you read it, and in the end is going to tell readers more about the poster than it does about you.

Also, we regulars here know more about the posters than you do. We know the Arjay is an ardent consumer of conspiracy theories, there is a cacophony of voices like skeptic's that react to any threat to their world view by hurling abuse at the perceived attacker, and Antiseptic invariably manages to drag his personal gender war into the conversation.

Putting it all together, your pointing out skeptic is a "gutless wonder who can't do anything but hurl personal abuse" didn't tell me anything new about skeptic, but it did tell me a bit about you.

That's disappointing because I didn't come here to learn about that side of you. I enjoy reading your articles because we aren't often see experts taking the time to dumb their public policy ideas so we plebs can understand it. And it's even rarer to be blessed with experts taking the time to debate the points, as you did with Senexx.
Posted by rstuart, Friday, 15 July 2011 9:43:31 AM
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rstuart:"Antiseptic invariably manages to drag his personal gender war into the conversation."

Not true on two counts. first, I don't have a "personal gender war", although I do consider the direction our society is being dragged by dishonest and self-serving feminist misrepresentations and reconstruction of social norms is a bad one and doomed to failure once the resources run out. That is perfectly germane to the topic and Saul Eslake's piece does not contradict this view.

Second, unless my views on feminism are relevant, I don't raise them. I see no reason why I shouldn't do so when they are relevant.

One of the biggest problems faced by frequent contributors is that everyone "knows what they think", so they often don't read it properly, instead inserting a narrative of their own devising the fits with whatever they think the other persons views will be. Perhaps genuine anonymity with absolutely no identification of the posters might resolve some of that, although some will be instantly identifiable on style alone.

All-in-all I tend to agree that a thicker skin and a decent capacity to think critically about what is said are critical in participating properly in on-line discussions. Far too many substitute a thin skin and an appeal to pity (http://www.nizkor.org/features/fallacies/appeal-to-pity.html) for considered responses. This stifles discussion rather than encouraging it and should be condemned.
Posted by Antiseptic, Friday, 15 July 2011 10:14:34 AM
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"rstuart" and others, I realize that various people may have valid reasons for using pseudonyms online. They may, for example, be public servants who are not supposed to have any views other than those of the government of the day.

My skin is as thick as it needed to be to work in and around financial market dealing rooms for the best part of 25 years. I don't lose sleep over the 'slings and arrows' hurled by the likes of 'skeptic' and 'arjay'.

I guess what I am trying to say is that there is, or at least in my view there ought to be, a greater obligaton on those who do use pseudonyms to observe the conventions that usually apply to civil discourse.

Amost everyone who reads my stuff knows that I used to work for a bank, although even when I did work for a bank I always tried to couch my public remarks in terms of what I saw as being in the national interest, as opposed to the commercial interests of my employer (and I sometimes got into trouble, internally, for that). And my other past and present affiliations are disclosed in the biography that's available on here. But surely it's hypocritical for those who accuse me of being motivated solely by the commercial interests of my former employer, not to reveal what interests or affiliations (eg, membership of political organizations or lobby groups) they might have - which, of course, anonymous posters never do.

'rstuart', you're right that those anonymous posters who do resort to crude personal abuse reveal more about themselves than they do about the targets of their abuse.

Incidentally, I don't seek to 'dumb down' stuff for public consumption. I've always tried to write about economic issues in language that the general public can understand, rather than in the language of academic journals. And I'm usually happy to engage in discussion with people who disagree or criticize what I've written, as long as they're not abusive. But I do reserve the right to defend myself against gratuituous or offensive personal abuse.
Posted by Saul Eslake, Friday, 15 July 2011 11:08:18 AM
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Saul Eslake:"in my view there ought to be, a greater obligaton on those who do use pseudonyms to observe the conventions that usually apply to civil discourse. "

Is the "obligaton" a special econometric term? The quantum of personal responsibility, perhaps?..

I don't agree. A properly placed barb can carry a great deal of meaning in a small package. The real shame is that so few seem capable of either constructing or placing such darts well, so things degenerate to mere abuse. I don't claim special status in this regard: despite my best efforts I sometimes cringe at the things that creep in.

As you say, when such abuse occurs it diminishes the lustre of the argument presented and can cause the discussion to derail. Such is life. If it were a perfect world you economists wouldn't have much to talk about...
Posted by Antiseptic, Friday, 15 July 2011 1:38:30 PM
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I'm delighted that you could join us here, Saul.

I don't know enough about economics to know whether or not your proposal is a good one. It makes sense to me, though. Some of the criticisms in here seem to me to be largely red herrings. Whether it is ethical or not, whether or not we are being lured deeper and deeper into an international capitalist authoritarian plot seems irrelevant to me.

The fact is that Australia is making money and seems to have no idea what to do with it. Secondary to this is the fact that the current trend of making money has an end-date. An ill-defined end-date, but an end-date nonetheless. Sooner or later, either supply or demand has to dry up. If demand dries up first, it's entirely possible that another market will emerge. If supply dries up first, we need to hope that we haven't put all our eggs into one basket. Our exports are based on something we have - not on something that we are producing. It's like spending an inheritance rather than an income: eventually, our entire inheritance will be spent, and if it is not spent wisely, there will be some hungry days to come. If it is spent wisely - to generate an income - then the good times could well keep on rolling.

What concerns me, then, is that there seems to be no long-term plan for the profits of the current boom. There are many plausible explanations for this: one that keeps coming up is that politicians are reluctant to look beyond the current term. Infrastructure spending is all well and good if it has a plan, and if that plan isn't based entirely on current trends. Nice highways and railways to and from the mines are great, but using our collective profits from the mines to generate new means of earning seem even better to me.

Of course, all of this is merely my opinion. Comments and criticisms are always welcome!
Posted by Otokonoko, Friday, 15 July 2011 5:30:36 PM
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