The author does not justify cutting public sector expenditure to 90 per cent. Instead we get adjectives, like “rapacious”, “bungling” and “meddling” – as one would expect form the Institute of Public Affairs. This is typical of the IPA. I have completed an extensive analysis of one IPA document that sets out to reduce the public sector. You can find it at:
http://blogs.crikey.com.au/pollbludger/2009/11/02/newspoll-57-43-to-labor-in-victoria-2/comment-page-1/#comments

Alternatively, you can read a letter I submitted to the editor of The Age in response to a recent IPA moan. It was denied publication, as are most of my letters showing up the IPA’s flawed analysis. It is on the next post.

“Julie Novak of the Institute of Public Affairs uses lots of big figures about the Victorian Government’s revenue and expenditure (“10 years of Labor is a record of records; especially in spending”, 8/12), but a moment’s reflection shows how misleading they all are.

“She chooses 2000-01 as her starting year, thus ensuring she begins her comparisons after the unjustified cuts of the last Liberal Government and just as the Labor Government commenced the massive task of rebuilding Victoria. Thus, she ignores the previous government’s removal of 6,787 much-needed effective full-time teaching positions from our schools and the current government’s restoration of 5,193 of them by 2006, as well as the thousands of extra doctors, nurses and police that have been employed.

“She uses nominal figures rather than making adjustments for CPI or AWE increases and ignores population growth, thus exaggerating growth in revenue and expenditure. She ignores the fact the total state revenue has increased from 13.2 per cent of State Gross Product in 2000-01 to only 14.6 per cent in 2008-09, a modest increase which allowed the restoration of public services and which leaves Victorians’ per capita income after state spending higher in real terms than it was 10 years ago.

“She ignores the fact that if Commonwealth grants had not increased, the state would not be spending the money on the items that those grants fund and thus would still not be in deficit.

“She ignores the fact that Victorian public sector numbers had to grow faster than those of other states because they had been cut so dramatically by the previous government.

“In the period before the 1992 election, the IPA set up Project Victoria to pave the way for the undermining of public services in the state. This set the agenda for the Liberal Government elected in 1992 and led to the most destructive period in my lifetime as that government tore up once legally enforceable contracts, slashed government services and ran a campaign of intimidation and demonisation of employees. The IPA may have learnt nothing since then. Victorian voters have.”

You know, there is another huge factor here, which has obviously been completely beyond the scope of the Henry Review, despite the fact that Ken Henry has expressed real concerns about sustainability and continuous growth.

This is the sad truth that our tax dollars are very largely going into building infrastructure and expanding services in order to cater for a rapidly growing population. Our money is going into providing the same lifestyle as we enjoy for ever-more people, and NOT into improving the quality of life for existing residents!

Billions of dollars are being spent on roads, health, education, etc, etc. But NONE of these things are actually improving. Arguably, they’re all getting steadily worse! We are desperately battling to keep up with population growth!!

The taxpayer is directly facilitating the massively unsustainable direction that our society is moving in.

I think that the average taxpayer, perhaps mostly subconsciously, can see the absurdity here. And they can immediately very consciously appreciate it when it is clearly expressed to them.

I’d argue that this is a much bigger factor than inefficiencies and inequalities in the tax system.

If the people could see real gains being made via the expenditure of their tax dollars, then they’d be a much happier bunch of munchkins.

But if, even with the best tax reforms, they continue to see the expenditure of their money leading to no real improvements in basic services and infrastructure, then how do you think they’ll feel?

The simple reduction of our immigration rate down to somewhere near net zero is thus a much bigger factor in our taxation regime and its effectiveness than going to enormous efforts to improve efficiencies and equalities in the tax system!

The Australian populace feels highly plucked about this Rudd-imposed massive-population-growth big-Australia crappola. And at long last, they are starting to hiss loudly about it!

Ludwig
Just as a matter of curiosity, what would you see as being the ideal result of your preferred population policy?

Peter, the ideal result would be to have our population at a stable level that can be sustained by our resource base, with a big safety margin that will get us comfortably through a series of hard years. This is especially so with water supplies.

The best population level would be the lowest level that we can easily achieve by simply reducing immigration to net zero and abolishing the baby bribe, which would be about 24 or 25 million.

As far as tax is concerned, this population would allow our dollars to be put into real improvements instead of constantly lagging behind the demands of an ever-bigger populace.

And within this scenario, the natural environment would hold its own rather than being constantly degraded. Expenditure on environmental issues would actually start to yield a net positive outcome.

It is as simple as that. It is not some Utopian dream. It is a very basic straightforward and eminently achievable desire.

Ken Henry is unusual for someone in his sort of position and area of expertise. For someone deep within the traditional financial and continuous-growth economic system, he can see the folly of never-endingly increasing demand exerted by population growth and indeed by an economic regime based on continuous expansionism.

So I’m sure he can appreciate the message in my last post – that the biggest factor in our tax regime is to make our tax dollars lead to real improvements for the whole community. Within this goal, the major fiddling with the minutiae of the system in order to achieve better efficiencies and equalities is desirable, but of a much much lesser importance.

And indeed, to ONLY do this second highly complex and expensive step without attending to the first very simple step would be pretty damn pointless!

What do you reckon Peter? Do you think I’m on the right track here?

The problem is the banking system.We have to take away from them fractional reserve powers that enable them to create money from nothing.

Why does Kevin Rudd have to borrow money from China to fund stimulus packages which are totally inflationary and put us into debt?We are borrowing from China to buy goods from China to stimulate spending.There is no productivity backing it.

Hitler broke away from the international Reserve Banks and created his own currency thus making Germany extremely powerful.There is no need to go into debt to fund infrastructure.Soverign countries should be allowed to create their own credit.We are in a perpetual state of debt with Govts increasing taxes just to service it.

We have to look at the basis upon which money is created.It does not and should not belong the international banksters who are just self oppointed thieves who debase our currencies by the creation of easy credit in the good times and restrict supply bring on recessions like now.They then go about buying up devalued assets expanding their power base and controlling our lives even more.