A list of where the Howard Government far out performed the present government:

1. GDP growth
2. GNI growth in real terms
3. Net Federal debt
4. Unemployment
5. Total tax on companies incl company tax carbon tax etc
6. No Additional tax levies
7. job participation rate
8. personal tax rate decreases over 5 years
9. company tax rate
10. Non mining industrial production growth
11. dental health care
12. Consumer confidence
13. Business confidence
14. Insolvencies business and domestic
15. Government red and green tape regulations
16. Transparency (use of productivity commission for major projects)
17. Immigration control.
18. overall quality of life

Good morning Shadow Minister,

Are you up for a genuine discussion on these issues? I’m game, if you are.

And I promise you I will retract and apologise if I have made an inaccurate assertion anywhere. Okay?

So just a few questions for clarification first:

Re 1, 2, and 14: How do you want to measure and compare these? Are you happy with this authority:

http://www.tradingeconomics.com/australia/indicators

Re 3: Do you regard borrowings as an outcome or as a strategy? Is debt/GDP an indicator or a setting? To illustrate the difference, when you took out a mortgage, did you wake up next morning with “Omigoddd!! I suddenly owe the bank $300,000 !” Or were you quietly satisfied that you had made a wise, if perhaps brave, active decision for your long-term future?

Re 4, 7, 10: are you happy with Bureau of Stats data?

Re 6: Do you regard the gun buy-back levy introduced in 1996, the Medicare levy surcharge introduced in 1997 and the GST introduced in 2000 as additional tax levies?

Re 14: what does that prove? When a Government is running things well, businesses are booming and the banks are splashing cash, a lot of drongos try to make their fortune on borrowed money. No?

Re 15: do you accept Heritage Foundation as the authority?

http://www.heritage.org/index/

Re 12 and 13: no contest. The media in Australia has done such an appalling job of misreporting the actual state of Australia’s economic affairs, that it’s a miracle these are not at one tenth of the current levels. Correct?

Re 17. Not an economic variable.

Re 5, 8, 9, 10, 11, 16 and 18: which authorities do you prefer, SM? I have my sources of info, but happy to go with yours.

Thanks, SM,

Cheers

AA,

"Are you up for a genuine discussion on these issues?"

Yes that would be refreshing.

1,2,14,

Trading Economics shows they were all better under Howard.

3,

If I woke up with a $300 000 overdraft and nothing to show for it, yes I would panic.

4 Howard brought down unemployment to just above 4%. Labor increased it to 5.5%

7. No change

10. Non mining industry has dropped in real terms.

6. Even

14. Insolvencies are an indicator of poor economic conditions which is why they are considered a key factor.

12,13, Rubbish has nothing to do with the media, and more to do with people losing their jobs and business conditions falling.

15. No I don't accept the heritage foundation as the authority. This is a small group of undistinguished people patching data together.

17, Considering that this is now looking to cost up to $4bn a year, this is not just a governance issue.

5, 8, 9, 10, 11, 16 and 18, Mostly your indicators, my information shows that under Howard things improved faster than any other government. Prove me wrong.

"Simple and sound" - that's why you're not getting my point. It's not simple at all.

You are looking for a "simple" explanation for Australia's performance by comparing the size of fiscal stimulus to economic growth across countries. But I have already explained that you cannot compare fiscal stimulus across countries with different monetary conditions.

I have explained why monetary factors alone can explain the performance of certain countries which you listed. I have explained how Australia did well because it kept NGDP growing on a stable path, and why high interest rates helped Australia, but maybe didn't do much for other countries.

The links I gave to back up my case were all to sites with very good reputations, but still it's not sufficient for you.

I am the one using the modern keyensian argument. For more than 2 decades it has been a general principle that fiscal stimulus is only needed when interest rates hit zero (ie in a liquidity trap). Krugman will tell you the same. There is a reason why central banks, not governments, are given an inflation target.

Heres another link from the money illusion blog. Its from a US perspective, where interest rates are zero and hence keynesians can support your hupothesis that fiscal policy impacts NGDP. However, the facts are not in their favour.
http://www.themoneyillusion.com/?p=21146

If you don't get it now I don't think you ever will. You deny that I have refuted your argument. You deny that my links refute your argument. But you haven't avtually provided any counter arguments nor have you provided anywhere near as many facts to support your case as I have. If you're not well read on monetary economics that's fine, but don't dismiss arguments in my links from highly regarded monetary economists without providing any coherent argument against their facts.

It's been a good debate, but my last post was pretty comprehensive. I don't think you will ever budge, but i do think you should read the link in this post.

Hi Shadow Minister,

Thanks for this.

Re: “1, 2, 14, Trading Economics shows they were all better under Howard.”

Correct. Average annual growth was 3.65% for the 11 Howard years. Then down to 2.44% average under Labor.

But here’s the extraordinary thing, SM. Australia’s average of 3.65% through the Howard years was about the same as equivalent countries. The USA averaged 3.04%. Canada 3.3%. Some European countries were higher.

Then came the global financial crisis which knocked the stuffing out of every economy. Well, all except one.

In the five years under Labor in Australia, growth was 2.44%. But in the USA 0.54%, And Canada 0.94%. Euro Zone negative 2.3%!

This is why economists around the world use this as one major pointer to the Australian Government being the world’s best economic manager.

Re: “If I woke up with a $300 000 overdraft and nothing to show for it, yes I would panic.”

Yes. Me too, SM. But Australia has got substantial value for that investment. They say some of those insulated buildings will save money for the owners for more than 100 years. All those schools now have better facilities for the kids. The national estate has grown enormously. No?

Re: “4. Howard brought down unemployment to just above 4%. Labor increased it to 5.5%.”

Hmmm. Not sure. What are we comparing here?

After Labor has managed the economy for five years, the rate is 5.5%. In the USA it is now 7.5%.

After Mr Costello had run the economy for five years, the rate was then 6.6%. In the USA it was then only 4.3%.

So, again, in the global context, the performance is much better now. No?

Re: “15. No I don't accept the heritage foundation as the authority. This is a small group of undistinguished people patching data together.”

Why not, SM? Pretty conservative, right wing organisation. No? Who do you trust on this?

Re 5, 8, taxes are lower now, here:

http://stats.oecd.org/Index.aspx?QueryId=21699

Re 9: company tax hasn’t changed.

Re 11: industrial production here:

http://www.tradingeconomics.com/australia/industrial-production

Re 18: quality of life, here:

http://en.wikipedia.org/wiki/Quality-of-life_Index

More later, SM.

Cheers,

Hi Grim23,

Thanks for getting back on this.

Re: “I have already explained that you cannot compare fiscal stimulus across countries with different monetary conditions.”

Maybe. But have you explained how Australia's monetary conditions differed from other nations?

In 2007, 29 OECD countries had interest rates within the range 3.9% to 8.1%. That is, plenty of flexibility. Australia was in the middle of that bunch.

When the GFC hit, what did they all do? How did governments respond? And with what outcomes?

They all did pretty much the same with interest rates. All those 29 countries dropped rates by the end of 2009. Some more than others. Some marginally like Hungary, Poland and Mexico. Some dramatically like the Euro zone countries, Canada, the UK and the USA. Australia was about average.

There seems nothing exceptional whatsoever in Australia’s monetary policy which explains the extraordinary surge from 11th placed economy in the world – around that of the UK and France – to the top of the rankings now – by a huge margin.

Clearly, Australia had a radically different fiscal policy from all the other nations. That is obvious. But monetary policy?

I have read your links, Grim23, and can’t see that anyone has identified anything exceptional about Australia.

Re: “Australia did well because it kept NGDP growing on a stable path”.

Correct. But how did it achieve this? Was the largest set of stimulus packages in the history of the world a factor perhaps?

Re: “For more than 2 decades it has been a general principle that fiscal stimulus is only needed when interest rates hit zero”

Perhaps. Not sure. But the GFC is now prompting significant rethinking of once-accepted precepts. As did the Great Depression in the 1930s.

It seems Australia’s extraordinary success is now giving rise to revisions of economic theory.

You said in an earlier post, Grim23, that “Australia had much more effective monetary policy than Britain during the crisis. Fiscal policy has nothing to do with it.”

What precisely did Australia do that Britain – and the rest of the OECD – didn’t?

Thanks.

Cheers