Australia should have much better transport systems - better urban freeways, better regional freeways and, not least, much better public transport: better trains, & better bus terminals & corridors.

The Howard govt missed doing anything for transport infrastructure - they should've at prioritised the Pacific Hwy. It got caught far too much in war-mongering, and neglected the domestic scene.

Thanks for quick the response Alan.

I wrote:

>> One of the biggest factors in balancing the books and achieving a healthy fiscal future is to curtail the ongoing huge demand for infrastructure and many other things that borrowed money is helping us build. <<

You replied:

<< No, not really. Balancing the books is only one objective. Jobs, income, quality of life and being a good global citizen are also important. Building infrastructure is necessary for these. >>

Absolutely. So wouldn’t it be pertinent to build infrastructure with these objectives in mind instead of a very large part of our infrastructure expenditure being put into the duplication of the basics for ever-more people?

Wouldn’t a big reduction in immigration actually allow us much more freedom to build other sorts of infrastructure?

Wouldn’t a winding back of the huge demand for infrastructure that very high immigration creates actually be very good for us in terms of the diversity of infrastructure and real improvements in the existing stuff?

continued

From Jenny Goldie’s article (OLO 12/08/13):

<In 2012, Australia's population growth rate was 1.8 per cent. It meant an extra 394,200 people a year >

< Our annual increase is even greater than the population of the Australian Capital Territory of 379,600. It's twice the size of the city of Geelong. >

Nearly two-thirds of this (235 900) is due to net overseas migration. So that’s the equivalent of a city somewhat larger than Geelong, each year, with all its infrastructure, services and all other life-supporting and quality-of-life-supporting stuff that we are having to pay for in order to provide the same level of everything for ever-more people, due directly to our immigration intake!

This is surely an absolutely critical factor in the whole debt, budget and overall financial picture!

Alan, you wrote:

<< That chart shows the repayment rate the IMF anticipates. Relative to other nations, Ludwig, it’s quite readily repayable. The current net debt will have halved by 2018 - provided there is no change of government. Then halved again every two or three years. >>

Yes, but as we come off the end of the mining boom, discontent in the general community is likely to increase and the demand for our government to spend up on various things will increase along with it. The pressure is very likely to be right on government to cut debt payments and indeed to increase borrowing!

So, surely in the face of this scenario it is highly pertinent for us to slash immigration and hence give ourselves a considerably greater chance of putting money into the things that the EXISTING community really needs, and still be able to progressively pay off our debt!

Interesting article and discussion, thank you all, even Spindoc who has just demonstrated why the level of public discourse is so often abysmal.

Alan,
The other comment of import yesterday from Tony Abbott was his claim on ABC 7.30 that the Coalition Governments can consistently achieve a budget surplus per year of 1% of GDP. In my view he put his foot right in it. I wonder if the Labor Party has enough nous to drive the point home.

Australia has consistently run a current account deficit of about 3%pa average. Using those two figures (1%pa + 4%pa) Modern Money Theory shows conclusively (i.e. with empirical evidence) that private financial wealth must decrease by 4%pa of GDP.

In the Howard era that blight was overcome by private debt, largely in the housing area and on credit cards. Housing loans interest rates were then about 7-8% and long term credit card more than double that.

Yet the government can run a budget deficit at nil% if it choses or it can pay upper crust welfare at about 3% below the housing rate. It just instructs the Reserve Bank, which it owns, to credit the accounts of people from whom it has bought goods and services. That will not increase inflation until the economy starts to boom when the effects I mentioned in my earlier comment will reduce the debt to GDP ratio and having achieved its aims the government can back off (act counter-cyclically.

Why are people scared of government debt but willing pay the banks very high interest rates? The combined banks take about $3 off every citizen's purchasing power on average every day.

The situation described above also arose elsewhere in the world and when the debt bubble deflated, as people lost their enthusiasm and started to attempt to mend their personal balance sheets, the GFC hit.

We were lucky in Australia; our gang of five, Rudd, Gillard, Swan and Tanner (competent economic politicians as a group) and the Reserve Bank Governor acted quickly and almost perfectly. Hence we had no recession.

Correction; Figures in brackets should read (1% + 3% = 4%)