Very well argued and extremely cogent Jo.

What seems to missing in politics is original creative thinkers and exceedingly rare honesty.

And in his recent address making out the case for keeping him on, Tony Abbott seemed to put personal interest ahead of the party, the party ahead of the nation, and we mug electors/the national interest last!

It seems to be all about winning and personal outcomes, and then beating the other side of politics.

These guys are so immersed in the politic conflict/winning the debate and the inevitable circular thinking that goes with that, they have no time for anything else; and just keep repeating the same old same old/ can't see the forest for the trees!?

And you're completely on the money Jo.

Elections are lost by those currently most on the nose, not by superior tactics or superior thinking/outstanding nation building ideas. Now wouldn't the latter be a new and novel approach?

If only we could attract some creative thinkers not bound by some invisible force that seems to say to all pollies, thou shalt not think!

I mean if it actually happens now and again, the burning smell emanating from previously unused cerebral circuits soon puts an end to that nonsense?

Anyway, most of them are just rubber stamps, and what the hell use are rubber stamps that think or rock the (warm and comfortable) boat?

The South Australian coalition Pollies made one fatal error in their negotiations with Tony?

They didn't get it in (parliamentary props) writing!?

Several more one term parliaments might finally force the message home? i.e., lift your game people, or else!
Rhrosty.

The basic problem of today's times was summed up recently by the Prime Minister of Finland, when he was challenged about politicians not taking action to fix the EU's economic problems.

He said: "The problem is not that politicians do not know what to do; it is that they don't know how to get re-elected after they have done it."

The real problem in Australia today is that there needs to be a large reduction in the standard of living of ordinary people. Unfortunately that is something that no politician with any hope of being elected dares say. As a result we end up with humbug, deceit, broken promises and other twists and turns. I believe that the main game at the moment is to get the other side to get the blame for cuts that both sides realise need to be implemented. Readers between the lines will have noticed that when the recent cuts to the ABC were announced, there was no undertaking from the opposition to reverse them.

Why do voters believe that their living standard must always increase? When the standard rises too high, as evidenced by our huge and rising level of debt, it is obvious that it must be reduced.

The current technological revolution, in which low-skilled jobs are disappearing at a rapid rate, are eloquent evidence that our wages are too high.

All the indications are that the world is heading for a deflationary depression, which will be much worse than that in the thirties. This will crucify any person or country with an excessive amount of debt.

We have the option of cutting the living standard now, or face a far greater crisis on the Greek model in a few years.

Always remember, in all these occasions, that money is, and always will be, much more important than people.

The real problem in Australia today is that we have idiots who think there needs to be a large reduction in the standard of living of ordinary people. Productivity is improving and can be improved more, yet many think ordinary people should be denied the benefits of this!

We're nothing like Greece. Our debt is low by international standards and we have unlimited credit because we own the RBA. People who don't understand economics are told to panic by the Libs and the Murdoch Press, but in reality the government deficit is actually too small for the current economic conditions — we really need another stimulus.

It's not our wages that are too high, it's our dollar. And even that's not much too high.

'We're nothing like Greece. '

no but Labour/Greens very quickly put the structure in place for us to become so.

plerdsus

you summed it up very well.

runner, are you just taking the opportunity to insult Labor? Or do you actually believe what you write?

If the latter, what is the basis of that belief?

Its not the size of the debt as it stands (although that is horrifying in itself) its the trajectory of that debt.

GDP-DEBT ratio.
2007 10%
2009 11.7%
2011 20.5%
2013 27.07%

Thats all under labor. It has to be acknowledged that the GFC is in this period and had an effect on these numbers, equally it has to be acknowledged that the debt was run up at a time of increasing government receipts. The same cannot be said for the situation currently.

Under the coalition it has continued to climb to 28.6% in 2014, which we have to grant is a improvement of sorts, the rate of increase has slowed but by no means sufficiently.

Combine a series of debt bombs left by Rudd-Gillard-Rudd (Gonski, NDIS) and the declining terms of trade we have a big problem that calling on tribal connections of your political party of choice wont change.

We are not yet greece, but we cannot change the rules of math that will give us the same problems.

Goodies presented to us to buy our votes from the Howard years, followed with the wild spending of Rudd-Gillard-Rudd combined with the decline in our key exports make changing what we do a imperative

Aidan wrote: Our debt is low by international standards and we have unlimited credit because we own the RBA.

Sorry, Aidan, but you have not realised that there are two things that NO government in the world can do.

These are to make a foreigner lend us money, and to print foreign exchange.

Sure, we own the RBA and can print unlimited amounts of Australian dollars; but do you have any idea what those dollars would be worth if it did so? Zimbabwe provides an excellent example if you don't.

We are able to borrow at low rates because we are in a group of less than a dozen countries with an AAA credit rating. If we overborrow and lose that rating the interest rate required would rise substantially.

Even now, overseas borrowers require a premium loading on loans to us. This does not include exchange risk, as the loans are in US Dollars. That is why the RBA rate is 2.25%, and you can still get 4.02% on deposits. Presumably the rate being paid to overseas lenders is a bit more than that.

We have a gross foreign debt of around 2 trillion dollars, of which around 80% is in foreign currency. If overseas lenders refuse to renew loans, the RBA cannot help, as they don't have enough US dollars, and cannot print any. The banks here would have to choice of paying the rate the foreigner requires, or defaulting. You can be sure that if Westpac is paying 10% to overseas lenders, the people borrowing from them will be paying more.

We also have the problem that we do not have a self-contained economy. That is to say, we have mountains of iron ore and bauxite for which we have no use, and we must import many items unobtainable in Australia.

Economics is not called the miserable science for nothing.

One can only hope that the coming deflationary depression is not followed by a major war like it was last time.

We should lower the standard of living; and entirely unearned undeserved rewards!

i.e, someone like Alan Jones may earn millions every year, and therefore pay the current top tax rate of 48 cents in the dollar.

However, if he and his ilk invests the maximum amount they're able, into their super, they are forgiven 33 of those tax cents, bringing their tax down to just 15 cents in the dollar.

And that on its own costs the nation 40 billions per and rising, in foregone tax!

Moreover, we stand alone as the only economy to shoot itself in its own economic foot with negative gearing, which is estimated to cost internal revenue between 5-15 billions per!?

Family trusts may cost more that both of those combined?

However, because this number is cleverly hidden, it's hard to know how much revenue is being redirected, and if all the schemes are indeed legitimate?

A very wise man said, at some point complexity always becomes fraud!

Without question these "tax avoiders" are the real leaners, and the real lifters are those expected to carry the tax collection can for them.

Yes some do need to do some long overdue belt tightening; just not those folk whose financial belly button is already rubbing hard against their financial spine!

And we can hugely stimulate growth without acquiring bad government debt!

There are two types of debt, good debt and bad debt.

Good debt built the Snowy mountains scheme and the Sydney Opera House.

Government involvement was essentially limited to underwriting the finance commitments, thereby obtaining the essential funding at half the cost of the private sector!(the snowy's have long since paid for themselves and now earn a handsome profit)

And we stand almost alone as yet to try self terminating thirty year bonds, to get some quite massive money earning projects; (that pay for themselves) up and running, along with the massive economic stimulus that in turn, will provide the non mining economy!

OUR GRANNIES, OUR WAR WIDOWS,SINGLE MUMS AND OUR ORPHANS HAVE ALREADY DONE ENOUGH BELT TIGHTENING THANKS, PLERDUSOREOUS!
Rhrosty.

I know of some people, who seem able to afford to play the pokies as they please, live in luxurious mansions, on acreage estates; often frequent markets, where the produce they grow (hobbies) as surplus to their needs, earns a tidy untaxed profit?

Have over a hundred thousand in the bank?

And seem able to take regular annual holidays to some distant overseas locations, where an allegedly inherited property; pays for the entire holiday and then some?

Yet given current guidelines and a very limited burden of proof, are still able to collect a full or part pension, and all that goes with it!?

It's time some of these patent leaners did their fair share of the lifting!

If you worked hard and did well? So what!

And how much avoided tax along the way, contributed to that?

Well don't answer, given if you have, an honest answer now, would be the most unexpected outcome!

Moreover, many of the things that government provide as services made much of that possible; as did the opportunities Australia alone, enable success stories handed out on a veritable platter, and impossible elsewhere!

Be grateful for that, and the opportunities, rather than thinking that you in some way via your apparent success, are now owned a living in whole or in part; via the public purse/patently disingenuous and mendacious misrepresentation of your means and circumstances!

AND IF THE CAP FITS?

For mine, you and all like you have had all the breaks you have earned, or not?

Welfare is for the needy, not the patently greedy!

Start and do some of the lifting, even where that is a new and novel approach!
Rhrosty.

plerdsus, our dollar will fall, but it certainly won't go into freefall like Zimbabwe's. Zimbabwe had effectively declared war on its main export industry and was discouraging foreign investment. Whereas if our dollar falls our exports get more competitive and its rate stabilizes. IOW we get the competitiveness benefit of lower wages without the huge blow to ordinary people.

For the last two decades the Australian government has had a policy of not borrowing any foreign currency, so Australia's not going to pay any more with a lower dollar. Some Australian corporations have borrowed foreign currencies but that's their problem not ours. And you can be sure that those borrowing from Westpac won't do so at 10% if those borrowing from Bendigo Bank are doing so at 5%. What Australia must do is ensure credit in Australian dollars is always available.

omni, you seem to be assuming that the trajectory is linear, or worse still exponential.
But a sinusoidal trajectory would be a much better fit.

Trying to reduce the deficit too soon won't reduce the peak debt; it will just delay it. What we should be concentrating on is creating the conditions most conducive to private sector growth. Right now a lack of aggregate spending is reducing opportunities for the private sector to make money. With more public spending, there's more opportunities for the private sector to make money, so they'll employ more people and pay more tax. Once we get near full employment then it will be a good time for the government to start cutting spending.

Gonski and NDIS, though costly, will also improve productivity and hence revenue. And a floating dollar ensures terms of trade are ultimately self correcting.

And we will never be Greece. Japan has much higher debt than Greece, yet has escaped the problems because it has its own currency, as we do.

It is a pleasure to find a subject on which I can agree with Rhosty. Soundly financed infrastructure, which generates enough income to service the debt and have something over towards capital repayment, is undoubtedly a good thing. The Snowy Mountains and Sydney Harbour bridge are excellent examples.

The problem today is people keep pushing projects such as the Sydney-Melbourne fast train, which, like other passenger train services, would not even cover operating costs, let alone give any return on capital. The ticket price would be limited to the air fare, as very few would pay more for a slower trip.

The other old chestnut that Rhosty rolls out is the attack on the rich. Apparently Rhosty does not realise that if someone borrows, someome else has to save, and that they won't save unless it pays them. The twentieth Century is replete with examples of countries, of which East Germany is the best example, where socialism resulted in mass emigration, followed by walls, observation towers and the rest. It is a sad fact of human nature that these idealistic attempts at equality could only succeed by havng everyone at the same level, but at a level at or near the lowest paid in the capitalist system.

Today we live in an area where tax levels in Australia are much higher than in neighbouring Asian countries, so that anyone with a bright new idea is well advised to emigrate to somewhere where he can reap a reasonable reward for his efforts.

As for the widows and orphans the Rhosty mentioned, they currently enjoy some of the most generous pensions in the world, and would be stupid to risk their loss.

The best advice that we should follow today comes from Mr. Micawber, who said:

Annual income £20, annual expenditure £19/19/6, result happiness.

Annual income £20, annual expenditure £20/0/6, result misery.

Tax reform can do two essential thing simultaneously!

Lower the individual tax rate to the point that all those too clever by half schemes can be junked; given the lowered rate could save the average AUSTRALIAN operator around 7%, currently ripped from the bottom line by compliance! And increase the amount of revenue raised!

Ending the need for compliance ends the need to part with this money. And an 18% (adjusted for 7% savings, @11%) single stand alone unavoidable expenditure tax; does just that, as as the only tax needing to be collected!

All the other convoluted and costly complexity can be jettisoned, along with all the unproductive parasites that live off of that complexity!

The GST can be replaced by a direct funding paradigm, that increases the coal face funding by a much as 30%, without actually increasing the real funding totals!

And just by eliminating the number of entirely unnecessary in-between hands and handling, all of which have a cost component!

Rapid rail along the third busiest air route in the world, has no choice but to succeed.

And can be largely funded by the later sale of some of the necessarily resumed then rezoned land.

Naturally, a number of people, will try as they might to buy up land on the supposed corridors, to try and make a financial killing!

However, if states and councils are relived of rezoning responsibilities along national highways and byways, (projected) this can be avoided along with the prohibitive costs this would create!

In the interim, self terminating thirty year bonds, will get many of these things kick-started!

Can't died in a cornfield over a century ago!
Rhrosty.

plerdsus, what makes you think high speed rail from Sydney to Melbourne would not even cover its operating costs? High speed trains overseas don't have any trouble doing so. And like air fares, the ticket prices would vary depending on time of day.

Did you not realise that for most passenger train services in Australia, fares are set by political rather than commercial considerations? That's not always a bad thing BTW, as it does reduce the amount of traffic on our roads.

<<Apparently Rhosty does not realise that if someone borrows, someome else has to save, and that they won't save unless it pays them. >>
If someone borrows then whether it pays them or not, someone will save because the money has to go somewhere! That someone could be an individual, a business, a superfund, a bank, a foreign investor or the government. But the saving is NOT a prerequisite for borrowing.

<<Today we live in an area where tax levels in Australia are much higher than in neighbouring Asian countries, so that anyone with a bright new idea is well advised to emigrate to somewhere where he can reap a reasonable reward for his efforts. >>
There's no idea bright enough to guarantee a profit. Increasing the chance of those efforts succeeding is often more valuable than increasing the reward for success.