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The Forum > Article Comments > Manna or myopia? The 2006 Australian budget > Comments

Manna or myopia? The 2006 Australian budget : Comments

By Mark McGovern, published 15/5/2006

Is our current prosperity of substance? Or is it an illusion, one that could shortly be shattered?

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"And, among other straws in the growing wind, ABC News reports the World Competitiveness Yearbook 2006 ranks Australia “57th as an international trader” out of 61 on the measure of most competitive economies."

Mark, you might want to check your sources accuracy. The IMD World Competitiveness Notebook lists Australia as the 6th most competitive economy - last year we were 9th.

The IMD assessment used 312 pieces of data - measuring economic performance, government, business efficiency and infrastructure. It also included factors such as education, technology, health and social services.

We are behind the US, Hong Kong and Singapore but ahead of Canada, UK, China and India
Posted by Bruce, Monday, 15 May 2006 4:14:00 PM
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Interesting statistic, Bruce; an improvement in competitiveness from 9th to 6th. It looks like the author (a "Senior Lecturer at the School of Economics and Finance, Queensland University of Technology") has fallen into a trap for young players and relied on the ABC News and not checked original sources. That would qualify the essay for a "D". The author can check the IMD approach here:

http://www01.imd.ch/documents/wcc/content/methodology.pdf
Posted by Siltstone, Monday, 15 May 2006 9:56:37 PM
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Actually, the most productive economies are those with centralised and mediated industrial relations. The the country with the highest productivity rate at the moment is Ireland, yet Ireland has the most centralised industrial relations policy according to the UN OECD reports. The US is actually behind Austalia.
Australian leadership is acting in arrogance, following private economic statistics, not the statistics of the UN, blindly following a false economy facing serious infrastucture problems.

There will be no ability for the Government infrastructure to deal with major natural disaster, and natural disasters are inevitable and expensive. A rise in fuel prices, which will only get higher, and then even higher interest rates, therefore secure higher unemployment, and finally recession will go double digits. This will not just be any recession like the other's we have seen. With Global warming, there will be even bigger and more cyclones next year, and meteorologists predict that they are moving away from the equator. Brisbane, could realistically, for example, face a major cyclone in the next few years. Australia is not prepared for this, and will not cope with the cost of the destruction of a major city. The draughts will make more farmers bankrupt.

Meanwhile, the recession will not cope with the oceans of unfairly sacked employed citizens, falling to hunger, then homeless and will be left with nothing. The economy could have avoided this. Australia, as a result of so many expenses not met by Government revenue, will not even be a "Banana Republic" as the greenhouse cyclones will destroy the bananas.

John Howard is following the omens of Malcom Frazer and Paul Keating before disaster. Malcolm Frazer's plot point to his down slide was his swan cry: "life wasn't not meant to be easy". Paul Keating's statement to infamy was "it was the recession we had to have". John Howard's passive-aggressive wimper was last week was: "this is going to be a difficult time". Now, he looks like he can't run away fast enough.
Posted by saintfletcher, Tuesday, 16 May 2006 1:18:19 AM
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I didn't see any big picture stuff in the budget. Where are we going? What is the coalition's vision for Australia?

With the disappearance of government services and no investment in the future (ie education) in the last 10 years, a Darwinian free-for-all springs to mind.
Posted by gusi, Tuesday, 16 May 2006 2:55:55 AM
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I agree, a Darwinian budget is a Dickensian tragedy. You can almost picture the Artful Dodger, the stench of the Thames, and a misery of the underclass.
Posted by saintfletcher, Tuesday, 16 May 2006 3:44:13 AM
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I agree saintfletcher, although you could of mentioned the massive burden of debt that ordinary australians are carrying so they can live their so called 'never been better off lives'. The fact of the matter is clear; any crumbling of the economy will be worsened by our incapacity to pay back the already monsterous amounts of personal debt we owe. This is the crux of the matter. We're as worse off now as we were under %18 interest rates back in the early nineties. We're paying much, much more for our homes (with rising interest rates all around us), paying back exorbitant interest on credit cards and buying now and paying back in 48 months time. We are living in a fanatsy land which suggests we are rich because we can own/have almost anything we want; problem is, it's not ours!
Keating used a good phrase once in Parliament: 'Going troppo; we are simply going troppo
Posted by Country Unionist, Tuesday, 16 May 2006 1:58:04 PM
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Thanks for the comments and three quick points.
1) Media commentary since I wrote this opinion last Thursday would seem to offer some general support to the points that I made as well as revealing some interesting further information.
2) Scepticism about the strength of our position seems to be shared by your online opinions so far. I am particularly interested in your ideas on which aspects deserve to be more fully built out.
3) As regard the World Competitiveness Yearbook 2006 rankings, the 57th trade ranking is on factor 1.2.18 Trade to GDP ratio. This is calculated as half(exports+imports)/GDP. The overall subfactor breakdown for international trade is 54th. I took the factor reported by the ABC and CEDA but yes the overall 54th might be better use. CEDA provides the 4 page Australian factor breakdown at http://ceda.com.au/public/publications/wcy/yearbook_2006.html. The "Competitiveness landscape" graph (p70)highlights how poor the trade competitivenss aspect is, which was the point I was trying to reinforce.
Over to you.
Posted by Mark McGovern, Tuesday, 16 May 2006 3:15:30 PM
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If countries ever stop buying our "holes in the ground" we will be faced with a great deal of nothing. Do we export anything besides 'dirt'?
When the next election comes around,many pensioners are going to recall that though they pay big taxes on most things they buy, they were totally overlooked in the Budget.
Pensioners do exist and they do vote.
Posted by mickijo, Wednesday, 17 May 2006 2:09:19 PM
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The latest Federal budget is the most wonderful budget since the one presented in 1977 by the Premier of Queensland, the Honourable Johannes Bjelke-Petersen, KCMG, in which death duties were abolished.

At last, at long last, the federal government is addressing the basic problem that Australia faces, our mountain of private foreign debt. Have exercised financial prudence and paid off the government foreign debt, it has now set the policy settings in place that can lead to us doing the same with our private debt.

For far too long in this country the disciples of Keynes have made sure that it did not pay to save. By taxing nominal income from investments instead of real income, and allowing nominal deductions of interest instead of real interest, they ensured that we would build up the mountain of debt that we currently face. With the likelihood that we will face a deflationary downturn, when debtors will be crushed, any efforts to correct this cannot come to soon. The only way to correct a mountain of debt is to create a mountain of saving. From the national point of view, it doesn't matter too much who does the saving, as long as it is done. As the rich are the ones with the greatest ability to save, they are the ones who need the incentive.

There are two ways to achieve saving; you can force people or encourage them. The Labor party's solution was to force people to do something that it did not pay them to do. The problem with this is that people would only save the amount they were forced to. The non-labor way is to encourage them, and this will produce a much better result.

Is it too much to hope that I will live to see the final deliverance from the nightmare vestiges of socialism? These of course would be the end of capital taxation, the end of income taxation, and last of all, (something for which we may have to wait until our Chinese friends dominate international finance) the restoration of the Gold Standard.
Posted by plerdsus, Thursday, 18 May 2006 2:21:24 PM
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