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.

Arjay: I completely agree.
Rather than creating borrowings from savings we have allowed the banks to create virtually unlimited spending. When this unsustainable situation almost corrected...the government provided guarantees and let the profit train roll on (for a bit more).
Savers have to speculate rather than just save...thus making pre-canned profits for Super funds, share traders, and the property business.
All the while "inflation" has been re-defined into statistical uselessness, as has "unemployment". This allows the government to hide the slow decline of our quality of life.
Whatever the new tax system does, I just hope it doesn't create more comfy millionaires at the expense of the rest of us...again.

Don't get sucked in by (Eeyore) Arjay's rants, Ozandy.

He believes that fractional reserve banking is responsible for NSW's drought, 9/11, Osama bin Laden's dyspepsia and Bronwyn Bishop's hairstyle.

>>This allows the government to hide the slow decline of our quality of life.<<

Perhaps you could elaborate on this a little? Most people believe that our quality of life has improved dramatically over the years.

It wasn't that long ago that we were scuffing along on a 50x150 block, with black-and-white TV, fixed-line phones, no computers, no Internet, a stunted choice of automobiles (Ford or Holden), a tiny range of foodstuffs at the local store, no Playstation, massively expensive airfares to get away anywhere etc...

There's quite a long list of stuff that most folk list as having improved their lives.

And the stunning thing is, it is almost entirely due to the availability of money, with which people have started new businesses and expanded both our horizons and our economy.

>>Rather than creating borrowings from savings we have allowed the banks to create virtually unlimited spending.<<

Limiting borrowings to that which has been saved is a recipe for instant stagnation, Ozandy. You only have to think about it for a couple of seconds to realize that the credit that has been created is the lifeblood of our economy. As we noticed - particularly in Europe and the US - when the GFC required a tightening of credit, businesses toppled over, left, right and centre.

Cutting it off entirely, as you seem to favour, would send your precious "quality of life" into a tailspin from which it would not recover in your lifetime.

Pericles,

I don't want to comment on the financial system, as I don't know enough about it to have a sensible opinion. I'll leave it to people like you, who have the background knowledge to understand it better. Being mathematically literate, however, I do understand that a system based on unending growth of population and/or consumption is bound to crash.

So far as quality of life is concerned, there have been undeniable benefits from technological progress, which we would have enjoyed, however, without the population growth, as they have in Europe. Otherwise, life within and around our big cities has become worse. More crowding and congestion. A choice between slow and unreliable public transport (if it exists) and nightmare traffic with endless hassles over parking at the end. More road rage, tree rage, and other forms of conflict that you get when too many people are crowded into too small a space. More ethnic tensions. Casualisation, unpaid overtime, and other forms of exploitation at work. Deteriorating environment. Shrinking block sizes, denying the ordinary person the chance to grow a few flowers, fruit trees, or vegetables. Housing costs rising from 3.5 times the median wage in 1973, with about 30% representing land costs, to 7-9 times the median wages, with 70-75% representing land costs, with the exorbitant housing costs resulting in overworked mothers with full time jobs and tiny children left for long hours in child care. High density hells for low income people. Permanent water restrictions, with people encouraged to spy on their neighbours. Endless fees for things that used to be free, and more and more means testing of benefits. More rules and restrictions. Crumbling infrastructure and public services. More homeless. Prisons and the streets used as de facto psychiatric hospitals... Tell us all how wonderful it is.

You have my sympathy, Divergence.

>>a system based on unending growth of population and/or consumption is bound to crash<<

There is absolutely no doubt that you are mathematically correct in this statement. What you have not allowed for is any change in human behaviour, as a result of adjusting to changing circumstances.

Which is something the human race has been particularly good at over the years. Whether by accident or design, is difficult to tell.

But dire predictions of everlasting doom and gloom have also been with us through the ages. Malthus was particularly voluble on the topic in the dying years of the eighteenth century, Henry Wallace had a good shot at it in the nineteen thirties, and Ehrlich gave it another whirl in the sixties.

I'm pretty confident that there will be a new Cassandra strutting her stuff, every fortnight between now and the sun-death of the universe.

But what is really sad about your post is the long list of ills.

Are you really that miserable? Or have you been watching Grumpy Old Men, and just wanted to let off a little steam?

I hope it is the latter, because no-one needs to be that unhappy with life.

Especially in Australia.

Pericles wrote:
"Are you really that miserable? Or have you been watching Grumpy Old Men, and just wanted to let off a little steam?

I hope it is the latter, because no-one needs to be that unhappy with life.

Especially in Australia."

I'm afraid I have to agree with Divergence. It's pretty much the nature of things where I come from in Victoria and I'm on the South Eastern outskirts of it but still getting hemmed in :(

It was wonderful out here 20 years ago, it's a hell hole now, looking for a country, mountain change! Hopefully, by the time we're hemmed in again, I'll be pushin up daisies and enjoying a well deserved rest :)

At least in the great land of Oz we still have an escape, but for how long?

Pericles,

I note that you don't dispute my long list of urban ills. I accept that conditions are even worse elsewhere in the world, but that doesn't mean that they haven't deteriorated here.

Your picture of conditions always getting better, despite the Cassandras, is more than a little simplistic. I refer you to the work of the Harvard archaeologist Steven LeBlanc. In his book, "Constant Battles", he identifies a recurrent theme in human prehistory and history. People outbreed their resources and overexploit their environment to maintain living standards or just survive. When they become desperate enough, they then try to kill or drive off their neighbours to take what they have. See

http://discovermagazine.com/2003/may/featwar

Times of peace and plenty can occur when new technology or new crops have expanded the carrying capacity, or when there has been a big die-back of the human population, as with the Black Death, but more and more mouths inevitably eat up any surplus and restore the customary level of misery. The average European was taller and had higher real wages in 1400 than in 1800. You are generalising from a very small and atypical slice of human history.

With the benefits provided by the Haber-Bosch process, the Green Revolution, and modern contraception, we have had a chance to stay out of the trap and help others out as well, but it is all being subverted by mindless growthism.

Thanks, Raw Mustard. Your posts are like a blast of fresh air.

Thank you, Divergence. I really enjoy some of the journeys that OLO takes me on, and this was one of them.

Until today, I had never heard of the Haber-Bosch process.

Nor had I ever knowingly read anything from Discover Magazine.

Mind you, from the sample provided, that's probably not a great loss. Sort of Readers Digest, gussied up with faux-demotic familiarity...

"...a grateful Lord will one day wash your tired feet in Paradise. For it is from here, looking east, that you get to see the truth—long known in the scientific community, and as a consequence long kept quiet—that Mr. So-Called Charles Darwin, with his dumb beard and his dumb theories, born 200 years ago this very year, was wrong. Not just a little bit wrong. A lot wrong. Wronger than a bluetick hound on moonshine. Wronger than a Dixie Chick wearing a blindfold. And he could, additionally, be a real pain in the you-know-where about it."

Classic.

But I think I may be missing your point a little.

>>it is all being subverted by mindless growthism<<

Having made the very strong and valid point that civilizations tend to self-manage their growth and shrinkage, are you suggesting that what we are experiencing now is somehow different? Or is it just another go-round of the same cycle?

From the macro viewpoint, you are of course correct in pointing out that decline is ultimately inevitable. Just as RawMustard is perfectly right at his own, micro level, that "it was wonderful out here 20 years ago, it's a hell hole now".

But declines, as you showed us, have never been permanent.

And hey, where did I paint a "picture of conditions always getting better"?

I simply pointed out that despite their overcrowded conditions, large cities around the world seem to continue to rub along. And since it is unlikely that we in our lifetime will see conditions that allow, say, the inhabitants of Kolkata slums to live in the same comfort as yourself and RawMustard, we would do well to consider that we are, comparatively, well off.

Pericles,

I posted the link to the Discover article because it had a discussion of LeBlanc's ideas that was available for free on the Web. Discover is a popular science magazine and doesn't pretend to be anything else. Sneer if you like, but the point is

"The fundamental, underlying reason for warfare is competition over scarce resources," says LeBlanc. "It's not to prove your manhood, it is not to gain prestige, it is not because of inherent genetic blood lust, or anything like that. You're fighting for survival because there are always more people than there are resources. And the only times you have peace are when there are a lot of resources."

Decline is horrific, not a nicely self-managed process. If you doubt this, read some eyewitness accounts of the Irish Potato Famine or the Rwanda Genocide.

You seem to imply that we should feel guilty about wanting some personal space, that we are rich because Third World people are poor. Nothing could be further from the truth, although we should certainly help, if we can do this without making the long term situation worse. The main reason why people are desperately poor in Kolkata and other places is because they as a society made the traditional human choice of putting the benefits of Haber-Bosch (developed in Germany), the Green Revolution (mostly developed in the US), modern medecine, etc. into more babies rather than into development and making poverty history. South Korea, on the other hand, went from poorest country on Earth in 1960 to First World country in 35 years. Taiwan and Singapore made similar advances.