With domestic violence being the latest topic of discussion, costing us billions of dollars, that's billions we have to borrow, if we don't take a hard stand and identify the causes, and address them, we are simply going to go broke. Maybe not in our time, but most certainly down the track. Is that the Australia we want to leave to our children.

All this money gets continually thorn at the symptoms, yet the best solution is to identify the cause, then treat that.

Political correctness has our leaders and lawmakers hamstrung and as a hard working tax payers, seeing my taxes being CONTINUALLY piss up againstbthe wall, I say its time we had some leaders with real balls that want to have a go, not just sound mean and nasty whikenthey the cameras are on them.

I don't work as hard as I do and pay as much tax as I do to fund preventable societal problems at seem to be reoccurring time and time again.

WTF do you mean by "go broke"?

Australia is a sovereign currency issuing nation. We can't run out of money, as we have unlimited credit.

Why dont you stand for Parliament butch?
Id vote for ya.

Sensationalism, Scare mongering, Fear mongering.

These are just some of the actions that are associated with Domestic violence. So rather than a rational debate, it becomes emotive. Once it becomes emotive, logic and rationalism goes out the window.

It is true that we do need to examine and determine what the triggers are that lead to physical domestic violence that results in injury or in extreme cases death.

Aidan,

Would you explain, please, what this comment of yours actually means?

"Australia is a sovereign currency issuing nation. We can't run out of money, as we have unlimited credit."

Aidan is an agent of misinformation. Our Govt borrows from OS central banks and the RBA does not create debt free money for us. Our Govt debt is now over $700 billion or nearly half our GDP and our total debt is greater than the USA per capita.http://www.australiandebtclock.com.au/

No one mentions the unfunded liabilities such as pensions and Govt super. That is the real can of worms.

It's the 'unlimited credit' that is concerning. I can understand business enterprises borrowing with a view to make money with the borrowed money; they have no choice, considering the large sums involved. Governments don't make money from their borrowings; neither do individuals, most of whom now seem to be up to their ears in debt.

What happened to 'living within your means'? If you can't afford something, go without it until you can afford it. This applies to individuals and governments.

I totally agree Ttbn.
The first waste of money item to go should be paying for Chaplains to work in public schools, then move on to the waste of money for a plebiscite into gay marriage...the Government should just allow a conscience vote and get on with it themselves.

There are problems in DV that are not seen as significant, so you are stuck with DV. As is said market forces sorts out market prices. So to DV will be also be sorted out when it gets bad enough.

Has there been a shift in the rate we are going broke, or just same same. Turnbull is fighting against Conservatives in the liberal party, that is a sticking point.

Gay marriage, is just one example. They have the means to clean it up themselves.

Of course we are going to go broke. Australians, who ever the hell that describes today, have become so stupid they will even replay their recent totally failed history.

We were stupid enough not to see through that slime ball Rudd, so what have our MPs now done? Only elect his clone Turnbull to the job. What's more, he has a high approval rating, just for looking pretty.

The pair even have the same shiny, greasy appearance, like a bit of chrome that has been wiped by an oily rag. Can their slimy nature even shine through to warn the dills?

It is far too late to avoid going broke now rehctub, we are all for handouts, slimy politicians, & avoiding reality. People have lost that hard edge & work ethic that made us what we were, the only place left to go on a slippery slide is down. The diseases of political correctness, excess welfare, multiculturalism have infected all of western society & we won't take the cure.

When the US can not only elect a fool like Obama, but re-elect him, they have it at least as bad as us. If they actually stupid enough to elect the proven failure of the Clinton woman, it will be time to party, because the end will be nigh.

There are ways to get ourselves out of the current mess (which has occurred in better civilizations than ours). Unfortunately, those ways are too 'old fashioned' to be of any interest to the past two generations, who know nothing about history, cooperation, family and self-help. Too much sneering about the past; too much tertiary 'education' without life experience; too much expecting governments to solve the problem (when they are the least qualified); too much 'me,me,me"; too much wanting for no effort what the previous generations achieved through sheer hard work and determination. The people supposed to be leading are gutless, self-serving midgets, and the people they are supposed to be leading will accept anything as long as they don't have to get it for themselves. Our civilization is on the way out, because of too many smart A's, and too few doers.

How anyone can think we don't have a debt problem is beyond me.

While our debt is a percentage of our GDP, the problem is that 8 years ago we had zero debt, and in fact actually had some savings.

What worries me is that the debt we accumulated during Labors governing (not meaning to finger point) was rung up during what was by far the largest boom I have seen in my time, so had we not had the boom, and the debt be the same, perhaps we would already be broke.

Of cause any government from here on in has to attempt debt reduction with one hand tied behind their backs by way of dramaticlly reduced revenues.

To add to this we have emerging funding emergency requirements for the likes of domestic violence, uninvited arrivals, the fight against terrorism, both abroard and now sadly 'home grown', plus, our usual funding shortfalls fir the likes of health, education and indigenous welfare to name just a few. Furthermore we are still funding unavoidable debt, from borrowings because our revenues are no longer able to cope with the enormous costs, all this within a period of next to zero interest rates.

The other huge elephant in the room are the thousands of baby boomers, like myself, who are nearing retirement, although thankfully unless something goes drastically wrong, I won't be a burden.

So to just continually pump billions upon billions into problem areas, without first identifying the causes of the problems we are simply treating the symptoms and ignoring the causes because it appears they are in the too hard basket, yet, they are also preventable in most cases.

And of cause, with the likes of welfare waste, it's always the innocent kids who are missing out, because every single dollar wasted from welfare, was one paid in good faith, by the tax payer, to help the kids, families, or dependent singles. Stopping the cash for all recipients is the first step. No cash, no splash!

ttbn,
The Australian government does not borrow in foreign currencies. It hasn't to any large extent since our dollar was floated, and it hasn't at all since the 1990s.

Therefore, even if our debt were the biggest in the world, we could still borrow more just as easiily as if we had no debt at all. The BRA would never refuse to lend us money if we needed it, and because of that, bondholders can also be 100% sure of getting their money back.

This doesn't mean we should always run deficits. There are often good reasons to run surpluses. But fear of going broke isn't one of them.

And there are ALWAYS good reasons not to waste money. But again, fear of going broke isn't one of them.

Governments often do make money on their borrowings, as the money can be spent on things that make the economy more productive.

"Living within your means" is an INCREDIBLY STUPID policy for a government, as it not only prevents that government from investing in the future, but also forces the economy to shrink. This in turn reduces tax revenue, so more likely than not, the government would fail to achieve that dumb accounting objective anyway.

Cooperation, family and self help are good things, but they're not a cure for the problem of a stagnating economy. More government spending is.

And the worst thing now is the people like you: whinging about the gounger generations' failure to take the opportunities that aren't there any more. Tertiary education is not an alternative to life experience, but a way of enabling life experience!

Governments are best placed to solve the problems because they have the resources that ordinary people don't have (and often don't even have access to). But we do need capable government. When the most able are the least qualified, it's likely to lead to a lot of waste.

Aidan,

Thank you for our response.

Debt is debt, whether in A$ or roubles. Where does Australia borrow, by the way?

What is the BRA?

How does "the government often make money on their borrowings, as the money can be spent on things that make the economy more productive." ? I have never heard them bragging about this.

Why is " " "Living within your means" an INCREDIBLY STUPID policy for a government, as it not only prevents that government from investing in the future, but also forces the economy to shrink." ?

What investment for the future is involved, and how does living within your (the governments) means force the "economy to shrink".
You obviously know something that I don't, and I would appreciate enlightenment.

How is "more government spending" going to cure the "stagnating econommy.? How much and for what target?

People like me: "whinging about the gounger (sic) generations' failure to take the opportunities that aren't there any more. Tertiary education is not an alternative to life experience, but a way of enabling life experience!

I'm not "whinging"; I reckon on about 5 more years, going on my health and and family history. And, sitting on your butt in a university is not, in any way, "enabling life experience!"

Governments are "best placed" to regulate and attend to defence: that's it. The rest should be left to private enterprise.

Always happy to benefit from your vast experience and knowledge.

Adian's first comment made a lot of sense. The Federal Government, as the issuer of the Australian dollar, can always pay for anything it can purchase in exchange for an appropriate amount of that currency.

The Australian Commonwealth Government (a name I prefer) can buy all the underemployed labour and domestic resources available and put them to work provided it can keep inflation under control.

Australia only needs to borrow foreign currency to purchase goods that are not available in exchange for $A. To help with internal unemployment problems some foreign governments will accept $a as settlement. In that case the $A balances become part of the reserves of such country and that government issues their own currency to cover the internal wages and all the other costs.

Some of our bankers prior to the GFC thought it was sensible to borrow foreign currencies short to back long (mortgage) loans. The Commonwealth Government used its high quality ranking around the world to roll over those bank borrowings as they became due, in effect bailing the banking incompetents out.

Within Australia a credit rating for the Commonwealth Government for Australian dollars makes no sense whatever.

Too many people on this site write nonsense about a subject that they understand little about.

ttbn,

Sorry, the BRA is a typo. I meant the RBA.

Australia borrows exclusively on the domestic bond market (though that does depend on what you  regard as borrowing — commercial banks depoosit money with the RBA so that could also be regarded as Australia borrowing).

Contrary to what Foyle said, Australia does not need to borrow foreign currency to purchase goods not available in $A. What we do instead is borrow $A and then sll them to buy the required amount of foreign currency.

The government sometimes brags about some of its infrastructure spending, but because the payback time typically outlasts governments, they're pretty cautious about it. Plus it's something that most people would expect anyway. 

Those who say the government should live within its means" when they really mean it should balance its budget fail lto understand several things abut the economy:
Nearly all  money is debt. Apart form the small fraction that  is physical cash, nobody can save unless someone else borrows.
Having large numbers of people unemployed is bad for the nation. It's bad for social inclusion, it's bad for health, it's bad for skill levels (because most learning is done on the job) and it's bad for business (because when potential customers don't have a reliable income source, they're unlikely to spend much money). But most of all it's bad for the government because they not only have to pay dole, but also forego a lot of tax revenue.
The governments true means are  nothing to do with its budgetary outcome; they're the availability of workers, materials and energy.

(tbc)

(continued)
When the private sector is weak (as it now is) it needs to be confident of its ability to make money before it takes on any staff. If the govenrment tries to spend less in order to  "live within its means", there's even less money available so the private sector is likely to lay off more staff. Combined with the increase in unemployment from the public sector workers/private contractors who were workng on whatever the government was spending the money on, and thre'll be a lot less tax revenue. So cutting in these conditions is very bad for the economy.

Conversely, in the boom time when there's full employment in some areas, a government spending more (because running a surplus, it thinks it has more means) will exceed its true means. It will either have to compete against the private sector for wages and materials (pushing up costs) or hike interest rates or taxes (to deter private investment).

To get the best value for the money it spends, and keep the economy strong, the government should deliberately run much bigger deficits now, and should run (and bank) surpluses in the boom times. We should not let the amount of debt we have affect the size of the deficit or surplus.

"sitting on your butt in a university is not, in any way, 'enabling life experience!'"
When the alternative is long term unemployment, it certainly is!

(tbc)

ttbn (continued)
Governments that confine themselves to regulation and defence will  inevitably fail to solve the nation's problems (including the domestic violence issue that sparked this thread). Public benefits, especially long term ones, will be ignored. Some industries will become less efficient (notably health, where it's generally agreed the public hospitals are more efficient than the private ones for most purposes).

But most importantly, a capable public sector is crucial if we want to ensure public money is spent well. Consider the school halls scheme: a triumph in WA where the state government scrutinised every plan to ensure the money was being spent efficiently. OK in SA, Queensland and Tasmania where the state governments oversaw it. But a scandalous waste of money in NSW and Victoria where the private sector were in charge of everything.

_____________________________________________________________________

rehctub,

Not only has our debt not caused us any problems, but there's no credible mechanism by which it could do in future. If how anyone can think we don't have a debt problem is beyond you, I suggest taking some time out to educate yourself rather than continuing to spread your ignorance.

Your recolection of past events is particularly dodgy. 8 years ago the government were achieving surpluses, but doing so by underinvesting in infrastructure, and by selling assets like Sydney Airport at a fraction of their true vaule. But rather than banking the surpluses, the government announced them and then spent them. And going into the 2007 election, both main parties promised irresponsible tax cuts of equal size.

The next year the GFC hit. It was the biggest bust since the Great Depression. Rudd's prompt action meant we got through it almost unscathed, despite a collapse in mining revenue. Afterwards mining revenue recovered, but the economy was weakened by the RBA board's paranoia about an inflation risk that wasn't really there, and by the Gillard and Abbott governments' irrational attempts to rush back to surplus.

Foyle should apply this to himself." Too many people on this site write nonsense about a subject that they understand little about."

The Govt creates only cash and coins which is lucky to be 1% of the total money supply. Nearly all the money supply is created as debt by the private banking system.As James Rickards notes ,after 40 yrs exponentially more debt must be created now to pay for the debt of yesterday. Our system is now in the last stages of total collapse, that's why they are bringing in the IMF special drawing rights but most people will lose most of their wealth when our currencies collapse.

USA money supply. Cash = $ 1.3 trillion. Deposits = $8.7 trillion. Stocks = $20 trillion. Bonds =$38 trillion. Credit market = $59 trillion. Derivative gambling = $220 trillion.

Our economies are all based on debt and gambling.

Aiden, while I confess I'm no expert in this field, there is little doubt Rudd caused far more harm, than good.

Firstly the stimulus.

While on the surface it seemed like a reasonable idea, the reality is far too much of that money was wasted, and it was wasted because it was able to be wasted as recipients were handed unconditional cash splashes, repeatedly despite evidence that it was being wasted.

What should have occurred was the stimulus should have been by way of a restricted debit card, similar to that used for the 'tools for trade' bonus, whereby restricted goods, along with cash could not be purchased. Many of the poor flushed it down the pokie, grog cigs toilet, while many of the better off reduced their mortgages or stashed it away. Neither of these really stimulated the economy and in fact, once gone it led to hardship in many cases.

The other thing was, it should have had a use by date, a 'use it or loose it' clause as that would have seen it all spent here in Oz, and on essentials. How many newborns all of a sudden owned plasmas.

Then there was the insulation debacle. Again, nothing wrong with the idea, just poorly managed and despite repeated warnings from industry experts,Rudds arrogance assisted in the deaths of four people. In fact, had he been a CEO, we would still be caring for him as we are, only he would likely be in jail.

And of cause his greatest failure, the one that has caused the most harm both here and abroad, his border protection debacle for which we are still paying for and will do for decades to come.

So which part of that is wrong Aiden?
Continued

Continued
This debt you say is never going to be a problem has mostly been incurred during boom times, the likes of never before and now we can't even pay the interest, at a time when rates are at record lows.

While I agree that surplus is not the be all end all, spending on infrastructure, if poorly managed, ar la Rudd/Gillard, will have to come back to bite us one day.

Of cause you and I will be gone when that day arrives, but is that really what you want to leave for future generations to deal with?

We have far far more noses in the trough with far less income and you say, don't worry.

Sorry, but I do worry.

rehctub,

What's your opinion of the govt dolling out $1.4 million "a day" to abuse people on Manus and Nauru?

(Considering the the ADF is now fulsomely chasing away any boat that appears on the horizon)

Reminder of Australia's low low low debt to GDP at the time of the last election - and which you all bang on about as if it was a disaster...look at the graph.

http://www.abc.net.au/news/linkableblob/3727694/data/possum-graph-8-government-debt-as-gdp-data.jpg

Compare it to the rest of the developed world.

Of course, Hockey and Co bumped it up a bit (and didn't even have a GFC as an excuse)...but then he was a particularly dud treasurer in a particularly crap govt.

Butch, it would help if you could get a very basic understanding of economics, instead of simply blaming Labor based on your anti Labor bias. I do not know what you were doing during the 'Global Financial Crises' of 2007/08 but if you were in employment or running a small business at the time, there is a likelihood that it was government action that saved your bacon.

" The election of the Rudd government in 2007 coincided with the global financial crisis and the worst recession since the 1930s.

‘The weakness in the global economy just meant that government revenue, the tax receipts from companies who were no longer making any money, just fell away sharply,’ says Koukoulas. ‘We did have this period of very low inflation, which meant that price increases and therefore spending and profitability were also hampered.’

‘It was obvious that the world economy was going into a very nasty slump, the banking sector was grinding to a halt, banks were failing around the world and Mr Rudd, with advice from Ken Henry as treasury secretary and Glenn Stevens as RBA governor, decided to spend money to try to limit the fallout from what was obviously just horrendous global economic conditions, it was just a miserable time for the world economy. What they did was of course very costly in terms of dollars but obviously very beneficial in terms of economic growth and jobs. A couple of percent of GDP was pumped into the economy and it caused the Budget deficit to blow out to the highest deficit that Australia has ever seen."

http://www.abc.net.au/radionational/programs/rearvision/a-history-of-australian-budget-surpluses-and-deficits/5446434

ABC got it wrong again.
http://www.abc.net.au/news/linkableblob/3727694/data/possum-graph-8-government-debt-as-gdp-data.jpg Our Govt debt to GDP is not 11% . Govt debt is over $700 billion. GDP is $1800 billion which is about 40% of GDP.

This is the best political rant I've seen. It sums up what's wrong with the West. Dylan Ratigan on MSM http://www.youtube.com/watch?v=tL6xpKJgpVw

rehctub,

You don't have to be an expert in that field; if you merely understood that the choice was between more debt and the combination of economic collapse and more debt, you'd conclude that there was (at most) little POSSIBILITY that Rudd caused more harm than good. He prevented a collapse in business activity and tax revenue during the biggest bust since the 1930s, and made each Australian $900 better off.

Some people subsequently wasted their money, but your nanny state restrictions on how the money could be spent would've been a much bigger waste.

The Abbott government set up a Royal Commission into the home insulation scheme in the hope that it would implicate Rudd. It didn't. And while with hindsight the scheme was a debacle, there were two strong positive outcomes: the safety problems in the industry have been fixed, and many homes have been insulated.

Border security is not border protection. Preventing invasion is one of the most important duties of a government, and Rudd did not fail on that. He did fail on border security, but even his policy was better than the current policy. Actively persecuting asylum seekers is far worse than letting them risk their lives at sea.

Most of the debt was not incurred during boom times, but in the time of the biggest bust since WW2. And though in the years after Rudd's intervention the mining industry returned to boom status, none of our other industries did. And the mining industry's successful campaign against the mining tax limited the amount which everyone else benefitted from the mining boom.

Regardless of whether we are taking on debt faster than we pay interest on it, WE CAN AND ALWAYS WILL BE ABLE TO REPAY THE INTEREST ON OUR DEBT.

Spending on infrastructure, even if poorly managed, will never come back to bite us. Poor economic management will in the long term lead to a lower value of our dollar, but there will be no day of reckoning but rather a slow, ongoing process that can be reversed by good economic management.

......What's your opinion of the govt dolling out $1.4 million "a day" to abuse people on Manus and Nauru?

Two words Poirot, Rudds mess, our present government is trying to deal with the fallout.

The other thing you convenient,y forget is that these people arrived uninvited, again, as a direct result of Rudds mess.

Paul, if you go over my post history you will see that I have never had a problem with spending, it's how the spending has been mostly wasted that's my beef.

Another search of my post history will show that I thought Swans endeavor to return to surplus were not only unachievable, but irresponsible. But with a track record lime labor have, who could have trusted them to continue spending money without results.

While I accept the GFC was a real issue, it didn't cause any of the waste, waste we are still paying for today.

I do not know what you were doing during the 'Global Financial Crises' of 2007/08 but if you were in employment or running a small business at the time, there is a likelihood that it was government action that saved your bacon.

I had a butcher shop that was greatly effected, more so from the reaction of the land lord. One thing I can tell you that I had never seen such cues at the pokies (waiting fir the pub to open) and the cigarette counter at Coles. In fact, an operator to,d me one lady spent $900 in one go on fags.

The fact of the matter is that the Rudd/Gillard government was not clever enough to do what they set out to do, and nor was Abbott, and we will pay for that period for decades to come.

Since the last election governments have become too focussed on minor issues and spend more time watching the polls and adjusting accordingly.

As I say, the race to the bottom continues, perhaps Turnbul will be better but only time will tell.

Aidan,

Unless you run a business, have done the homework and are as sure as you can be that you will make a profit after you have repaid the loan, you should not live on debt. I apply this simple code to governments - who do not have any money of their own: they use ours - and to individuals

Yes, I do really mean that governments should balance the budget, as one side of the the political divide often has. You say that "nearly all money is debt" and only a "small fraction is cash". I suppose you are talking about wealth 'on paper'; and, of course, some of us do have to save to that others can borrow. But, no matter what form wealth takes, you have to have it to spend it. If you don't have it, you can forgo you immediate want, or you can borrow it. I maintain that, unless your life depends on it, you don't borrow. "Never a lender nor a borrower be". I don't know who wrote that, but it used to have 'currency' in the 'old days'.

Governments should not spend money they don't have on 'make work' schemes; governments are not supposed to do that, and when they try, they make a total pig's ear of it. Private enterprise is the only creator of jobs. If they see an opportunity for growth and profit, they might very well (and they do when they see their way clear) expand their enterprises and supply more jobs. They might even borrow money to do that, and that's fine: they are not risking public money as politicians do with their unqualified meddling. We are a free enterprise society, not a Marxist collective.

I don't agree with you that the private sector is weak "now". It's still there, rearing to go, but fettered by interfering governments more interested in globalisation and cheap goods (bread and circuses for the plebs) than it is in our own society and economy. We have broken one of the basic rules by separating, further than ever, supplier from the consumer.

rehctub

"Two words Poirot, Rudds mess, our present government is trying to deal with the fallout."

But they're "not" dealing with it.

No-one on Manus has been resettled. In fact more asylum seekers have died on Manus than have been resettled. The Abbott govt, when it took power, decided to halt processing on Manus.

And they only ramped up processing on Nauru when a High Court case came looming into view.

The only thing they have been doing on those islands is presiding over abuse - $1.4 million dollars a day...$280 million dollars a quarter...and over $1.2 "billion" dollars a year funnelled to a couple of companies to do little more than oversee the abuse of human beings.

That's what it is.

You whinge non-stop about your bloody taxes, yet not a squeak about that sort of waste - and that's obviously because you couldn't give a toss.

Catherine Austin Fitts says there are 3 possible outcomes. Economic collapse, war or change.http://www.youtube.com/watch?v=K73gNKjFx0I
Perhaps we'll get all 3.
Very intelligent lady.

ttbn,

"Unless you run a business, have done the homework and are as sure as you can be that you will make a profit after you have repaid the loan, you should not live on debt. I apply this simple code to governments - who do not have any money of their own: they use ours - and to individuals"
If you look at why it's generally sensible to apply that to individuals, you'll see that it doesn't apply to governments. They never die, they never retire, they never become unemployed, and (for sovereign currency issuers like our Federal government) they will never be refused further credit. So instead of planning to eventually eliminate debt (which would be sensible for humans due to their limited lifespan) they should do what's best for their people instead of trying to meet some accounting objective.

And would you say corporations do not have any money of their own? If not, what's the difference?

"Yes, I do really mean that governments should balance the budget, as one side of the the political divide often has."
Both sides of the political divide! The myth the coalition are better economic managers is baseless; it's merely due to their happening to be in power when the economic conditions are right. See http://blogs.crikey.com.au/pollytics/files/2009/09/cashbalance.PNG

"I suppose you are talking about wealth 'on paper';"
No, I'm talking about money. It is not the same as wealth, even though it has a secondary purpose as a store of wealth.

" and, of course, some of us do have to save to that others can borrow."
No, it's the other way round: some of us have to borrow so that others can save. If nobody was borrowing, there wouldn't be the money available to save.

"I maintain that, unless your life depends on it, you don't borrow."
So you think that those not already rich should keep renting even when that's the more expensive option?

"Never a lender nor a borrower be" was said by someone misquoting Shakespeare. The correct quote is "Neither a borrower nor a lender be"...

..."Governments should not spend money they don't have on 'make work' schemes;"
Even when the benefits outweigh the costs?

"governments are not supposed to do that, and when they try, they make a total pig's ear of it."
Who are you to determine what governments should and shouldn't do?

And the Rudd government's stimulus packages kept Australia out of recession, so I'd rate them as an economic success.

Private enterprise is not the only creator of jobs. Many people work for governments and for businesses that have contracts with governments. Who someone is working for doesn't determine the value of the work. We are a mixed economy, and governments can contribute to the success of private enterprise.

Though the private sector is currently weak, of course it is still there and raring to go! But demand is depressed, and that's holding it back. Meanwhile, globalisation is good for the economy, and provides a lot of business opportunities. Cheap goods counteract inflation. But we need to take advantage of these new economic conditions.

You're wrong Poirot, I do give a toss.

I give a toss about our kids leaving school after ten or twelve years not being able to fill out an application form for a job.

I gave a toss about people wanting or needing the most basic of operations, being sent home because the under funded hospital can't cope.

I give a toss about our pensioners, most if whom have paid taxes all their lives, not being able to pay the service call fee to see why their washing machine won't work.

What I don't give much if a toss about are foreigners, mostly Muslims, who have arrived here uninvited, cue jumpers, whinging about how poorly they are being treated, when they are being fed and live without fear if having bombs dropped on them.

So I do give a toss Poirot, I just channel my 'toss thoughts' towards issues at home because I'm a firm believer that charity starts at home.

Now if part of that makes me a racist in your eyes, quite frankly I don't give a toss because my tosses are focussed on trying to maintain our peace loving way of life, the life that I as a kid grew up with, and a life that I now as a grand father would like to see my grand child grow up with, although it too late fior that I'm afraid.

So as you can see Poirot, I do give a toss, just not your toss.

So you keep tossing over the cue jumpers and il Chanel my tosses toward home grown issues, issues that I consider far more worthy of my tossing.

Cheers!

Btw, I have no problem paying taxes, my problem lies with how my taxes are distributed by incompetent people.

Aidan,

Who am I to dictate what governments do? I am an Australian citizen and voter. Judging by your waffle, you are too young to vote. You have been given more than enough chances to explain your eco-babble, but the best you can do is keep repeating the same rubbish and correct a quote you seem to think I got wrong. What a serious and intelligent character you are - not.

Tell you what: I have room left on my idiot-best-ignored list. I'll add you to it.

ttbn, I too am an Australian citizen and voter. And the majority of voters in Australia reject your very limitedl government ideology, especially when it comes at the expense of practicality.

As for my "eco babble", I have explained why what's arguably a ggod policy for people is an extremely bad policy for governments. If my explanation is in any way unsatisfactory, tell me what you think the flaw is in my reasoning and ai'd be happy to discuss it further.

But I get the sense that your objective is to maintain your existing beliefs; like Arjay you won't seriously consider any evidence to the contrary. Or possibly even that you regard accounting outcomes as more important than real outcomes, and would prefer to put a million people out of work than for the government to borrow money.

Gawd, I go away for a few days and you all get yourselves into this mess.

Ignore Aiden, he is living in a Business as Usual world.
We are borrowing $1000,000,000 a month, that alone is enough to worry about.
GDP is on its way out so there will be no point in arguing GDP ratios.
Sooner or later someone will want their money back, and they may want
it in Remebis however you spell it.
China no longer trusts US$ so they won't want that.
They may just foreclose.
Sometime in the next year or two Australia will join Germany and others
in the zero growth club.
Worse, we may not be able to pay the Singapore refinery for our petrol & diesel.
I again draw your attention that oil & coal production has started to
fall and it will affect nearly all countries, with a collapse of a few
countries very much on the cards.
The real experts, I am just an echo chamber for them, believe that
when the price starts rising again most countries will go into a
recession, some worse than others.

How will Australia handle the extra expense of high unemployment ?
By that time printing money will just mean massive inflation.

Unless we stop exporting our coal & gas we will not have the means
to build the next energy system whatever that turns out to be.
There is a distinct possibility that there will be no solution.
I doubt we can afford a fleet of nuclear power stations.

Now a lesson in reality: Energy is the key to all production !
Whether it be food or manufactured goods or anything you can think of.
Forget money, the only energy it produces is when you burn it.
Our world wide problem was trigged off in 2008 by peak oil in 2006
and we have been fiddling with the problem ever since.
Fortunately there is gradually now an understanding by more economists
that money is not the answer. Maybe the pollies will listen to them.

rehctub,

"You're wrong Poirot, I do give a toss.

I give a toss about our kids leaving school after ten or twelve years not being able to fill out an application form for a job.

I gave a toss about people wanting or needing the most basic of operations, being sent home because the under funded hospital can't cope.

I give a toss about our pensioners, most if whom have paid taxes all their lives, not being able to pay the service call fee to see why their washing machine won't work."

Which, of course, all sounds rather altruistic and dripping with social consciousness and inclusion...except that you forget that I've followed your ramblings for quite some time here on the forum - and I know that you don't "usually" give the faintest damn for those you consider lower down the social order than your bourgeois self.

Have you turned over a new leaf?

"What I don't give much if a toss about are foreigners..." - yes that sounds like you...straight out of the Alf Garnett school of bigoted blathering.

"Btw, I have no problem paying taxes, my problem lies with how my taxes are distributed by incompetent people."

Well, paying a couple of companies $1.4 million a day to preside over abuse, would come under that umbrella, I should think.

Bazz, the reason I'm living in a business as usual world is that there is nothing to stop business from carrying on as usual.

You may be alarmed at our borrowing figures, but if you base your opinions on opportunities and threats rather than instinctively baulking at big numbers, there's really nothing to worry about.

We don't owe our creditors RMB. If they want yuan, they're free to buy yuan, but the Australian government does not owe our creditors anything in any foreign currency.

If we try to implement austerity then we may join other countries in the zero growth club. If instead we stimulate the economy, our economy will continue to grow. It really is that simple.

Of course we will be able to pay Singapore for our petrol and diesel! Our exports effectively pay for our imports. Should the value of our exports fall and the value of our imports rise, the market will adjust the value of our currency until it balances again.

Now a lesson in reality: the sun supplies us with an enormous amount of energy.

"Unless we stop exporting our coal & gas we will not have the means
to build the next energy system whatever that turns out to be."
How would stopping exporting our coal and gas help us exploit solar energy?

Aidan,

"If we try to implement austerity then we may join other countries in the zero growth club. If instead we stimulate the economy, our economy will continue to grow. It really is that simple."

Ask Bazz to look at the graph - and tell him that all those European countries (with debt to GDP that dwarfs Australia's) implemented austerity in the wake of the GFC.

http://www.abc.net.au/news/linkableblob/3727694/data/possum-graph-8-government-debt-as-gdp-data.jpg

.......Well, paying a couple of companies $1.4 million a day to preside over abuse, would come under that umbrella, I should think.

Too right Poirot, and I doubt I have to remind you that this is one of Rudds messes, conveniently left for others to manage, and the likes of you to criticize.

Now just on my attitudes geared others.

I'm sorry, but I don't care for single mothers who have six children to five fathers. Nor do I care for the wellbeing of doleblugers who whinge and complain about their dole cheque not streching far enough to provide them with booz and gigs for the whole two weeks. Nor do I care for those who scam the system by needing a full time cater on the off chance their knee might give out, when wheelchair bound people are seen working a checkout at the local K Mart.

The people I have no time or respect for Poirot are those who think the world owes them a living.

The people I do respect, are those either rich, poor or in-between, who try their level best and share the heavy lifting.

As for austerity V stimulus, you forget those European countries didn't have a mini g boom the likes unseen before.

So taking that boom away, where do you think we would have ended up under Labors watch?

You conveniently forget there is a huge difference between productive stimulus and waste.

rehctub,

"... Nor do I care for those who scam the system by needing a full time cater on the off chance their knee might give out..."

What a load of baloney - who gets a full time carer for a dicky knee?

Disingenuous of you.

"As for austerity V stimulus, you forget those European countries didn't have a mini g boom the likes unseen before."

You're a bit mixed up there, rehctub...Costello is the guy who failed to take advantage of the resources boom - giving most of it away in tax cuts and middle-class welfare (which is hard to shift once impemented and it's still with us)...he also sold our gold hoard at bargain basement prices, I believe. Also about two-thirds of the Howard govt's surplus was down to them selling off the countries prime assets, Telstra among them...but let's not talk about that.

Every respected domestic and international economist has recognised Australia's early and strong stimulus as the prime factor in our economy not missing a beat and us riding the GFC aftermath in healthy fashion....not that you'd ever admit it.

I'm sure you'd rather have seen us implement austerity like most of Europe did - and slump into recession - like most of Europe did.

We avoided recession (sorry about that)

No Poirot, we paid our way out of recession and it what all those hundreds of billions DIDN'T ACHIEVE that pisses me off.

Like it or not history shows that both the Rudd and Gillard governments resided over failure after failure and left unfunded bombs like the NDIS and the illegals for others to clean up the mess. The Abbott government tried to pull so e back but the people who enjoyed the win fall hand outs from Rudd wouldn't have a bar of it.

As for Howard selling our assets, yes, I agree with you on that, but ask yourself Poirot, why did he sell them? He sold them to pay down what was then massive debt accumulated from Labors mismanagement, there's a pattern there Poirot, can you see it?

As for dodgy caters, I've seen it first hand where a guy has a dodgy knee and his wife gets a full time pension just in case his knee gives out.

I also know a guy with a crook back, not broken like mine, just crook. He has nit worked for thirty years and says to centerlink, will you take liability for me if I return to work and become a cripple. He does work, but only for cash.

As for middle class welfare, how dare anyone give anything to those who actually contribute. Shame on them the spoils should be shared among those single mums with kids to multiple fathers, or those dole bludgers who continually scam the system or even our indigenous folk who live in remote areas where there is no prospect for work. Then again there's those uninvited guests that only came here for the gravy train.

Yep, we shaw are the lucky country Poirot, especially if you are one of the non contributors with their noses in the trough having made their way of life a generational problem.

Continued

As for austerity, many today are facing bankruptcy owing hundreds of thousands instead of tens of thousands thanks to Rudds stimulus.

We will go into recession, but it will now be huge. Houses that were a few hundred grand back in 08 are now millions and given many owe 70% of millions rather than 70% of say 200 K it's gunna hurt big time.

The best way to fix this country is to stop the handouts and make everyone do the lifting.

You want six kids, fine, but don't expect the tax payer to raise them.

We must put a stop to the entitlement mentality.

Senator Lamby might be on to something there.

rehctub,

"We will go into recession, but it will now be huge. Houses that were a few hundred grand back in 08 are now millions and given many owe 70% of millions rather than 70% of say 200 K it's gunna hurt big time."

On that point, I'll let Saul Eslake reiterate the answer he so kindly gave to you in 2014:

"....Although I didn't say it yesterday, I would certainly support the abolition of negative gearing as making a useful contribution to reducing the budget deficit.

I agree that 'negative gearing' DOES encourage investment. Unfortunately, the investment it encourages - which is, overwhelmingly, the purchase of existing housing - does nothing to increase the supply of housing, but serves merely to inflate the price of exisiting housing and thus worsening affordability conditions for would-be home buyers."

And this from Saul to Bazz on the same thread:

"....the reason that 'negative gearing' was brought back a short period after having been abolished in 1986 was in response to please from the NSW Labor Party which was about to lose the 1988 State election. Ever since then, defenders of NG have pointed to what they say happened as a result of its temporary abolition - that it 'caused' a surge in rents, and that the same thing would happen again if NG were to be abolished again.

Rents did rise in Sydney and Perth at this time - but that was because vacancy rates in both cities were less than 2%. In other words, rents would have risen anyway, whether NG had been abolished or not. If abolishing NG had been the 'cause', rents should have escalated in other parts of Australia as well - but they didn't.

So this assertion by proponents of 'negative gearing' is actually an illustration of what Josef Goebbels is supposed to have said, namely that if you repeat a lie often enough, and the lie is big enough, people will come to accept it as the truth."

rehctub,

Nice to see you're back to your old self and castigating the lower orders - (of which you as a middle-class butcher appear to believe you've risen to aristo class:)

"The best way to fix this country is to stop the handouts and make everyone do the lifting.

You want six kids, fine, but don't expect the tax payer to raise them.

We must put a stop to the entitlement mentality."

How about these folks?

"Superannuation carries taxation concessions which primarily benefit the rich, with the top 20 per cent of income earners accounting for 58 per cent of superannuation tax concessions, including concessions on earnings," it says.

"The government should reconsider providing taxation incentives for superannuation whereby contributions up to a certain amount attract a concessional rate. This benefits high-income households the most, contributing to equity concerns."

http://www.smh.com.au/federal-politics/political-news/superannuation-tax-concessions-benefit-the-rich-committee-for-economic-development-of-australia-20150831-gjbpq9.html#ixzz3pzyQm2OJ

More "leaners" here:

"The latest tax statistics show 75 ultra-high-earning Australians paid no tax at all in 2011-12. Zero. Zip.

Each earned more than $1 million from investments or wages. Between them they made $195 million, an average of $2.6 million each.

The fortunate 75 paid no income tax, no Medicare levy and no Medicare surcharge, even though 60 of them had private health insurance.

The reason? They managed to cut their combined taxable incomes to $82. That’s right, $1.10 each."

http://www.smh.com.au/comment/budget-pain-not-for-millionaires-who-pay-no-tax-20140511-zr9o3#ixzz3pzzjs96A

As for a recession - I've yet to here you once criticise failed Liberal treasurer, Joe Hockey...under whose tenure there was added over $140 billion to our net debt.

Over $140 billion!

Added in debt!

In two years!

You don't cut Rudd any slack for the GFC so I'm not about to cut Eleventy Joe any slack for the resources downturn. If our economy has headed south (and it has since the LNP took over) - then it's down to the pathetic governance of the Abbott/Turnbull govts.

Just as a matter of interest, I want to back up this statement by Saul:

"Rents did rise in Sydney and Perth at this time - but that was because vacancy rates in both cities were less than 2%."

Absolutely true! We were looking to rent in Perth in 1986. The vacancy rate at that time was 0.7%. There were long long lines outside every house for rent at viewing times.

We finally got one - (but that's because we're charming : )

Aiden, yes stimulation does work, although economists are now wondering
why neither stimulation or austerity no longer work as they used to in bygone times.

For the economy to grow it just must have increased energy deployed.
Now, if you do not have extra energy available you cannot get growth.
This is a basic fundamental.

You said:there is nothing to stop business from carrying on as usual.

BAU requires growth, because it operates with the use of credit.
Credit is a promise on future work.
However the future work has to be an increase in work & energy.
It is necessary to repay interest and capital.

The catch22 is that the increased energy is/will not be available.
This then relates to why we need to reserve our fossil fuels for our
own use to build the next energy regime, whatever it is.

Sure the sun can supply lots of energy but how do we build the next
energy regime without using fossil fuels ?
As yet no one has an answer to that.
Also the sun does set and there are calm days & nights.
So how big a solar/wind system do we build to cover how many overcast
still days complete with battery backup ?

To cover those overcast days we need
number of days X one day capacity plus one.

Do we cater for a week of overcast, then what happens if there are
9 days of overcast.
Are we able to invest seven times the cost of one days generation ?

What we need is a real base load facility. Nuclear is the only option
at the present time.
However any base load system will fill in all those overcast days.

The upshot is we are in a world declining production of all fossil
fuels, natural gas being a temporary exception, but Australia is in
a fortunate position as far as coal is concerned but we must make
sure we have enough to build the next energy regime.

This is an absolute priority if we are not to go back to the 19th century.

rehctub,

"Like it or not history shows that both the Rudd and Gillard governments resided over failure after failure..."

I can't help it if you're a partisan economic illiterate - but let's take a look at Australia's economic well-being after the GFC - the greatest global financial crisis since the Great Depression.

Apart from our economy not faltering and ending up with a 3xAAA rating, let's compare our debt to a few of those gung-ho for austerity economies (that you reckon we should have emulated)

Debt% to GDP (time of last election):

Australia - 11%

New Zealand - 31%

Canada - 36%

Germany - 44%

Spain - 52%

United States - 61%

France - 67%

United Kingdom - 86%

Belgium - 97%

Italy - 109%

Greece - 148%

Japan - 190%

To name by a third of the countries on that graph I posted.

So we came out of a global financial meltdown with added debt...well I'll be!

We still kept out AAA rating with three top agencies.

In comparison the Hockey/Abbott govt delivered this in two years:

Govt debt was $273 billion and is now $402 billion.

Unemployment rate was 5.6% now 6.2%.

Wages growth was 3.0% now 1.2%

Private investment is way down.

Consumer confidence is down.

Business confidence is down.

The biggest mistake of Labor prior to the election was to take the bait and rabble-rousing from the incompetent Opposition on debt. Hockey promising a surplus in the first year and every year after - ROFL!...added to all the other outright lies delivered by Abbott and his cronies in Opposition.

Rehctub, there needs to be a shift in emphasis in discussions, not
just here either. There is too much reliance on past techniques both
financial and technical.
The world economy is undergoing a major shift that is rewriting all the rules.
Economists are not really aware of this and still believe all problems
can be solved with money fiddling.

Most people do not realise what set off the big financial bomb in 2008.
The financial people built a house of cards that was fine until a
card fundamental to the structure was pulled out from under it.
When peak crude oil occurred in 2006 the price started rising slowly
until 2007 when a tightness in the oil market became apparent.
As the price rose during 2007 and early 2008 people started defaulting
on their mortgages until July 2008 when the price reached US$147 a barrel.
The economy could not afford that price and the sub-prime housing
loans fiasco collapsed taking the banks with it.
Joe six-pack as they called him, could not afford to pay his mortgage
and the defaults rose through 2007 & 2008.

This was a lesson that governments, economists and business did not learn.
There almost certainly will be a repeat sometime in the next five years.
The fundamental rule is "No increase in energy, no growth".

Bazz,

(Genuine question) What's your opinion of the stories circulating that Saudi Arabia is set to go bust within two years or so?

http://www.smh.com.au/business/comment-and-analysis/saudi-arabia-may-go-broke-before-the-us-oil-industry-buckles-20150805-gism05.html

"Saudi Arabia is effectively beached. It relies on oil for 90 per cent of its budget revenues. There is no other industry to speak of, a full fifty years after the oil bonanza began.

Citizens pay no tax on income, interest, or stock dividends. Subsidised petrol costs twelve cents a litre at the pump. Electricity is given away for 1.3 US cents a kilowatt-hour. Spending on patronage exploded after the Arab Spring as the kingdom sought to smother dissent."

"The International Monetary Fund estimates that the budget deficit will reach 20 per cent of GDP this year, or roughly $US140 billion. The 'fiscal break-even price' is $US106.

Far from retrenching, King Salman is spraying money around, giving away $US32 billion in a coronation bonus for all workers and pensioners.

He has launched a costly war against the Houthis in Yemen and is engaged in a massive military build-up - entirely reliant on imported weapons - that will propel Saudi Arabia to fifth place in the world defence ranking."

"Money began to leak out of Saudi Arabia after the Arab Spring, with net capital outflows reaching 8 per cent of GDP annually even before the oil price crash. The country has since been burning through its foreign reserves at a vertiginous pace."

(Much more info on the machinations in the article)

Bazz, if Joe Hockey couldn't afford to pay his mortgage, I'm sure Labor would've got maximum political milage out of it. But I find it extremely unlikely, as Joe's rich.

And if you're trying to use it as a metaphor than you're trying to spread a vicious lie. Vicious because the Australian economy, and indeed many other nations' economies, have been damaged by trying to implement policies based on that lie. The truth is that Australia can and does pay all our debts. Furthermore, even if our debts were bigger than those of Greece, we could still pay them easily because (unlike Greece) we have unlimited credit.

"...although economists are now wondering why neither stimulation or austerity no longer work as they used to in bygone times."
Austerity has never worked for this purpose. It works when there's a shortage of real resources, but at the moment there's a glut so it can't do anything other than harm the economy.

Stimulating the economy works and always has done, but if the stimulus is not big enough than it can be counteracted by other factors. Exactly the same as in bygone times.

"For the economy to grow it just must have increased energy deployed."
Not necessarily, as energy expenditure is not proportional to value.

"Now, if you do not have extra energy available you cannot get growth.
This is a basic fundamental."
Except that it's not true. If you do not have SUFFICIENT energy available than it's very difficult to get growth. But Australia's energy use peaked in 2009.

And hypothetically, even if future work did require an increase in work and energy to pay interest and capital, the amount needed could be cut by cutting the interest rate.

The need to reserve fossil fuels for our own use is a red herring. We don't have, and aren't in danger of having, anything like the severe shortage of them that would dent our ability to "build the next energy regime"

The requirements for moving to 100% renewable energy are irrelevant to this thread. We can discuss it some other time.

Aidan,

"Bazz, if Joe Hockey couldn't afford to pay his mortgage, I'm sure Labor would've got maximum political milage out of it. But I find it extremely unlikely, as Joe's rich."

I don't think Bazz was referring to "our" Joe...but since you've brought him up in connection with his mortgage, I have to include this observation, especially in connection to rehctub's comment:

"We must put a stop to the entitlement mentality."

Which brings us to Joe Hockey's "nice little earner" of claiming $271 from the taxpayer for every night he spent in his wife's property in Canberra.

(well her name is on the title at least, but we all know it's his too)

Entirely within "entitlement" of course, his accommodation allowance paid around $46,000 off his wife's mortgage.

Great eh!

And, as you've pointed out, he (and she) are RICH!

Now he's (most likely) off to "double dip" from his parliamentary pension while vacuuming up his wages from his sinecure as Ambassador to the US.

Not bad for the most failed treasurer in Australia's history.

Poirot, Saudi Arabia is worried by the drain on their finances.
In a recent month they drew down $US70 billion. It appears that they
have about $US700 billion tucked away. I cannot guarantee that figure
I just read it in an article somewhere.
The Saudi government has banned the buying of new cars and furniture
by the Princes and government offices.
I am sure that will break their heart.
Nevertheless they are worried. They are hoping that the US tight
shale companies will fold. Some are already declared bankrupt and many
have ceased operations. Operating rigs have fallen from 1600 to about 600.
It will however take another year before most would have to stop.
It all depends on the price. It is down now because the economies
could not afford the $80 plus and wound back demand.
This was predicted in 1994 by Colin Campbell & friends.

As Saudi Arabia is believed to have peaked they cannot turn the screws
any harder and now the US has started selling their strategic reserve
which will turn the screw on Saudi another notch.

Aiden said:
"For the economy to grow it just must have increased energy deployed."
Not necessarily, as energy expenditure is not proportional to value.

Well that is correct and some energy sources are more effective than others.
We use fossil fuels because they produce a lot of energy for the input.

However if there is no increase there will be no growth.
Otherwise what will power the growth ?

Our oil based energy is almost zero and we must buy it from Singapore
Korea and Taiwan. That will disappear if we are outbid.
No one is even suggesting that we build a Topisch-Fischer coal plant
to at least supply some liquid fuel for emergency services.
The decline in crude oil production will overpower any shale or
oilsands production in just a few years time.
Alternatives take years to design & develop and we may not have many years.

Bazz,

Sorry about the Joe confusion (I assumed six pack to be an ironic nickname).

"However if there is no increase there will be no growth.
Otherwise what will power the growth ?"
There are two ways growth can occur Despite no change in the energy input. The first is greater efficiency. The second is increasing the value of the products.

"Our oil based energy is almost zero and we must buy it from Singapore
Korea and Taiwan. That will disappear if we are outbid."
Our oil energy is far from zero, and as for the imports, if we're outbid on one tankerload we just bid more for the next one.

"No one is even suggesting that we build a Topisch-Fischer coal plant
to at least supply some liquid fuel for emergency services."
Because we don't need to. But there are plenty of potential unconventional fuel suppliers who'll produce it if the price is right.

Aiden, our oil production is now below 400,000 barrels a day down from
1,000,000 a day. As it is continuing to fall there was no economic
sense in operating some six or seven refineries.
The last will close either next year or the year after.

Effectively we are not an oil producer. We sell it off.

You said:if we're outbid on one tankerload we just bid more for the next one.
Yeah sure ! Deep pockets have we ?

Just for Sydney we require two oil tankers to arrive EVERY day.
We cannot afford to miss a bid and wait another day.
We have almost no storage, just several days, plus what is the service stations.

Regarding efficiency Mr Jeavons in his Paradox had something to say about that.
Greater efficiency results in higher consumption, not less.

You said:Increasing the value of the products. !!

That is applied magic. Fiddling with money values producing higher
numbers produces nothing. It used to be called inflation !

Bazz,
I never sad there was economic sense in operating six or seven refineries. But where did you get the idea that the last will close in 2016 or 17? I thought we were now down to three, only one of which has announced a planned closure. And there are even plans to build another at Gladstone - see http://www.abc.net.au/news/2015-05-19/plans-for-oil-refinery-in-gladstone/6480980

Yes we do have deep pockets! Australia is a rich country - had you failed to realise?

Selling oil off is generally what oil producers do.

"Regarding efficiency Mr Jeavons in his Paradox had something to say about that.
Greater efficiency results in higher consumption, not less."
In absolute terms, all other things being equal, that is true. But combined with an energy shortage of even just a substantial increase in the energy price, it would result in less energy consumption.

"You said:Increasing the value of the products. !!"
Indeed I did, and I meant it. You seem to think I meant increasing the PRICE of the products. Are you really not aware of the difference?

Ar Poirot, good old Saul.

For an economist, assumably a clever man, to suggest negative gearing on old homes doesn't stimulate new housing is just a joke.

Is he suggesting people who sell their used home, simp,y buy another used home yea right!

Some people actually sell their multi million dollar home, buy a down size home, then buy a few investment homes, which in turn stimulates housing.

As for the big end getting tax breaks on super, are you aware super contributions are capped depending on your age?

So a young go getter on say 2 million a year can pay about $9,000 into super before paying more tax, considering the jobs they create, are you seriously concerned about the 35cents in the dollar on nine grand. Give me a break.

As for other economies, I again remind you that these economies didn't have a mining boom to fall back on.

As for lack of business confidence, the mining tax and the carbon tax put a huge hole in that, and given Abbott was so bad in the end and Shorten stated he would look at bringing them back, business went a bit gun shy and how could we blame them for that.

rehctub,

"Ar Poirot, good old Saul.

For an economist, assumably a clever man, to suggest negative gearing on old homes doesn't stimulate new housing is just a joke."

Well that's a first...Mr Butcher is patronising one of Australia's foremost economists.

ROFL! - you don't see that every day.

"Mr. Saul Eslake is an Australian Economist at BofA Merrill Lynch, Research Division. From 1995 to August 2009, he served as the Chief Economist at Australia & New Zealand Banking Group Ltd. He served as the Chief Economist of National Mutual Funds Management (now AXA Australia), McIntosh Securities and Merrill Lynch International (Australia) Ltd. Earlier, he served as the Chief Economist at The National Mutual Life Association of Australasia Limited....' etc

http://www.bloomberg.com/research/stocks/private/person.asp?personId=42721343&privcapId=100415941

"As for other economies, I again remind you that these economies didn't have a mining boom to fall back on."

In the case of our immediate and successful response to the GFC - that's a load of old cobblers.

But I'll leave you to it - you're a lost cause : )

Poirot and rehctub,

So many prominent economists talk absolute crap that "patronising one of Australia's foremost economists" is quite reasonable.

However, the claim that "For an economist, assumably a clever man, to suggest negative gearing on old homes doesn't stimulate new housing is just a joke" doesn't stand up to scrutiny. How does it add to the supply other than by increasing house prices? And wouldn't increasing house prices add as much to the supply even if negative gearing were not available?

But Poirot's right on the other matter: we didn't have a mining boom to fall back on. Commodity prices crashed in the GFC, temporarily ending the mining boom.

So what you're both saying is that people who sell second hand houses only buy more second hand houses. That's simply not true.

In fact, many investors buy brand new so they can claim maximum deorectiation.

As for NG, I even suggested that perhaps there needs to be a 'return to profit' test, that basically states that the property purchased must be posetively geared within say ten years.

What this would do is eliminate the property banking that goes on whereby investors use built up equity in one proerty to fund the next, continually, eventuating in multiple properties all with a debt ratio of 80% and all receiving negative gearing benefits. Low interest rates have assisted this.

Another option is to implement laws that state that in order to receive NG credits, the loan must be P&I. This again would be a game changer but assist those who genuinely want to invest, but remove the property barrons who in my view do abuse the system.

I'm sure that was never the intention of negative gearing.

rehctub,
"So what you're both saying is that people who sell second hand houses only buy more second hand houses."
I'll let Poirot answer for himself, but that's not what I'm saying at all. I'm saying that the people who sell second hand houses would sell them whether or not the buyers were buying to let.

FWIW personally I think the best solution would be to retain negative gearing but have a broad based land tax to replace GST and stamp duty. Unfortunately phasing that in without unfairly disadvantaging existing property owners would take decades.

...... I'm saying that the people who sell second hand houses would sell them whether or not the buyers were buying to let.

Aiden, that doesn't make sense because the debate is about Mr Eastlake suggesting that negative gearing does nit stimulate the new housing market. Untrue.

Poirot, while I accept your opinion on Mr Eastlake, the fact is that most economists tend to sit between business and governments when it comes to opinions.

Business usually try's to predict the future, the recent bank intreats rate hikes are a prime example because they see pain coming. Government acts on data, and this data is 'old news' because it's already happened, eg, the data released for the Setember quater. Economists use a mixture of data (old news) and predictions, eg, they have an opinion on whether or not the reserve bank will touch rates, but when talking about issues like housing, they generally rely on data, eg, building approval rates.

Again, when building approval rates drop for a quarter, business (builders etc) have alrady acted.

Mr Eastlake is very much against negative gearing, yet refuses to accept that if we remove incentives for investors to invest in housing, two things will happen. Actually three.

The first thing is that less houses will be built, and this will effect the building and it's support industries. The second is that renters will compete with renters, meaning more tenants and less houses, price increase!

The third, and in my opinion the complete unknown is that oncebthe investors leave the market, banks will most likely firm up their lending criteria by insisting borrowers go back to the 80's (coincidently ore NG days) so borrowers may require 30% deposits again, effectively reducing any real benefit from what should by all means be a reduction is over all house prices.

Let's face it, 10% of $600K is the same amount as 30% of $180K and houses won't drop that much.

So I'm sorry if I don't agree with one of our smartest, but that's life and I think I've given a pretty good reason as to why.