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Co-payments and inept budget messaging put Coalition in a hole

What’s the purpose of the Medicare co-payments? It’s a good question that not even the government has been able to answer in its shambolic efforts to sell the budget

Quick, informed, engaged Crikey reader, tell me — what’s the purpose of the Medicare bulk-billing co-payment?

Is it to help address the budget emergency?

Is it to provide a price signal to change behaviour to ensure Medicare is, in the long-term, sustainable?

Is it to fund a vast medical research fund that will eventually, at some point perhaps in the 22nd century, reach tens of billions?

Is it because Bob Hawke wanted it and Labor was a proper reformist government prepared to take tough decisions unlike this mob opposite right now, Madam Speaker?

If you picked any of those four, you’d be right, because all four have been repeatedly offered by the government as justification in its shambolic efforts to sell the co-payment and the budget more broadly to voters.

The government has been ringing the changes this week in its efforts to sell the budget. The fact that it actually still needs to sell it is testimony to how badly it has gone down with voters. By this stage of the political cycle, in recent years, we’d already moved on to other matters —   usually whether Julia Gillard was about to lose her job. But the media cycle stolidly refuses to move on from this dog of a budget.

So, this week, Joe Hockey dropped out of the budget sales pitch — apart from breakfast TV appearances yesterday, he’s kept a low profile this week, leaving the selling effort to the Prime Minister. Peter “the black hole” Dutton stepped up his efforts on the co-payment, including with a National Press Club address. Christopher Pyne also tried to lift his game in selling his laissez-faire education changes, only to cause another stuff-up for the government when he opined that it might be a good idea to chase the estates of dead people for their higher education loans.

Pyne (and Hockey, who in one of his few outings supported him) is entirely correct — there’s no reason why higher education loans should be treated differently to other loans. No reason except the political reason that it’s a shocking look, especially for a government that has already created the impression it views itself as an instrument of Old Testament fiscal justice raining down on the just and the unjust alike. Forget all those nasty, offensive “poodle” references — in chasing dead graduates and his Gonski debacle last year, Pyne is starting to look a lot like the loaded dog of the government.

One of the other changes was in its question time tactics, where the government, via Abbott and Hockey, tried to shift the argument back to the budget emergency (which, actually, the government has already won) by explaining how irresponsible Labor had been and how responsible the budget was for Australians. The result was a blizzard of numbers. Consider this answer to a Dixer from Hockey:

At the moment we are paying a billion dollars a month—one billion dollars every month in interest on the debt that Labor has left. This would be $2.8 billion a month in 10 years time if nothing is done. That is $2.8 billion a month in 10 years time if nothing is done about the state of the budget. Under the legacy of the previous government, each Australian’s share of the interest would be $9,400 over the next 10 years. In four years time alone, if nothing is done, every single Australian will be paying the equivalent of $740 in interest alone on Labor’s debt—$740 each.”

That’s four separate numbers in mere seconds. During the week, the government tried out a variety of figures. Hockey talked about “$25,000 for every man, woman and child in Australia” the following day, as if holders of Australian bonds would be coming a’knockin’ on the door of every house to demand repayment of Labor’s debt, or they’d send the bailiffs in. Abbott tried “$1 billion a month of dead money”. Hockey used both. Then yesterday Abbott produced yet another figure, saying “a family of four would face a $100,000 share in Labor’s debt bill”.

This was a favourite trick of the Howard government — invent a number (say, about the cost of taking action on climate change) and divvy it up by population to warn that “every man, woman and child” would be up for some hideous debt. Except, the Howard government realised you need to stick to one number when using this tactic, not seven.

The other argument, on the co-payment specifically, was that it was a Labor idea, because Bob Hawke had introduced it. They skipped the bit where Paul Keating capitalised on the febrile reaction to the co-payment (which, in Hawke’s version, didn’t apply to pensioners and was accompanied by compensation) and used it as one of his weapons for blasting Hawke out of the Lodge. Perhaps Malcolm Turnbull remembers that particular bit. But Bob Hawke was “the father of the co-payment”, the government kept repeating, and yesterday it insisted Jenny Macklin — who back then was an adviser to then-Health Minister Brian Howe — was the “mother of the co-payment”.

Well, thank goodness the co-payment wasn’t reared by a single parent or same-sex couple.

That the Coalition brains trust seriously thinks this will be a compelling case for voters deeply hostile to the co-payment illustrates either their desperation or the profound loss of the sure populist touch they had in opposition. It’s reminiscent of a desperate John Hewson defending his GST in 1993 by arguing Paul Keating had wanted one in 1985. “And we decided it was such a bad idea we never introduced it,” Keating would shoot back.

News Corp has been doing its best to help out: today The Australian splashes with an “exclusive” (naturally) that “senior Labor leaders” supported a co-payment. Gamechanger! Who were these senior Labor leaders? Bill Shorten himself? Chris Bowen? Or maybe Kevin Rudd or Julia Gillard or Wayne Swan in the former government? Well, as it turned out, the “senior Labor leaders” (sic) was Peter Beattie, in 2005, who considered charging payments for hospital admissions. We’ve all seen some desperate efforts to support the Coalition over the years from The Oz, but for sheer WTFness, this was a new high, even before you thought through the logic of the story, which was that Tony Abbott as federal health minister had, erm, blocked the proposal.

Still, at least it was only nine years ago, not 23.

The government might want to try the tactic of just shutting up. Its efforts to sell the budget, far from helping, are making things worse. Time to stop digging.

52
  • 1
    Dez Paul
    Posted Friday, 30 May 2014 at 1:36 pm | Permalink

    Be careful, BK. This gumint might offer you a job as a comms consultant.

    Love the reference to Poodles as the loaded dog….

  • 2
    Jimmy
    Posted Friday, 30 May 2014 at 1:39 pm | Permalink

    Bernard you forgot a reason for the co-payment - pre budget when it was being mooted the reason was that medicare was becoming unsustainable and health costs were growing at something like 7 times the rate of inflation.

    As for News Ltd - articles in the Herald Sun this week have included the amount of money ALP ministers spent on travel, a front page artivle on Sunday about Tim Mathieson’s “bizarre attack” on the amount of charity work our first lady is doing and that 46 people have been on Newstart since it was brought in - no bias though.

  • 3
    leon knight
    Posted Friday, 30 May 2014 at 1:50 pm | Permalink

    Agreed Dez, but I recall the loaded dog was a rather attractive black retriever with a winsome red grin….but Pyne would look a heck of a lot more attractive with a stick of well-wrapped dynamite in his mouth, and it would shut him up while we all excitedly awaited the explosion.

  • 4
    wayne robinson
    Posted Friday, 30 May 2014 at 1:52 pm | Permalink

    Bernard,

    You owe me a new iPad. I read your item drinking a cup of coffee and the screen is now ruined. Loved the loaded dog reference. Actually, loved it all.

  • 5
    MsCharli
    Posted Friday, 30 May 2014 at 1:59 pm | Permalink

    You made my day with the use of the term “WTFness”. A term that could be applied to the LNP government in general lately.

  • 6
    klewso
    Posted Friday, 30 May 2014 at 2:00 pm | Permalink

    What’s that old saying “Better to remain silent and be seen a fool, than to gob-off and remove all doubt”?

  • 7
    Steve777
    Posted Friday, 30 May 2014 at 2:08 pm | Permalink

    The Co payment has nothing to do with paying back debt. It does’t go towards the Government’s bottom line but goes into this bizarre ‘Medical Research Future Fund’. It’s real purpose is to make bulk billing less attractive or even unviable for doctors. Those who bulk bill now would have to accept a big pay cut to continue. It is a first step in the process to dismantle Medicare. Malcolm Fraser took 6 years to get rid of Medibank. Abbott, given a second term, probably won’t take as long.

  • 8
    klewso
    Posted Friday, 30 May 2014 at 2:12 pm | Permalink

    It’s black-mail - to crucify Labor with, if they refuse to pass their dog?

  • 9
    Emoticom
    Posted Friday, 30 May 2014 at 2:12 pm | Permalink

    Well it can’t be all of these.  If it’s to fix the budget bottom line it has no effect if the copayment and more is effectively taken from the bulk billing GP to fund the research. At best such research will find expensive remedies for chronic illnesses, many of which are lifestyle driven.

    If it is to reduce overuse of Medicare, the 1% saving in numbers of consultations may well cost more in terms of a reduction in the best management of these same chronic illnesses at the primary level leading to even greater costs, including expensive hospital costs, down the road.

    The sleeper in these proposals is the cost to the patient for necessary pathology tests.  The $7 copayment would apply to each billable test, not each pathology visit.  For many people with chronic conditions, five or mor tests that need to be done regularly, amounting to a copayment of $35 or more each time.  Pathology ordering needs to be reigned in but punishing the patient is not the way to do it.

    The government will be forced to allow unrestricted bulk billing as now for pensioners and Health card holders.  For others, the could allow the GP to charge up to $6 and still bulk bill for the rebate.  This would be optional for the doctor, but the squeeze on general practice due to a freezing of the rebate for three years will push mor doctors to charging some copayment for most patients in this cohort.  The government would get what it wants, a price signal, and the GP would wear the opprobrium.

  • 10
    Barrie O'Shea
    Posted Friday, 30 May 2014 at 2:15 pm | Permalink

    The figures used publicly by the Liberal Party in justifying their cuts are completely at odds with their own Budget figures. According to Statement 10, Table 3 of the Budget papers, our net debt is $145 billion, not $670 billion, and our interest bill is $560 million per month, not $1 billion. We paid substantially more than this for 5 years under Howard, without any “emergency” being mentioned. We should never have let a lawyer handle the accounts!

  • 11
    Bort
    Posted Friday, 30 May 2014 at 2:15 pm | Permalink

    Time for Abbott’s colleagues to stick the knife in. Surely there’s more talented people in that party than the current front bench?

  • 12
    Jaybuoy
    Posted Friday, 30 May 2014 at 2:52 pm | Permalink

    old women in nursing homes losing their lollie money to Joeliars medicare co-payment… these idiots are politically clueless..

  • 13
    Janti Escrow
    Posted Friday, 30 May 2014 at 3:14 pm | Permalink

    What’s a loaded dog?

  • 14
    Jimmy
    Posted Friday, 30 May 2014 at 3:21 pm | Permalink

    Janti - It’s a story about a miners dog who got hold of some dynamite ny Henry Lawson.

  • 15
    archibald
    Posted Friday, 30 May 2014 at 3:23 pm | Permalink

    @Janti

    It is a reference to the subject of a very famous short story by Henry Lawson.
    (en.wikipedia.org/wiki/The_Loaded_Dog)

  • 16
    CML
    Posted Friday, 30 May 2014 at 3:35 pm | Permalink

    @ leon knight #3 - Priceless! The sheer imagery of your comment made me LOL!!
    My sentiments exactly!!!

  • 17
    j.oneill
    Posted Friday, 30 May 2014 at 3:57 pm | Permalink

    Bernard, it seems that the bulk of Australian commentators are incapable of looking beyond our shores to see how a national economy might be managed. Norway is a good example. It has a rent resource tax on oil up to 78% and according to their experts it has not had an effect on investment. The big companies are queuing up for a slice of the action.

    The profits from the resource (oil and gas) are mostly invested in a sovereign wealth fund which currently has a tad under one trillion dollars in its piggy bank. That for a population a shade over 5 million. The fund spends no more than 4% of its income each year. Most of the money is invested off shore and as a result the fund owns 1% of all the world’s stock market wealth.

    The tax system is progressive, and on some items, eg alcohol and tobacco, punitive. The high tax level pays for free education and hospital care (no private versions of either exist) and thanks to the wealth fund there is no pressure on the pension system.

    There is absolutely no rational reason why Australia could not devise a similar system. The real reason I suspect is that (a) the politicians of both major parties are in hock to the pressure groups; (b) they have neither the wit nor the cojones to implement real reform; and (c ) the major media do an abysmal job of telling us what is really going on.

  • 18
    The Hood
    Posted Friday, 30 May 2014 at 4:13 pm | Permalink

    This government is interesting, notice how everything is unsustainable, from pensions costs newstart costs, medicare, to budget deficits. Yes everything is unsustainable except the environment, that will go on functioning just fine forever it seems! BY the way has anyone heard from Greg Hunt recently?

  • 19
    Luke Hellboy
    Posted Friday, 30 May 2014 at 4:23 pm | Permalink

    It must be so they can set up a ‘world leading’ medical research fund. They need to after they cut the arse out of the CSIRO and other grant funding bodies, not to mention the whole federal department of science!

  • 20
    Zeke
    Posted Friday, 30 May 2014 at 4:26 pm | Permalink

    j.oneill@17

    I’m sure you’re wrong… didn’t our PM Tony Abbott tell the international community in a stirring speech that “No country has ever taxed its way to prosperity”. Surely we should believe the opaque economic wizardry of Tony Abbott rather than the reality of a cashed up Norway.

  • 21
    bushby jane
    Posted Friday, 30 May 2014 at 5:13 pm | Permalink

    A nasty (usually)Right wing woman on The Drum last night told us that if you hadn’t managed to pay your HECS debt before you died, then presumably your education hadn’t contributed to you earning enough money to pay it off. Therefore, you didn’t actually owe it any more, as HECS is supposed to be your own contribution to earning a lot of money was her logic. I liked it.

  • 22
    j.oneill
    Posted Friday, 30 May 2014 at 5:29 pm | Permalink

    A point I meant to make earlier was that Germany also introduced a “co-payment” for medical services. After a few years it was obvious that the policy was an abject failure, note least because it cost more to run than it engendered. The payment was 10 euros (about $13). In 2012 the German parliament unanimously, repeat unanimously, voted to scrap it.

    Not only is this government driven by ideology rather than evidence, it seems singularly incapable of learning from the experience of others.

    @Zeke(20). Yes, he did say that, which only confirms his economic illiteracy.

  • 23
    Scott
    Posted Friday, 30 May 2014 at 5:36 pm | Permalink

    You just have to look at the Medicare Statistics to realise what the Government is trying to do.

    In the last 10 years, you have the population gropwing at around 1.5% a year, but the number of services for Medicare has been growing at 4.5% a year and the benefit being paid out by the government growing at 8.6% a year, way in excess of inflation. That means a greater number of more expensive medical services per person. Can’t continue at the current rate without blowing the budget.

    So the idea is to slow that down. Not just for the patient, but also the doctors. When people don’t pay anything at the till, they assume it’s free and hence, if your doctor suggests tests, multiple appointments etc what ever, you go, yes please. The doctor loves it as he gets his money from the government regardless so is actually encouraged by the present system to test/re-visit, even if it isn’t necessary.

    But if there is a cost, you might decide to make a judgement call on whether it is worth it. The doctor, especially if they have to waive the co-payment might be less inclined to ask you back/encourage un-necessary testing as they will be losing a bit of dosh.

    So it’s for the first two reasons, the third is just a bonus. The 4th reason is rubbish.

  • 24
    klewso
    Posted Friday, 30 May 2014 at 5:51 pm | Permalink

    It will be “unsustainable” up to the budget before the next election - then they can let our belts out and we can vote for them?

  • 25
    klewso
    Posted Friday, 30 May 2014 at 5:53 pm | Permalink

    All that research money? They can reverse non-existent climate change with that?

  • 26
    Emoticom
    Posted Friday, 30 May 2014 at 6:09 pm | Permalink

    I’m not sure how the GP benefits financially from ‘unnecessary testing’. Enlighten me.

  • 27
    The Pav
    Posted Friday, 30 May 2014 at 6:44 pm | Permalink

    Scott @ 30

    Bulk billing is usually only avaialable to those on benefits and the simple costs of getting to the GP is a sufficient disincentive for unneccessary visits.

    The truth is the heaviest consumers of the health service is the affluent, like me and I suspect you, who already pay a gap payment. In my case $45 per visit.

    The proposed copayment is bad policy based on a flawed number as the Audit Commissiion couldn’t even get a simple number like the number of visits rights.

    It will end up costing more and in any event will not address the acceleration in medical expenditure. I thinl it needs to be wound back but lets look at facts not doctrinaire politics

  • 28
    The Pav
    Posted Friday, 30 May 2014 at 6:47 pm | Permalink

    Not quite sure if I follow Hockeys number but $740 over four years works out to $3.55 per week.

    Thats about a middie isn’t it and Mr Hockey said that was a small number.

    The other thing is why is there this sudden push to talk about debt levels in 10 years as if it was little more than a very rough guide and furthermore not to put it into poerspective by giving what it would be as a proportion of GDP in 10 years……

  • 29
    Electric Lardyland
    Posted Friday, 30 May 2014 at 8:01 pm | Permalink

    Just a couple of things. Firstly, I find the spin of dividing the debt into an equal share for all Australians to be tediously vacuous. I mean, one handy thing about have a large amount of natural resources, is that you can use those resources to pay off debt and fund other areas of the economy. Or you can, if the party in charge is not largely funded and supported by various arms of the resources industry. Also, I find it interesting that before the budget, the Medicare co-payment was being floated as something that would be only charged on people who earned over $150,000, or something like that. However, after the budget, the plan seems to be to charge pretty well everyone. I suspect the ‘thought’ process behind that went something like this.
    “Uh, so how are doctors going to tell if someone earns over $150,000?”
    “Sheeeeeeet, I didn’t think of that.”
    “Errr, maybe we should give the Commission of Audit a call?”


    “Uh no, they didn’t think of that either. Stuff it, we’ll put it on everyone”.

  • 30
    David Hand
    Posted Friday, 30 May 2014 at 9:11 pm | Permalink

    Well it’s the price signal, isn’t it. We know this because of the vast numbers of people in all sorts of media claining that their children are going to die for want of 7 lousy bucks to keep them alive.

    The price signal has sure had an effect already.

  • 31
    David Hand
    Posted Friday, 30 May 2014 at 9:22 pm | Permalink

    J.Oniell,
    Norway’s oil and gas industries are nationalised. So all their profits go into government investments like sovereign wealth funds.

    It is reasonable to ask whether or not Australia might be better off by nationalising say its iron ore industry. But it’s also reasonable to ask how much better off Norway might be by allowing private enterprise to run its oil and gas industry and the nation tax and invest the proceeds.

    A bit like the Australian government did before the end of the resources boom.

  • 32
    j.oneill
    Posted Friday, 30 May 2014 at 10:35 pm | Permalink

    @David Hand. The proof of the pudding is in the eating. The Norwegian system runs very well as is and apart from the usual right wing fringe there is no public voice demanding privatisation of the oil and gas assets. The Norwegians take the view, rightly in my opinion, that the resources belong to the nation and therefore the benefits from those resources should accrue to the nation.

    In principle the same argument should apply to Australia’s resources. The biggest stumbling block here is the entrenched view (shared by Labor and the Coalition) that capitalism is somehow better. As Thomas Piketty has shown in his recent huge best seller, one of the inevitable consequences of the kind of capitalism allowed free rein here and elsewhere is a steady accumulation of wealth for the top 1% of the progressive pauperisation of the rest of us. No wonder it is hard to find reviews of his book here.

  • 33
    Draco Houston
    Posted Saturday, 31 May 2014 at 6:25 am | Permalink

    One of the other changes was in its question time tactics, where the government, via Abbott and Hockey, tried to shift the argument back to the budget emergency (which, actually, the government has already won) by explaining how irresponsible Labor had been and how responsible the budget was for Australians.”

    I wouldn’t be so sure of that, Bernard. Palmer is trying to shift the debate on debt, sensing people don’t believe it as thoroughly as the government would think. Time will tell if he can neutralize the ‘budget emergency’ argument but it can’t be good for the one argument the LNP has to be under attack.

    Maybe the only thing they’ll have to boast about are orange boats and state sponsored murder

  • 34
    JohnB
    Posted Saturday, 31 May 2014 at 6:40 am | Permalink

    Further about ownership of resources.

    Mongolia is not usually listed amongst the smartest of nations, however they at least understand who owns their minerals.

    In an nutshell, those who own mines in Mongolia do so on the basis that (a) the government will, form Day 1, hold 34% of the shares of the mining company’s local subsidiary and (b) after 35 years, the remaining 66% revert to the government.

    Against that, consider the situation of Our Gina, whose daddy (not her) had a hand in kicking off a mining venture far more than 35 years ago.

    In Mongolia, she would no longer be reaping the windfall.

    In Australia, she owns the joint!

    And all because of a fluke of parentage and a sequence of governments, state and federal, that don’t understand that their job is to govern for all Australians, not just for the big end of town.

  • 35
    AR
    Posted Saturday, 31 May 2014 at 7:50 am | Permalink

    ANSWER -all, and none, of the above, the real reason is that this is the first, baby steps of the Best Fiends Medicare ever had to ompletely obliterate the threat of socialised medicine.

  • 36
    wayne robinson
    Posted Saturday, 31 May 2014 at 8:06 am | Permalink

    JohnB,

    I don’t think that you’ve expressed it the best way. Governments don’t own anything. Public assets are owned by the public - the people- who are represented by their governments, and which can be dismissed in a functioning democracy.

    If Thomas Piketty gets his way, inherited wealth (not just natural resources) will become heavily taxed to prevent increasing concentration of capital in later generations. And to prevent the ‘Golden Rule’ applying (whoever has the gold, makes the rules…)

  • 37
    Scott
    Posted Saturday, 31 May 2014 at 8:11 pm | Permalink

    The Pav…you’re joking right. Again, look at the stats. Everyone is bulk billing. In NSW, one of the richest states in Australia, 86% of vists to the GP were bulked biilled…unbelievable. It’s not just those on benefits, its become a marketing tool.
    That is why something needs to be done. People are taking the piss. There is no price signal on public Heath at the moment. Both the public, and the GP’s have their snouts in the trough.

  • 38
    Waste of Time
    Posted Sunday, 1 June 2014 at 8:49 am | Permalink

    Fair enough Scott. I reckon tax free religions, superannuation concessions, negative gearing and salary packaging are also a piss take. Maybe we can start on those once we’ve nailed universal health care?

  • 39
    David Hand
    Posted Sunday, 1 June 2014 at 3:52 pm | Permalink

    Hey J.
    I wouldn’t rush to laud Picketty’s view of capitalism too quickly. One of the mistakes people make when considering the evils of unequal wealth distribution is to act as though creation occurred in 1982, nothing economic existed before then and the Hawke government deceived us into leaving the economic garden of eden.

    I don’t know if Picketty commits this sin as I only took possession of his book last week and have yet to start it. It’s a daunting book of nearly 600 pages and over 100 pages of notes.

    The conundrum of public versus private ownership of resources is hard to be objective about because we can’t say how much better Norway’s economy might be if the oil was run by private enterprise and then taxed, and vice versa for Australia’s natural resources.

    But we do know that in 1982, the nirvana of equality that most trendy lefty economic commentators recognise as the beginning of time, virtually all captains of industry were public servants because the government owned everything, wages, prices, the exchange rate, interest rates, tariffs and import licences were centrally set.

    Inflation was 7-17% unemployment was high, economic growth was low and Australia and New Zealand’s grand experiment with social government had come to a crashing halt. These conditions ushered in the reforming government of Hawke and Keating, the most visionary government I have ever witnessed in Australia whose positive impact will last for the rest of this century.

    Whenever I read someone praising the virtue of public ownership or bemoaning the inequality that our open economy allows to occur, I wonder where they were in 1982.

  • 40
    wayne robinson
    Posted Sunday, 1 June 2014 at 7:10 pm | Permalink

    David,

    You should read Thomas Piketty’s book before you criticise it. My take on his book wasn’t that he was calling for state ownership of resources. He’s calling for progressive taxation of all income to eventually eliminate public debt, and to get rid of regressive taxes, such as consumption taxes, which tend to fall on the less well off.

    Everything the federal government isn’t doing.

    Anyway. In 1982, the coalition had been in power for 7 years.

  • 41
    Aidan Stanger
    Posted Sunday, 1 June 2014 at 11:23 pm | Permalink

    wayne,

    Why does he want to eventually eliminate public debt?

  • 42
    David Hand
    Posted Monday, 2 June 2014 at 12:04 am | Permalink

    Straw man, Wayne.
    I’m not criticizing Piketty’s book. After all, I’ve not read it.

    My discussion about private ownership is in fact directed towards j.oniell who was praising Norway’s tax and spend economic system around its huge oil industry.

    Your précis on Piketty makes him a contrarian thinker regarding mainstream economic thought, which is why I bought it. I shall find his book interesting.

  • 43
    David Hand
    Posted Monday, 2 June 2014 at 12:15 am | Permalink

    And yes, the Coalition had been in power for a lot more years than the 7, during which most of the western world fell into the big government trap that Hawke and Keating reformed.

    Your party political slip is showing.

    It’s not about Labor and the Coalition, in fact Labor and the Coalition are very close together on this, Much to the frustration of most posters here. It’s about the economic policies that will be best for our country.

  • 44
    wayne robinson
    Posted Monday, 2 June 2014 at 6:55 am | Permalink

    Aidan,

    Piketty wants public debt eliminated for the conventional reason. It should diverts revenue from services to paying interest. And not all public debt is bad though, as Piketty notes too. To avoid recessions. Or to build infrastructure adding to public capital.

    David,

    Your party political slip is showing. Labor and the coalition aren’t very close together. The coalition wants to eliminate public debt by austerity measures (except for the Tony tax, a short term measure on the rich - I’m still trying to calculate whether I’ll be affected, perhaps, but not significantly…).

    Austerity didn’t work in Europe. Britain slashed spending, economic growth is stagnant and public debt increased.

    Anyway - enjoy reading Piketty ‘s book - it’s a hard slog, only made easier by the fact that it’s repetitive. If you didn’t get his point the first time, perhaps at the tenth repetition…

  • 45
    David Hand
    Posted Monday, 2 June 2014 at 11:12 am | Permalink

    Labor didn’t raise income tax when in power. It just went on a massive spending spree under cover of the GFC while it allowed the government’s tax share of GDP to fall, opening up a deficit between spending and revenue of 3-4% of GDP.

    So they are closer to the Coalition than you suggest, Wayne. Bowen is a disciple of the reforming Hawke and Keating governments and would be unlikely to shift into the tax and spend world too far.

    Austerity didn’t work in Europe? Pray tell. Name one EC country that has made any attempt at anything like austerity. Their economies are holding on to the tax and spend status quo like grim death behind that increasingly absurd customs barrier. Unemployment remains stubbornly high, mostly because it is so hard to lay anyone off that businesses won’t hire. GDP growth is pathetic. Spain has 25% unemployment. Just imagine the destruction of wealth going on there. Greece and Italy have been propped up by Germany but how long do you think the Germans will be able to maintain that? All the European economies are carrying debt at or over 90% of GDP with no strategy whatsoever to reduce it. Apart from Britain, that is. Oh yes paying off debt is what the left calls “austerity” isn’t it? Britain will exit the EC next time they have a referendum on it and everyone there is grateful they avoided the disaster that is the Euro.

    The European slow motion train wreck has only just begun.

  • 46
    wayne robinson
    Posted Monday, 2 June 2014 at 12:56 pm | Permalink

    David,

    When the economy’s in a recession, or threatening to go into one, one thing governments shouldn’t do is to cut spending, otherwise it will make the recession worse, cutting government revenue and increasing the deficit. Such a policy was tried in the Great Depression, with disastrous results.

    The Australian economy has come out of the GFC in good shape. National debt isn’t high compared to GDP. Britain tried austerity under Cameron (with similar social welfare cuts as Abbott is proposing) and it resulted in sluggish growth and increasing deficits.

    If Labor agrees with deficit reduction, it’s only because the Murdoch press insisted that they had to do so.

  • 47
    David Hand
    Posted Monday, 2 June 2014 at 2:20 pm | Permalink

    Yes Wayne,
    The Rudd government did the right thing to stimulate the economy in 2009 and go into deficit. Any competent government should have done the same.

    But the Australian economy is only in “good shape” if we can stop the headlong rush into debt at the rate of about 4% a year. The rate we have accumulated debt in the past 6 years means we will join the European economies of about 90% by 2030. This is the budget emergency that the left is denying exists.

    It’s like saying that my credit card debt of $3,000 against a limit of $10,000 is “in good shape” without recognising that I started binge spending at a rate of $500 a day on my kids last Friday and will hit my limit in about 2 weeks. That puts me in a sort of crisis that someone with a $9,000 balance and $10 a day spending habit doesn’t have.

    The other thing I ponder about the left is how convenient Murdoch is as a sort of bogey man, capable of being the answer to un-leftie economic thinking. We all believe in economic rationalism because Rupert tells us to. What a great way of avoiding the inconvenient fact that there is widespread consensus that a deregulated economy with flexibility in the allocation of resources is best for Australia.

    It’s because Murdoch told us? Really?

  • 48
    wayne robinson
    Posted Monday, 2 June 2014 at 2:29 pm | Permalink

    David,

    It’s a little simplistic thinking that you can extrapolate past economic data over the next 16 years. I don’t worry too much about what I owe today being increased by what I spend in the future because I know I’ll also be getting income to eliminate debt too.

    The Murdoch press is important for setting the agenda. They control 70% of the print media. Television and radio stations, including the ABC, tend to take their editorial line as a basis for their reporting.

  • 49
    David Hand
    Posted Monday, 2 June 2014 at 2:49 pm | Permalink

    That’s it Wayne.
    Hold on tight, change nothing and hope. Just like France. And Spain. And Greece. Not so much England. Oh! That’s right! They’re doing what Murdoch told them to as well!

  • 50
    AR
    Posted Monday, 2 June 2014 at 4:04 pm | Permalink

    Hey One-Hand, next time you return to your planet could I accompany you for a look-see? Must be one weird place - probably why you spend so much time here.

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