Joe’s economic story just doesn’t add up –

Joe’s economic story just doesn’t add up –

Joe’s economic story just doesn’t add up

Bernard Keane
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Dec 05, 2014 1:00PM

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Voters aren’t buying Joe Hockey’s economic narrative. It could be because it just doesn’t stack up.

If you try following the logic of Treasurer Joe Hockey’s
economic arguments, you very quickly see why the government is failing
to get its key messages through and has spent much of the year in a mess
of its own creation.


The essence of the Hockey narrative for much of the year is
this: Labor left an appalling fiscal legacy, but the economy is too weak
for a stringent and dramatic return to surplus, so the budget was about
putting medium-term savings and structural reforms in place that would
begin the fiscal repair task, while infrastructure spending would
provide the immediate stimulus required to spur growth. But Labor,
vandals that they are, are both opposing those medium-term savings and,
as if their evil knows no bounds, trying to sabotage infrastructure
spending through their opposition to asset recycling, designed to get
the state governments spending. And Labor, so the narrative goes, even
dawdled on free trade agreements, which will deliver a big benefit to
the economy over the medium-term.


Hockey has remained wedded to this narrative even after
Wednesday’s terrible GDP number — indeed, for Hockey the evidence of
softness in the economy reinforces the need for Labor to support asset
recycling and encourage Premier Daniel Andrews to build the East West
Link (although Hockey has opened the door to other big projects Andrews
might want to bring forward, provided they can get started pronto).
Hockey, like Wayne Swan, says he won’t be “chasing down” falling revenue
in the forthcoming Mid-Year Economic and Fiscal Outlook.


But the Hockey narrative doesn’t stand up to the simplest
scrutiny. For starters, Hockey himself actually made the budget
situation significantly worse. Between the election and the end of 2013,
the government took decisions that worsened the deficit by more than
$20 billion over four years. It dumped the carbon price, a move which
the 2013-14 MYEFO
acknowledged would cost $6.3 billion in lost revenue. It dumped the
mining tax, which MYEFO acknowledged would cost $3.4 billion. And it
walked away from a series of tax and superannuation measures already
announced by Labor that cost $3.6 billion in lost revenue.


Each of those figures is just for forward estimates — they
were all ongoing measures. As revenue sources, they might go up or down,
but they were built into the budget — the carbon price might have
fallen in line with international trends, and the fall in iron ore and
coal prices would have reduced mining tax revenue this year, but the
removal of some superannuation tax concessions was designed to provide
long-term savings that would make a substantial difference a decade
hence.


Then there was the $8.8 billion handout to the Reserve Bank, a one-off that substantially worsened the 2013-14 deficit.


So when Hockey laments that Labor is blocking his
“medium-term” fiscal repair job, he hopes voters will ignore that he
made that job substantially harder himself, purely for political
reasons — especially the grossly irresponsible act of walking away from
measures like ending the Fringe Benefits Tax novated lease rort, and the
tax on superannuation incomes over $100,000, which his predecessors had
already announced and worn the political pain from. Hockey has not
merely wasted the Coalition’s political capital, he chucked away
measures Labor has burnt political capital on for the good of the
budget.


Then there’s what Hockey calls his plan to “significantly
increase infrastructure spending over the next few years” — the
equivalent of eight Snowy Mountains Schemes, he likes to boast. As a
number of commentators have pointed out, in fact the government is
simply spending on the projects it inherited from Labor, albeit with a
greater bias towards roads, which self-confessed Luddite Tony Abbott
seems to think is all that 21st century infrastructure involves. Given
infrastructure lead times, whatever stimulus is delivered to the economy
over the next 12 months will be entirely because of former
infrastructure minister Anthony Albanese and Labor, and not because of
Abbott, Hockey or Deputy Prime Minister Warren Truss.


And as we know from the Productivity Commission, free trade
agreements are good for diverting trade, but their actual economic
benefits are far harder to identify, if they ever materialise at all.
Don’t hold your breath waiting for a Chinese consumer-led recovery.


That leaves Hockey urging consumers to spend up big for
Christmas in order to give the economy a shot in the arm — while warning
of the terrible damage Labor is doing to the economy and the budget.


In opposition, Hockey long insisted the mere election of the
Coalition would provide a surge of business and consumer confidence
that would spark higher economic growth and get the animal spirits of
the economy stirring. If it ever did, Hockey killed all that off himself
with his budget communication strategy. Now he’s left with Plan B that
consists of wishing consumers a merry Christmas.


No wonder the dogs are barking about his job.

Abbott and Hockey’s debt and deficit disaster

Abbott and Hockey’s debt and deficit disaster

Alan Austin 27 September 2014, 3:00pm 14

EconomicsFinancePolitics

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The Abbott Government has abandoned any pre-election
promises to reduce Australian public debt, with borrowing and interest
costs skyrocketing after their first year in power. Alan Austin reports.







Despite all their rhetoric and hyperbole, both debt and deficit has blown out under the Abbott Government (Image via @qldaah)



THE ABBOTT GOVERNMENT HAS ABANDONED all pre-election commitments to reduce the nation’s ‘skyrocketing debt’. Borrowings have increased dramatically since the last election.



Now we know by how much.



Debt has increased by 13.7% over Labor’s levels. Interest payments
have risen a staggering 28.6% to more than thirty million dollars per
day — in just the first nine months.



The Final Budget Outcome 2013-14 was released this week by Treasurer Joe Hockey and Finance Minister Mathias Cormann.
Buried in the long-awaited document is confirmation that net government
debt at the end of June, nine months after the Coalition took office,
has risen to $202.46 billion.







That’s quite a blow-out.



The last monthly Finance Department report prepared under the previous Labor Government, for 31 August 2013, showed forecast end of year net debt at $178.10 billion.



The following monthly report,
September 2013, prepared after the Coalition had taken charge, also
showed projected year-end debt steady at $178.10 bn. So did the October
and November reports.







In December, however, following several decisions by the incoming
treasurer, including abolishing the debt ceiling, the debt projection jumped to $191.52 billion.



This number was reaffirmed in January, February, March and April 2014. In May, it was increased to $197.85 billion. Then, without notice, monthly reports ceased.



Clearly, the actual outcome under the Coalition is a cool $24.36 billion more debt than forecast had Labor stayed on. Up 13.7%.



Hockey has, of course, attempted to blame Labor:

‘The Final Budget Outcome for the 2013-14 financial year is a
budget report card on the previous Government’s irresponsible fiscal and
economic management.’

Hardly. Mr Hockey has had more than 42 weeks – and a clear mandate –
to reverse anything ‘irresponsible’. Instead, wasteful spending has
increased, including dubious travel for ministers and their entourages, costly royal visits and expensive politically-motivated royal commissions.







Table 5
of this week’s Treasury document shows that in just seven weeks between
the May budget and June 30, expenditure on ‘legislative and executive
affairs’ blew out by a staggering $68 million.



That was not Labor’s doing.



Other unjustifiable spending by the Abbott Government includes its punitive border protection regime and an $8.8 billion grant paid to the Reserve Bank that it didn’t ask for and doesn’t need.
On the revenue side, equally damaging failures include abolishing the
carbon and mining taxes without adequate replacement income. Those were
not Labor decisions.



This week’s proof of the debt expansion follows confirmation after
the May budget that Abbott and Hockey had more than doubled the
projected budget deficits over Labor’s levels.



ABC Fact Check unit showed in June that government decisions increased the deficits for the four-year forward estimates period by more than $68 billion.





Clearly, there is no commitment whatsoever to

‘… balance the books, live within our means and return the budget to surplus as quickly as possible.’

Gone are the dire warnings before the last election of debt ‘spiralling out of control’.



So if the debt was more than $202 billion in June and rising rapidly,
what is it now, three months later? Well, we just don’t know. The debt reports produced monthly since December 1999 have suddenly stopped.



Independent Australia asked the Finance Department why this was and when the next statement would be released.



They replied:

‘The last Australian Government Monthly Financial Statements were
published in May 2014. The June data is incorporated in the Final
Budget Outcome document. Under the Charter of Budget Honesty Act 1998
the final date for the release of the Final Budget Outcome is 30
September.... The July and August 2014 Australian Government Monthly
Financial Statements are prepared and published after the release of the
Final Budget Outcome.’

How long after? We shall see.



Meanwhile, we now know what the extra debt is costing. A year ago, the Final Budget Outcome
for 2012-13, released by incoming treasurer Hockey, showed net interest
payments on the debt were $8.3 billion for that year – the last full
year Labor managed the economy. Labor’s projected interest bill for
2013-14 was then $8.4 billion, according to Treasury and Finance’s
Pre-election Economic and Fiscal Outlook.



The actual interest costs incurred for 2013-14, we discovered this week, was a thumping $10.8 billion. That’s up 28.6%.







So Hockey is not just borrowing more money, but borrowing more expensive money.



Of course, this debt increase is of no immediate economic concern provided the investments are well-managed. There are compelling arguments
that Australia’s debt has been too low given negative real interest
rates and the opportunity for investments in productive infrastructure.



Australia’s debt to GDP ratio is a mere 12.8% — even with the recent
Hockey blow-out. If that were doubled Australia’s debt would still be
less than Switzerland’s. If tripled it would be less than Canada’s. It could be multiplied by six and remain lower than Germany’s and the UK’s.



All these countries have a triple A credit rating and hence no discernible debt problem. And, of course, neither does Australia.



Australia does have, however, a surplus of government hypocrisy and a deficit in truthfulness and competence.



You can follow Alan Austin on Twitter @AlanTheAmazing.





This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License

Kings Tribune - Not Your Average Bio

Kings Tribune - Not Your Average Bio

Not Your Average Bio

Written by
Andrew P Street

What made Diamond Joe change from jovial, avuncular goof into angry, sulky goof?

We asked Andrew P Street to read the Joe Hockey biography so that you wouldn’t have to. You're welcome. 

Biographers, more or less by necessity, have to fall in love in with
their subject. Writing a book is a nightmarishly long ordeal and
Stockholm Syndrome must kick in at some point out of sheer
self-preservation.


So it’s no surprise that Not Your Average Joe’s author
Madonna King is clearly a fan of Joe Hockey and goes that extra mile to
spin his successes as mighty victories and his failures as being the
fault of lesser men (and always men) who either lack Hockey’s peerless
vision or are jealous of his incandescent talents.


The problem is that it all comes across like that friend who talks
about the awesome new guy they’re dating, or their hilarious colleague,
but every single story makes the guy sound like a bullying jerk.


It feels a bit like King is telling the reader breathless tales of
her new crush. You can just imagine her dishing over a coffee: “Joe was
criticised by feminist groups on campus during his election campaign for
the University of Sydney Student’s Representative Council, so when he
became President he immediately closed the Women’s Room! Isn’t that hilarious?”


“Um, actually, that sounds like he was, at best, being dickishly
ungracious in victory and at worst putting women at risk by eliminating a
safe space for them on campus,” you would hesitantly reply.


“Oh, you just have to get to know him!” King would presumably respond
with a dismissive guffaw. “It’s just his sense of humour! Like when he
claimed he’d signed up 80 new members to the local branch of the Liberal
Party on the North Shore and now admits that he mainly just added the
names of dead people to the register and was never caught – I mean, what
a caution!”


Not Your Average Joe is not just a collection of
heart-warming tales of revenge-misogyny and voter fraud, it's also the
story of how one deeply insecure young man grew up to become the most
deeply entitled and self-aggrandising treasurer Australia has ever known
– which, in a field that includes such avowed Paul Keating fans as Paul
Keating, is no small achievement.


Then again, most of the evidence for Hockey’s inflated sense of his
own glorious significance is not contained within the covers of the
book, but in the fact that there’s a book with covers within which to
contain said glorious significance.


Put bluntly: why the ever-loving fuck would a man in the first year
of his job say yes to the writing and publication of his biography
unless he was a) utterly assured of his importance and felt there was a
genuine need to capture this historic moment, or b) knew in his heart of
hearts that no-one was going to remember what a Joe Hockey was after
the next election, and possibly by mid-way through the current
government?


The answer, told time and time again in the book, is a). Joe Hockey
wanted to be PM since he was four, we’re assured. Everyone – from his
unshakably supportive father to his indulgent schoolteachers to his
mates on the rugby field – repeatedly and unceasingly assured him that
he would be PM. The fact the wanted it when he was a preschooler
indicates that his desire for the role predated having any idea what
that role actually meant. This is primal gimme-I-want stuff, not a
cool-headed dedication to public service.


That theme – unshakable entitlement – is what comes through time and
again through the book. When he’s successful, he gloats. When he fails,
he explodes.


An illustrative example is that before he was the first to be
eliminated in the three-horse Liberal Party leadership spill in 2009 –
the one that toppled Malcolm Turnbull and installed Tony Abbott as
leader in opposition – he was so assured of his own victory that he
didn’t even bother to call MPs and lobby them for their vote, as Abbott
was comprehensively doing.


“That feeds the view that he has this destiny thing where he should
get things easily,” said one unnamed ‘senior Liberal’, echoing the
opinions expressed elsewhere by John Howard, Peter Costello, Peter
Dutton, Nick Minchin and practically everyone else.


Needless to say Joe sees it rather differently.


He didn’t lose the vote: he was betrayed by Turnbull, who assured him
he wouldn’t run (despite having declared his intention to do so on
television a mere two days before the vote, and who gently suggests in
the book that Joe’s version of events exists entirely in his own head)
and by Abbott who had pledged to support Hockey (who changed his mind
after they argued over giving a free vote for the Turnbull-and-Kevin
Rudd-endorsed Emissions Trading Scheme).


Among the other people that Joe accuses of betraying him – in a book
written by a sympathetic author who even fills several pages singing the
praises of the universally loathed WorkChoices – are the following
people:


Howard (for giving him bad advice about pushing for a free vote on
the Emissions Trading Scheme), Costello (for not supporting his desire
to be finance minister), Minchin (for backing Abbott after earlier
supporting Joe), Abbott (for running against him after he said he
wouldn’t), Rudd (for asking Hockey’s advice on how to be opposition
leader and then applying it), Ian Macdonald (for criticising Hockey as
senior tourism minister), Family First’s Steve Fielding (who agreed to a
free vote on the ETS, according to Hockey, and then announced on TV
that he didn’t), and pretty much everyone else.


He also gets some stories in about cool Terminator-like quips he made
to the faces of Howard and Turnbull during arguments, which both men
politely deny ever happened, lending weight to the idea that Hockey is
first and foremost a fabulist convinced of his own greatness.


It’s at times a genuinely sobering read: much of the first act of the
book covers Joe’s childhood and education, painting the picture of an
isolated little boy carrying his self-made immigrant father’s dreams of
greatness on his shoulders, teased for his size through school (gaining
the nickname “Sloppy Joe”) and looking for camaraderie through sport,
cadets and finally politics.


It’s also implied that Joe wasn’t exactly a hit with the ladies. It
doesn’t help that his wife, Melissa Babbage, comes across in the book as
the least sympathetic spouse since Lady Macbeth. The enormously
successful and mightily wealthy investment banker met Joe at a Young
Liberals function and every quote in the book suggests that she quickly
assessed him as a sound, if undervalued, investment and engineered a
matrimonial merger, speaking of their courtship and marriage as though
they were necessary obligations to be overcome rather than the glorious
unfolding of a love to last through the ages.


Mind you, he did allegedly propose to her while accompanied by a violinist playing music from The Phantom of the Opera which suggests that romance and creativity aren’t big concerns of Joe’s either.


The art of the hubrisography is a rich and noble one – why, right
this minute I have two music bios on my shelf, David Barnett’s Love and Poison: the authorised biography of Suede and Tony Fletcher’s Never Stop: the Echo & the Bunnymen Story,
both of which have penultimate chapters in which the respective bands
express their boundless optimism for their rosy, hit-filled future which
are followed by an immediate pre-publication epilogue essentially
reading “…and then they split up.”


In a similar spirit, the book ends with King mentioning that Joe was
photographed having a cheeky cigar with finance minister Mathias Corman
just after delivering his first triumphant budget, and then suggests, as
though in passing, that it remained to be seen how it would be
received. Which is sort of like writing a biography of Austria that ends
in 1914, mentioning that Archduke Franz Ferdinand had just been
assassinated in Sarajevo and idly speculating as to whether there’d be
any sort of official response.


One of her closing sentences, though, was meant to reiterate how much
Joe and Tones are BFFs these days, but now has a somewhat ominous tinge
as they both grow increasingly testy over who is failing to win the
nation’s hearts and minds: “Barnaby Joyce, who like Hockey is one of the
government’s best retail politicians, says the two will rise and fall
together.”


That may prove to be the most accurate line in the entire book.

The Minister for Lost Opportunities - The AIM Network

The Minister for Lost Opportunities - The AIM Network

The Minister for Lost Opportunities

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  September 18, 2014
  
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  John Kelly
  
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You have to hand to him. Joe Hockey would have to
be the eternal optimist. He says that we are on the threshold of
Australia’s greatest era. Really? He says his plan is to fix the budget
and pay down the debt left by Labor. The debt he is referring to, is the
ongoing sale of government treasury bonds issued since 2008
(approximately); these are the ones that protected Australia during the
Global Financial Crisis (GFC).


He’s a man on a mission; you can see that. The problem is, he can’t
see where the missionaries need to go. We should not forget that he was
part of the Coalition in opposition that opposed those stimulus measures
Labor used to avoid an economic catastrophe. One can only wonder if a
Coalition government were in power at the time of the GFC and failed to
act, in other words, did nothing, where, and in what condition, our
economy would be in now.


The likely outcome would have been up to 2 million unemployed, small
business’s going bankrupt, a massive reduction in bank depositors’
savings, a serious reduction in tax revenues and a gigantic ex nihilo
(money created from thin air) programme to save our failing banking
system and drag us out of the depression that would have ensued.


This imaginary Coalition government would have attacked social
programmes to minimise the structural deficits that would have followed.
But, having patted themselves on the back just two years earlier for
falsely claiming to have paid down debt when they were in government,
they would have found a new way of describing the debt they had now
reluctantly created. They might have opened a special account and called
it the Fiscal Expansion Account, or The Asset Minimisation Account and
denied that it was debt at all.


But
we, as a nation avoided all of that thanks to Labor’s economic
management and now all Hockey has to do is manage those bonds. As of
right now, he’s not doing it very well. As of right now, those bonds
that totalled $280 billion at the end of August 2013 are $337 billion in
September 2014 and growing. That is an additional $57 billion which
translates to just under $5 billion a month of bonds issued in the first
12 months of a real Coalition government.


That’s slightly faster a rate of borrowing than Labor did in 6 years.
Compounding Hockey’s problems is the reality that current tax revenues
are not meeting expectations. That will mean further bond issues to
cover a continuing shortfall. I’m almost feeling sorry for him.


Joe could easily fix this annoying little matter by opening a new
account. He could call it the Asset Recovery Account and create $10
billion ex nihilo a month to pay out each bond issue as it becomes due.
At the same time he could continue to issue further bonds to meet
expenditures without impacting on inflationary pressures. It might also
have the effect of putting downward pressure on the Australian dollar.


That would do wonders for our export industries and create
opportunities to get the unemployment rate down. Then he could re-visit
his pathetic first attempt at constructing a budget and try
restructuring it to reflect a fairer balance of the heavy lifting.
Little things like removing mining subsidies and tax minimisation
schemes like negative gearing would do wonders.


With
all that now under sound management he could wave the green flag for
all those infrastructure programmes to tackle unemployment; the ones his
boss wants to be known for. But he won’t do this because, he’s too busy
looking back at what Labor did instead of looking forward at what he
could do. His boss wants to be known as the Infrastructure Prime
Minister but neither of them know how to go about making that happen.
Neither can see the bigger picture. Instead, they will let this false
debt accumulate and continue to blame Labor.


Joe could, if he knew how, become a Paul Keating Mk 2 and continue
reforming our monetary system. But he doesn’t know how, and even if he
did, his ideologically bound party, not to mention their masters, the
IPA, would not let them. They would much rather have us running off to
Iraq to help save the world from a handful of fundamentalist nut cases
who like beheading westerners. That’s money well spent; a new Crusade,
how original.


They
would also like us to return to the Reaganomic and Thatcherite slash
and burn monetary policies of the 1980s; the same policies that led us
to the GFC thirty years later. They say what goes around, comes around.
And in the process, guess what? Another forward looking, nation building
opportunity goes down the toilet. Forget about Abbott being the
Infrastructure Prime Minister. Joe will become the Minister for Lost
Opportunities.

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Joe Hockey: Give the man a cigar

Joe Hockey: Give the man a cigar

Date

August 16, 2014 - 12:15AM

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John Birmingham

Columnist

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Illustration: Glen Le Lievre

Why are people so unkind to Joe Hockey? It’s not like he was
trying to be mean when he said poor people don’t have cars. He said
cars, people. Cars. Plural. Come on. Joe knows poor people don’t have
lots of cars. Unless they’re up on cinder blocks in the front yard. Not
like Joe, who has a Canberra car and a Sydney car and Commonwealth car
which comes with its very own driver. A quick shout out to Twitter (the
omnipresent surveillance state you have when you’re not an omnipresent
surveillance state) delivered up multiple happy snaps of Joe in multiple
cars, including a late model Commodore, some sort of Toorak tractor,
possibly a black Range Rover, and a bright yellow Mini that the rock
steady crew at All Aussie Hiphop’s Twitter feed unkindly compared to a
giant cheeseburger. I really don’t think it’s fair to crucify Joe for
that. Driving a giant cheeseburger around just goes to show how hard Joe
works to stay in touch with the common man. And he has to work damned
hard. Notwithstanding Joe’s Herculean efforts to bring an end to the Age
of Entitlement, the Finance Department says he is of course entitled to
the Commonwealth’s limo service but also to a free ride of his own
choosing. It’s possibly another reason those poor people who do somehow
get behind the wheel of some old clunker don’t actually drive very far.
The roads are already gridlocked with Joe Hockey’s personal fleet.



Perhaps if poor people just drove better cars, they
wouldn’t be so poor. No raking the bottom of the cup holder for coins
when Jeff McCloy rolls into the drive-though. The property developer,
mayor of Newcastle and proud owner of a magnificent Bentley, seems to
drop wads of the folding stuff like dog hair in summer. Mostly he drops
it into the pockets of Liberal Party politicians but there appear to be
so many hundred dollar notes floating freely around the former steel
town that maybe if you lazy poor people just leaned up against
Hizzoner’s Bentley some would rub off on you too.




Of course, you may have to drop your metaphorical pants rather quickly.



“What? No foreplay?” quipped Geoffrey Watson, SC, counsel
assisting the Independent Commission Against Corruption this week, when
former Liberal MP Tim Owen testified McCloy wordlessly handed him a
''thin envelope'' containing $100 bills in Hunter Street, Newcastle.

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“I took it at the time,” said Owen, “and I must admit I thought ‘Hmm, what do I do with this'?”



Hmm. Well, Tim, it’s not rocket science, you could say: “No, thanks.” Or you could trouser the lot.



Although Tim probably meant to testify under oath that he
took the trouser option, what came out, under oath, was a story about
returning the ''thin envelope'' with not very many hundred dollar bills
in it and a note which amounted to: “No thanks, Jeff.”



Fair enough. We’ve all had that awkward moment when a
property developer hands us a thin envelope with not very many hundred
dollar notes in it. It’s a situation almost guaranteed to cause
confusion. Is Jeff handing me this thin envelope in his capacity as lord
mayor of Newcastle, because he wants me to be the local Liberal member
which is understandable, because we’re both smashing fellows? Or is Jeff
handing me this thin envelope – See how thin it is? I really must
emphasise the thinness here – because he’s a property developer, and
they do that sort of thing even though it’s illegal, in which case I
should probably give it back. The thin envelope, that is. See? Very very
thin.



Yeah. No. Not so thin, as it turned out. The $2000 Tim first
admitted to returning because, gosh, it wasn’t a very good look was it,
turned out to be $10,000, and he didn’t so much return it, as, well,
trousered it.



In Tim’s defence, he would have been in heaps of trouble with
his wife if he admitted to taking the ten grand after she’d told all
her Facebook friends that he didn’t –how embarrassing!– and at least he
did spend his dirty money on the purpose for which it was intended;
funding his re-election campaign. His colleague Andrew Cornwell could
not even do that. By one report he spent McCloy’s hard-earned on paying
off his tax bill. The scoundrel. No wonder the Libs wanted to expel him.



It seems if a fellow is going to pocket a bribe he should really spend the money on whatever the bribe was pocketed for.



On a sojourn from the far northern suburbs, I took an
hour before lunch to wander around The Rocks and Millers Point, a fine
walk most any time, but purely sublime on that diamond of a mid-winter’s
day. There are so many ghosts of the old city still floating around
those streets but being Sydney ghosts, they’re mostly kicking back,
catching the rays. 



Best soak them up while they can. The state’s scrapping of
heritage rules, the eviction of hundreds of public housing tenants, the
sell-off and the inevitable redevelopment of those properties by the
sort of spivs and chancers who keep ICAC in business will finish off
even the hardiest spirits. It’s a pity. So much of the city’s story is
written in the line of those streets. When the First Fleet arrived the
officers grabbed all the best real estate for themselves, laying claim
to the greener, pleasant lands of the Eora people, east of the Cove.
They took one look at the unappealing, rocky wastes on the other side
and packed the convicts off over there. Sydney’s east-west class divide
was born on that first day. Hundreds of years later, the descendants of
the first jailers and the Rum Corps have decided the lower orders can
bugger off out of Millers Point too. It was ever thus in this city. It
will ever be.



Twitter: @JohnBirmingham

Read more: http://www.smh.com.au/comment/joe-hockey-give-the-man-a-cigar-20140815-1046au.html#ixzz3AURh1Ask

Tone-deaf Treasurer: Joe Hockey the budget's worst enemy

Tone-deaf Treasurer: Joe Hockey the budget's worst enemy

Date

August 14, 2014 - 6:08PM

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John Hewson

"The government has now burnt a lot of its political capital for little gain in "fixing" the budget." Photo: Alex Ellinghausen

Treasurer Joe Hockey made a meal of his first budget and is making an even bigger meal of settling and selling it.



He was clearly "best on field" in the run up to the budget
but has been near to the worst since, with some now wanting his contract
reviewed. They certainly don't see him as "foreman material".




Hockey (and Prime Minister Tony Abbott) seemed genuinely
surprised that the budget was criticised and rejected so widely. Yet
Hockey waited some 10 weeks before attempting to woo the essential
crossbench senators and was AWOL in the media much of that time, except
for the serious distraction created by the release of his ill-conceived
biography, Hockey: Not Your Average Joe. This only served to further undermine the budget's integrity and to raise questions about his judgment.



This week, he again made himself the issue with his remarks
that "the poorest people either don't have cars or actually don't drive
very far in many cases", in some bizarre attempt to defend his fuel
excise decision. Another dumb error of judgment, especially given the
obvious inequity of his budget, whereby the disposable income of
lower-income earners was cut by some 12 per cent to 15 per cent, while
the income of those at the top was cut by less than 1 per cent.




Don't get me wrong, it is unnervingly easy to make dumb
statements in politics. Often attempts to make points with the best of
intentions fail to strike the desired chord – indeed, they can easily
offend.



One of my classics was to suggest that "you can always tell
the rented house on the street", made towards the end of a very long
speech to the Housing Industry Association in 1992. The line, originally
written by my then press secretary, Tony Abbott, was moved in and out
of the speech by various advisers before being finally reinstated and
was only noticed by one journalist at the time. But that was enough. The
media bushfire was ignited. I was very soon flat out back-pedalling.



In my experience, the best response to such acts of stupidity
is to immediately and openly admit the mistake and set about rectifying
it. To try to defend the indefensible breaches the first "law of
digging holes" – namely, once you reach the bottom, you should stop
digging.



Even though Hockey can find statistics to "prove" that the
rich pay more fuel excise than the poor, it's still making the hole
deeper. To those on low incomes, any additional impost, or benefit cut,
eats into their capacity to survive. They don’t have the luxury of
"choice" as to how to respond.



Behind all this, the Abbott government has shifted its
position on how to deal with the budget's weaknesses and criticism.
Initially, as expounded by Abbott himself, they were simply going to
"tough it out", with even a hint of a potential double dissolution.
Emerging in the aftermath of its successful handling of the MH17
tragedy, the view of the government shifted, sending messages far and
wide that it "would deal" and was capable of doing so. Obviously this
was an attempt to defuse criticism, to get "a" rather than "the" budget
through the Parliament and to reassert some control of the political
agenda.



For example, Health Minister Peter Dutton initiated
discussions with the Australian Medical Association, seemingly
entertaining some possible limiting of the GP co-payment. Similarly,
Education Minister Christopher Pyne seemed willing to contemplate a deal
that would reverse some of the proposed changes to HECS, in order to
preserve the proposed "deregulation of universities".



Selling these health and education decisions were a "big ask"
from the very start, as they were announced without an overarching
health and education policy framework. They appeared as simply
mechanisms to improve the budget bottom line, not as essential elements
of a broader policy in each area.



Much of the inequity of the budget could have been avoided with a full, integrated policy in key areas.



For example, focusing on pensions, just proposing to tighten
income and asset tests, and to lift the retirement age, is an obvious,
inequitable response.



However, if the government also proposed to significantly
increase the pension benefit that, on some measures, is below the
poverty line, and to reduce the near obscene skewing of superannuation
concessions in favour of the wealthy, it would have been seen to have
produced a more comprehensive and equitable overall response to the
budgetary consequences of our ageing population. However, this hasn't
happened and Hockey's misguided comments have only worked to distract
and further compound the difficulties of the budget-selling task.



The government has now burnt a lot of its political capital
for little gain in "fixing" the budget, especially recognising the
massive expenditure commitments still to be addressed.



If growth and budget revenue turn out to be weaker than
forecast, how will the government be able to go back again for another
round of cuts and initiatives?



I recall my time in the Fraser government, when treasurer
Phil Lynch was pilloried for his initial "razor gang" expenditure cuts,
only to see the Fraser cabinet still having to struggle, in every other
year of the government, to "fix" the budget.



Hockey still has it all to do.



Businessman John Hewson was federal leader of the Liberal Party of Australia from 1990 to 1994.

Read more: http://www.smh.com.au/comment/tonedeaf-treasurer-joe-hockey-the-budgets-worst-enemy-20140814-1042pt.html#ixzz3AOKhCIlO

Joe Hockey gets outnumbered in the battle of the stats

13 August 2014, 10.48pm AEST

Joe Hockey gets outnumbered in the battle of the stats

Article by MICHELLE GRATTAN 

Treasurer Joe Hockey has been in begging mode, flying around the country to meet crossbenchers.
AAP/Paul Miller

When a government has to negotiate with crossbenchers there is often
an element of humiliation involved, especially if that government
suffers from a touch of “born to rule”.



Governments think of themselves as having the right to get on with
what they want to do, only to often find they need to kowtow to those
who received just a fraction of the vote.



With so much of this year’s budget up for grabs and the Senate
crossbench packed with players enjoying both profile and power, the
wheeling and dealing is a circus for the public and a high wire act for
Treasurer Joe Hockey.



How ministers must (in private) curse having to go as supplicants to
Clive Palmer. Hockey turned up for dinner with the PUP leader on
Tuesday. Education Minister Christopher Pyne had lunch on Wednesday.
Health Minister Peter Dutton will see him on Thursday.

Education Minister Christopher Pyne spent his birthday lunching with PUP leader Clive Palmer.
Twitter

Click to enlarge

Is progress being made? Reading the Palmer signals doesn’t get any
easier over time. He seemed to be hinting at some flexibility over the
Medicare co-payment plan on Wednesday; on other occasions he’d said the
Palmer United Party senators would not vote for it under any
circumstances.



Hockey – coming to the task late and figuratively speaking holding
his nose much of the time – has, in begging mode, done his rounds of the
crossbenchers, travelling the length and breadth of the country.
There’ll be more work ahead. In a few weeks, the results can be audited.



But on Wednesday the Treasurer was in trouble with a clanger as he
tried to mount an argument for the proposed restoration of the
indexation of fuel excise in equity terms.



“The people that actually pay the most are higher income people,” he
said. “Yet the Labor Party and the Greens are opposing it. They say
you’ve got to have wealthier people or middle-income people pay more.
Well, change to the fuel excise does exactly that. The poorest people
either don’t have cars or actually don’t drive very far in many cases.
But they are opposing what is meant to be, according to the Treasury, a
progressive tax.”



This was dismissive politics; an inaccurate description of the tax; and a use of numbers that doesn’t reflect the full picture.



After howls of outrage Hockey put out a note to back his argument. It
showed average weekly household expenditure on petrol in absolute terms
increasing with household income thus: lowest quintile, $16.36; second
$27.60; third $38.55; fourth $47, and highest $53.87.



“Based on census data, households in relatively disadvantaged areas
are less likely to own motor vehicles than those in relatively
advantaged areas. Where motor vehicles are owned, households in
relatively disadvantaged areas are most likely to own only one car
whereas households in relatively advantaged areas are more likely to
have two or more motor vehicles,” the note said.



But these figures don’t tell us the relative burden of petrol costs,
and Hockey was quickly challenged on Twitter by more relevant figures.



News Corp’s national economics editor Jessica Irvine tweeted
the numbers for spending on petrol as a percentage of household income,
by quintile, showing that poor households spent more of their income on
it than those better off: Q1- 4.5%; Q2-3.5%; Q3-2.9%; Q4-2.3%; Q5-1.3%.



Greg Jericho, who writes for Guardian Australia, tweeted a graph
showing the percentage of annual household expenditure spent on petrol:
it was higher for the poor than for the top income bracket. Also, and
significantly, the second lowest income quintile (that is, relatively
modest earners) had the highest percentage.



In its submission to the Senate inquiry on the legislation the
Australian Automobile Association said: “Research indicates that the
people who use their cars most frequently are in the outer metropolitan
areas and rural and regional areas where there are lower incomes, less
jobs, and little or no access to public transport.



“The AAA is concerned that individuals in these areas will bear the highest cost increases of indexation changes.”



There are sound arguments for restoring the indexation of fuel
excise, not least environmental ones, as well as the need for a source
of revenue that grows. Also, the slugs to households will be small,
although mounting up over time.



It will be unfortunate if the Senate refuses to pass the measure.
Indexation was only abolished because John Howard was politically
embattled in 2001.



For all that, there is no getting away from the fact that it is a
regressive tax, and Hockey’s blunt-edged defence was just another
misstep in a budget sales job that has been full of them.

Joe Hockey fights to claw back a little for the overburdened wealthy - » The Australian Independent Media Network

Joe Hockey fights to claw back a little for the overburdened wealthy - » The Australian Independent Media Network

Joe Hockey fights to claw back a little for the overburdened wealthy

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  August 11, 2014
  
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Joe Hockey (image from afr.com)

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If Joe Hockey’s first budget
wasn’t enough to convince people that the government was going into bat
for the nation’s wealthy, then Joe himself has surely confirmed this
with his recent suggestions that the rich have already done their share
of heavy lifting. But as Warwick Smith reports, Mr Hockey certainly
isn’t playing with a straight bat.


Recent reports
show that the government knew beforehand that the federal budget would
hit lowest income earners hardest. Treasury modelling predicted that low
income earners would lose $844 and high income earners lose $517 per
year. Treasurer Joe Hockey’s response demonstrates that he thinks the
rich are doing too much of the heavy lifting and are unfairly burdened
by the tax and transfer system.


Hockey has criticised the Fairfax reporting and claimed that the
figures from the Treasury modelling don’t give a complete picture. Here
is a breakdown of some of his statements in support of that claim:

“It doesn’t take into account the fact that higher income households pay half their income in tax.”

For a start, the factual basis of Hockey’s statement is false. If
you’re on $180,000 per year (often cited as the threshold to be
considered high income) and you make no deduction claims you pay less than one third
of your income in tax. Now, if your taxable income is $20 million per
year, you do in fact pay close to half your income in tax. The reality
though is that people who earn that much use complicated financial and
accounting arrangements which result in them paying much less than the
marginal tax rate of 47%. The genuinely wealthy don’t pay much income
tax, that’s largely reserved for wage earners.


So, factually what Joe says here is just plain wrong. Make no
mistake, he knows it’s not true. He may not be the best Treasurer we’ve
ever had but I’m fairly confident he knows the difference between
marginal tax rates and average tax rates. Now, onto the relevance of the
remark for the point he’s trying to make. The assertion is that the
budget measures hit low income earners hardest. The response is that
high income earners pay lots of tax and low income earners pay little.
The Treasurer’s response has no bearing whatsoever on the assertion he
is trying to refute.


I think we should make logic classes mandatory for politicians. See,
what Hockey says can be true (though the specifics are certainly false) and
the reported Treasury modelling figures and Fairfax’s comments about
them can be true. This means that what Hockey has said is not a
refutation of the figures, it’s just an unrelated assertion.


OK, Hockey’s refutation of the Fairfax story continues:

“Every dollar that lower income households receive comes from higher income households”.

I don’t want to spend too long repeating myself but, once again, what
Hockey says here is both factually incorrect and irrelevant to the
question at hand. Welfare payments and funding for concessions come from
consolidated revenue, of which a bit less than half comes
from individual income tax. So, only every second dollar comes from
higher income households. Again, Hockey knows that but he’s not one to
let facts get in the way of a good argument – or, in this case, a bad
argument. Does the fact that high income earners support low income
earners refute the validity of the claim that low income earners suffer
more under the budget measures? No, of course not. Again, it’s just
another unrelated assertion meant to serve as distraction.


I could go on citing and refuting Hockey’s statements but I think the point has been made.


Hockey failed to meaningfully respond to the Treasury modelling. What
he does say though is very revealing. His response is a continuation of
his “lifters and leaners” narrative of the budget. He’s effectively
saying that low income earners deserve to suffer more than high income
earners because the high income earners are already suffering so much.
Their suffering is caused by the tax office taking from them to give
handouts to the bludgers at the bottom of the social pile. This is the
only possible interpretation of Hockey’s words that I can come up with.
He’s saying that the budget measures are not unfair, they’re just
correcting a little bit of the unfair burden that the rich already bear.


I think it’s important that we see these statements for what they
really are. Joe Hockey wants the poor to be largely left to fend for
themselves so as not to be a burden on his wealthy mates and campaign
contributors. He either doesn’t understand or doesn’t care about the
mountain of evidence that shows that the country as a whole will be much
worse off if we allow wealth and income inequality to grow.


Warwick Smith is a research economist and social commentator. He blogs at reconstructingeconomics.com and tweets @RecoEco.