Coalition politics and the end of market liberalism

December 14th, 2017 1 comment

Lots of commentators are making a fuss over the prospect of the Greens taking the seat of Batman following the likely and unlamented departure of Labor MP David Feeney (if not under S44 then at the next election). The underlying claim is that the election of Greens candidates represents an existential threat to Labor. This is typical of a commentariat mindset that sees anything other than majority Labor or LNP governments as recipes for disaster (the phrase “hung parliament” is indicative), even though we have decades of experience of such governments operating successfully both federally and in (I think) every state and territory. The reality is that, however fractious their relationship may be at times, Labor and the Greens constitute a centre-left coalition. As I said a year ago

For Labor that means giving up the idea that the Greens are a temporary irritant that will go the way of the DLP, if they are abused and/or ignored long enough. For the Greens, it means abandoning Third Way rhetoric suggesting that they represent an unaligned alternative to a two-party duopoly.

The details of the alignment between the two will vary according to the circumstances, from formal coalition to general support, but there is no alternative.

The problem of coalition politics is much more problematic on the right. Despite the frictions, I’m not thinking primarily of the LNP “coalition” (so rusted together that, even where they aren’t merged, the two are lumped together as a single “major party” in most commentary). Rather, the problem is the relationship between the LNP as a whole and the tribalist/Trumpist right, represented in various forms by One Nation, the Liberal Democratic Party, Bernardi’s Conservatives* as well as a large faction within the LNP itself. These two groups have nothing in common except that they have common enemies, and even that common ground is limited. They all hate greenies and unions, but the overt racism of One Nation and the religious bigotry of Bernardi repel lots of mainstream LNP types, while the Trumpist base is suspicious of banks and multinationals.

Most importantly, the ideological framework of market liberalism (aka neoliberalism, economic rationalism) and so on has lost its power, which always rested more on the idea that There Is No Alternative than on any positive appeal. Sermons about the need for reform, budget surpluses, more competitive tax regimes and so on no longer get the kind of automatic approval from the political class as a whole that they used to. So, the mainstream LNP no longer stands for anything in particular. Meanwhile, the Trumpists want nostalgic gesture politics without any concern for coherence or practical consequences.

For the immediate future, at least, politics in Australia has resolved itself into a struggle between two coalitions. Both are going to be fractious, but the big problems are going to be found on the right.

* There’s also the Katter party, but Katter is too idiosyncratic to fit into any classification.

Categories: Oz Politics Tags:

A barbarous relic

December 13th, 2017 21 comments

That’s what Keynes called the gold standard nearly a century ago, and he was right. I was reminded of this by the commentary on my latest piece on Bitcoin, published in the Conversation and also the ABC. I restated the points I made in my 2015 article on the massive and wasteful use of electricity in Bitcoin mining. The key points are that the cost of mining Bitcoins will inevitably rise until it is equal to the price for which Bitcoins can be sold, and that the great bulk of this cost is the electricity used to run specialised computer systems.

The responses included a great deal of huffing and puffing to the effect that I know nothing about cryptocurrency and shouldn’t comment, but showed no understanding of the central point, let alone any attempt to refute it. The scale of Bitcoin’s electricity use (which was hard to observe directly when I wrote in 2015 is now so massive as to be undeniable.

The other response, standard in cases like this, is whataboutery, that is, attempts to point out other wasteful uses of electricity compared to which Bitcoin is allegedly insignificant. I addressed one of these in the article, responding so someone who claimed that the electricity used by Bitcoin (serving at most a few million people) is “only” one-third of that of the rest of the global financial system.

Some other whatabouts led me to some interesting thoughts. One, which I plan to look at further is the use of electricity in electronic equipment on standby. The other, pushed with some vigour by commenters is gold. So, is gold worse than Bitcoin

Read more…

Categories: Economics - General Tags:

Reviving TAFE

December 8th, 2017 26 comments

I’ve just been invited to make a submission to a Senate inquiry into TAFE in South Australia. From what I can glean, this is a politically motivated exercise by the Turnbull government to make capital out of some embarrassing failures in a Labor state. But it gives me the incentive to write something about the catastrophic failure of vocational education and training in Australia, a failure for which there is plenty of blame to go around. Rather than making political capital out of such incidents, we need to rebuild the TAFE system as the core of a greatly expanded vocational education and training system, including public and non-profit institutions, free from the discredited ideology of markets and competition.

Among the points I want to cover

* The impact of decades of cuts in public support for vocational training
* The disastrous effects of subsidising for-profit providers
* The goal of universal participation in post-school education and training
* Integration of technical/vocational and university education

Categories: Economic policy Tags:

Contradictions, Part 2

December 7th, 2017 12 comments

The contradictions in the LNP/IPA attack on free speech became even more evident today with the appointment of Gary Johns as the head Australian Charities and Not-for-profits Commission. Johns was once a junior minister in the Keating government and used this position to give a non-partisan veneer to subsequent career as a hack for the IPA, which was followed by a stint at the Australian Catholic University.

Johns has been at the forefront of the push to suppress political advocacy by charitable organizations eligible for tax-deductible donations. So his appointment by Minister Michael Sukkar followed logically from the LNP/IPA anti-free speech agenda.

There’s just one problem. The announcement came on the day of the vote on equal marriage, an issue on which numerous religious charities campaigned on the losing side. So, in the same breath as announcing Johns’ appointment, Minister Sukkar expressed the hope that the legislation might be amended to allow charities to continue advocacy on this issue.

This is silly, of course. It was already obvious that no amendments would be passed. And, as Warren Entsch pointed out, under current interpretations of the law, there’s no need for them. As Entsch says “A charity may advocate on any issue relevant to that charity and nothing in this bill will change that”. He’s right of course, but the whole idea of appointing Johns was to change this situation.

Hopefully, the government will realise what a trap they are setting for themselves here. If they attempt to remove tax-deductibility for conservation organizations that engage in advocacy, they will create a precedent that can subsequently be used against religious organizations. Turnbull should overturn Johns’ appointment and find someone who actually supports charities and non-profits.

Assumming, as seems likely, that the government is in too much of a mess to work this out, perhaps the churches will do so. If they want to protect freedom of speech for themselves, they’d better start defending it for others (cue Ditrich Bonhoeffer).

Categories: Oz Politics Tags:

Contradictions

December 6th, 2017 31 comments

The breakdown of the market liberal right, and the accompanying rise of tribalist politics, is producing some interesting contradictions, most of which are embodied in the Institute of Public Affairs. David Leyonjhelm, a longterm IPA member has staged a provocation by inviting racist troll Milo Yiannopoulos to Australia under the banner of free speech. The Senate condemned him for providing a platform to someone who “incites abuse and harassment of women, jews, and members of the LBGTIQ and multicultural communities”. When the words of the motion were quoted back at him, Leyonjhelm threatened legal action, and stated his general willingness to use defamation law against his political opponents.

Meanwhile, at the same time as backing an IPA campaign to remove charity status from environmental groups that engage in political advocacy, Malcolm Turnbull is supporting amendments to the equal marriage bill, pushed by IPA alumnnus James Paterson to preserve the charitable status of groups that oppose the law.

What’s happening here, I think, is that a group that has always assumed itself to be part of the silent majority of “real Australians” is being faced with evidence that it is actually a shrinking minority, regarded by the majority as a set of noisy and unpleasant bigots. One reaction is to double down on aggressive assertion of its views, treating things like the outcome of the marriage survey as a temporary aberration. The other is to seek the protections traditionally accorded to minorities, appealing to the rhetoric of tolerance and diversity.

This contradiction can’t be sustained for long, although that won’t stop them trying. But how should the decent majority deal with this problem. The answer is to remember that everyone will be in the minority some time. We should reject the attempt to stop charitable groups from engaging in advocacy, even if we don’t always like what is being advocated. As regards free speech, we should resist the temptation to use legal bludgeons, but make it clear to the promoters of racism, and those willing to line up with them, that they will be called out for what they are. This has already happened to the LNP in Queensland and WA following disgraceful alliances with One Nation. One of the few encouraging signs from the right was Turnbull’s recent declaration (motivated by fear rather than principle) that the Federal LNP would do no preference deals with Hanson.

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Victory in sight on Adani, but Aurizon still a threat

December 4th, 2017 21 comments

After years of campaigning, it finally looks as if the Adani mine-rail-port proposal in the Galilee Basin has been defeated. A week after the Palaszczuk government was re-elected on a promise to veto funding from the Northern Australia Infrastructure Facility, the two biggest Chinese banks have announced that they will not be lending to the project either.

The election outcome is particularly striking. Premier Palaszczuk executed a rather inelegant backflip on this question after it became apparent that her weak pro-Adani position was politically untenable (I hope my column on the subject may have had some small influence there). My expectation (widely shared, I think) was that this would cost the government seats in Townsville and Rockhampton, where the local governments had committed millions of dollars to be nominated as FIFO hubs. In fact Labor held all these seats, with the possible exception of Townsville, still in doubt. Meanwhile, the LNP proposal for a coal-fired power station gained them nothing in North Queensland and cost votes in the South-East. With the election over, Adani’s political leverage in Queensland is now non-existent.

The Chinese banking decision also welcome. Although China is rapidly moving away from coal in its domestic economy, the Chinese export finance machine is still pushing coal projects around the world, as long as they use Chinese equipment and expertise. Perhaps this announcement is part of a broader change, or perhaps the Carmichael mine project is too much of a dog even for pro-coal lenders.
Read more…

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Monday Message Board

December 4th, 2017 7 comments

Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.

Categories: Economics - General Tags:

Bitcoin now a much bigger waste of energy

December 2nd, 2017 27 comments

I’m giving a talk tomorrow at a Colloquium organized by a group called Sort, on The Wasteful Economics in Resource Recovery, and I’ve been asked to talk a bit about blockchain technology. That reminded me that I needed to take another look at the issue, and what has changed since 2015 when I wrote that

at most of the market value of a Bitcoin reflects the electricity wasted in the calculations needed to “mine” it, with the obvious disastrous implications for the global climate.

and concluded that the sooner this collective delusion comes to an end, the better.

As far as I can determine, the only thing that has changed is that the Bitcoin bubble has got massively bigger and that the associated waste of energy is now much more widely recognised than when I first wrote about it.

Despite the huge increase in the market value of bitcoins, they seem further than ever from becoming an actual currency. Unsurprisingly, there’s no sign that governments are willing to accept bitcoins as legal tender. Nor is there any sign that they are displacing standard forms of money. On the contrary, bitcoins now seem to be seen as a financial asset, with no real suggestion that they will ever be a general medium of exchange.

As a check on this, here’s a list of firms that accept bitcoin as payment, which fits easily on to a single page. Sydney readers who would like to buy a beer with bitcoin are in luck, or were back in 2014 when the Old Fitzroy got a bit of coverage for saying it would accept bitcoins. There’s another pub listed in London, and that’s about it as far as drinks are concerned. After nearly a decade, Bitcoin acceptance remains the stuff of publicity stunts, not a serious commercial option.

At least by repute, bitcoins are used more extensively in covert transactions such as those involving drug trading, tax evasion and money laundering. But that’s scarcely a good reason to bet on them beintg around for a long while. If the scale of the problem gets large enough to cause real problems, governments will act to shut the whole system down or regulate it to the point where the compliance costs make the whole idea unattractive.

At any rate, the durability and magnitude of the Bitcoin phenomenon, running for nearly 10 years and with a putative value of nearly $US 100 billion, provides us with a very sharp test of the Efficient (financial) Markets Hypothesis. If Bitcoin eventually becomes a currency, the EMH and its supportsr will be vindicated, and I (along with quite a few other economists) will have a lot of egg on my face. If the bubble bursts, the roles will be reversed.

Finally, I should give a plug to Gridcoin. This is a project that aims to avoid the massive waste involved in Bitcoin by making calculations that are actually useful to science. This is a worthwhile idea. But with a current market capitalization of $21 million, it’s obviously got a long way to go.

There are also alternatives to the “proof of work” method of validating changes to the blockchain, such as “proof of importance”, which is analogous to Google’s page ranking systems. I’m still trying to find out more about these.

Categories: Economics - General Tags:

Appearances

November 29th, 2017 5 comments

I’ll be at the State Library of Queensland tonight for Science Says!. I don’t know what I’ve let myself in for, but I’m assured it will be fun.

On Sunday, I’ll be talking at a Colloquium organized by a group called Sort, on The Wasteful Economics in Resource Recovery.

My last event for the year (I think!) will be a talk about the Economics Nobel award (yes, I know) at the Economics Society of Australia Christmas party. Free for members, probably not of much interest to others.

Categories: Economics - General Tags:

Monday Message Board

November 27th, 2017 18 comments

Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.

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Last-minute economic policy post

November 24th, 2017 19 comments

Both Labor and the LNP have released their economic policies just two days before the state election. This isn’t just a matter of “costings”. Essentially, all the new expenditure items and tax reductions were announced with some fanfare during the campaign, while the revenue measures and expenditure cuts needed to fund these goodies have been kept under wraps until now. This is a terrible way to run an election, but the “hardheads” on both sides obviously think it’s a good idea (the same hardheads who gave us compulsory preferential voting on the Labor side and the Commission of Audit for the LNP).

On the LNP side, my assessments here and here have been confirmed. The tax cuts and extra spending promised by the LNP have been financed by cuts to services (euphemistically referred to as “efficiency dividends”) and by the abandonment of the Cross-River rail project, which appears to be vital if we are going to handle a growing Brisbane population in the future. The efficiency dividend will necessarily involve reduced employment. If the promise to avoid compulsory redundancies is adhered to in spirit as well as letter, that will mean a semi-permanent hiring freeze in areas with low turnover, which is likely to have adverse effects on efficiency.

These are big cuts, but not enough to reach the target of a surplus on fiscal balance. That means the stage is set for yet another Commission of Audit and unannounced further cuts.

Labor is planning to finance promised improvements in services through a mixture of tax increases (targeted at the relatively wealthy) and unspecified reallocation of existing funds, yielding a modest net increase in expenditure as compared to the cuts proposed by the LNP.

We have a choice then between Labor offering improved services, which must ultimately be financed by tax revenue and the LNP offering cuts in taxes, services and jobs. It would have been helpful if this choice had been made explicit four weeks ago, but still it is clear enough. Unsurprisingly, I prefer Labor.

Categories: Economic policy Tags:

Financing a UBI/GMI

November 23rd, 2017 17 comments

A couple of months ago, I wrote a post making some observations on the closely related ideas of a Universal Basic Income or Guaranteed Minimum Income. The most important was

Observation 1: Any UBI scheme can be replicated by a GBI with the same effective marginal tax rates, and vice versa

I meant to follow up with a more detailed exploration of financing issues, but all sorts of other things intervened. However, I’ve now prepared a draft, which is over the fold.

Comments and criticism much appreciated

Read more…

Renewables, coal and culture war

November 22nd, 2017 11 comments

In the final week of the Queensland election campaign, I’ve been busy trying to do what I can to influence the result. I’ve put out a couple of opinion pieces about the choice between coal and renewable energy. This one, in The Guardian, focuses on the central role of the culture war in motivating rightwing opposition to renewable energy. In The Conversation, I look at the economics and business aspects and debunk the idea that ‘ultrasupercritical’ technology makes coal-fired power a high efficiency, low emissions technology

Also, in New Matilda, I’m collaborating with Morgan Brigg and Kristen Lyons of the Global Change Institute to produce a five-part series on Adani and the resistance to the project by the Wangan and Jagalingou people.

Categories: Environment, Oz Politics Tags:

Sandpit

November 20th, 2017 19 comments

A new sandpit for long side discussions, conspiracy theories, idees fixes and so on.

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Monday Message Board

November 20th, 2017 10 comments

Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.

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An opportunity for a Bill of Rights

November 18th, 2017 30 comments

One of the striking outcomes of the equal marriage survey is that a lot of people who had always assumed themselves to be part of (in Spiro Agnew’s phrase) the “silent majority” have been presented with undeniable evidence that they are actually in the minority. Not only that, but the minority to which they belong on equal marriage would be even smaller if it weren’t boosted by lots of people they’ve always thought of as undesirable minorities. Most notably, the No vote was swelled by Muslims and recent migrants from more traditional cultures.

Against that background, it’s not surprising to see people who have never had a good word to say about the United Nations, or about a Bill of Rights, embracing the idea of incorporating the International Covenant on Civil and Political Rights into Australian law (we’re already a signatory, but that has no legal effect).

It would be absurd to incorporate a document dealing with topics as diverse as the death penalty and war propaganda (both prohibited) into the Marriage Act. Nevertheless, now that the issue has been raised, it’s a great opportunity for Australia to get something like a Bill of Rights enshrined into law (though of course it wouldn’t change the Constitution).

It’s tempting to use the thumping majority recorded in the survey as a stick with which to beat those (variously described as “dinosaurs” or “reactionaries”) who campaigned against equal rights on this occasion. But all majorities are temporary. It would be far better to use this moment to make common cause in support of protections for minorities of all kinds.

Read more…

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The thin end of the wedge on anti-discrimination law?

November 15th, 2017 39 comments

The latest attempt to derail equal marriage was a proposal by a group of conservatives to remove anti-discrimination provision to allow a wide range of discrimination against same-sex married couples. The leading proponent of the proposal was James Paterson who, like so many Liberal MPs, is a former staffer at the Institute of Public Affairs.

Press coverage duly noted that Paterson had answered “Yes” in the postal survey and described him as a supporter of individual liberty, but didn’t as far as I can tell ask the obvious question: is Paterson’s position on discrimination specific to this issue, or does he support a general right to discriminate on racial, religious and other grounds?

The public record isn’t very clear on this. Insofar as he’s said anything about anti-discrimination law, Paterson has been opposed. This is consistent with the orthodox propertarian position that employers, business and landlords should be free from any interference from government. However, so far, he has only made this point explicit in relation to equal marriage and racist speech (Section 18C). So, it would be good to have a clear statement as to whether the current bill is intended as the thin end of the wedge, or whether he sees equal marriage as a special case.

Categories: Oz Politics Tags:

Some whataboutery from Tim Nicholls

November 13th, 2017 10 comments

Among the tools used to defend the indefensible, the most widely used is “whataboutery”. When faced with a criticism you can’t answer, you point to something allegedly comparable done by someone supposed to be on the same side as your critic, and ask the critic “what about …”

A recent example (Hat Tip Bill Wallace). Presented on ABC TV with my observation that his election promises represent an arithmetic impossibility, Tim Nicholls resorted to whataboutery, suggesting that I had gone easy on Anna Palaszczuk in regards to the use of transfers of debt between the general government sector, GBEs and public service superannuation. Oddly enough, I’ll be covering this exact point in an article I’m now writing for The Guardian. The relevant para

Labor has been able to improve the accounting performance of the general government sector by requiring public enterprises to make bigger contributions to the budget and by making transfers from the funds hypothecated to pay for public service superannation. This doesn’t change the financial position of the public sector as a whole, but makes the budget sector look better. The relevant criteria is public sector net worth and net financial worth, which are unaffected by such manoeuvres. Fortunately, public sector net worth has never been a problem: the Queensland government had net worth of over $170 billion when the Costello Commission reported, a figure that is projected to exceed $200 billion by 2020.

Some broader responses:

* Whataboutery is a very weak defence in a clear-cut case like this. Even if I were an ALP hack (readers of this blog can judge for themselves), it wouldn’t invalidate the point I’m making

* I don’t think Palaszczuk is open to the specific criticism I’m making of Nicholls. She hasn’t promised to cut taxes or improve the budget balance, and her election spending promises look to be the kind of thing that can be managed within the normal budget process

* I’ve already been critical of both sides in this election campaign. My only published opinion piece was a criticism of Palaszczuk’s pro-Adani policy, which she has subsequently reversed (not claiming cause and effect here, of course). If Nicholls cares to put up an election platform that adds up and protects crucial services from cuts, I’ll be the first to congratulate him.

Read more…

Categories: Economics - General Tags:

Monday Message Board

November 13th, 2017 17 comments

Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.

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Where’s the money coming from?

November 11th, 2017 10 comments

In the Courier-Mail, Stephen Wardill responds to my observation that LNP’s campaign promises don’t add up, and must imply large unnannounced cuts to services, by suggesting that they may instead imply large unnannounced cuts in infrastructure, specifically the Cross-River rail tunnel project. There is a simple way to resolve this: the LNP could say where they plan to cut, and by how much. This idea doesn’t seem to have occurred to Wardill however.

It’s also easy to check that cutting the Cross-River project will go nowhere near filling the gap in the LNP’s promises. The commitment in the last budget was $2 billion, and the total (assuming no Commonwealth funding) is about $5.4 billion over 7 years, with a target completion date of 2024. Scrapping the current budget allocation of $2 billion would barely be enough to pay for the reintroduced Royalties for Regions program, let alone the many other ideas that have been floated. And none of that goes anywhere near achieving the promise of a surplus on fiscal balance.

So, as Robert Menzies famously asked, “Where’s the money coming from?”

Read more…

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Armistice Day, 2017

November 11th, 2017 20 comments

Another Armistice Day and the prospects for peace are bleaker than they have been for years. Not only are militaristic demagogues in the ascendancy just about everywhere, but the cult of the military is increasingly unchallenged, even in countries generally seen as peaceable, like Canada. Then there’s the threat of nuclear war posed by a much more capable North Korea, and the erratic responses of the Trump Administration.

It’s a day on which I feel increasingly alone. It seems obvious to me, 100 years after the bloodiest year of war in Australia’s history and the revolutions the war produced, that war and revolution are almost invariably a pointless waste of life and human potential, usually ending in disaster for all, and that even grave historical and social injustices are better resisted by peaceful means than by resort to force. But every military anniversary reminds me that this is the view of a small and shrinking minority.

One day, perhaps, peace will come. But not today.

Categories: Economics - General Tags:

Email update

November 10th, 2017 1 comment

Over the fold, my latest irregular email update. If you’d like to be on the mailing list, write to me at [email protected]

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Why even bother ?

November 8th, 2017 17 comments

Questioned about the obvious arithmetical impossibility of his promises to increase spending, cut taxes and greatly improve the budget balance, Queensland LNP leader Tim Nicholls had two responses.

First, he claimed that he could balance the books by not renewing some unspecified programs as they aspire and by cutting government advertising expenditure. This is laughable. The savings from discretionary programs expiring in any given year are going to be tiny in relation to the billions Nicholls needs to find annually. As for government advertising, not only are the sums involved relatively modest, but this is a promise routinely made and broken by Opposition parties in just about every election. Nicholls may not like government advertising when Labor does it, but, in office, he was happy to spend $70 million on the Strong Choices asset sales campaign.

More importantly, Nicholls stated that his campaign would release costings by an unnamed accounting firm on 23 November, two days before the election and after lots of people have cast early votes. This is stunning. It’s obvious that the date has been selected to ensure that the costings can’t possibly be checked in time to confront him with the errors it will undoubtedly contain.

He might as well have promised them five minutes before the polls close on election day. Why even bother with such a charade?

Categories: Oz Politics Tags:

The laws of mathematics don’t apply to the LNP

November 6th, 2017 15 comments

LNP promises don’t add up

It is common for political parties to promise more than they can deliver at election time. Even by the relative lax standards of Australian campaigns, the LNP Plan “Getting Queensland Back in Business” stands out for its unreality. 

The Plan only promises to create 500 000 jobs through a fiscal policy that involves

* Cutting taxes;

* Increasing expenditure; and

* Improving the budget balance

These are all desirable objectives, but it’s a matter of simple arithmetic that all three can’t be achieved at once.

Reductions in revenue

The LNP plan proposes to:

* Increase the payroll tax threshold

* Freeze registration for 6-cylinder cars

*  Write down the value of GOC assets in electricity, and increase competition to drive down prices.  This must entail a reduction in the flow of dividends to the general government sector The LNP has criticised the current governments reliance on dividends from GOCs but has made no suggestion as to how this revenue source will be replaced.

Increased capital expenditure

The LNP Plan proposes a substantial increase in  infrastructure spending.  The strategy implies that spending will be increased by up to $3 billion a year. Explicit commitments of $1.3 billion for water projects and $500 million ‘Royalties for Regions’  are included in the Plan.  The Plan commits to building a new coal fired power station at an unstated costs. It has also been suggested that the M1 will be duplicated at a cost of $2.4 billion

Current expenditure

The LNP plan announces no cuts in current expenditure, other than symbolic targets such as the Safe Schools program and executive bonuses in energy businesses, which would yield minimum savings. The LNP has promised no forced redundancies and has advertised its intention to build schools and hospitals, though without a specific budget. The Plan includes expenditure commitments including a crime action plan, a youth employment plan and assistance for tourism.

Greatly improved budget balance

Following the recommendations of the Costello Commission of Audit, the LNP proposes to target a surplus on fiscal balance rather than, as at present, net operating balance. The difference between the two is net capital investment, currently around $3 – $4 billion. Proposed increases in infrastructure spending would make this difference even greater.

500 000 jobs

As for the 500 000 jobs promise, it turns out to be a simple statistical trick.  In previous election campaigns, it’s been common to commit to employment targets for a three-year term in government.  Nicholls has shifted the goalposts by promising to create the jobs over a period of 10 years, an annual rate of 50 000 jobs a year.  That’s only marginally greater than the rate achieved during the term of the Palaszcuk government. The implied annual rate of growth is 1.9 per cent, again only marginally higher than the rate of growth under recent Labor governments. It would, however, be a significant improvement on the outcome under the Newman government, when less than 50 000 additional jobs were created in a three year term of government.

Summary

Despite Malcolm Turnbull’s recent suggestion to the contrary, the laws of arithmetic apply in Australia and, in particular to Australian governments. The promises made by the LNP can be delivered only through large, unannounced cuts in general government expenditure. This is consistent with the strategy adopted by the Newman government in 2012, and by the Abbott government in 2013. 

Categories: Economics - General Tags:

Sandpit

November 6th, 2017 9 comments

A new sandpit for long side discussions, conspiracy theories, idees fixes and so on.

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Monday Message Board

November 6th, 2017 20 comments

Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.

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Connected and Disaffected

November 3rd, 2017 4 comments

That’s the title of a UK podcast on which I appeared recently, talking about Zombie Economics

Soundcloud stream: https://soundcloud.com/connectedanddisaffected/season-2-episode-1-the-grand-relaunch

Facebook: https://m.facebook.com/story.php?story_fbid=165173310736451&id=114184012502048

Twitter: https://twitter.com/CandDPodcast/status/925800309351428097

It can also be found on ITunes and other podcast directories.

Categories: Dead Ideas book, Media Tags:

Here’s a fine mess

November 3rd, 2017 61 comments

The great citizenship debacle rolls on, and it’s hard to see anyone coming out of it looking good.

The primary blame goes to the High Court which decided to use an absurdly literal interpretation of the Constitution to knock out a couple of independent candidates back in the 1990s (they’d been naturalised but hadn’t properly revoked their previous citizenship). If the first person to fall afoul of this interpretation had been a senior government minister, I have no doubt the Court would have decided differently. But literalism and precedent are a disastrous combination.
Read more…

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The MFP illusion

October 31st, 2017 23 comments

Expanding on a post a little while ago, I have a piece in Inside Story arguing that multi-factor productivity, the Holy Grail of microeconomic reform for the last few decades, is a residual that is and should be equal to zero.

From getting the idea to publishing it took me a few weeks. That’s a huge contrast from last century when the best I could have hoped for is an article in a low-prestige journal, taking a year or more and reaching an audience of, at most, a few hundred.

That’s great for me, as I’m more interested in reaching a large intelligent public than in impressing my fellow economists (I have to do that to keep my job, of course, but it’s not my top priority). By contrast, the general direction of the profession has been towards fewer and fewer articles in an ever-narrower range of prestigious journals.

Monday Message Board

October 30th, 2017 31 comments

Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.

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