Voters understand better than commentators the trickery of state budgets

That’s the title of my latest piece in the Guardian.
Opening paras

Privatisation has been the last fiscal resort of desperate governments for decades. By now, just about everyone in the community understands that the supposed windfall achieved by selling income generating assets is spurious. Voters have routinely tossed out governments that have advocated or implemented privatisation, sometimes by stunning margins.

The only people who haven’t got the memo are the politicians who make budget policy and the journalists who write about it. The politicians’ reluctance to abandon privatisation is understandable if discreditable: when electors throw them out, they are virtually guaranteed a lucrative post-political career in the financial sector.

The failure of political journalists to understand what they write and talk about for a living is more surprising. Yet the coverage of the Queensland and NSW elections suggests that there has been no improvement in understanding of the basic issues.

6 thoughts on “Voters understand better than commentators the trickery of state budgets

  1. Must get to the Guardian article, just scanning this but will just comment that the Berejiklian government has a smell about it already, owing to water policy and a couple of other things that seem retrograde.

    Maybe in my case, it is just prejudice, but it is a government and a premier I have developed an intense mistrust and dislike for and suspect its ethical standards plumb the same depths as its federal counterpart.

    It can be recalled that the only reason it is there is because of the public mistrust of the ALP after its government in the first decade of this century. A half decent opposition and it would have been consigned after its first term.

  2. “Australia’s top marginal tax rate has decreased over the past 50 years from over 75 per cent in the 1950s to 46.5 per cent (including the Medicare levy) as of 1 July 2006 …” ***

    I’d put it back up to 75% for those earning one million plus per annum. Almost no-one is worth that kind of money.

  3. rampant lordlings of the corporate imperium?
    drowning government in a bathtub?

    one can’t help getting the feeling that the”rebel” flag wavers are protesting the loss of the right to openly and legally own another human as an item of property.

    is it all about “property rights”?

    so all tax is theft?

    and owning the life of a person as an item of stock ( a flock of sheep, a herd of cattle and a coffle of slaves) is not theft?

    delete if you like JQ but this is one end in a continuum of this subject.

  4. The Conversation has an article from June 6, 2017 titled “How America can copy Australia’s asset-recycling scheme.” This article praises asset-recycling to the skies. Ironically, it has an advertisement on screen which says “Help combat alt-facts and fake news and donate to independent journalism. Tax deductible.”

    Help me here. Is asset-recycling the latest variation on asset sales? Now, the talk seems to be about leasing assets rather than selling assets. When does leasing an asset make sense? A business asset presumably can earn an income or dividend. No good business person would buy into the lease of an asset as a lessee unless their due diligence showed they could make a profit on the lease price. If the asset can generate an income, the lessor would not lease it unless, somehow, leasing could earn a higher net income than running it or unless they (the lessors) were not in a position to run or manage the asset or any business which might be run from the asset.

    So, the question here seems to be, in what cases does it make sense for governments to lease assets and which assets would they lease? Leasing large government-owned ports or airports (for example), seems as absurd as selling them. They are regional monopolies. It makes sense for the government to remain the monopolist owner. Management is another matter. It may under a statutory authority or it may be contracted out.

    It seems to me that a business would only lease a government owned port (for example) if the lease price was artificially low. The government in turn would be taking a poor lease price to just have “lumps” of capital now or soon (depending on how lease payments were structured). Instead, the government could keep the revenue stream from the port and borrow lumps of capital. Interest rates are very low at the moment. Of course, this is just what J.Q. is saying.

    These seems to me no reason for the push for government sales and leases of profitable assets other than the desire by the private sector to acquire these assets cheap by boondoggles.

    The relentless neoliberal push to steal everything from the 99% of the people continues. When will it end?

  5. In addition to my post above, I notice on the 2014-2015 Commonwelath Budget website “The Asset Recycling Initiative helping states unlock their balance sheets”. Wow, this is boondoggle central.

    I quote.

    “How the Asset Recycling Initiative works

    Scenario 1: State invests all proceeds in new infrastructure

    State A decides to privatise Port Thomas under a 99‑year lease with expected net sale proceeds of $1 billion, based on book value, and to reinvest 100 per cent of these proceeds in additional road investment in the capital city and regional areas, consistent with the eligibility criteria for new investments under the Agreement.

    Under the terms of the Agreement State A will expect to receive $150 million as an incentive payment, in two instalments of $75 million.”

    End quote.

    Here we have an incentive bribe to state governments to quickly rush through privatised leases at cheap prices. It doesn’t matter if the state government sells an asset cheap. It gets its coffers topped up by the Commonwealth. Essentially, this free money ($5 billion from that budget) goes / will go straight through to private enterprise. It’s the interests of state government pollies to run the scheme that way. Then they get jobs after politics as J.Q. mentioned.

    How can the ordinary citizen (not skilled in accounting or finance in the main) keep up with these creative boondoggles endlessly concocted and buried in budgets?

    Q. What kind of system multiplies errors faster than truth?

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