What is the real state of the economy?

[Power Raid]

We (as a nation) must at least be part of the research, development & design efforts of some of these sunrise technologies. Otherwise we are FORKT. Even some high tech specialist manufacturing is not beyond us. We do need to invest in these areas before we lose too many more quality researchers to OS.

Biomedical is another area we must invest more in before we fall behind forever.

I'm not sure if this Gument understand the idea or urgent need for such Investment. IMO this bunch of visionless bean counters seem to want to economically 'act in haste', only to have us all 'repent at leisure', to use an old saying.

I wish I could say the gument are supportive but unfortunately the Labor gument changed the tax laws and forced investment companies to shift OS.

we need to tax foreign investment the same as local investment.

Hopefully that fix it over the next decade or two.

 

[madmug]

I wish I could say the gument are supportive but unfortunately the Labor gument changed the tax laws and forced investment companies to shift OS.

we need to tax foreign investment the same as local investment.

Hopefully that fix it over the next decade or two.

I guess neither side of politics has the mortgage on short sightedness

 

[Old Spice]

if the rba was responding only to the GFC and its impact on our economy, they would have reduced rates. but to tackle inflationary effects of a poorly targeted and over-cooked stimulus, they had to work against the government and increase rates.

thanks for that. i wasn't aware spending had increased prior. i stand corrected.

You'll note this unsourced graph includes govt spending and GDP. It's a collation of private and govt spending meant to bedazzle.

Spending growth in any case certainly trends up over many govt periods. The below graph is Real Govt Payments which is what counts if we are being honest and not trying it on.

http://archive.treasury.gov.au/documents/1352/HTML/docshell.asp?URL=03_spending_growth.asp\

And this is where government spending comes into play, where the market fails to provide the necessary stimulus to production, spending and demand. That is during an economic downturn. Poweraid is half right when he says fiscal and monetary policy are enmeshed, but he's dead wrong when he thinks there is no place for government to pull the levers. And that is because we live in a society, not an economy. A govt can provide targeted spending, economic direction, economies of scale and discretionary outlays whereas monetary policy does nothing in and of itself.

 

[Power Raid]

You'll note this unsourced graph includes govt spending and GDP. It's a collation of private and govt spending meant to bedazzle.

Spending growth in any case certainly trends up over many govt periods. The below graph is Real Govt Payments which is what counts if we are being honest and not trying it on.

http://archive.treasury.gov.au/documents/1352/HTML/docshell.asp?URL=03_spending_growth.asp\

And this is where government spending comes into play, where the market fails to provide the necessary stimulus to production, spending and demand. That is during an economic downturn. Poweraid is half right when he says fiscal and monetary policy are enmeshed, but he's dead wrong when he thinks there is no place for government to pull the levers. And that is because we live in a society, not an economy. A govt can provide targeted spending, economic direction, economies of scale and discretionary outlays whereas monetary policy does nothing in and of itself.

I didn't say they shouldn't do it.

I said they over-cooked it. That is evidenced by the RBA having to work against their wasteful spending measures.

 

[Old Spice]

I didn't say they shouldn't do it.

I said they over-cooked it. That is evidenced by the RBA having to work against their wasteful spending measures.

If Labor 'over-cooked it' as seems to be a favourite, wish-washy saying of yours, the rest of the world seems to have burnt their economy to ashes. The proof of the pudding is in the results and it's so well known that Labor's 'debt crisis' as a % of GDP was so minuscule that it's hardly worth re-hashing, but we'll do it anyway.

Now, the Labor govt increased spending, that led to lower interest rates via the RBA from 2008 which should have been a boon to exports but quite clearly it wasn't.

The reasons for that dip, which continues, is primarily because China doesn't want to fuel their economy via coal. China didn't subtly pursue that policy, they telegraphed it in the most straightforward manner for years but the LNP were more interested in fighting a redundant political war here over resources. That is just pure politics at it's most myopic and stupid proportions.

I mean, every economic policy has winners and losers. High interest rates are bad for exporters but good for investors, high unemployment is bad for workers but good for bosses who want lower wages, but the Liberal Party have managed to pick only losers by their policy inclinations. Let's go for high debt with a low economic, social and political yield because we don't want to make our already bloated mates pay taxes.

 

[Mofra]

I didn't say they shouldn't do it.

I said they over-cooked it. That is evidenced by the RBA having to work against their wasteful spending measures.

The RBA were enthusiastic supporters of the measures.

I disagreed with the level of the "round 2" stimulus when announced, however Treasury modeling shows it had the desired effect and actually protected budget income for many years afterwards.

 

[Power Raid]

The RBA were enthusiastic supporters of the measures.

I disagreed with the level of the "round 2" stimulus when announced, however Treasury modeling shows it had the desired effect and actually protected budget income for many years afterwards.

I recall the RBA saying they wanted to reduce rates but couldn't due to the inflationary pressures of the stimulus. I don't recall the timing but you're probably right re round 2.

Over-cooking a first round could be forgiven as the size and effect of the financial tsunami in Oz was unknown. but quite early on, it was clear we were protected given our bank liquidity ratios and our strong trading partners.

Hopefully going forward, we keep a running list of projects to unveil in the event of another downturn rather than a ad hoc knee jerk ideas. As these events a cyclical and should never come as a surprise.

 

[Mofra]

Hopefully going forward, we keep a running list of projects to unveil in the event of another downturn rather than a ad hoc knee jerk ideas. As these events a cyclical and should never come as a surprise.

One of the aspects that make stimulus in 'crises' conditions harder to roll out is the timing aspect of it.
Keatings infrastructure spending in the early 90s is used as an international example of how to do the right thing, but do it so poorly that it actually makes the problem worse.

Because the Keating government insisted on "accountability" above all else to ensure every dollar spent went where it was meant to, the decision was taken to fund large infrastructure projects that were overdue to soften the blow of the 91-92 recession.
The problem with larger projects like this was the need for longer lead times - by the time the projects were underway and the bulk of committed government spending was rolled out in 93, the economy had recovered so aggregate demand being back at normal levels + additional government spending pushing up demand = high inflation and the inevitable treasury response that hurt so many people with such high interest rates.
Even those of us who admire Keating have to admit this was a huge balls-up.

 

[Max zero]

One of the aspects that make stimulus in 'crises' conditions harder to roll out is the timing aspect of it.
Keatings infrastructure spending in the early 90s is used as an international example of how to do the right thing, but do it so poorly that it actually makes the problem worse.

Because the Keating government insisted on "accountability" above all else to ensure every dollar spent went where it was meant to, the decision was taken to fund large infrastructure projects that were overdue to soften the blow of the 91-92 recession.
The problem with larger projects like this was the need for longer lead times - by the time the projects were underway and the bulk of committed government spending was rolled out in 93, the economy had recovered so aggregate demand being back at normal levels + additional government spending pushing up demand = high inflation and the inevitable treasury response that hurt so many people with such high interest rates.
Even those of us who admire Keating have to admit this was a huge balls-up.

Thats what amazed me. We can all agree that there are major infrastructure projects that need doing and yet when we get a chance to do them we don't. We could of had the original NBN plus more. The biggest solar plant in the world cost 2.2 billion. Imagine if we had built a few here? We spent over a 100 billion dollors and what do we have to show for it?

This is why I am wary when people say the government needs more revenue. Look at what they did with the revenue they had. Does it strike you as being particularly smart spending?

 

[Power Raid]

One of the aspects that make stimulus in 'crises' conditions harder to roll out is the timing aspect of it.
Keatings infrastructure spending in the early 90s is used as an international example of how to do the right thing, but do it so poorly that it actually makes the problem worse.

Because the Keating government insisted on "accountability" above all else to ensure every dollar spent went where it was meant to, the decision was taken to fund large infrastructure projects that were overdue to soften the blow of the 91-92 recession.
The problem with larger projects like this was the need for longer lead times - by the time the projects were underway and the bulk of committed government spending was rolled out in 93, the economy had recovered so aggregate demand being back at normal levels + additional government spending pushing up demand = high inflation and the inevitable treasury response that hurt so many people with such high interest rates.
Even those of us who admire Keating have to admit this was a huge balls-up.

add me to the admire Keating camp. I felt he left at about the right time but just wish he had an extra 3 years at the beginning of his PMship.

this country owes its modern framework and our strong banking system to Keating.

 

[Mofra]

Thats what amazed me. We can all agree that there are major infrastructure projects that need doing and yet when we get a chance to do them we don't. We could of had the original NBN plus more. The biggest solar plant in the world cost 2.2 billion. Imagine if we had built a few here? We spent over a 100 billion dollors and what do we have to show for it?

The NBN is an of-budget item that should generate a net positive ROI by the end of the project. Why anyone wants to roll that back (beyond scoring political points) is crazy to me.

This is why I am wary when people say the government needs more revenue. Look at what they did with the revenue they had. Does it strike you as being particularly smart spending?

We don't have a problem with needing to implement wholesale tax increases, however we do have a tax avoidance problem - which is why cutting the ATO is a crazy move. We could merely collect the revenue we're owed and be in a far better budget position.

 

[Tomjas00]

The NBN is an of-budget item that should generate a net positive ROI by the end of the project. Why anyone wants to roll that back (beyond scoring political points) is crazy to me.

We don't have a problem with needing to implement wholesale tax increases, however we do have a tax avoidance problem - which is why cutting the ATO is a crazy move. We could merely collect the revenue we're owed and be in a far better budget position.

People try to avoid taxes because the rates are so high

Bring them back to a reasonable level and the arguments for avoidance become largely redundant due to the cost of implementing schemes

 

[Mofra]

People try to avoid taxes because the rates are so high

Bring them back to a reasonable level and the arguments for avoidance become largely redundant due to the cost of implementing schemes

Very open statement - we have comparatively low taxes by OECD standards.
To what level would you cut taxes and how would you make up the foregone revenue shortfall?

 

[Tomjas00]

Very open statement - we have comparatively low taxes by OECD standards.
To what level would you cut taxes and how would you make up the foregone revenue shortfall?

IMO, comparisons with OECD countries are complete nonsense as most of them are absolutely stuffed and have vastly different economic drivers to Australia in any event

The one-eyed man being king of the blind springs readily to mind

 

[Mofra]

IMO, comparisons with OECD countries are complete nonsense as most of them are absolutely stuffed and have vastly different economic drivers to Australia in any event

So you have made an open statement with absolutely no reasoning behind it, even ignoring countries who fared as well (or better) than us during and post GFC?

Okay then...

 

[Power Raid]

The NBN is an of-budget item that should generate a net positive ROI by the end of the project. Why anyone wants to roll that back (beyond scoring political points) is crazy to me.

We don't have a problem with needing to implement wholesale tax increases, however we do have a tax avoidance problem - which is why cutting the ATO is a crazy move. We could merely collect the revenue we're owed and be in a far better budget position.

because the full plan would not meet the required return to keep off budget

 

[Tomjas00]

So you have made an open statement with absolutely no reasoning behind it, even ignoring countries who fared as well (or better) than us during and post GFC?

Okay then...

What possible rationale is there for increasing taxes atm?

 

[Showbags]

People try to avoid taxes because the rates are so high

Bring them back to a reasonable level and the arguments for avoidance become largely redundant due to the cost of implementing schemes

So if taxes were lower people would then not try to avoid them and find a loophole? That's just rubbish. If people were paying 1% tax they would still be looking for ways to pay 0%.

 

[Long Live HFC]

What possible rationale is there for increasing taxes atm?

we'll never pay back the debt without tax increases.

 

[Showbags]

What possible rationale is there for increasing taxes atm?

Isn't it your mob that is screeching budget emergency at every opportunity?

 

[pazza]

What possible rationale is there for increasing taxes atm?

An increase in the revenue will actually help to bring the Budget back into surplus a lot faster and a lot fairer than cutting spending left, right and centre.

 

[Forward Press]

What possible rationale is there for increasing taxes atm?

I read this post three times over because I was almost certain that it was a typo. You've been debating economics in this thread and are a clear supporter of the right side of politics - I was surprised you don't know the possible rationale for a tax increase and what it would do to the Budget.

 

[Tomjas00]

So if taxes were lower people would then not try to avoid them and find a loophole? That's just rubbish. If people were paying 1% tax they would still be looking for ways to pay 0%.

You obviously have no idea of how much it costs to establish a tax shelter

Hint: you just cant fly to Singapore on Scoot, open an a/c in your own name and expect to get away with it

 

[Tomjas00]

I read this post three times over because I was almost certain that it was a typo. You've been debating economics in this thread and are a clear supporter of the right side of politics - I was surprised you don't know the possible rationale for a tax increase and what it would do to the Budget.

So you're assuming that, in general, employers will continue to invest, pay higher salaries & benefits and employ more people despite being slugged more in tax

History says you're wrong

 

[Tomjas00]

An increase in the revenue will actually help to bring the Budget back into surplus a lot faster and a lot fairer than cutting spending left, right and centre.

Why would revenue increase?

Ever think that business/consumer confidence would go through the floor and that revenue would actually decrease?