The hazards of voting Liberal

It’s clear that around half of all voters for the major parties will vote for the Liberal-National Coalition and half for Labor and the Greens. The result is likely to be close. There are many seats that promise to throw up intriguing results. If the Coalition wins, the Senate may end up being no more helpful to it than the last one.

The purpose of this piece is not to attempt to predict the election result, but rather to ask what might motivate voters to place the LNP first, and to examine the hazards of doing so.

It really boils down to what voters want of a federal government. Liberal-National voters seem to want different things from Labor and Greens voters, or for that matter different from what voters for independents want.

As our politicians tell us, whether they can do what they want to do, and what voters want them to do, revolves around priorities. Who would not like to see policies put in place that made us all well off, with the services we want and need readily available to us all whenever we needed them? In a perfect world we would have it all. Yet we know that we can’t have it all. The political and economic system in which we live produces disparity. There have been, and always will be the very well off at one end of the spectrum, and at the other those who struggle day to day simply to survive.

There is not room here to describe all the hazards of voting Liberal, so I will confine myself to examining just four areas: Inequality, Medicare, the NBN, and Marriage Equality, where Liberal priorities conflict with those of other parties.

Those who disparage the idea of equality do so because they believe those seeking equality want the same for all. Nobody believes we can all be millionaires or even modestly well off, but who would not want everyone to at least have the necessities of life? What the ‘equality’ advocates want is the gap between those at the top and those at the other end to be less grotesque than it is, to see it narrowing as a result of government policies, not widening. Inequality is currently at a 75 year high!

Yet LNP policies will widen the gap. Its proposal to spend $48 billion to reduce company tax, not just for small businesses, which Labor supports, but large ones, even our big banks and multinational corporations, is yet another example of the application of ‘supply-side economics’, colloquially known as ‘trickle down economics’. How many examples of the failure of this model do they need before they acknowledge that it does not work? All it does is increase inequality.

Tax breaks given to businesses do not trickle down to workers in the form of more jobs and better wages. History tells us that businesses save more of any tax break they are given than they spend; they do not invest it predominately to grow their businesses; and they do not roll out lots more jobs.

‘Jobs and growth’ is just a fine-sounding mantra, not a plausible plan for growing our economy or creating more jobs. It is a façade with almost nothing behind it. It is hard to contemplate that those who perpetrate this charade really believe in its effectiveness and its worth. If our PM, Treasurer and Finance ministers do believe their own ‘jobs and growth’ rhetoric, heaven help us; if they don’t, what we are witnessing is a grossly cynical political plot to deceive the electorate.

And what’s more, the Coalition has never explained why business tax breaks of $48 billion should have priority over the $37 billion needed for schools.

Research studies show that conservatives are resistant to change and are tolerant of inequality, which they regard as part of the natural order of societies, dating back to the days of feudalism and serfdom. They have no innate motivation to work for a more egalitarian social order, although this is what the average Aussie wants. Their support for reducing workers’ penalty rates on Sundays is an example of their tolerance of worsening inequality.

The first hazard of voting Liberal then is that inequality will increase and disruptive social consequences will follow.

The future of Medicare has been at the top of the issues discussed during the final campaign weeks. Labor is insistent that the Coalition is intent on disrupting and diminishing Medicare; the LNP labels this as a gigantic ‘scare campaign’ built on a ‘deceitful lie’. Malcolm Turnbull has been forced to react to Labor’s attack by denying any ill intent, and has promised, almost in legalistic terms, that no changes will be made to Medicare should his government be elected: “I am making a solemn commitment, an unequivocal commitment that every element of Medicare’s services will continue to be delivered by government. Full stop.”

That ought to be the end of it, but politicians have so diminished themselves in the eyes of the electorate, have told so many lies and broken so many promises, that only their rusted-on supporters believe them anymore.

Who can ever forget John Howard’s 1995 ‘never, ever’ GST reassurance? Who could possibly forget Tony Abbott’s 2013 promise of "no cuts to education, no cuts to health, no change to pensions, no change to the GST and no cuts to the ABC or SBS"? The GST was the only area to avoid the Abbott/Hockey savaging.

Voters are skeptical and highly cynical about any political promise, no matter how volubly made. Turnbull ought not to be surprised at the reaction of voters; frothing at the mouth with indignation will not change their views.

None of us can predetermine what will happen to Medicare. Words have no value in the bare-knuckle street fighting we are seeing as the election draws near. All we have to go on is past behaviour.

The most brazen upshot of the Abbott/Hockey push to reduce expenditure was the 2014 Budget. It contained attacks on Medicare with the proposed GP co-payment, blocked in the Senate, but now being put into effect with the freeze on GP bulk billing rebates until 2020. As practice costs continue to rise, the freeze means that bulk-billing GPs are making less and less profit from each consultation to the point that practice viability is being threatened. The government is forcing them absorb the deficit, or to charge their patients a co-payment. This is pushing them to the point where bulk billing is no longer a viable option. Expect more and more to abandon it, partially or completely.

The result will be that the less well off will not be able to afford the co-payment, and will not consult their GP when they ought to. Their illnesses will progress and the cost to them and the healthcare system, especially to public hospitals, will increase. This is dangerous healthcare, and wasteful to boot.

Writing in The Conversation about the threat of privatization of Medicare, Stephen Duckett, an architect of Medicare, says: “The greater threats to our national public health system lie in the increasing role of consumer co-payments and the power of vested interests that stifle policy innovation in health.

Another attack on Medicare was the change to bulk billing incentives for pathology and diagnostic imaging proposed to begin on 1 July, which is now on hold. This would have made it difficult for the less well off to have necessary pathology tests and imaging. Cancer patients particularly would be affected. Moreover, the proposed $5 increase in the cost of prescription drugs (also held up in the Senate) would penalize patients with chronic illness.

How can we believe Turnbull’s denialism about Medicare, and his mealy-mouthed rhetoric about preserving Medicare in all its facets, when past and quite recent actions show how determined the Coalition is to reduce its cost and thereby erode it, subtly yet persistently? It’s his government’s actions that belie Turnbull’s effusive reassurance.

The Royal Australian College of General Practitioners and the AMA support Medicare strongly and are mounting a powerful campaign with patients and the public to preserve it and shield it from attacks.

The maintenance of Medicare is Labor’s most important policy platform; it has received much prominence during these latter weeks. Voters will have to decide whether they believe Bill Shorten’s or Malcolm Turnbull’s rhetoric.

So the second hazard of voting Liberal is to invite more assaults on our universal health care system – Medicare – and further erosion of the benefits it offers. The less well off would suffer most.

The National Broadband Network
With someone supposedly as tech savvy as Malcolm Turnbull, it would have been reasonable to expect something better from him when he was when Communications Minister in the Abbott government. Although he did not carry out Abbott’s instruction to “demolish the NBN”, what he has given us is a cobbled together mess: a multi technology mix, fibre to the node on the street corner (FTTN) in most instances, and ageing copper wire from the street corner to the premises. Speeds are not what the original Labor fibre to the premises (FTTP) promised, roll out is slower than predicted, the cost is growing every month and is likely to be no less than Labor’s fibre to the premises rollout. The NBN rollout has been badly bungled by Turnbull and the Abbott/Turnbull government.

Turnbull insists that Labor’s plan was too expensive, too slow to roll, and that the speeds it offered were unnecessary. He cites the uptake of slower speeds as indicating that users did not want Labor’s 100 Mbps!

To give the lie to Turnbull’s assertions, let’s look at a public speech given last week at the University of Melbourne by the first chief executive of the NBN, Mike Quigley. He called the current rollout ’backward-looking’ and ‘incredibly short sighted’, saying the current state of the project is ‘such a pity’.

His scathing critique of the Coalition’s current multi technology rollout strategy included evidence that a majority of the NBN will quickly become obsolete.

He’s what he said:
"The Coalition regularly points to the fact that a majority of the data packages purchased by customers already connected to the NBN are lower-tier packages as proof the network is sufficient for the nation’s needs.”

“It seems especially curious that a government that styles itself as the innovation and infrastructure government, should argue this. Gigabit services are just starting to emerge elsewhere in the world, so the applications that can take advantage of this type of speed are in their infancy. But we all know they are coming.”
Writing in The Conversation, Quigley adds:
"To spend billions of dollars on building a major piece of national infrastructure that just about meets demand today, but doesn’t allow for any significant growth over the next ten or 20 years is incredibly short-sighted.

“It is such a pity that so much time and effort has been spent on trying to discredit and destroy the original FTTP-based NBN plan. Equally, it’s a pity the Coalition has put its faith in what has turned out to be a short-sighted, expensive and backward looking multi-technology mix (MTM) plan based on copper.

“The nation is going to be bearing the consequences of those decisions for years to come – in higher costs and poorer performance in an area that is critical to its long-term future. Betting tens of billions of taxpayers dollars at this time on copper access technologies, as the Coalition has done, is a huge miscalculation…

“It is becoming increasingly obvious, especially to customers, that an NBN based on FTTP is a much better network than an MTM-based NBN from every angle – speed and capacity delivery, maintenance costs, reliability, longevity and upgrade costs.

“An FTTP network would be a much more valuable public asset and could generate greater cash flows for the government due to lower maintenance, higher revenues and almost no upgrade costs. And it would be vastly superior in driving growth through the wider economy.

“So it is a great pity that before making the shift to the MTM, the Coalition did not heed the words of the then independent MP for New England, Tony Windsor: “Do it right, do it once, do it with fibre.”
What more needs to be said? After vehemently criticizing Labor’s FTTP NBN, Turnbull has created a multi technology mess that will leave Australia struggling in the wake of the 58 countries that already have superior connection speeds.

This then is the third hazard of voting Liberal – an inferior broadband network, dangerously uncompetitive in the global market. Yet Turnbull thinks this is OK for his innovative, agile nation!

Marriage equality
It is with foreboding that LGBTI folk and their supporters anticipate the plebiscite forced upon the LNP by Abbott and his conservative faction, now slavishly adopted by Turnbull. Despite his protestations of support for marriage equality, his dependence on the support of the conservative clique in his party renders him impotent to substitute a parliamentary vote in place of a plebiscite.

He knows full well that Abbott’s choice of a post-election plebiscite was to frustrate the popular push for marriage equality, first by delaying its implementation, and more importantly by giving the bigots a chance to frighten the public with predictions of dire outcomes should marriage equality, or more baldly ‘same sex marriage’, come about.

We have already seen the fear mongering of the Australian Christian Lobby via its aggressive chief executive Lyle Shelton, who wants anti-discrimination laws suspended before the plebiscite so he can say what ever wants! And we have heard the grotesque utterances of the likes of Cory Bernardi, which do not deserve repeating. Pamphlets designed for the plebiscite campaign claim that ‘social outcomes’ for children of same-sex parents are ‘unemployment’, ‘sexually transmitted diseases’, and ‘drug use and abuse’, which is at odds with the body of scientific research demonstrating that children of same-sex couples are likely to have at least as positive emotional, social and academic outcomes as other children.

Penny Wong, a member of the LGBTI group, recently highlighted her apprehension. She pointed to ugly posters and hurtful social media hate speech, such as were seen in Ireland, that demean LGBTI people, hold them up to ridicule, hurt good parents, and induce uncertainty, fear, suspicion and loathing. Opponents of marriage equality do not care what hurt and anxiety they cause; their purpose is to stop it in its tracks, no matter what the cost to others. They are not kind or empathic; they are ruthless in the pursuit of their quasi-religious dogma. We now hear that Turnbull will allow his members to vote any way they wish and not be bound by the plebiscite outcome!

Here then is a fourth hazard in voting Liberal. It will result in a damaging lead-up to an unnecessary and expensive ($160 million) plebiscite that will hurt many, and which runs the risk of frustrating the wishes of a clear majority of the electorate which wants marriage equality, and wants it now.

This piece is already long enough. To detail all the other hazards of voting Liberal would take another piece, or two. So do read Michael Taylor’s excellent catalogue of reasons not to vote Liberal which you will find on the AIM Network in Why on earth would you want to vote for the LNP? He has compiled a comprehensive list that will astonish you. It makes one wonder how the LNP could possibly succeed on July 2.

I suppose voters who can’t see the ghost of Abbott with his cynically calculating conservative faction hovering over Turnbull, who don’t care about inequality, who are indifferent to the Coalition’s assault on Medicare, who don’t care that our NBN is slow and already antiquated, who don’t give a toss about marriage equality for our LGBTI friends, and who are unaware of the many other hazards of voting Liberal, would be comfortable voting this way, dangerously unaware of the awful consequences.

What do you think?
Let us know in comments below.

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Turnbull’s Medicare backflip – or is it?
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Turnbull recently announced that his government, if re-elected, will not change any element of Medicare. It came in response to Labor’s campaigning that Medicare was under threat, that it would be privatised, under a Liberal government. The general media response was to take Turnbull at his word and that Labor’s continuing use of the campaign was no more than a ‘scare campaign’ now based on a ‘lie’. But let’s take a closer look, including a careful examination of the words used.

National security theatre

It’s probably a co-incidence that there has been a lot more advertising around the National Security Hotline since the election was called. You know the ones, the sober colours, formal fonts asking you to report anything suspicious to a free call number. The television and radio advertising (with the foreboding music and deep voice reading the message) give you the impression that all information is valuable and a team of experts will dissect every scrap of information given and act on it. The overwhelming implied message is that we live in dangerous times, the Government will protect you and if you do report something you have done your patriotic duty.

If you have had the misfortune to travel by plane in the past couple of decades, you would be aware of the security clearance process required before you get to the boarding gate at larger airports. While unloading your pockets (and occasionally finding a bit of change hiding at the bottom), taking your shoes and so on off is dehumanising; if you are really lucky you also get chosen for an explosive check where someone rubs a piece of cloth around pockets, zips and bag closures – puts it into a machine and a minute or so later the machine declares that there are no explosives on your person or bags. While the process is dehumanising and it adds to the stress of the travelling experience, at least there won’t be a ‘nutter’ on my plane with a knife or bomb – which is a relief.

Airport security practices and sealing of medicine containers are practices imported from the USA. The US requires foreign powers to implement the practices in respect to airports under the threat of banning flights from US airlines to the particular country and denying landing/overflight permission to foreign airlines from that country if they don’t comply.

The US airport security service is provided by the Transport Security Administration. Unlike Australia, the TSA is a US Government agency and is well known amongst travellers around the world for their militaristic demeanour. Australia’s airport security is contracted out, but as the clip below demonstrates, the method of operation is similar.

You may have noticed some references shown on screen during the clip – they link to the sources of the information for the statements made. The website is here should you like to read further. The television program Adam ruins Everything is shown on SBS2 in Australia.

We all know the way to get the ‘tamper-proof’ cap off a medicine bottle is to ask any child over the age of 4 or 5 to do it for you. When we struggle to get the caps or the silver seal off medicine bottles, we put up with it because we determine that it stops people getting into the medicine before the end user does and potentially keeps younger children from overdosing on the medicine.

Again Adam has done the research. The tamper-proof cap and seals appeared in the US after 1982 when some bottles of a pain relief tablet called Tylenol were interfered with resulting in seven deaths. This (US) Public Broadcasting Service article gives the history. The determination was that the packaging of the tablets needed to change to protect them from tampering.

Bruce Schneier was seen in the video clip above and also has an opinion on the rise of the tamper proof seals post the Tylenol tampering event

There wasn't any real risk, but people were scared. And this is how the tamper-proof drug industry was invented. Those tamper-proof caps, that came from this. It's complete security theater. As a homework assignment, think of 10 ways to get around it. I'll give you one, a syringe. But it made people feel better. It made their feeling of security more match the reality.

Yes, a degree of national security preparedness is required. Are we however shutting the door after the horse has bolted? Given that Australian authorities are more than happy to shout the results from the rooftops when they find a potential terrorist cell (although you rarely hear about any follow up action), I can’t recall any publicity about a potential threat to a plane being foiled by security screening. In addition, thousands more cram onto the public transport networks in our large cities every morning and afternoon with no overt security protocol (and sometimes without even checking if the ticket is valid for the journey), despite incidents involving commuter transport in other parts of the world.

Given there are holes in the screening of people so large you can drive a train through them (sorry), is there a better option? According to a number of the links suppled above, yes there is. While undoubtedly the National Security Hotline is part of the process and probably has led to the investigation of actual security risks; ramping up the advertising around the Hotline during an election campaign is pure theatre with ulterior motives that have nothing to do with how safe you feel next time you are out and about.
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The real Malcolm

Since Malcolm Turnbull’s elevation to the role of Prime Minister, there has been consistent reference to his stated ideals and beliefs last time he was the Leader of the Liberal Party plus his public comments on ‘social issues’ such as same sex marriage, internet connectivity, climate change, the republic and so on versus his actions as Prime Minister. For a member of the same party as Abbott and Bernardi, he was really quite ‘small L’ liberal. At times he was more ‘liberal’ that the ALP.

All the issues above have not been converted into action by Turnbull since Abbott lost power in 2015, which has disappointed many people. There have been calls for ‘the real Malcolm’ to surface, shake off the conservative elements of the Coalition Government and show a sign that his personal statements actually mean anything. So far there has been little evidence of social change, which commentators have suggested is due to the ‘hold’ the conservative elements of his party have over him or his desire to obtain a thumping majority at an election and then implement what he actually believes in.

Let’s throw a third option into the mix. Let’s suggest that you are seeing ‘the real Malcolm’. Turnbull’s proud of the fact that he was raised by his father as the sole parent from the age of 9 and at times it was hard on him and his father. Without minimising the effects of the dislocation he endured while growing up, he certainly wasn’t on the same struggle street as a multitude of other children growing up with single parents endure.

Turnbull started school in Vaucluse (not a poor area by any means), then a preparatory school, which was a campus of Sydney Grammar School, as a boarder before moving to the Randwick campus to board while attending the main campus of Sydney Grammar School on a partial scholarship. He was a school captain.

After school he was lucky enough to go to University during the mid 1970s, when Whitlam’s ALP Government introduced free university courses and to his credit he won a Rhodes Scholarship. Turnbull attended Oxford University and on his return to Australia became a barrister. He then worked for Australian Consolidated Press – owned by the Packer family at the time before setting up his own law firm with a partner. Later he established an investment banking firm with some well known partners and became a partner in Goldman Sachs.

It is well known that Turnbull was involved in one of Australia’s internet service providers, Ozemail, and had other commercial interests. Certainly, Turnbull has done well and his ability to adapt, change and demonstrate more than a passing level of competency in a number of different fields is a credit to him. It also demonstrates a level of determination as well as a degree of self-belief.

However, where is the understanding, knowledge and empathy with those who don’t have the good fortune (or financial backing) to be able to be sent to one of Australia’s most expensive schools, obtain a University degree, be awarded a Rhodes Scholarship and be the Managing Director of a number of companies? While Turnbull can clearly read a balance sheet and legal brief, does he have any comprehension or understanding a family budget where the decision has to be made if another 2 litres of milk (even at $1 a litre) can be purchased before payday? Has Turnbull ever faced the prospect of having his basic wage hours reduced because the company’s management is going to miss their profit projection – causing the loss of 1 cent per share to the dividend payment? Turnbull certainly doesn’t need to worry about retiring and being forced to live on the current age pension and other government subsidies that are reducing in comparison to costs in the future.

While it could be argued that Shorten isn’t much better – at least he has almost certainly heard first hand accounts of those who really do have to wonder if they can buy the milk. Shorten also seems to have the ability to empathise with those who haven’t had the skills, knowledge or ability to become a lawyer, as both Turnbull and Shorten have done.

So while Turnbull may have been the public face of the Republic Campaign in the late 90s, supported action on climate change in the late 00s while Opposition Leader and came out in support of same sex marriage and climate change mitigation more recently, that doesn’t necessarily mean he has the courage of his convictions to prosecute the argument should the going get tough (as it apparently did when he lost the Liberal Party leadership to Abbott). Neither has he had the lived or learnt experience of those who haven’t had the opportunities that Turnbull has been given.

Turnbull has lost significant political capital since his elevation to the Prime Ministership. You’d have to ask if it’s because the Turnbull who spoke out on the republic, same sex marriage and climate change has been consumed by the Turnbull who understands he only retains the ‘top job’ if he doesn’t rock the boat. If so, is ‘the real Malcolm’ the one who will say or do what is necessary to retain position and some power.

With half of the election campaign to go, the Turnbull we see on TV each night more often than not looks tired and irritated with having to deal nicely with people while on the hustings. Shorten seems to be enjoying the interaction. So the proposition is – have we seen ‘the real Malcolm’ for the last 9 or so months hidden in plain sight?

What do you think?
Let us know in comments below.

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You cannot succeed without a clear economic plan. Everything we have is encouraging companies to invest, to employ.

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PM Turnbull wants you to believe that his bag contains a piglet, but all you will find is a pup. The piglet is called ‘Jobs and Growth’. Every day, many times every day, he is out there …

What economic plan?

Prime Minister Malcolm Turnbull declared that GDP growth of 3.1%, reported by the ABS on 1 June, showed that his plan for the economy was on track:
You cannot succeed without a clear economic plan. Everything we have is encouraging companies to invest, to employ.

So far so good.

This confirms the direction we are leading the country in, in terms of our economic plan, but there is much more work to do.
[from The Guardian’s live election blog on 1 June]

But did he read the fine print?

As reported by the ABC:
However, while the headline number was strong, it was driven by a rise in output, while the prices Australia got for its exports continued to fall relative to imports.

That saw the terms of trade decline another 1.9 per cent in the quarter, and 11.5 per cent over the past year, which in turn saw the real net national disposable income rise by just 0.2 per cent over the quarter and plunge 1.3 per cent over the past year.

The ABS describes this number as “a broader measure of the change in national economic well-being” and the fall in this figure indicates declining purchasing power for Australian households.
That was picked up by Labor’s Chris Bowen:
Beneath the headline figure, we know there is an economy struggling with falling demand and falling income growth. In these figures today we see the eighth consecutive decline in nominal income: living standards.
Michael Janda, the ABC’s business reporter explained that ‘real’ GDP only measures how much we have produced in goods and services. It is ‘nominal’ GDP that actually gives a measure of the value of those goods and services. As an example, the current GDP figure includes a surge in iron ore and LNG exports but we are getting less dollars for these exports than we did before:
This measure is far more important for households, businesses and governments as it better reflects how much income, profits and revenue they are getting …
Despite that, the initial reaction in the markets was that the Australian dollar rose as overseas financial markets focused only on the headline figure, as that is taken as a global and uniform indicator, but our local share market fell.

Weakness in the economy has been repeated in other recent data from the ABS.

Although the government liked to claim some success for unemployment remaining at 5.7% in April, other labour force figures associated with the release of that data showed:

  • the headline figure of 10,800 jobs created actually included the loss of 9,300 full-time positions but an increase of 20,200 part-time jobs

  • monthly hours worked in all jobs decreased 17.9 million hours to 1,613.8 million hours, the fourth consecutive decrease (the first time that had happened in three years) and a cumulative decrease of 1.0% since December 2015.
The ABC reported:
Paul Dale from Capital Economics observed that full-time employment has not increased at all over the past three months and that the average number of hours worked per employee per month is at a record low.

“In other words, the quality of the jobs being generated is deteriorating and the amount of work being done is falling,” he wrote in a note on the data.
The April figures reflected similar declines in March when 34,900 part-time jobs were created but 8,800 full-time positions lost, resulting in a loss of 17.5 million hours worked.

It also followed the Wage Price Index for March (released on 18 May) which showed a rise of 0.4%: ‘the lowest rate of wages growth recorded since the start of the series in 1997’ the ABS noted in its commentary.

The Business Indicators for March, released on 30 May, showed the trend estimate for company gross operating profits fell by 3.1% in the quarter, or 4.7% seasonally adjusted: mining fell 9.6% seasonally adjusted; manufacturing 14.5%; and electricity, gas, water and waste services fell 5.6%. There were minor improvements in construction and retail, with both growing by 0.6%. The biggest loss in seasonally adjusted profit estimates was for financial and insurance services which fell by 69.4%.

Those indicators are not good news for the government. Less hours worked translates to lower PAYG income tax revenue and the company profit estimates also indicate lower company tax revenue.

Business investment in the March quarter, as reported by the ABS on 26 May, was down 2.8% for the quarter and down 15.4% over the year. Expectations for future investment in 2016‒17 showed some signs of improvement but, in dollar terms, would still remain below the investment in 2015‒16.

While the trade deficit improved marginally in the March quarter (as compared to the December quarter) the fall in prices for our exports meant that we were still running up foreign debt — now a record $1.03 trillion, or two-thirds of our total GDP. While that is not government debt, it does leave our companies vulnerable to changes in international conditions, particularly increases on the currently low international interest rates. And, of course, if companies (including banks) are hit with higher borrowing costs for overseas loans or refinancing, that will be passed on to consumers in Australia which, in turn, could lead to lower domestic demand and more headwinds for our economy.

Some of this is not supposed to happen, according to economic theory. As a CBA analyst said of the figures:
Today’s figures confirm that the Australian economy finds itself with a unique set of circumstances that will continue to perplex policymakers and complicate the interest rate outlook.

GDP growth is running at an above trend pace and the unemployment rate has been declining. In isolation two highly desirable outcomes. But wages growth is at its lowest level since the 1990s recession and consumer inflation has been falling. On the surface, these four outcomes occurring simultaneously is bizarre. [emphases in original]
[from the Canberra Times ‘Markets Live’ blog on 1 June]

It does go on to suggest that the ‘anomaly’ can be explained by the negative terms-of-trade, soft domestic demand and historically high under-employment, which means there is spare capacity in the labour market.

Most analysts were predicting that GDP growth would come in at 2.8%, so an actual increase of 3.1% was a ‘pleasant’ surprise. Normally such an increase in GDP would be welcome and would indicate a robust economy but all the other data show that the increase in GDP is not being reflected in other improvements, like full-time employment, wages, even business investment, and so is not being reflected in improvements in our standard of living which it normally would.

Of course, Turnbull and Morrison give the figures a positive spin and also offer the line that only their approach will help overcome the poorer aspects but in a report in The Guardian on 1 June, the Council of Small Business Australia estimated that only 4.6% of small businesses would take advantage of the Turnbull/Morrison company tax cut to reinvest and expand their operations. The Council suggested that the instant asset write-off was a better mechanism to encourage expansion — the government is keeping the $20,000 asset write-off until 30 June 2018, instead of ending on 30 June 2017, and will expand it to businesses with a turnover of up to $10 million (currently $2 million).

Also, Goldman Sachs, at which Turnbull was chairman and managing director in Australia between 1997 and 2001, found that 60% of the benefit of Turnbull’s company tax cut would flow to foreign investors, 10% to domestic investors, and only 30% would boost the Australian economy.

Turnbull’s and Morrison’s plan to boost the economy is under pressure. The impact of the tax cut is being questioned, not by Labor but by people in the market that it is aimed at. The economic indicators are mixed but more heavily negative and the benefits of economic growth are not being seen. So where is the economic plan to turn this around and ensure that people actually benefit from an increase in GDP growth? All the growth Turnbull and Morrison promise from their tax cuts and innovation agenda will mean nothing unless they can turn around the other indicators and growth actually provides benefits for all.

The fact is their plan isn’t working and isn’t a plan that will benefit all Australians through a rising standard of living. It is time they found another plan!

What do you think?
How can Turnbull claim his plan will boost the economy in the face of the economic indicators?

If his plan does not lift our standard of living, is it worth the paper it is written on?

Will Turnbull’s blindness as regards social policy come back to bite him?

Let us know in comments below.

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