Wednesday 9 May 2018

Fiscal Folly

I watched our Federal Governments 2018/19 budget last night and have subsequently read numerous summaries and listened to multiple interviews.

I have reviewed Twitter, Facebook and Buzzfeed.

Of course, the Government likes their budget and speaks well of it, however to varying degrees, everyone else has a problem or two with it.  

By way of (contradictory) example:

·       The tax cuts are blatant short termism

·       The tax cuts go too far in to the future

·       Budget forecast assumptions are too optimistic

·       Budget forecast assumptions are too conservative

·       There are no funds allocated to build coal fired power generation

·       There are no funds allocated to develop renewable power generation

I could go on, and on, and on.

Basically, if your area of interest received something in the budget, it wasn’t enough, soon enough.

If your area of interest was subjected to a cut, it was too much, too soon.

Like recent budgets from both sides of politics, it is more about politics than needs. Sure, politics has always been a factor but over the last decade, it has become “the” factor”.

Like with all budgets since the Hawke/Keating/Howard/Costello era, tax is being tampered with rather than reformed. Do we really think what was implemented in 2000/01 remains relevant in our global 2018 world?

What has changed?

I read something yesterday that perhaps summarised what has changed.

A former senior politician suggested that in the past, politics was a contest between ideas whereas now, it is a contest between interests.

What is the difference?

Ideas tend to be generated over time and have a link to a fundamental belief system or philosophy.

Interests may be short term and purely self-centred.

Ideas need to be developed and then debated in order to gain acceptance whereas interests will have by definition, one group of people who share the same interest, another who prefer another interest and a 3rd group that is ambivalent.

If we are going to base everything on our “own short term interest” I want the following:

·       Tax free everything for self-funded retirees over age 60 (I am soon to be 60)

·       Automatic upgrade to business class when over 60’s travel internationally to compete in marathons, embark on a cycling tour or attend an international hockey tournament (The reasons I travel internationally)

·       50% subsidy for the cost of electric vehicles (I have a Tesla 3 on order)

·       Free unlimited data worldwide (relieves the constant travel battle)

·       Half price coffee – black only (I drink long blacks)

·       Minimum wage for freelance creative pursuits eg writer, photographers (I write)

Ok, much of what I have outlined above is written with my tongue firmly planted in my cheek.

Our political leaders drive the wider corporate and citizen behaviours. Is it any wonder it is more than ever “all for me” and “I don’t care what the impact is on you”. Why should I be concerned if your flat white costs more so my long black can be half price?

Under Hawke/Keating Labour and Howard/Costello Coalition Governments, we had a continuous period of reform.

Hawke/Keating floated the dollar, changed import tariffs and reformed industry policy alienating many in their traditional supporter base.

Having already achieved Government, Howard/Costello took a tax reform package back to the electorate and in doing so, wiped out much of their majority.

There was little that was popular about these policy positions for either Government. It would have been far more popular and easier to have done nothing, to have left in place the ailing industry policy they inherited or left us with an outdated uniquely complicated tax system.

These were Governments from opposite sides of the political spectrum driven by philosophies they believed in and ideas they were prepared to argue for.

It matters not if we believed in or supported what they were doing but more about the fact they were acting in a way they believed was in our long term best interests.

For the last 10 years, we have had budgets heavy on short term political motives and light on underlying philosophical beliefs about what was good for the Country.

Or to put it another way, it was about “interests” and not about “ideas”.

Is it any wonder our banks and institutions follow suit and behave as the do?

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