Pokie gifts revisited

The economic benefits from breaking up Federal Group’s exclusive license to operate electronic gaming machines (EGMs) in pubs and clubs are an assortment of half-truths and baseless assertions.

Whilst the Federal Group holds an exclusive license, it does so as the lead member of an oligopoly which includes the pubs and clubs which provide premises for EGMs in the community. 

Tell us about Basslink before approving Marinus

THERE’S an eerie feeling of deja vu about Project Marinus, the second electricity interconnector proposed for Bass Strait.

Both major political parties at the federal level announced support for the project before the May election. The recently released business case contains media releases from Prime Minister Morrison and then opposition leader Shorten. One can’t help but feel the business case is really a search for reasons for doing something that has already been decided.

It was the same story 20 years ago. Both the Bacon government and the previous Rundle government supported Basslink. In early 2000, Hydro Tasmania signed a preliminary agreement for the construction of Basslink which was built by Basslink Pty Ltd (BPL). At this early stage it was not an irrevocable commitment, but Hydro proceeded as if it was.

The workers' shrinking pie

The current anaemic growth in wages will have far reaching effects. Our economy is structured around large levels of consumption spending. Our State government’s precarious fiscal position is largely dependent on GST receipts which are directly impacted by slower wages growth.

Yet most of the discussion about low wage growth glosses over the fact that labour’s share of national income, as distinct from the share going to the owners of capital, has been in decline for years. Sharing the spoils was a feature of the 1950s and 1960s as labour’s share of the national pie grew. However, over the last 40 years, labour share of the pie has fallen by almost ten percentage points.

Surplus myth lives on

Who remembers the Budget slogan?

Every budget is sold with a particular message and this year’s State budget in May 2019 was no exception.

“Maintaining the momentum…. investing for growth” was the chosen catch cry.

The massive infrastructure spend of $2.8 billion over four years was set to lay the foundations for the future.

With the year almost over, the infrastructure spend for the full year 2018/19 was expected to be $699 million, The preliminary outcomes report for the completed year released last week showed spending was only $582 million, $117 million less than expected a month earlier.

The pattern of recent governments is to consistently spend less on infrastructure than budgeted, on average roughly $100 million each year. In that sense the momentum has been maintained.

If it is a priority, we can afford it

SAYING we cannot afford something is code for saying it’s not a priority. We are a rich society. We have all the resources we need to deliver better housing, health, education and infrastructure, but we choose not to. We are constantly told we cannot afford them and we need to live within our means.

Imagine for a moment Australians were shipped to a desert island, a new paradise. All facilities were there, infrastructure, schools, hospitals, even a new K Block. Lots of people with all the required skills are ready to start working, but nobody has any money. Neither does the government nor its bank, the Reserve Bank. Nor do private banks or any residents or businesses. The government cannot raise taxes or borrow money because there’s no money to pay the taxes or lend to the government. Gridlock. What would happen?

One practical solution would be for the government to simply start spending money by crediting accounts. Hospitals would be paid enough to operate. So too schools and other government departments. Workers could then be employed and paid. Money would start circulating. Some will return to the government via taxes. Businesses and residents would start borrowing and spending. Without government spending in the first instance none of this would not be possible.

Most of us have been led to believe the opposite, that the Australian government must raise money before it can spend.

It’s not true.

Some people would regard this solution as heresy.

Tripartisan blindness

The complete and utter failure of the Tasmanian political class to articulate and discuss policy options for the State has never been more apparent than with the State budget in May and the ensuing parliamentary Estimates hearings.

After two weeks of tribal conflict the combatants appeared together, in a mock tri-partisan display of support for a Tassie based AFL side. Their sheepish demeanour was tacit acknowledgement that the public is tiring of their inability to solve problems.

The Labor Party’s budget response was predictably tightly scripted. Every wearisome contribution focused on the State’s impending debt position.  ‘At least we didn’t go into net debt’ was the gist of Labor’s position. But that’s a red herring, a complete furphy. Former Labor Treasurer Michael Aird when asked why the State’s unfunded superannuation liability, now $8 billion, wasn’t included in the net debt calculation, used to respond by saying “it’s a liability, not a debt”. The current Labor leadership is continuing with the same convenient hair-splitting approach.

Unsustainable budget Part 2

This is a follow up blog to the previous post on the unsustainability of the Tasmanian State Budget. Trying to see the wood for the trees in a set of budget papers is hard, even for those with some accounting knowledge.

There’s only one place to start. The beginning. And that is with the cash flow statement. The Tasmanian government is a service provider. Nobody should care too much if it doesn’t make a profit. The things that matter are:

·       Is it paying its way?

·       If not how is it financing the shortfall?

·       Is it spending enough on infrastructure?

·       Are financing costs strangling the budget?