You have to hand to him. Joe Hockey would have to
be the eternal optimist. He says that we are on the threshold of
Australia’s greatest era. Really? He says his plan is to fix the budget
and pay down the debt left by Labor. The debt he is referring to, is the
ongoing sale of government treasury bonds issued since 2008
(approximately); these are the ones that protected Australia during the
Global Financial Crisis (GFC).
He’s a man on a mission; you can see that. The problem is, he can’t
see where the missionaries need to go. We should not forget that he was
part of the Coalition in opposition that opposed those stimulus measures
Labor used to avoid an economic catastrophe. One can only wonder if a
Coalition government were in power at the time of the GFC and failed to
act, in other words, did nothing, where, and in what condition, our
economy would be in now.
The likely outcome would have been up to 2 million unemployed, small
business’s going bankrupt, a massive reduction in bank depositors’
savings, a serious reduction in tax revenues and a gigantic ex nihilo
(money created from thin air) programme to save our failing banking
system and drag us out of the depression that would have ensued.
This imaginary Coalition government would have attacked social
programmes to minimise the structural deficits that would have followed.
But, having patted themselves on the back just two years earlier for
falsely claiming to have paid down debt when they were in government,
they would have found a new way of describing the debt they had now
reluctantly created. They might have opened a special account and called
it the Fiscal Expansion Account, or The Asset Minimisation Account and
denied that it was debt at all.
we, as a nation avoided all of that thanks to Labor’s economic
management and now all Hockey has to do is manage those bonds. As of
right now, he’s not doing it very well. As of right now, those bonds
that totalled $280 billion at the end of August 2013 are $337 billion in
September 2014 and growing. That is an additional $57 billion which
translates to just under $5 billion a month of bonds issued in the first
12 months of a real Coalition government.
That’s slightly faster a rate of borrowing than Labor did in 6 years.
Compounding Hockey’s problems is the reality that current tax revenues
are not meeting expectations. That will mean further bond issues to
cover a continuing shortfall. I’m almost feeling sorry for him.
Joe could easily fix this annoying little matter by opening a new
account. He could call it the Asset Recovery Account and create $10
billion ex nihilo a month to pay out each bond issue as it becomes due.
At the same time he could continue to issue further bonds to meet
expenditures without impacting on inflationary pressures. It might also
have the effect of putting downward pressure on the Australian dollar.
That would do wonders for our export industries and create
opportunities to get the unemployment rate down. Then he could re-visit
his pathetic first attempt at constructing a budget and try
restructuring it to reflect a fairer balance of the heavy lifting.
Little things like removing mining subsidies and tax minimisation
schemes like negative gearing would do wonders.
all that now under sound management he could wave the green flag for
all those infrastructure programmes to tackle unemployment; the ones his
boss wants to be known for. But he won’t do this because, he’s too busy
looking back at what Labor did instead of looking forward at what he
could do. His boss wants to be known as the Infrastructure Prime
Minister but neither of them know how to go about making that happen.
Neither can see the bigger picture. Instead, they will let this false
debt accumulate and continue to blame Labor.
Joe could, if he knew how, become a Paul Keating Mk 2 and continue
reforming our monetary system. But he doesn’t know how, and even if he
did, his ideologically bound party, not to mention their masters, the
IPA, would not let them. They would much rather have us running off to
Iraq to help save the world from a handful of fundamentalist nut cases
who like beheading westerners. That’s money well spent; a new Crusade,
would also like us to return to the Reaganomic and Thatcherite slash
and burn monetary policies of the 1980s; the same policies that led us
to the GFC thirty years later. They say what goes around, comes around.
And in the process, guess what? Another forward looking, nation building
opportunity goes down the toilet. Forget about Abbott being the
Infrastructure Prime Minister. Joe will become the Minister for Lost