Howard was a big spender. Who Knew?

Update: Henry Ergas rips the Fairfax and ABC coverage of this IMF paper to shreds. Well worth reading if you’ve missed it.

… the Fairfax press would so misleadingly present its results.

Rather than help readers understand their limitations, it used selective reporting to indulge its dislike of the Howard government.

That is not to claim the Howard government’s spending and taxing decisions were invariably wise. On the contrary, many were very poor indeed, though they pale in comparison with pink batts, school halls and the NBN. But the quality of public expenditure is not what the IMF working paper, which concentrates on the level of public debt, is about, and to suggest otherwise is misrepresentation.

Fairfax’s readers are therefore owed an explanation.

As for “your ABC”, its charter obligations and reliance on taxpayer funding should have made it wary of descending into poorly informed politicking.

Original Post starts below.

So six years after Andrew Norton wrote about the big spending ways of the later Howard years and five years after Kevin Rudd promised this ‘reckless spending’ would stop*, we’re told the IMF thinks that spending in the Howard era was profligate.

AUSTRALIA’S most needless wasteful spending took place under the John Howard-led Coalition government rather than under the Whitlam, Rudd or Gillard Labor governments, a study has found.

The International Monetary Fund study bills itself as the first to examine 200 years of government financial records across 55 leading economies.

It identifies only two periods of Australian “fiscal profligacy” in recent years, both during Mr Howard’s term in office – in 2003 at the start of the mining boom and during his final years in office between 2005 and 2007.

The stimulus spending of the Rudd government during the financial crisis does not rate as profligate because the measure makes allowance for spending needed to stabilise the economy.

While I completely agree that the later years of the Howard era were characterised by excessive spending, there is a tad too much ‘hyper bowl’ in that article.

First things first. There is no actual discussion of Australia in the IMF study. Australia is one of 55 economies that have been analysed and Australia makes up numbers in the various tables and figures. There is nothing wrong with that and this sort of thing often happens in studies. But this sort of thing needs to be augmented with in depth country studies.

Then we get to the study itself. The study applies the methodology developed in this paper to a sample of economies and then adds some bells and whistles.

How do governments react to the accumulation of debt? Do they take corrective measures, or do they let the debt grow? Whereas standard time series tests cannot reject a unit root in the U. S. debt-GDP ratio, this paper provides evidence of corrective action: the U. S. primary surplus is an increasing function of the debt-GDP ratio. The debt-GDP ratio displays mean-reversion if one controls for war-time spending and for cyclical fluctuations. The positive response of the primary surplus to changes in debt also shows that U. S. fiscal policy is satisfying an intertemporal budget constraint.

So the IMF investigates the sustainability of the fiscal balance relative to gross public debt (with a whole bunch of control variables).

Then the interpretation is as follows:

Bohn (1998) shows that if [rho - that italicised p looking variable in front of the d] is estimated to be positive and significant, then fiscal policy is consistent with the intertemporal budget constraint under uncertainty, and that the test is robust to changes in interest rates, debt structure, and growth rates.

The basic result of that test for Australia is shown in Table 7:

So over the long-run Australia has had prudent fiscal policy relative to the level of public debt. Okay – but in the long-run we’re all dead, or have grand children, or are living off our super or something. So the IMF study looks for deviations from the long-run result but testing for structural breaks, testing for outliers and then running iterative regressions on longer time series.

The results for the structural break tests are shown in Tables 10 and 11. For Australia the years identified are:
Table 10: 1965, 1985
Table 11: 1949, 1982
The difference between those tables is the sample period used in the analysis. It is important to note that the test period in table 10 ends in 2007.

The iteration results are shown in table 8. That table reveals that the Australian rho coefficient has never been statistically significantly negative. In other words from 1937 – 2011 Australian fiscal policy has been prudent. But in 2003 the rho coefficient was negative but not statistically significantly different from zero. The IMF study finds that the period 2004 – 2011 has a positive and statistically significant rho coefficient.

So what about the outlier test? Results are shown in Table 12. Here the IMF study finds profligacy outliers in 1942, 1960, 2003, 2005-7. This result (one out of three) is the focus of the Canberra Times article. It is worth pointing to one US result:

Hence, the “most profligate” years, those whose omission is sufficient to restore the country to a finding of prudence, are identified. For example, in the case of the United States from 1950-2011, this procedure finds that dropping the years 2008-2011 is sufficient to return to a positive and significant slope coefficient.

That’s the last year of the Bush-era and the entirety of the Obama-era in the data sample. So much for the US not having a spending problem.

Table 13 shows periods of strong prudence and strong profligacy. There is one period in Australian history of strong prudence: 1931 – 1935. For periods of strong profligacy the IMF study reports:

none

For the US the IMF study identifies a recent period of strong profligacy as being 2009-11 – the Obama years.

So long story short: The IMF study finds in one out of three tests that the later Howard era spending was profligate. In that test the post-Howard era is specifically excluded from the analysis. The IMF itself describes that particular test as:

…somewhat less standard, it has greater flexibility to capture sudden changes in behavior and influential observations in opposite directions in close proximity to each other.

But it does fit in with our expectations – so I suspect it is over-weighted as being important. In fact the result in table 12 is weak – it isn’t confirmed in any of the other tests or in table 13.

So is the Canberra Times article a beat-up? Maybe. The thing is this; journalists have to fill space and write stuff every day. A story about Australia being fiscally prudent is boring. Whereas a story about the reckless spending of the last Howard government isn’t. There is something in it for everyone. Lefties get say that even the IMF knows what was wrong with the Howard government, righties get to talk about how useless the IMF really is and so on.

But … the article is still over-egged.

* Stop sniggering.

Update 1: I’m just thinking what the common-sense interpretation of the claimed IMF result for Australia might be? It goes something like, “Given the level of gross public debt, everything else being equal, the budget surplus was too small”. I wonder if that result would still obtain if you added back the Future Fund to the budget surplus?

Update 2: This ABC piece talks about the IMF study and conflates some the Fairfax reporting as if it came form the study itself.

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211 Responses to Howard was a big spender. Who Knew?

  1. blogstrop

    Hmmm. Debt and budget surplus situations then and now?

  2. C.L.

    AUSTRALIA’S most needless wasteful spending took place under the John Howard-led Coalition government rather than under the Whitlam, Rudd or Gillard Labor governments, a study has found.

    Ahahahahahaha.

  3. candy

    So far there’s been nothing to equal the good government of the Howard/Costello years.

  4. Skuter

    So presumably, if Costello had closed down the Commonwealth bond market rather than accumulated assets in the future fund, this ‘Howard profligacy’ result would have never appeared?
    Peter Martin should hereby be known as the press gallery’s Peanut-in-chief…Phil ‘pigeon toes’ Coorey can be his deputy.

  5. Sinclair Davidson

    So presumably, if Costello had closed down the Commonwealth bond market rather than accumulated assets in the future fund, this ‘Howard profligacy’ result would have never appeared?

    :)
    It could have been worse. Depending on how the model handles the discontinuities round zero the Howard government might have had to have an infinitely large surplus.

  6. johno

    There is one period in Australian history of strong prudence: 1931 – 1935

    Interesting. This covers the period following the Wall Street crash of 1929. Following that crash, the then PM, Scullin, initially chose to ‘stimulus’ Australia out of the downturn, but his plan was voted down by the Senate and he lost office in 1931. Lyons relaced Scullin as PM and he pursued an orthodox policy of sound money and fiscal discipline. Australia started to recover from the post Wall Street crash downturn by 1932.

    If only Kevin Rudd and his Treasury advisors had been taught a little economic history, Rudd may still be PM and looking forward to winning his third term in office.

  7. Sinclair Davidson

    If only Kevin Rudd and his Treasury advisors had been taught a little economic history, Rudd may still be PM and looking forward to winning his third term in office.

    Look there’s a unicorn :)

  8. Andrew

    Does this study actually look at borrowing of this current Government in comparison to the Howard government? So this study thinks that the ‘stimulus spending’ somehow stabilised the economy therefore the increase in spending in real terms is ignored?

  9. Sinclair Davidson

    Andrew – read the post and the paper. As I say, it does not actually discuss Australia at all.

  10. Gab

    Thank you for fisking that “report”, Sinclair. It seems the IMF has distanced itself from the report, stating: “This Working Paper should not be reported as representing the views of the IMF.” Okay, maybe that’s a general disclaimer on all papers?

    “It is important to note that the test period in table 10 ends in 2007.” But of course! And naturally the only graph highlighted in Fairfax publications is this one derived from page 10 of the associated Chartbook. This, it seems, is what the Fairfax “economics reporter” has based the blaring headline upon. No mention, naturally, that govt. spending declined during the Howard years.

  11. Infidel Tiger

    I welcome a return to Howard’s profligacy.

  12. Gab

    it does not actually discuss Australia at all.

    True. I had a look through earlier and while some charts and graphs mention Australia, there’s no actual discussion of Australia’ performance. That’s all been made up gleaned by the Fairfax reporter.

  13. papachango

    So can anyone explain why, other than for reasons of ideological bias, they didn’t give Whitlam a whacking too?

  14. duncanm

    We’ve been told
    * Spending is good
    * Howard/Costello were big spenders

    ergo

    * Howard/Costello are good.

  15. thefrollickingmole

    So high spending, within a budget is worse than high spending and a deficit?

    Id agree Howard shoulf have “starved the beast” as nothing except lack of money will retard government overreach.

    But seriously, pink batts, school halls, NBN, disability reform (unfunded as yet) and Gonski (unfunded as yet) are not waste?

  16. Andrew

    Sinclair – I only went off the Fairfax article (my bad)!

  17. I haven’t had a chance to look at this in detail, Figure 5 in the IMF paper looks interesting.

    How much was “spent” on tax cuts?

  18. Sinclair Davidson

    NGD – that figure is reproduced in The Age – a bit clearer there.

    They don;t talk about tax cuts being ‘spending’ so not sure where that fits in.

  19. Skuter

    http://www.theage.com.au/opinion/political-news/howard-rejects-imfs-big-spender-tag-20130111-2ck3z.html
    In this follow up article, we have this little nugget from K D Wong…

    The Minister for Finance, Penny Wong, said the IMF study endorsed the current Labor government’s ”responsible spending decisions” while diminishing Mr Howard’s record.
    ”The study shows the Howard government clearly missed opportunities to effectively use the mining boom and strong global economic conditions to invest in Australia’s future, and it debunks the myth spouted by Tony Abbott and Joe Hockey that the Howard government exercised spending restraint,” Ms Wong said.
    ”Rather than investing in key infrastructure projects like the National Broadband Network, which this government is rolling out . . . the Howard government made spending decisions that made the budget unsustainable”.

    Shameless…

  20. JC

    How much was “spent” on tax cuts?

    He’s back. Better than ever.

  21. Sleetmute

    Profligacy is in the eye of the beholder. Presumably Howard was regarded as profligate because budget surpluses in 2005-07 were not higher. Labor opposed many tax cuts and certainly didn’t argue for larger tax cuts, so the only way Howard could have avoided the ‘profligacy’ tag would have been to accumulate larger surpluses. That is also George Mega’s oft-touted view. I think Howard and Costello are right in arguing that such a strategy would not have been politically viable given the nature of the political opposition they faced. There is also no evidence that a Labor government would have had larger surpluses. Even now, Penny Wong is saying that Howard should have spent more – not less – on projects such as the NBN. I guess that’s off-budget so it doesn’t imply profligacy… She says:

    The study shows the Howard government clearly missed opportunities to effectively use the mining boom and strong global economic conditions to invest in Australia’s future… Rather than investing in key infrastructure projects like the National Broadband Network, which this government is rolling out . . . the Howard government made spending decisions that made the budget unsustainable.

    Putting politics to one side, Stephen Kirchner and others have also argued larger surpluses would not have been economically sensible either. Fiscal policy is (or ought to be) about getting the supply-side right, not trying to stabilise the demand-side.

    The IMF seems to believe that Rudd’s stimulus spending was not profligate because (according to Martin’s reporting):

    …the measure makes allowance for spending needed to stabilise the economy.

    In other words, the IMF has decided how much anti-cyclical fiscal policy is too little and how much is too much. What a joke. Most of the Rudd stimulus was spent after the 2008-09 financial year, after the point recession had been avoided.

    The IMF doesn’t know what it is talking about. What the IMF (and Steve Kates amongst others) don’t understand is that under inflation-targeting, it is the central bank that drives the nominal economy. Australia avoided recession in 2008-09 because the RBA accommodated and added to the fiscal stimulus. By contrast, the Fed, BoE and ECB did not loosen policy sufficiently and hence suffered terrible recessions in spite of sizable fiscal stimulus spending. Empirical studies of fiscal stimulus and austerity episodes need to take account of monetary policy or else they will show very little other than the scatterplot Treasury’s Sinc-corrected chart shows.

  22. It’s a different graph, Figure 5 shows the 25 year rolling Bohn Coefficient.

  23. Sinclair Davidson

    The figure in the paper isn’t very clear to me.

  24. Infidel Tiger

    Wasn’t Julia shouting the other day that Abbott was not a Liberal in the mould of John Howard? Why yes she was:

    “Many of those Australians might be thinking to themselves that they’d like to exercise a vote for John Howard’s-style Liberals. I’ve got news for those Australians. There are no John Howard-style Liberals any more.

    “The political party known as the Liberal Party in this parliament is an entirely different creature from the political party led by John Howard.”

    J Gillard, November 2012.

  25. Sleetmute

    Figure 3 shows how prudent Tony Blair was… Yeah, right.

  26. .

    I want monty to explain Gillard’s ace in the hole strategy of the NBN.

    Jock Mc Turdman isn’t even spinning that one.

    Bueller? Bueller? Bueller?

  27. Skuter

    So let me get this straight…
    we have pretty much had a continual string of budget deficits from 1953-54 to 1996-97 (apart from a string of four surpluses from 1987-88 to 1990-91). From 1997-98 to 2007-08 we had a budget surplus in every year bar one.
    Sources: Table 2.14 http://www.rba.gov.au/statistics/frequency/occ-paper-8.html?accessed=2013-01-11-14-22-24 and
    http://www.budget.gov.au/2012-13/content/myefo/html/13_appendix_d.htm (Admittedly, I don’t know what is going here with the MYEFO figures for 1970-71 to 1974-75, but the sources disagree so I’m calling them deficits).
    Yet the conclusion of Peter Martin is that only Curtin in 1942, Menzies in 1960 and whomever gave us that string of virtually continuous surpluses in the 2000s were profligate???
    Had Australia never had a mining boom before???

    What a flog, Peter Martin is…

  28. Dan

    So, does the report take into account Howard using tax reciepts to pay off the debt accumulated previously? Or will we never know?

  29. John H.

    I welcome a return to Howard’s profligacy.

    I’d welcome a return to his more moderate approach to politics, less grandstanding, less about personality and more and policy, more about respect than denigration, and a man who truly knew what making “tough decisions” is about.

    I hope Mr. Abbott’s change of attitude of late reflects his desire to make politics more substantive again, to rely on policy not rhetoric, to undercut those bastards who treat us like bots who can be conned by words.

  30. .

    This is such bullshit.

    You could easily compares any cost benefit analysis or lack thereof on line item spending, ex ante and post ante.

    Or you could measure public sector productivity ratios.

    Or spending to total labour or multi-factor productivity.

    They may not be appropriate, but a similar measure or method would be.

    To say Howard spent too much, is blindingly obvious.

    Welfare churn should have been eliminated, but Peter Saunders II and Pete Whiteford don’t agree.

    The lefties must be in a bind. Maybe Howard ought to have cut funding of the states or the military instead?

    Howard could have eliminated income tax if he left spending at 1996 levels in real terms, and not allowed it to grow in real terms. This may have been possible with eliminating churn, reforming welfare to get rid of poverty traps and eliminating spending that didn’t pass a cost benefits test.

  31. .

    and eliminating spending that didn’t pass a cost benefits test.

    Which would include middle class and corporate welfare…

  32. Andrew

    I agree with Dot that Howard spent too much on welfare but to be fair, some of the welfare was ‘forced’ upon them to get support from other parties to pass legislation through the Senate, i.e GST and Democrats.

  33. eb

    I call bullshit on this idea of Howard bringing in middle class welfare. Please give some examples of what is being deemed “middle class welfare”.

  34. .

    Baby bonus, first home owners buyer grant…

  35. H B Bear

    Now I have a sense of how pissed the Thais, Indos and others must feel when the IMF arrives to tell them how to put their house in order. The 3rd term Howard government was bloody hopeless but still orders of magnitude better than “I’m a fiscal conservative” KRudd and the sheer hopelessness of Gillard and her ship of fools.

  36. Tel

    The political party known as the Liberal Party in this parliament is an entirely different creature from the political party led by John Howard.

    Well Tony Abbott has yet to declare war on anyone.

  37. *, we’re told the IMF thinks that spending in the Howard era was profligate.

    It probably was, I was told that my initial and core training in the military cost about $100 000 and this was during the Howard era (was just what was told don’t know the truth of it), so assuming there was some truth to the rumour it cost $100 000 to provide 16 weeks of training plus my wages. Seems a bit excessive to me.

  38. Tel

    I want monty to explain Gillard’s ace in the hole strategy of the NBN.

    It’s a pretty simple idea, people want free stuff, so you tell them they can have free stuff, and you put together business plans and the whole box and dice. Then sign heaps of contracts, making it difficult for the next government to back out again.

    If Turnbull just follows the plan as it stands, the whole lot either slurps taxpayer’s money or goes broke, either way the ALP can blame Turnbull. Better still because the supposedly “off budget” NBN will have to hit the balance sheet sooner or later.

    If Turnbull shuts it all down, then he will get blamed for not delivering the free stuff as promised.

    If Turnbull forces people to use the NBN and cranks up the price until it does make a profit, then oh the howls and pushback from the people paying higher prices.

    The ALP have really done a good job of boxing the next government into a corner on this one. There should be a name for it.

  39. Tom

    Mr Eslake did say, however, that he was ”gobsmacked” the IMF did not judge Gough Whitlam’s government as profligate.

    ”That they didn’t regard the 40 per cent plus increase in government spending in 1974 to 1975 under the Whitlam government as profligate . . . [that's] far worse than anything the Howard government undertook,” Mr Eslake said.

    No mention of the fact that Rudd-Gillard have increased spending by 72% and government borrowing from $(-)40 billion to $262 billion.

  40. ”That they didn’t regard the 40 per cent plus increase in government spending in 1974 to 1975 under the Whitlam government as profligate

    An interesting comment check what the spending was. I think you will find that the Howard government spent more as a percentage of GDP. Given the 10 years, more changes could have been made (assuming voters actually prefer lower taxes to handouts like Costello probably believes).

  41. Andrew

    It probably was, I was told that my initial and core training in the military cost about $100 000 and this was during the Howard era (was just what was told don’t know the truth of it), so assuming there was some truth to the rumour it cost $100 000 to provide 16 weeks of training plus my wages. Seems a bit excessive to me

    I doubt John Howard decides how much your military course

  42. Andrew

    An interesting comment check what the spending was. I think you will find that the Howard government spent more as a percentage of GDP. Given the 10 years, more changes could have been made (assuming voters actually prefer lower taxes to handouts like Costello probably believes).

    I remember Sinclair saying in one of the other pages was that backcasting back that far is very difficult. Even if it was lower in real terms, increasing spending by 40% over such a short period of time is absurdly large.

  43. Andrew what are you carrying on about? My course was half way through the Howard regime and if the number was correct or even close to, then we had an ineffective government. This in no way compares to the current government but I am a hard marker.

  44. Even if it was lower in real terms, increasing spending by 40% over such a short period of time is absurdly large.

    Of course it is too large. It seems Labor governments over the decades have caused us problems (Even Hawke and Keating did great stuff but in the end had to spend too much)

  45. Token

    Now I have a sense of how pissed the Thais, Indos and others must feel when the IMF arrives to tell them how to put their house in order.

    No you don’t. The Indo’s had a revolution and social turmoil for years as a result of following the IMF’s rules in ’97 / ’98. People died.

    They’ve now seen the Europeans & US explain clearly how those rules do not apply to them.

    The world changed with the GFC.

  46. Andrew

    Interesting to see what Howard says in his book about the middle class welfare attack that people use against him.

    Recently the term middle class welfare’ has been used, pejoratively to attack payments and tax concession to people whom the critics believe should not be receiving them. The use of the term ‘welfare’ is dishonest. because the payments under attack are not true welfare or income support payments; rather, they are measures to change individual behaviour in pursuit of good public policy or, in the case of Family Tax Benefits, recognise the cost of something society regards as vital – the bearing and raising of children. By contrast, the unemployment benefit is a true welfare payment, because it gives the recipient a basic level of financial support to keep him or her from poverty.

    – page 492, Lazarus Rising.

    I do see what he is saying, although some of the public policy measures were extravagant.

  47. No you don’t. The Indo’s had a revolution and social turmoil for years as a result of following the IMF’s rules in ’97 / ’98. People died.

    Token
    These countries are overtaking us and I am putting my money where my mouth is. Corporate tax rates in the 20′s . It is not wages that will kill us but our big government. Sorry to be harsh but people die.

  48. Louis Hissink

    The ABC just mentioned (4PM News ABC Classical) that the Howard Government’s excessive spending (as asserted by the interpretation of the IMF report) is the reason why the present government cannot achieve its budget goals (ie a surplus).

    The worry is that our lefties seem to actually believe this rubbish – which means that 2013 is going to an interesting year from a Chinese perspective.

    Hmmmmmmmm.

  49. Howard Government’s excessive spending (as asserted by the interpretation of the IMF report) is the reason why the present government cannot achieve its budget goals (ie a surplus).

    LOL that’s right.

  50. Steve of Ferny Hills

    Howard in Lazarus Rising:

    the payments under attack are not true welfare or income support payments; rather, they are measures to change individual behaviour in pursuit of good public policy or, in the case of Family Tax Benefits, recognise the cost of something society regards as vital

    I liked Howard but this is unadulterated big gov nanny-statism. Simply reduce taxes and leave the effing money in taxpayers’ pockets.

  51. I liked Howard but this is unadulterated big gov nanny-statism. Simply reduce taxes and leave the effing money in taxpayers’ pockets.

    Going by some accounts this is exactly what Costello wanted to do.

  52. Tator

    I was told that my initial and core training in the military cost about $100 000 and this was during the Howard era (was just what was told don’t know the truth of it), so assuming there was some truth to the rumour it cost $100 000 to provide 16 weeks of training plus my wages. Seems a bit excessive to me.

    Kelly, that figure sounds about right, it costs SAPOL $50k per new recruit and they do a 6 month full time course with no accomodation or catering involved. Albeit the cadet salary is $13k higher than an army trainee but with probably less materiel used for police training and especially less ammo which is expensive on top of paying full cost of employment for the instructors as well as trainee wages plus depreciation of the facilities which in SAPOL’s case up until last year were negligiable due to the age of bullshit castle which has just been replaced with a state of the art brand spanking new full Academy. The only part left over from the old Academy is the shooting range from the firing line to the backstop.
    Plus you have your costs of training deployments where the big boy toys running costs outweight any of the little boy toys us coppers run around with.

  53. .

    The ABC just mentioned (4PM News ABC Classical) that the Howard Government’s excessive spending (as asserted by the interpretation of the IMF report) is the reason why the present government cannot achieve its budget goals (ie a surplus).

    Fuck me.

    Homer Paxton’s dreaded ‘stucteal defecit’ strikes again.

  54. gary

    If both the right and left of politics agree we need to lower govt spending, a change to the constitution is needed so total govt (local, state & fed) spending (and taxes) is below 20% of GDP.

  55. blogstrop

    Middle Class Welfare is a pejorative term, intended to suck away any benefit that might accrue to a government that was (a) conservative and (b) prepared to put money towards real families and procreation.

  56. .

    Gary

    I think it should be 15%, and it aligns with what I said ealrier.

    I also think it ought to be funded with a 10% GST, 2 % LVT and a 5% royalties tax, and not other taxes.

  57. blogstrop

    According to the ABC TV News tonight the commission into sexual abuse of children is to “end the decades of silence” on the issue.

  58. Will

    I liked Howard but this is unadulterated big gov nanny-statism. Simply reduce taxes and leave the effing money in taxpayers’ pockets.

    Going by some accounts this is exactly what Costello wanted to do.

    Which is why Howard was a better political operator. He knew he had to give free stuff, as the voters expect it.

  59. .

    Bloggie

    I can’t justify the FHOBG or the Baby Bonus.

    Much better off with abolishing stamp duty and raising the TFT for income tax, along with abolishing payroll tax.

    This ought to be the libertarian and conservative (government) mantra.

    “Whenever someone wants money, give back some of what they have paid us. Do not increase their benefits.”

  60. .

    I should revise that

    ““Whenever someone wants money, give back some of what they have paid us stop taking so much away from them. Do not increase their benefits. Do not make them dependent upon us and consider their income as state property to be doled out as necessary”

  61. Jarrah

    “Going by some accounts this is exactly what Costello wanted to do.”

    That’s my understanding too, but he was overridden by Howard who elevated political considerations over economic ones.

  62. Skuter

    Whenever someone wants money, give back some of what they have paid us. Do not increase their benefits.

    Dot, I fully understand what you’re saying, but don’t forget who Howard was up against. If he left ANYTHING more in the bank, so to speak, his opponents would have used it against him. Also, there are lots of folks who pay little or no tax. Like Romney’s 47 per cent, tax cuts were never going to do it for them. If they kept the kleptos out for one or two terms, well, that is a price worth paying. If he made life more difficult for them, well, all good. The perfect is the enemy of the good.

  63. John A

    Excellent revisions, Dot!

    Plus 5 to your post.

  64. .

    Skuter

    How would you do it then?

    I’ve spent too long in my ivory tower. Any good suggestions are gladly accepted and will be expounded with vigour.

  65. Andrew

    If both the right and left of politics agree we need to lower govt spending, a change to the constitution is needed so total govt (local, state & fed) spending (and taxes) is below 20% of GDP.

    Too many believers in Keynesian economics in the Parliament for that to happen.

  66. .

    Skuter

    You would need to go in hard and early.

    If you’re a mendicant citizen, you still pay regressive and usurious taxes through tariffs, the cumulative and then dynamic supply effect/s on property construction, excise taxes and even GST on excise tax.

    These avenues ought to be explored in the first instance. The outcome regarding property may take a while. You’d have to go in hard after an election.

    Howard’s gambit worked for a while, but Rudd was eventually say they were no different.

    Even if only the surpluses were paid back as tax cuts, over 100 bn in cuts could have been made. The dynamic effect of that would have been amazing. Given from the outset, the combined effect would have been larger.

    Would have it resulted in us pissing it all away in 2007? Maybe, but we would have had a higher base to come off in the GFC and onwards.

    Imagine if by 2007, excise, payroll, tariff, stamp duties were all cut and the TFT was cut to be above the maximal dole payment, or at the level it is at now – or let’s just say around 20k.

  67. Skuter

    Dot, in short, the only way you can target the mendicants who pay little or no tax is to lower their cost of living…or give them transfef payments. Lowering their cost of living is perilous because you have to battle all those vested interests. The old story of concentrated costs and dispersed benefits. To be honest, I don’t know the libertarian answer, but I think in the circumstances, Howard made a good fist of it…for mine, this is the biggest problem facing us small government types. Let’s facebit, the vested interests have a massive advantage.

  68. .

    Point taken, but what vested interest benefits from the GST on excise tax?

    Arguably, the anti motoring lobby gets a non financial benefit.

  69. Fisky

    Did Homer write this report?

  70. Rabz

    “Whenever someone wants money, give back some of what they have paid us. Do not increase their benefits.”

    Agreed. This is a fucking fundamental principle.

  71. John H.

    Too many believers in Keynesian economics in the Parliament for that to happen.

    This is now such a global problem governments are going to be forced to address it. But we can’t do the slash and burn approach, too much potential chaos there. I’d prefer a clear cuts program over a decade, winding back various entitlements but allowing time for adjustment. At some point we’re gonna have to do this. Do it now.

    But the politics screws the above idea. An opposition would be too tempted to argue that they will stop the adjustment and too many will then vote for them.

  72. Skuter

    Point taken, but what vested interest benefits from the GST on excise tax?

    State governments???

  73. Skuter

    Honestly dot, I am with you on principles, but I have become dismayed at the extent to which the current order has become entrenched…

  74. Andrew

    This is now such a global problem governments are going to be forced to address it. But we can’t do the slash and burn approach, too much potential chaos there.

    I think you can have the best of both worlds. Slash and burning the unnecessary waste is fine but still maintain the Government funding which helps fund or allows jobs to be created (not unnecessary public sector jobs) and you can still have a strongly growing economy. I think Sinclair tweeted a good article showing how austerity can work and does not halt growth and job creating if done correctly. Here is the article…

    http://www.bloomberg.com/news/2013-01-07/why-austerity-works-and-fiscal-stimulus-doesn-t.html

  75. Skuter

    Sinc, tweeted that article??? Thanks for the HT, Sinc!?!?!?!
    But also, I think it requires a crisis…a real crisis to pull that shit off!
    Let’s see how Newman goes here. I wish him all the best. On a side note, how are those arseholes in the QPS…fucking ‘together’ Queensland my arse…

  76. David Brewer

    Despite Howard’s vote-buying in his later years, I agree with others that the attempt to pin “profligacy” on him is desperate, and farcical given the Rudd/Gillard performance.

    Some variations and additions to points already made:

    1. There was no net debt in the later Howard years – there was even a growing cash horde in the form of the Future Fund. What government could have resisted scattering a few freebies in that context?

    2. The freebies were often welfare churning – transfer payments to tempt voters – baby bonus, first home buyers’ grant, and especially steady real increases in the age pension. Some of this is inefficient in the sense that it costs money to get revenue in and pay it out again, but at least people could spend it on what they liked, so that the inefficiency was nothing compared to pouring the money down the drain on worthless boondoggles – e.g. Building the Education Revolution, dud pink batts, whopping renewables subsidies.

    3. Rudd/Gillard have run some of the largest deficits in Australian peacetime history despite record high commodity prices, even higher than they reached at the end of the Howard years.

    4. As several have observed, Wong’s dragging in the NBN is shameless. The NBN is not on budget, so it could not possibly be in the IMF analysis anyway. And if it were on budget, then Labor’s deficits, huge as they are, would be even huger.

    5. Rudd/Gillard have done long-term damage to the revenue base by reregulating the labor market, over-regulating other markets, jacking up subsidies and protection, and scaring off investment with policy u-turns. The fact that they cannot balance the 2012-13 budget, despite all the political capital invested in this for three years, is testament to how much they have fouled the nest for themselves and their successors.

  77. Skuter

    David Brewer, well said…

  78. Simsy

    When Howard started, Australia was in deficit and there was no money in the futures fund. When Howard left office we had a surplus of some forty billion dollars and a futures fund of some 80 billion dollars.

    Annual Government revenue has increased over the last 5 years but now we have a deficit if some 200 billion dollars yet Howard, was a bigger spender than Whitlam,Rudd and Gillard.

    As Pauline Hanson once said “Please Explain”

  79. LOVO

    Once again the old adage has been backed up by the IMF no less…. ALP=builds…. LNP=demolish… and how you lot here hate that ‘truth’… like that other myth about LNP and ‘small govt’ …. ALP = smaller govt.. LNP= bigger govt… just another truism that you lot will reject… but hey, spin away… its all ya got.

  80. .

    Once again the old adage has been backed up by the IMF no less…. ALP=builds…. LNP=demolish

    You’re an imbecile. The ALP has set up union executives to steal worker’s savings through industry super funds. The ALP wants to finish the NBN which will realistically end up costing over 100 billion and remain incomplete before it is rendered obsolete.

    Fuckhead.

  81. .

    ALP = smaller govt.. LNP= bigger govt… just another truism that you lot will reject… but hey, spin away… its all ya got.

    Gillard turned a moderate surplus and no debt into a 300 billion debt ceiling that won’t last for such longer.

    There is no spin here.

    “Small Government by carbon tax and mining taxes”

    You’re a rambling idiot, LOVO.

  82. Sleetmute

    Great article on this by Henry in the Oz today. Complete take-down of Martin and the ABC.

  83. Alice

    Simsy

    WTF good is a future fund when all they plan to use it for is to pay out the very good superannuation of a lot of over superannuated commonwealth public servants?.
    Plus WTF good is a future fund when it lost a heap in the GFC?.
    Unlike some countries who do plan to use their future fund to pay for useful infrastructure. Oh no – here in Australia it is to pay out bureacrats.

  84. Alice

    Simsy

    The future fund is money ripped off taxpayers to pay already well paid and over superannuated bureacrats.
    Its the greatest rip off of private money to the public sector of all time

    “The Future Fund was established by the Future Fund Act 2006. The object of the fund is to strengthen the Australian Government’s long term financial position by making provision for unfunded Commonwealth superannuation liabilities. These liabilities will become payable at a time when an ageing population is likely to place significant pressure on the Australian Government’s finances.

    Here – bearing in mind most of them get a super rate way above private sector averages.

    http://www.futurefund.gov.au/about_the_future_fund/outline

  85. Alice

    Further Simsy
    when you see how the future funds costs are going
    There is something very wrong with this picture

    Contracts with investment managers (millions)
    $55,727,014 2008/9
    $244,766,537 2009/10
    $237,920,018 2010/2011

    Yep those investment fund managers are walking away with a heap every year and its now more than 4.5 times what they charged ib 2008/9. What do we expect when they put biggie bank execs in charge of the super fund? They take biggie bites out of it.
    The government really is stupid.

  86. Alice

    Oh and for the education investment fund
    the investment contract fees started off being
    785,000 approx in 2008/9 – its now almost 7 mill a year and for the health and hospitals fund
    the investment contracts were worth 45,000 in 2008/9 and now they are eating up almost 6 mill a year in fees.

    Dont expect the stinking fund to make much at this rate of gouging.

  87. Alice

    Further the future funds “indirect cost ratio” has blown out from 17.9% of the net assets of the fund in 2008/2009 to an AMAZING (truly amazing) 61% of its net assets in the most recent year available (2010/2011).

    I mean its annual indirect costs of running the fund amount to 61% of the net assets in the fund in one year alone?????.

    This is highway robbery.

    WE all ought to be shot for allowing this to go on.

  88. Alice

    Ok those percentages above are wrong but either way management / investment agency fees for running the future funds have gone up more than fourfold in three financial years under this govts non watch.
    ripping close to 500 mill out every year and the government contributed zilch except from the sale of assets 60bill.

  89. If only Kevin Rudd and his Treasury advisors had been taught a little economic history, Rudd may still be PM and looking forward to winning his third term in office.

    You can lead a horse to water, but you can’t make it drink. Your statement presupposes (a) that Rudd was willing (and able) to learn from history, (b) he was competent enough to apply what he had learned, and (c) that it fitted his political agenda to do so in the first place. In my mind, based on everything that actually happened, the answer to all three questions is no.

  90. Crossie

    So, Gillard is ‘ready’ for the coming election and, so it seems, are Fairfax and the ABC. And Barry O’Farrell is determined to help them.

  91. Crossie

    If only Kevin Rudd and his Treasury advisors had been taught a little economic history, Rudd may still be PM and looking forward to winning his third term in office.

    Kevin did not have a political agenda beyond simply being a prime minister. His election campaign on any issue was ‘me too’ to anything John Howard presented and that’s how he won, by fooling the electorate into thinking all will be the same only a fresh face at the top.

  92. .

    WE all ought to be shot for allowing this to go on.

    You first.

  93. Skuter

    From Henry’s op-ed…

    With gross and net debt thus moving separately, a test that only examines gross debt would incorrectly conclude the government imprudently failed to push fiscal consolidation as much as it could and should have done.

    Sinc, this was essentially my first point. That was my first reaction when I read your post, without reading the IMF paper. That this did not occur to Peter Martin means that he should be censured for inaccuracy. Perhaps a complaint to the Press Council is in order? He should be subjected to Alan Jones style fact checking ‘remedies’…

  94. Indolent

    ‘Baby bonus, first home owners buyer grant…’

    One off payments – mischievous to describe it as welfare. Targeted de facto tax cuts is a more appropriate description.

  95. Sinclair Davidson

    Skuter – maybe. Although I suspect he never read the piece either. He was probably going off a treasury note on the IMF article.

  96. .

    It’s not one off given the scale (permanent income) and also the ability of human beings to be continuously fecund for roughly 30 years of their life.

    Baby bonus nor the FHOBG are/were not conditional upon an income threshold to deduct tax from.

    Anyone can get the baby bonus. A couple with only one partner working could get two dips of the FHOBG.

    They are not policies worth defending.

  97. Token

    Although I suspect he never read the piece either. He was probably going off a treasury note on the IMF article.

    I like Mark Steyn’s description for “journalists” like that.

    court eunuchs of the palace media

  98. Skuter

    Although I suspect he never read the piece either. He was probably going off a treasury note on the IMF article.

    Even worse then…off with his head! That this did not occur to Treasury is scandalous!

  99. HRT

    Fairfax have stepped on their doodle twice in the last week. You published the first, here is the second:

    http://blogs.crikey.com.au/planetalking/2013/01/12/qantas-safety-list-story-is-also-about-fairfaxs-decline/

  100. Indolent

    Dot whether it is a good policy or not is not my point. If someone is putting in more than they take out and presumably middle class people pay tax, it is wrong and somewhat insulting to call it “welfare”.

  101. .

    No, it is welfare, but worse still is that it is terribly wasteful.

    The state takes your earnings away as they see fit, and dole it back, as they see fit. Like it or not, that is the law and you have to signal certain behaviour to receive these earnings back.

    Don’t blame me if you’re insulted by how you were treated by even a conservative Government.

    Not only is it welfare, it is confiscatory and authoritarian.

    You presumed and still presume that people getting these benefits are net taxpayers. Not necessarily so.

    I’d prefer tax cuts which allow productive people like you to have a higher net income and stop subsidising poverty by creating perverse incentives for the indigent.

  102. Indolent

    “You presumed and still presume that people getting these benefits are net taxpayers. Not necessarily so.”

    Dot if they are buying a house, they are tax payers unless they cheating. I personally think this a better way spend money than many other things the government wastes money on.

    By the way, I am not insulted by the government but I think others may be insulted by your definition of the process as welfare.

  103. m0nty

    So Henry’s piece today is basically: “How dare Fairfax and the ABC make a partisan attack by fudging statistics and taking skewed perspectives! That’s my job!”

  104. .

    Dot if they are buying a house, they are tax payers unless they cheating. I personally think this a better way spend money than many other things the government wastes money on.

    If you buy a house, you pay a tax rate up to 80% on it.

    However, a single person earning x and a couple earning x with one working partner would have been given different subsidies. That is inequitable.

    So Henry’s piece today is basically: “How dare Fairfax and the ABC make a partisan attack by fudging statistics and taking skewed perspectives! That’s my job!”

    Please point out where Henry has done that or admit what you said was libellous.

  105. Token

    So Henry’s piece today is basically…

    No, poor trolling effort.

    That said, we do expect a partisan hack who sees the world in binary terms to make such as childish mistake.

  106. Skuter

    Ah, our own gavage-fed troll, m0nty pops up again.

  107. Judith Sloan

    Henry’s piece was just brilliant. He made the point so well that you don’t have to be an economics professor – which he is – to realise that the conclusions that Peter Martin was drawing were just wrong.

    I agree … I don’t think he had read the paper and was probably tipped off by Treasury or the Treasurer’s office. You think he might have learned after the Coalition costing fiasco.

  108. JC

    Another thread screwed over.

  109. Infidel Tiger

    You think he might have learned after the Coalition costing fiasco.

    mOnty fell for that big time too. Poor dears.

  110. m0nty

    Coalition costing fiasco

    Ah, you mean like this Coalition costing fiasco, reported on by that very same Peter Martin? No wonder you lot have knives out for him, he helped expose the $70 billion black hole that contributed to the Libs losing the last election.

  111. Tom

    “How dare Fairfax and the ABC make a partisan attack

    It was presented as a news story. At the very least, Fairfax should have published a correction that the draft working paper quoted by Martin was NOT the opinion of the IMF — as the paper specified. IMO, it was among the worst media misconduct of the past year.

    Did you really have a job as a journalist or did you get the qualification out of a Wheeties packet so you could score freebies and tickets to trade shows for that obscure IT rag you wrote for?

  112. Helen Armstrong

    How much was “spent” on tax cuts?

    So presumably 100% of ‘savings’ (from the Government’s point of view) is where the entire wage goes directly to the Government as tax?

  113. Andrew

    Ah, you mean like this Coalition costing fiasco, reported on by that very same Peter Martin? No wonder you lot have knives out for him, he helped expose the $70 billion black hole that contributed to the Libs losing the last election.

    Amazing how some of you on the left bring up the $70 biliion black hole in the Coalition’s budget and then claim that they have no policies. I ask you, how can you have no policies but then have a $70billion blackhole in the budget?

    Henry’s piece was just brilliant. He made the point so well that you don’t have to be an economics professor – which he is – to realise that the conclusions that Peter Martin was drawing were just wrong.

    The worst part of the reporting of the IMF report was not of Fairfax’s story but the news headline on the ABC which concluded that the Howard Government’s surpluses is the reason why the Gillard/Rudd Government has struggled to deliver a surplus.

  114. Tgrij

    Ergas’s article was excellent not only because I agree with what he said but also because he did his homework – unlike Martin (who Ergas gracefully acknowledged in his article) reinterpretted the IMF paper to suit his hypothesis.

  115. Julie Novak

    I note our little friend Penny Wong has continued the misleading spin about the IMF study on the state-run broadcasting service website, and made some factual howlers elsewhere, although she pleas for the public to focus on the facts.

    http://www.abc.net.au/unleashed/4463186.html

  116. Andrew

    I note our little friend Penny Wong has continued the misleading spin about the IMF study on the state-run broadcasting service website, and made some factual howlers elsewhere, although she pleas for the public to focus on the facts.

    I posted a reply to Penny’s awful article on The Drum. Her ignorance to the fact that Australia is in a terms of trade boom and is increasing net debt is a shocking example of her Government’s incompetence. Then you have pink batts, school halls and all of the other wasteful stimulus programs.

    Amazing how the ALP like to use the line that they are a lower taxing government yet then state that revenue has massively declined because of the GFC. The revenue decline that Penny refers to is largely from declines in tax revenue from the GFC. It is almost as if the ALP tries to paint themselves as a Party that has massively cut or eliminated taxes altogether.

  117. Token

    I posted a reply to Penny’s awful article on The Drum. Her ignorance to the fact that Australia is in a terms of trade boom and is increasing net debt is a shocking example of her Government’s incompetence.

    According to Fauxfacts & the ABC, Wong is one of the governments more impressive performers and leading lights on finance…

  118. Louis Hissink

    it does not actually discuss Australia at all.

    True. I had a look through earlier and while some charts and graphs mention Australia, there’s no actual discussion of Australia’ performance. That’s all been made up gleaned by the Fairfax reporter.

    And here again we see how the Left fabricate their reality – now are they doing it wilfully, or aree they doing it because that is how they interpret the data?

    If the former they have to be a bunch of crooks.

    If the latter, then we are in deep doo doo because we are then confronting stupidity and that is quite, quite unpredictable and also dnagerous.

  119. Entropy

    She isn’t my little friend.

  120. Mk50 of Brisbane

    Well Token, what d’ye expect? That fellow Wong’s more a rakehell than some sort of finance guru. The chap’s a renowned skirt-chaser, notoriously unable to keep his dick in his pants.

    That chap Wong makes Shagger T “…look like an anti-poon activist…” to quote a mad Texan of my acquaintance.

  121. Samuel J

    The IMF has really gone downhill. Ten years ago, a staff working paper of such poor quality as this would never have been published.

  122. PoliticoNT

    Can we (as in the Catallaxy Readership Collective) organise a joint complaint to the Press Council about this ABC/Fairfax crap?

    To not complain is to simply endorse the Left’s ongoing abuse of the complaints process.

  123. Borisgodunov

    The Lying alp ,”not guilty yer onnor .I dun nuffin rong”

  124. Alice

    Dot says to mu comment

    WE all ought to be shot for allowing this to go on.

    You first.

    No you first for being sucked in by these fee raising bank wanking bastard managers of the future fund , the DICKHEADS, who are gouging it from m my taxes.

    FUCK the FUTURE FUND. FUCK LABOR BS. FUCK them all DOT. WHAT THEY ARE STEALING IS OUR TAXES.

    You have no hope of getting a small givernment and low taxes while these pricks are on the take. Dont you get that? DP is a joke and its never going to happen. There are too many bank fingers in the pie of our taxes already..

    No one can tell me there was a good reason for bank / agency fees to rise 450% in three financial years for managing the fucking future fund.

    I am pissed off.

  125. JC

    Alice

    can I suggest a small to the latest rant please?

    Instead of:

    I am pissed off.

    It should more accurately read

    I am pissed

  126. Alice

    Fuck off JC
    You work for a bank. You are a compromised piece of shit. You dont care which banks rip off our taxes wanker.

  127. Tintarella di Luna

    Alice but do you mean it?

  128. Alice

    I mean it Tintarella.
    JC is a wanker who works for a bank as a trader and he gets in here like the alpha male spoutng right wing crap but its not right wing crap at all. These banks get fucking subsidised and JC doesnt object to that AT ALL. (protected industry it is. JC is a hypocrite of the first order).

  129. JC

    Alice

    I don’t work for a bank… any bank.

    And I agree with Tintarella. You don’t mean that awful stuff at all.

  130. John Mc

    Alice, put the crockery down and take some deep breaths.

  131. Alice

    JC I do mean that awful stuff. You work for a bank and atre always championing the cause a=of banks but look at the inflation on their fees for manageing the future fund and associated assets. These pricks are runninbg it at 100% inflation rate a fucking year (coutresy of neumerous ex bank chiefs being on the board).

    Why isnt it in the news?

    I swear I hate mnodern governments. They are ALL on the take.

  132. Alice

    Ripped off AGAIN by government – who? ME!!!!

  133. Alice

    Shut up John Mc.

    I have every right to be throwing the crockery at this point.

  134. JimD

    Alice, you been on the mushrooms from Wonderland Garden?

  135. JC

    JC I do mean that awful stuff.

    Of course you don’t.

    You work for a bank

    I do not work for a bank, any bank.

    and atre always championing the cause a=of banks but look at the inflation on their fees for manageing the future fund and associated assets.

    I’m not going to look at anything. The banks don’t manage the future fund, Alice. They may be allocated assets to manage but that is a decision made purely by the board of the future fund and made on very competitive tender.

    These pricks are runninbg it at 100% inflation rate a fucking year (coutresy of neumerous ex bank chiefs being on the board).

    There are no bank chiefs on the board of the Future fund Alice. You’re delusional

    Why isnt it in the news?

    Because they keep talking about the fireman who died of natural causes in the Tassie fires. That story seems to be hogging the airwaves today. In fact I will break something next time I hear it.

    I swear I hate mnodern governments. They are ALL on the take.

    Okay. sleep it off and I’m sure you’ll feel better tomorrow and a hair of the dog.

  136. Alice

    You are all mad…!!

    Just keep lining up in the queue of half asleep people who say

    “oh we need the future fund because the poor bureacrat fat cats wont get paid out their generous 17% super otherwise (never mind half the rest of us are on casual contracts earning jack in super) and oh dear we cant have all these well paid fat cat buireacrats earning nothing in retirement and we need funds for education and building infrastructures

    BUT WE (the givernment) ARE TOO STUPID TO RUN SAFE INVESTMENTS so instead we may as well gamble like the rest of the suckers on a share market RIGGED by goldman sachs

    and better still – just so we the (DIMWITTED STUPID) GIVT knows how to gamble properly and maniacally we may as awell as GOLDMAN SACHS to preside over the future fund and charge all you suckers 500 mill a year.

    Im pissed alright JC and I havent had a drink.

    You are all fucking idiots not to eject the dickheads in government running this.

    But can you honestly tell me LNP is going get Goldman Sachs fingers out of our futureless fund?

  137. Skuter

    Can we (as in the Catallaxy Readership Collective) organise a joint complaint to the Press Council about this ABC/Fairfax crap?

    I propose that this should be the first item of business on the CCC meeting agenda…

  138. JC

    You are all mad…!!

    No we’re not Alice.

    I’m pissed alright JC and I havent had a drink.

    Let me think about whether I believe you.

    Just thought about it.

    I don’t.

    You’re drunk alright.

    But can you honestly tell me LNP is going get Goldman Sachs fingers out of our futureless fund?

    Why would you preclude Goldmans from an open tender and not say Margan Stanley or fidelity?

    Go!

  139. JC

    I propose that this should be the first item of business on the CCC meeting agenda…

    Yep.. Happy to sign up. Tell me where.

  140. Alice

    JC thefact that you gave me such a long detailed pro bank response as someone “who doesnt work in a bank” just tells me you are a bloody liar.

    “The banks don’t manage the future fund, Alice. They may be allocated assets to manage but that is a decision made purely by the board of the future fund and made on very competitive tender.”

    Oh yeah – its a real competitive tender MY ARSE IT IS.
    We have reps from all the BIG GOLD TOOTHED RATS on the board of the future fund.

    Let me see GOLDMAN takes pride of place and then there is god knows how many of the wankers.

    Competitive tender MY ARSE JC.

  141. JC

    JC thefact that you gave me such a long detailed pro bank response as someone “who doesnt work in a bank” just tells me you are a bloody liar.

    what pro bank response? All I did was suggest you’re drunk.

    Alice, I don’t work for a bank. Any bank.

    Oh yeah – its a real competitive tender MY ARSE IT IS.

    Okay. Offer contrary evidence please. It doesn’t even have to be peer reviewed.

    We have reps from all the BIG GOLD TOOTHED RATS on the board of the future fund.

    Yes, but you said there are banks chiefs on the board of the Future Fund. That’s simply incorrect.

    Let me see GOLDMAN takes pride of place and then there is god knows how many of the wankers.

    Perhaps Goldman made a good pitch.

    Competitive tender MY ARSE JC.

    Umm yes they are competitive tenders, Delores.

  142. Carpe Jugulum

    Competitive tender MY ARSE JC.

    Alice the future fund, is not subject to any tender conditions. It is a fund set up to pay PS pensions.

    Given that i have been involved in probably hundreds of tenders with federal funding i can safely say that the FF was never mentioned in any of them.

  143. JC

    Carpe

    The FF doesn’t manage the money except as it pertains to the old telstra holding that may or may not form part of the assets. I dunno if they sold it.

    They allocate out of the money to be managed. I think Alice is referring to the allocation methods.

  144. JC

    Whatever it is, she’s very very angrified this evening.

  145. Alice

    Ill offer evidence JC

    Go read the future funds current annual report (yes the financials)
    Go have a close LOOK at “cost disclosures”
    and you tell me the bank / agency fees for maaging the fucking thing have not risen 450% n three years.

    Thats 450% – read my lips – with barely any givernment contributions exceot asset sales – yes selling off the family farm.
    You and your banker ilk and the pathetic government which you obviously have in your keep (on my money) are all assholes JC.

  146. Alice

    The future fund is a con and Im pissed off about it. We taxpayers are being robbed blind.

  147. JC

    Go have a close LOOK at “cost disclosures”
    and you tell me the bank / agency fees for maaging the fucking thing have not risen 450% n three years.

    Link it and I’ll take a look. Can’t be bothered to look for it myself.

  148. Dan

    Ok Alice, the government can fund the APS super liability with higher taxes. Sound fairer?

    Christ woman, get a grip.

    ——–

    We all individually should hound the oz press council. That Wong article is just one big lie written on the back of a piece that was a lie.

  149. Alice

    Xaepe

    “are you contradicting JC who seems tio think the process for bank agencies to run the future fund (and educationa nd building fund) is competitive?

    It isnt. We are being gouged right under our stupid noses because many people dont know how to read numbers in annual reports.

    Its a disgrace (not that people cant read numbers but that the evil government knows they cant and is obviously doing sly deals to tolerate such a bad deal).

  150. Carpe Jugulum

    I think Alice is referring to the allocation methods.

    Fair point JC, but when someone says government tendering it presses my “go apeshit” button.

  151. Alice

    Dan

    Shut up . You are another useless twirp who cant read numbers or you would be on my side.

    Toddle off to bed toddler. You are totally useless and what the fuck are you talking about highber taxes for when I am saying they are corruptly wasting the taxes I already pay?.

    You dope.

  152. Carpe Jugulum

    Alice – FFS go away and sober up, rummy.

  153. Alice

    I linked it already JC but here it is again

    do a control search (control F) and tyoe in cost disclosures

    http://www.futurefund.gov.au/__data/assets/pdf_file/0017/4661/16853_FF_2011_AR_WEB_A212093.pdf

  154. Alice

    Its somehwre round page 40 odd JC – fucking fees have blown out

  155. JC

    Okay Alice

    I took a quick look at the financials and came across this.

    Costs
    The Future Fund’s management costs for 2011/12, as
    extracted from the audited financial statements, were
    $325 million compared with $446 million (inclusive of
    Telstra) in 2010/11. This fall largely reflects a
    reduction in performance fees payable to external
    investment managers during the year.

    http://www.futurefund.gov.au/__data/assets/pdf_file/0012/5106/FF_Annual_Report_2012_WEB.pdf

    So those expenses you’re having another kid over actually fell from the previous year. So What gives?

    Should I look at the 2010 annual report because that would be the only year these expenses went up by 45%

  156. Dan

    I maybe not very bright, but I’m coherent.

    Never would I take sides with a crazy hermit lady. Hey, maybe if the US stopped spending so much on foreign wars the future fund would look more attractive to you

  157. Alice

    Carpe you arent even part of this discussion. Did anyone invite you?
    Im talking to JC now eack off kid.

  158. Mick Gold Coast QLD

    Is this the Bundy Rum thread?

  159. Gab

    You’re hilarious, Alice. You have me in fits of giggles.

  160. JC

    Alice they fell from $446 million to $325 million from 2011 2012.

    So you’re saying expenses were 738 million in 2010?

    How many gins have you had?

  161. Alice

    Dan ypou fool. You can rack off too with Carpe (couple of stupid young kids). Ive given the figures to JC and I trust him more than I trust you even though he is a pro bank merchant at least he is smarter than both of you green kids. Now take Carpe and bugger off.

  162. JC

    Carpe you arent even part of this discussion. Did anyone invite you?
    Im talking to JC now eack off kid.

    Carpe… Feel free to join in on any discussion.

  163. jumpnmcar

    The Future Fund’s management costs for 2011/12, as
    extracted from the audited financial statements, were
    $325 million

    You’re shitting me!!. How can we reduce this?

  164. Gab

    I thought the ALP had raided the Future Fund and there was nothing left in the kitty?

  165. Alice

    BS JC
    They did not fall
    485,020 (mill) this year

    339,889 (mill ) last year

    WTF JC cant you read the numbers?
    read this

    Health and Hospitals Fund
    Purpose Amount debited
    2008/09Contracts with investment managers $45,895
    Amount debited
    2009/10 $3,466,798
    Amount debited
    2010/11 $5,930,927

    Wait there is more -its the same for all the funds – JC – should I go on???? (Liar)

  166. Alice

    Jumpncar
    Its bullshit – costs of that much and JC knows it.

  167. Alice

    Gab

    the ALP are noty running this fund well. It seems they are giving banks carte blance to raid it in fees.

  168. JC

    BS JC
    They did not fall

    Here. let me repeat what they said,

    The Future Fund’s management costs for 2011/12, as
    extracted from the audited financial statements, were
    $325 million compared with $446 million (inclusive of
    Telstra) in 2010/11
    .

    They say they did fall Alice.

  169. Mick Gold Coast QLD

    Yep, the Bundy Rum thread with a live feed to a contributor living at the Beenleigh caravan park.

  170. JC

    J

    umpncar
    Its bullshit – costs of that much and JC knows it.

    It cost .4% p.a to manage and support $77 billion of assets. That doesn’t sound like a lot to me Alice.

  171. JC

    the ALP are noty running this fund well. It seems they are giving banks carte blance to raid it in fees.

    Really? How so?

  172. Mk50 of Brisbane

    Mick:

    Is this the Bundy Rum thread?

    urgh. OK for mixing, but bloody terrible stuff drunk as God intended rum to be drunk – neat and with no ice.

    Have you tried Mount Gay rum (from Barbados)?

    A great sipping rum, that.

    (Ignore Alice, she’s off her trolley and has morphed into her evil twin MAlice. Again. Stable as a sodomites ‘marriage’ is our Alice/MAlice)

  173. Dan

    Fuck you very much. It would appear that without the seed capital from Costello, there would be no future fund and no way to fund APS retirement benefits. Apparently this disturbs you.

    Since inception, The fund has grown on average at 5%. I gather this disturbs you greatly also.

    People, banks, cafe’s and even the humble lawn mower person charge fees for their services. Apparently this disturbs you greatly also.

    My conclusion

  174. Skuter
    The Future Fund’s management costs for 2011/12, as
    extracted from the audited financial statements, were
    $325 million

    You’re shitting me!!. How can we reduce this?

    Who the fuck is running this scam? Eric Roozendaal? Mike Kaiser? Gordon Nuttall? Bruce Wilson?

  175. JC

    Skuter

    It also includes management fees to the fund managers.

    It works out to around .4% of the assets under management including the direct costs of running the office etc.

    I don’t think it that bad a deal.

  176. Alice

    The point is not what the percentage rise is JC. The point is what the increase in fee % has been over three years for a not corresponding rise in assets under managemnt. like 450% rise in fees where assets have noit risen by nowhere near that much.
    Its fees rising by a percentage far in excess of what net assets has risen and if you looked at “cost disclosures” like I told you to you would see the percentage of net assets that these costs have risen over three years (450% rise).

    Bells should be going off but instead we get wanker charmen saying how great its doing. BS. It only made 5% on its share investments last year. So did most term deposits.

    No Gab the ALP is not running the futire and associated funds well IMHO but the banks managing are doing damn fine thank you and laughing all the way to the bank as they say…

  177. JC

    There hasn’t been a 450% increase in costs over the reported 3 year period, Alice. You are simply incorrect.

  178. JC

    No Gab the ALP is not running the futire and associated funds well IMHO but the banks managing are doing damn fine thank you and laughing all the way to the bank as they say…

    Do you understand how the decision is made to allocate the assets to a particular manager? Do you know the incentive fee structure?

    Go to bed as you’re drunk. Now!

  179. Alice

    At the moment the ALP is supposed to be in charge (ha ha) it but they have hived it off to bankl CEOs and chairmen and boardmembers.

    lets see we have

    “Mr Fitzgerald is Chairman of Goldman Sachs Australia and
    New Zealand and formerly Co-Chief Executive of Goldman
    Sachs & Partners Australia.”

    Dr Mulcahy has broad corporate experience and
    expertise in financial services. He was Chief Executive
    Officer and Managing Director of Suncorp and has held
    a number of senior roles in the Commonwealth Bank
    including Group Executive, Investment and Insurance
    Services.

    Mr Watson has extensive experience in finance and
    investment management. Mr Watson spent 16 years with
    JP Morgan & Co.

    Mr Browne was a Partner (New York) and Managing
    Partner of Australian Offices (Melbourne and Sydney) in
    the legal firm Sullivan & Cromwell and has extensive
    experience in capital market transactions. Mr Browne
    has also acted for the Commonwealth and state
    governments, mainly in relation to international bond
    offerings and privatisations.

    Mr Rowe is Chairman of Rothschild Australia Limited,
    Chairman of UGL Limited and Chairman of
    BrisConnections. He was a Director of Australian
    Securities and Exchange Limited (ASX) from 2003 to
    2010.

    Ms Austin is Investment Services Director for Contango
    Asset Management and a member of the Boards of HSBC
    Bank Australia and the Tasmanian Public Finance
    Corporation. She has held senior positions with Rothschild
    Australia Asset Management, Commonwealth Funds
    Management, BHP and the Reserve Bank of Australia.

    Ms Doyle has had an extensive executive career in the
    funds management industry, particularly in the equities
    and fixed interest sectors, working with Commonwealth

    This is the “board” who runs the future fund and you all wonder why its bank / agency fees are going up so fast?

    there is more

    The banks are bloody running it (yours and my taxes and asset sales) – thats why.

  180. Alice

    You go to bed JC.
    When their fees go up 450% in three years you would like me to be drunk and half asleep but Im not and you work for banks.

    You are a bloody traitor JC and you ought be ashamed of yourself. You get in here and preach small governments but BIG FAT BANKS who steal my taxes with government permission and all this is just fine by you.

    You JC are an arrogant hypocrite and I am not drunk you sleazebag.

  181. JC

    Alice

    You said there were chiefs of banks on the board.. ie CEO’s. There aren’t any.

    There are people who sit on the board of Banks, but so what? The board doesn’t operate the bank. It overseas the senior management on behalf of the shareholders/owners.

    Would you prefer that the ceo of say a soap detergent maker sits on the board than people with finance experience?

  182. Gab

    you work for banks.

    Which bank?

  183. JC

    You go to bed JC.

    I’m not drunk. You are.

    When their fees go up 450% in three years you would like me to be drunk and half asleep but Im not and you work for banks.

    They aren’t. You’re lying now.

    They were 266 million, 435 million and 325 million in order.

    You are a bloody traitor JC and you ought be ashamed of yourself.

    What treason have I committed?

    You get in here and preach small governments but BIG FAT BANKS who steal my taxes with government permission and all this is just fine by you.

    But they aren’t stealing, Alice. They are performing a service for which they are being compensated. That isn’t stealing as it seems to be all above board. You’re drunk.

    You JC are an arrogant hypocrite and I am not drunk you sleazebag.

    Go to bed, Alice. It’s one gin too many.

  184. JC

    you work for banks.

    Which bank?

    Who’s on first.

  185. Gab

    I don’t know….Third base!

  186. Alice

    Further more JC

    I am talking about a 450% increase in agency fees over 3 years. I put it in a post further up – staright out of the future funds annual report

    Just to remind you I extracted part of it
    from the health and educaton fund (then there is the building fund, then the future fund and they are all as woeful as this…)

    2008/09Contracts with investment managers $45,895
    Amount debited
    2009/10 $3,466,798
    Amount debited
    2010/11 $5,930,927

    from 45K to 590K in fees in three years just for this subset of the future fund?.

    You lie JC – its not even 450% increase – its 1211%

    Its a bamkfest gouge.

  187. Mick Gold Coast QLD

    “urgh. OK for mixing, but bloody terrible stuff drunk …”

    … and perfectly suited to stripping the aged paint off weatherboard beach houses.

    “Have you tried … ?”

    Never, it’s lunatic juice.

    We used visit a mate’s barbeque over Christmas, a most successful single gay fella whose family hadn’t drug ‘emselves quite so far forward over the years.

    His mother would be there (dim), his father (a tough old welder), his stepmother (about the filthiest mouth I’ve ever heard on a woman), the brothers and sisters and the other brothers and sisters (a majority of whom were veteran Centrelinkers). Oh, and the nephews who were on first name terms with the beak at Beenleigh magistrates court.

    You knew the party had started when the old man and the acquired sons ceased enjoying their pre-lunch Christmas Bundy together – in the front yard – and lapsed into the “You dirty rotten effin’ mongrel busted” snarling phase. Guests arriving, old hands weaving unconcerned through the chin-forward-chest-out bundy sloshing over the edge family confrontational, newcomers most uncertain.

    “Happy Christmas Jacko” you’d offer en route.

    “Yeah Mick, tah, except for this dirty rotten effin’ useless woofta here.”

    Our mate would be obliviously fussing about inside in the kitchen, having long since ceased apologising for the spectacle. It was the best entertainment of the year, every year for a bit, sponsored by Bundaberg Rum.

  188. Alice

    Mick aka MK50 you have stumbled into the worng thread

  189. Neil

    Well somebody should get into trouble over this. Some great brain thought it would be good to get rid of lots of Telstra shares from the Future Fund. They were sold for $2.60 in 2010 and are now selling for $4.50.

    http://www.news.com.au/money/money-matters/bad-time-to-cut-the-cord/story-e6frfmd9-1226293041934

    TAXPAYERS have been left hundreds of millions out of pocket as a consequence of the Future Fund’s ill-timed sell-down of Telstra shares.

    I think the bulk of the Future Fund is for Superannuation for the military. I would think that Politicians would make up only a small percentage of the Public Service.

  190. Alice

    JC

    says in degence of BIG FAT BANKS (WHO HE WORKS FOR)

    “But they aren’t stealing, Alice. They are performing a service for which they are being compensated. That isn’t stealing as it seems to be all above board”

    Oh yeah riiiiight you lying smarmy cretin.
    1211% increase by the Goldmans, JP Morgans and Commbanks and Suncorp for helping our poor dumbarse governments run the pool of our asset sale monies and taxes (which belong to the people of Australia).

    You and you banks running an service are nothing more than bloody thieves JC.

    You know it isnt hard to pick out scumbags is it? They are the type that dont want governments to regulate theft by banks.
    No that I trust our scumbag goivernments either but whileever they write laws and appoint people to help steal out taxes – what do we do with people like JC who get in here and tell us “dont worry – the thieves are being very helpful when they help themselves.”

    Its really bad.

  191. JC

    1211% increase by the Goldmans, JP Morgans and Commbanks and Suncorp for helping our poor dumbarse governments run the pool of our asset sale monies and taxes (which belong to the people of Australia).

    How do you know their allocation didn’t increase, Gin Girl?

    You and you banks running an service are nothing more than bloody thieves JC.

    I don’t.

    You know it isnt hard to pick out scumbags is it?

    True.I do it all the time.

    They are the type that dont want governments to regulate theft by banks.

    I’ve got harp music for you.

    No that I trust our scumbag goivernments either but whileever they write laws and appoint people to help steal out taxes – what do we do with people like JC

    Who’s stealing though?

    who get in here and tell us “dont worry – the thieves are being very helpful when they help themselves.”

    Its really bad.

    I’m sure. Now go to bed.

  192. Alice

    You go to bed.What wrong with a term depsit or some giovernmenbt bonds?. Im damn sure it wouldnt cost us 1000 mill a year to the banks …to gamble …ahem manage the futire fund money. No shame JC and we are being robbed.

  193. JC

    Alice

    They aren’t sticking it into term deposits because over the long term you will lose value.

    Gin girl. Go to bed.

  194. Mick Gold Coast QLD

    “depsit or some giovernmenbt bonds”

    Bloody near as entertaining as me mate’s family Christmas barbeque!

  195. Mk50 of Brisbane

    When Alice becomes MAlice

  196. .

    1211% increase by the Goldmans, JP Morgans and Commbanks and Suncorp

    Their fees went up tenfold (and then some)?

  197. Mick Gold Coast QLD

    “When Alice becomes MAlice”

    Where the bloody hell did you get that Mk50? It was only taken at 10:43!

  198. JC

    Their fees went up tenfold (and then some)?

    She’s making that shit up like she made up the crap about costs going up 450% over the past three years.

    She has no shame. None.

  199. PoliticoNT

    Skuter/JC/Sinclair – I’m serious about a formal complaint. More to the point I’m angry about the Left mis-using the complaints process. The ABC/Fairfax reporting is worthy of being subjected to some analysis by the Press Council. Even if a complaint is rejected it sends a signal. See my comments under Judith’s report on Sarah Clarke. Time to fight back.

  200. JC

    Yep

    I think you’re right. It may be worth complaining to the press council but as far as the ABC goes forget it. They never give complaints any hearing at all.

  201. Cato the Elder

    It’s a toss up whether or not to complain to the ABC. On the one hand, they’ll deny everything. OTOH, they’ll look like hypocritical gits (again), which is not news but worth something. It can be quite amusing to watch them twist and turn (moral equivalence of deniers and paed0s, anyone?)

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