Where I agree with Richard Denniss …

Richard Denniss – chief economist at The Australia Institute – has a column at the AFR.  This time he has some comments I agree with – getting soft in the old age.

There are 750,000 unemployed people in Australia, up from 690,000 when Tony Abbott was elected in 2013. The unemployment benefit of $267 per week is less than a federal politician gets for spending one night in Canberra. But despite the fact that unemployment benefits account for less than 2 per cent of government spending each year, “dole bludgers” are singled out for a rhetorical and policy thumping. This year it’s drug testing.

No economist really believes that Australia’s rising unemployment is caused by excessively generous benefits.

He goes on to crap on about the bank levy – but let’s just stop there.

The unemployment rate in Australia is a disgrace. The fact that the unemployment benefit is low compared to the staying away from home allowance for federal politicians is also a disgrace. Politicians should not be paid at all to live away from home. But that is another gripe for another day.

Richard Denniss is quite correct to suggest that rising unemployment is not caused by generous benefits. Rather it is caused by poor economic performance by the private sector. That poor performance in turn is caused by increasing levels of poor policy. Various taxes and levies, increasing regulation, red tape, green tape, and high levels of regime uncertainty (usually referred to as sovereign risk).

Now I’m sure Richard and I disagree on the cause of rising unemployment. But we do agree on what is not causing it.

This entry was posted in Economics and economy, Oppressive government, Taxation, Wasteful Spending. Bookmark the permalink.

50 Responses to Where I agree with Richard Denniss …

  1. Infidel Tiger

    Politicians should be paid to stay home.

  2. Hugh

    An odd definition of “poor” performance.

    If I’m known as a good runner, but am seen unaccountably hobbling along pathetically in a race, someone may say “That’s a poor performance for Harry!” But once they notice the four bricks tied to both my legs, they’ll alter the description. It’s not “poor performance” if you know the circumstances.

    I agree with the basic argument of the piece. Thanks, Sinc.

  3. Mark A

    Infidel Tiger
    #2382472, posted on May 17, 2017 at 9:37 pm
    Politicians should be paid to stay home.

    And public ‘servants’!
    I lost count of how many times I said this.
    If we must have them, just pay them to stay away.

  4. H B Bear

    Good to finally see Teh Ponds Institute receiving the sort of recognition it normally only receives from another fine Australian institution, namely the ALPBC staff co-op.

    I’m sure Scott Morriswan put in a cheap shot at the unemployed to keep Porter’s name on the list somewhere when they finally run out of options and have to dispatch Lord Waffleworth. Like everything else about the Lieborals it is a fraud.

  5. struth

    It is caused by both.

  6. Rafe Champion

    Is the chief economist at the Australia Institute in touch with the labour market regulations and other imposts on business which make it harder to hire (and fire) people? At the same time people who are not employed might be encouraged to try harder to find work. Revive the work ethic!
    My Popperian colleague Mark Notturno works for a research organisation in the US, ironically funded by a coal mine and run by lefties. They did a study of issues around work and Mark was not allowed to talk about the work ethic.
    Casual observation suggests it is alive in China!

  7. Siltstone

    I have a small business. I engage sole traders and small incorporated contrators to do certain work. It would be the height of insanity under Ausralian labour laws for me to put someone on the books as an employee, even though I would otherwise be happy to do so.

  8. Chase

    Agreed that unemployment is not wholly caused by ‘generous benefits’, and that government’s interference through regulation is a major factor to inefficiencies in the private sector, thus having a flow on effect to employment. However, if you receive money from the tax payer’s purse, of any value, to support you whilst you seek employment, their generosity should be received with gratefulness and appreciation, not squandered on drugs rendering you incapable of securing work.

    If there are savings to be had by drug testing, both tax payer funds and that of the human cost (with future long-term benefit to the society and the economy), then why should this approach not be adopted.

  9. entropy

    Backbenchers should get the average Australian wage, and get the same TA as a mid level public servant. And nothing extra for committee work.

    You can’t have someone on $200K plus perks voting for things that increase the cost of living for ordinary folks. They just wouldn’t have a clue.

    It also incidentally kills off the only idea in the head of those obnoxious, unwashed, spec wearing little uni numpties that politics is a rewarding and lucrative career, rather than an opportunity for service. Let them have their career before entering politics. They might actually understand something and we would all be better off.

  10. H B Bear

    Obviously as a non-Fauxfacts subscriber I can only guess what lies behind the paywall of Australia’s Leading Anti-business Business Pamphlet. I’m guessing Richarrdd Dennnissss didn’t lay the blame with Gillard taking IR back to the 1970’s and unfair dismissal laws.

    For all my criticism of the Father of Middle Class Welfare, I’m suspect people would like to be back when unemployment had a 4 in front of it and real wages were surging. Just one for the history books as the Lieborals can’t even mention IR even if they did have any policies.

  11. chrisl

    The local plumbing supplies has had an add for a delivery driver/salesman for ONE YEAR. Many of the applicants fail the drug test. Others don’t want to do the sales part of the job. There are unemployed and there are unemployable.

  12. Gavin R Putland

    We tax employers for hiring people. We make them collect tax from their employees and customers, and sometimes even their suppliers, without paying them for their service; and all these taxes make it harder for them to pay their workers enough to live within commuting distance of the premises. We make them work as unpaid superannuation agents and unpaid debt collectors (child support, etc.). We saddle them with social security functions (sick leave, maternity leave, equal opportunity, etc., and of course the minimum wage*), government functions (jury leave), and even charitable functions (emergency service leave).

    And then we wonder why they can’t perform their primary function, which is to create enough jobs to go around!

    * But I don’t see why that one should be singled out for special approbrium.

  13. Siltstone

    Chase;
    agree, if I go a Clients workplace to do some contacted work for them, I can be drug tested at anytime. If that is considered fair and reasonable, then I see no reason why those receiveing my tax dollars should not be subject to similar rules.

  14. Zulu Kilo Two Alpha

    There are unemployed and there are unemployable.

    That’s the difference. I ran a farm for fifteen years. There was a chronic shortage of semiskilled labor, so we operated on the basis that, if someone was willing to learn, we were prepared to show them the ropes – and I was never too fussed if someone was a bit vague about where he’d been for the past few months “Thuggery, buggery, murder or rape, you tell me. Anything else is your business.”

    The unemployable were the one’s who believed unskilled work was “demeaning” and they were being “exploited”, and “you live how far out? I didn’t think anyone lived that far out.”

  15. If there are savings to be had by drug testing, both tax payer funds and that of the human cost (with future long-term benefit to the society and the economy), then why should this approach not be adopted.

    Brilliant! Now perhaps you’d care to explain how there would be any “saving” of taxpayers’ funds?

  16. C.L.

    If there are savings to be had by drug testing …

    Stop right there. There will be no savings from drug-testing. None. It will certainly lead to a huge increase in government expenditure on all sorts of tangential things: specialists, ‘training,’ rehab, ‘education’, tribunal oversight, law suits, adjudication of ‘racist’ applications of the policy etc etc etc. It is a ridiculous stunt ginned up to appease disk-jockey lay-abouts like Alan Jones and Ray Hadley.

  17. agree, if I go a Clients workplace to do some contacted work for them, I can be drug tested at anytime.

    And if you are at home and the Client sends around a Random Drug Test squad . . .?

  18. Malcolm Thomas

    Unemployment is not caused by welfare benefits, but it is caused by high minimum wages, which Denniss supports.

  19. Infidel Tiger

    The only drug testing should be on politicians and public servants. There whole day and indeed life should be one of maximum inconvenience, causing them to live in a constant state of fear.

  20. Unemployment is not caused by welfare benefits, but it is caused by high minimum wages, which Denniss supports.

    It is an issue, Malcolm, but not the biggest. The worst impediment by far to people on the dole getting back into the workforce is the way earnings are calculated against dole payments on a fortnightly basis, which can actually lead to people losing money by working. Simply calculate dole payments against annual income and 90% of the problems disappear.

  21. Mark A

    Australia is at the forefront of this drug testing in the workplace.
    I agree, in some cases, it’s essential, in others a waste of time and effort.
    Someone remotely operating a horizontal drilling rig 500 M underground needs his wits about him.
    A bloke cleaning accumulated dust under a red tagged, idle conveyor belt? Not so much.

  22. Infidel Tiger

    Way too sensible MV.

  23. jonesy

    DAMP….just one of many regulations faced by business operations in the aviation sector.

    …if you want support…(because dieing destitute in the gutter looks uncool)…then a little mutual obligation will not hurt much.

  24. Siltstone

    And if you are at home and the Client sends around a Random Drug Test squad . . .?
    I dont need to let them in and we’ll sort it out contractually, but if a person is a tax eater then they are not in a contractual situation. Get wasted if they want, but there is not right of claim on those who provide.

  25. but if a person is a tax eater then they are not in a contractual situation.

    No, and they are not at work, either. So why should they be sober/fit for work?
    Just when are you intending to random test the unemployed, anyway?
    Business hours? Daytime? Evenings? Weekends? Public holidays?
    Why not just pass a law that people on the dole are not allowed to drink alcohol?
    Or use codeine-based pain killers without notifying Centrelink?

  26. Zulu Kilo Two Alpha

    The worst impediment by far to people on the dole getting back into the workforce is the way earnings are calculated against dole payments on a fortnightly basis, which can actually lead to people losing money by working. Simply calculate dole payments against annual income and 90% of the problems disappear.

    Fair comment, but how do you handle the situation where someone does get casual work, “blows his cheque” in the good old Aussie style, and expects to go back on the dole?

  27. Mark A

    memoryvault
    #2382532, posted on May 17, 2017 at 11:30 pm
    but if a person is a tax eater then they are not in a contractual situation.
    No, and they are not at work, either. So why should they be sober/fit for work?

    As mentioned above MV you make too much sense.
    Would you please stop huh?

  28. Mark A

    Zulu Kilo Two Alpha
    #2382534, posted on May 17, 2017 at 11:32 pm

    Fair comment, but how do you handle the situation where someone does get casual work, “blows his cheque” in the good old Aussie style, and expects to go back on the dole?

    Do you really want to tell peeps how to live their lives?

    Help those that help themselves and provide the minimum for the rest.

  29. True Aussie

    As usual Sinclair leaves out the biggest contributor to unemployment – immugration.

  30. Siltstone

    So why should they be sober/fit for work?
    A school bus driver is not expected or allowed to be shit-faced as he/she goes about his/her work. And that means being responsible in non-work hours. He/she pays his/her taxes and they go to the tax eater. The tax eater has a choice, if they do not want to be held to the same standard then stop eating taxes, if they want to eat taxes then be beholden to the same standard as the school bus driver.

  31. Fair comment, but how do you handle the situation where someone does get casual work, “blows his cheque” in the good old Aussie style, and expects to go back on the dole?

    At the moment a single person on the dole collects about $13,000 a year. If they get a few weeks work here and there, their dole is simply reduced or cancelled in the relevant fortnight, meaning at best there is no point in them taking the work, and at worst can mean them actually losing money.

    The dole is already considered “income” for taxation purposes. The tax threshold is around $18,000 a year. If it was all assessed annually at tax return time, it would mean the unemployed person could earn $5,000 a year before losing any dole. Under these circumstances it is irrelevant if he decides to “blow his cheque and go back on the dole”. He is STILL only going to get the original $13,000.

  32. if they want to eat taxes then be beholden to the same standard as the school bus driver.

    You think school bus drivers don’t get shit-faced evenings, weekends, and public and school holidays. You obviously have led a sheltered life. I repeat, exactly WHEN are you going to conduct your tests?

  33. Siltstone

    If a school bus driver gets caught shit-faced they run a massive risk of losing their income. I disgree with anyone who advocates that tax eaters should not be held to a similar standard. Its up to you if you if you want to advocate on behalf of shit-faced tax eaters.

  34. If a school bus driver gets caught shit-faced they run a massive risk of losing their income.

    You are evading the point. School bus drivers can (and do) get as shit-faced as they please when they are not driving school buses. They are perfectly, legally, entitled to do so. When are your random tested dole recipients allowed to have a beer?

    Its up to you if you if you want to advocate on behalf of shit-faced tax eaters.

    I’m not advocating for or on behalf of anybody or anything. I’m arguing against stupid, ill-conceived, back of a beer coaster thought-farts that will accomplish absolutely nothing except build ever new, ever more expensive bureaucratic empires. Go back upthread and read C.L.’s comment.

  35. Siltstone

    Maybe some are not aware the alcohol and other drugs have an influence long after being taken. Up to you if you want to be flown by a pilot who was shit-faced last night, or be operated on by his shit faced mate the surgeon, or have your kids driven to shcool by the bus-driver who was shit-faced until the early hours. Up to you if you think thats a good legal thing, but some don’t.

  36. Maybe some are not aware the alcohol and other drugs have an influence long after being taken.

    Siltstone, I’m dropping out of this, and going to bed. Your argument is becoming more and more ridiculous. Random drug testing tests whether the person is currently under the influence/effect of certain drugs. It does not ascertain whether a person’s hangover impedes their ability to do their job.

    Perhaps it should. It doesn’t matter. Different jobs have different standards. Commercial pilots, for instance, are not allowed to drink alcohol within 24 hours of crewing a flight. A crane driver is held to entirely different standards. Our unemployed person by definition doesn’t have a job. It is therefore utterly impossible to declare whether he may, or may not, be fit and able for a particular job.

    None of which alters the fact that the entire exercise is just another example of bureaucratic empire building, which will ultimately accomplish nothing except create more bureaucrats, and assuage the morals of those who think the answer to everything is to stomp on welfare beneficiaries.

  37. Andreas Brown

    $13k a year is a pittance. Just about unliveable for a 50 yo unemployed business analyst. Kept out of the workforce by dirt cheap 457 visa immigrants on less than $40k hired by overseas multinational companies. Unemployment is deliberate at the moment.

  38. Adelagado

    Small and medium businesses are struggling because they are being screwed every which way to pay for a hugely bloated public service that is now far better remunerated, and more secure, than the average private worker.

    This stinking imbalance in the wages and job security of those who are privately employed compared to those who are publicly employed must be addressed.

  39. John constantine

    Their greens want random testing of legal registered firearm owners.

    You do not want to have sunk a few cans watching the cricket when the State arrives for the unwarranted unannounced crime blitz of your house “to check your guns are safe”.

    You don’t want to have unhidden booze, full or empty where Batgrrl can see it, or waddle into your rubbish bin to check if it rattles.

  40. Ray

    I don’t know of anyone who really thinks that Newstart Allowances or Youth Allowances are overly generous, indeed, it would be very difficult to live on an income of less than $14,000 per annum. That being said, to ignore the effect which such allowances have upon unemployment is simply ignoring some pretty basic economic principles.

    All people make decisions about where and when they will work and conversely how much leisure time they get. It also goes without saying, or it should, that paying an individual to not work will distort those decisions and actually encourage the amount of leisure time taken.

    Now this is not about the $14,000 annual value of the Newstart Allowance but about effective marginal tax rates. A person on Newstart can earn up to $2,704 per annum before the allowance is affected, thereafter, he loses 50 cents in the dollar and at $6,604 per annum, this income test rises to 60 cents in the dollar. Then at $20, 542 per annum, income tax cuts in together with the Medicare Levy at 10% (yes that is right, 10% not 2%), producing an effective marginal tax rate 89%.

    Here is the question an unemployed person must make, assuming they earn the current minimum wage of $17.70 per hour, would they be willing to give up an hour of leisure in exchange for an after tax payment of $1.95. Clearly, many would elect to stay at home rather than turn up for work for such a small return.

    Thus the problem with our benefit system, is not the generous payments but the very punitive effective marginal tax rates embedded within the system which discourage work and creates poverty traps. It is these poverty traps which hamper the reduction in unemployment.

    Of course, the poverty traps are not the only cause of long term unemployment but any serious economist should not ignore the impact which the benefit system has in generating distortion in the economy.

  41. cynical1

    If there are savings to be had by drug testing …

    Bit hard to test for cheeseburgers.

    But there will be some nice cushy jobs in the “Centrelink Dept of Inquisition for Bogans”.

    What’s Marcus Rudd doing these days?

  42. cynical1

    At the moment a single person on the dole collects about $13,000 a year. If they get a few weeks work here and there, their dole is simply reduced or cancelled in the relevant fortnight, meaning at best there is no point in them taking the work, and at worst can mean them actually losing money.

    Most don’t lose money.

    If they are motivated enough to even consider working.

    And if the home owner/employer can save money, “Here’s Johnny”.

    Mr Cash has all the best tunes.

    Especially if you can crash at your single mother,err, girlfriend’s place.

  43. Hydra

    As usual Sinclair leaves out the biggest contributor to unemployment – immugration.

    Well this is now the dumbest comment ever on the Cat. A new low.

  44. C. Paul Barreira

    Unemployment in South Australia probably approaches fifteen per cent. of the work force. It cannot reduce without major changes to the ways in which the nation operates—all highly unlikely.
    It’s now two years since I was told that I was too expensive to keep on the books of my employer of five years. I have since had no income. Furthermore, we have rented our accommodation all our married life of nearly 40 years. On two counts, then, one becomes a second-class citizen.
    And now the holdings of the library that I use most, the Barr Smith, are shrinking radically, allegedly following student requests; more likely it’s in the direction of the “prohibition of questioning” (Eric Voegelin).
    In this part of the world there is no hope for the future unless one learns, understands (at least implicitly) and follows the life of a parasite—and drugs (broadly defined) are a significant element of South Australian life.

  45. Chase

    Yes memoryvault and C.L. I agree, there will of course be costs associated with a drug testing regime. However instead of looking at the immediate, there is as I stated in my comment, a future long-term benefit to society and the economy. Getting people off drugs and welfare and into work, and over time breaking down the generation unemployment and drug issue would have significant benefits including savings to the tax payer.

    I don’t advocate social hand-holding of citizens, there needs to be a strict approach to qualify for receiving tax payer funds, and drug testing could be one of many ways to make people accountable and set a standard that needs to be met.

    And before you ask about funding, middle class welfare is a cost to the tax payer of over $20 billion, remove this welfare and distribute it to areas of society that is needed and will bring a long-term benefit to the economy.

    memoryvault and C.L., I would be interested to hear your thoughts as to how to kerb this issue as you have not put forward any suggestions.

  46. thefrolickingmole

    The only drug testing should be on politicians and public servants. There whole day and indeed life should be one of maximum inconvenience, causing them to live in a constant state of fear.

    Going soft again.

    They should be followed night and day by police with orders to charge them immediately, and automatically impose the maximum sentence for ANY breach of regulations, after all if they write the laws they inflict on others they must be entirely comfortable those laws are fair, measured and just.
    Oh and their kids, grandkids, spouses and pets as well.
    24/7 complete surveillance.

    Anything less and we arent really trying.

  47. thefrolickingmole

    Chase

    A piss cup test is about $4.50 plus facilities, consent forms, about another $80 for confirmation testing, false positives caused by prescription and over the counter meds etc.
    A saliva test is about $27, but still requires a urine test to confirm.

    The local cops are issued about 4 per month each because of the cost factor.

    It also tends to see the shitty “spice” type stuff and new compounds used which dont show up on tests.

    Source: Ive been doing D&As on minesites for a very long time…. Its seen people switch from dope (a month till you are clear) to opiates/ice/speed because they are 12-24 hours and you are clear.

  48. Cynic of Ayr

    Lemme get this straight.
    Sinc says, “Government has increased taxes, business levies and other hindrances that are charged for by the Government, and paid for by Business.
    The result is that Government employment is up, and Business employment is down.”
    Who the fuck in their right mind could not agree with that short analysis? (Other than the Roman of course.)

  49. karl

    Does that $267 include rent assistance and a myriad of other payments they get on top of the dole?

  50. Rafe

    What Ray said about the punitive tax rate when the unemployed get a bit of work. We were talking about this on Troppo years ago before i was dropped for warming. skepticism. Nickolas Gruen was in the discussion. The consensus was that three competent people who understood the tax and welfare systems could make a plan before lunch to fix the

Leave a Reply

Your email address will not be published. Required fields are marked *