Wednesday, May 18, 2011

Joe packs his bags for Saudi Arabia

Joe Hockey today gave his Budget Reply address at the National Press Club. The best you can say is it wasn’t as bad a last year, where he failed to outline the Budget cuts that Tony Abbott had said he would.

To say it was not good would be kind. To say his answers to the questions from journalists afterwards was embarrassing would be accurate.

I won’t go through them tonight (I don’t have a transcript, and also don’t have the time), suffice to say they were all on the money. They started with Samantha Maiden whose question Hockey completely non-answered and it got progressively worse until Laura Tingle asked him a question that had Hockey responding “It’s a  fair question” which seemed to be code for “I have absolutely no idea and so will not answer it”.

Then Andrew Probyn, who last year tore into Hockey, got up like the Ghost from Budget Replies Past and asked him about some double counting in the Lib’s budget cuts. Probyn so perfectly skewered Hockey that Hockey could only respond by getting shouty and accusing Probyn of getting his question from the ALP. The whole session ended with Peter Martin essentially asking Probyn’s question again and asking Hockey about the “auditing” of the Lib’s election commitments.

It was hungry wolves on the meek lamb stuff. (You can listen to them here)image

Not pretty.

It won’t matter much. I don’t think bad interviews by politicians (opposition MPs at least) matter that much anymore. After all Hockey had a shocker this time last year, so too did Tony Abbott – remember him telling Kerry O’Brien this:

TONY ABBOTT: But all of us, Kerry, all of us when we're in the heat of verbal combat, so to speak, will sometimes say things that go a little bit further.

And yet here they are – well in front of the ALP, and seemingly electable.

I think the bar has been set so low and that unless they drop the F-bomb, it hardly rates a blip.

But while the answers were horrible, the speech had not been much of a prelude. It wasn’t so much a speech as a quasi economic lecture on why the Libs are so good at budget stuff, and why the ALP is not.

His lecture ranged wide and far – sometimes it even got close to reality. But there was one bit that most stood out for me. It was when Hockey came to the wonderful topic of debt (yes the evil, evil debt). He had had enough of the ALP talking about the net debt of 7.2 per cent being low compared to the UK and USA and Japan and others, he wanted to compare us with countries who were doing well:

The Treasurer is always keen to compare our net debt with other developed countries like Japan, the USA, the UK and Europe. But Australia started this journey with no net debt unlike those countries that he always compares us to.

A more realistic comparison is one where we compare ourselves with the fastest runners in the field rather than the slowest runners.

There are a number of developed and commodity exporting countries with balance sheets in the black such as Chile, Sweden, Saudi Arabia, Finland and Norway.

Against these peers Australia with net debt of 7.2% GDP looks like a very poor performer.

S0 suddenly, for no reason, we’re to compare ourselves to these five countries?

Joe even gave us a handy table to ram the message home about how bad we’re doing:

image

And yep, he’s right. Australia is lagging behind them on the net debt scale. It would seem to be a terrible state for Australia to be in. How awful for us. So it’s a damn good thing it doesn't matter one bit when it comes to examining how we’re doing as an economy.

Let’s compare these six countries of Joe’s on a few other measures, to see if Australia is looking so horrible:

  Unemployment Rate
Norway 3.1
Australia 4.9
Chile 7.2
Sweden 7.7
Finland 8.2
Saudi Arabia 10.8

Now call me crazy but I don’t think too many people would say give us Chile’s net debt level, but also their 7.2% unemployment, or Sweden’s 7.7%, or Finland’s 8.2%, or Saudi Arabia’s 10.8%.

What is more important Joe – Government debt or people’s employment? 7.2% net debt or 7.2% unemployment? I know which one I’m choosing...

Now sure, Norway has a nice low unemployment level, but I was surprised to see Hockey referring to it in such glowing terms – it is one of the fastest runners in the field, he said.

Usually when members of the Liberal Party refer to the economies of Norway, Sweden and Finland it is not in such glowing terms. As a rule, they deride these Scandinavian economies for one reason – taxation.

Here is how Wikipedia describes taxation in Norway:

The tax level in Norway is among the highest in the world. In 2007, the total tax revenue was 43.6 % of the gross domestic product (GDP). Of OECD-countries, only Denmark, Sweden and Belgium had higher tax levels. The tax level has fluctuated between 40 and 45 % of GDP since the 1970s.

The high tax level is a result of the large Norwegian welfare state. Most of the tax revenue is spent on public services like health services, the operation of hospitals, education and transportation.

Yep, see that phrase – “welfare state”.  Sweden, Finland and Norway love taxation. Sure their public services are plentiful, but by God do they pay for them. Here’s the list of Joe’s countries according to taxation receipts as a percentage of GDP:

  Taxation as a % of GDP
Saudi Arabia 5.9
Chile 18.2
Australia 30.5
Norway 43.6
Finland 43.6
Sweden 47.9

Usually you hear the Greens talking about the glories of Sweden, Finland and Norway. It’s good to finally see Joe getting on board the socialism train. Welcome comrade. Don’t be shy, come on in – plenty of room at the back on the right.

The Federal Govt level of taxation as a percentage of GDP is 23.7%. Anyone think Hockey or Abbott will be calling for an effective doubling of the Govt’s taxation revenue? Yeah, I thought not.

But look at Chile and Saudi Arabia I hear you say – sweet deal there. But ask yourself do you think public services, infrastructure in Saudi Arabia and Chile are comparable to Australia? Where would you rather get sick? Where would you rather send your kids to school?

Maybe we should compare these 6 countries by GDP per capita terms to see if Joe would still have us who swapping from Australia to lovely low-tax Saudi Arabia or Chile.

  World Rank GDP per Capita (PPP)
 Norway  4 $52,013
 Australia  10 $39,699
 Sweden  14 $38,031
 Finland  22 $34,585
 Saudi Arabia  38 $23,826
 Chile  56 $15,002

Hmmm. Doesn’t make life in the Middle East or west of the Andes so good does it. Is Joe suggesting we should compare ourselves with a country with less than half our GDP per capita? I can see the election slogan – “We’ll remove the debt and halve your income!”

It’s a winner, don’t you think?

But look, life isn’t all dollars and cents, it’s also about errr…life.

How do Joe’s favoured countries rank in terms of life expectancy?

  World Rank Life Expectancy
 Australia  5 81.2
 Sweden  7 80.9
 Norway  13 80.2
 Finland  25 79.3
 Chile  34 78.6
 Saudi Arabia  85 72.8

Gee. What a shock, Australia is doing well. Who said investing in public health and infrastructure doesn't pay off. Still Sweden is pretty close to us and they have a lot better debt levels, so I guess that’s score one for the 47.9 per cent tax take, eh Joe?

A few weeks back Hockey tried to float the policy idea of taxing family trusts at the company rate. That got knocked on the head within the day as the National’s quickly got on the phone. Last week he criticised the Government increasing the amount of foreign aid in the budget. That lasted about a day as Julie Bishop quickly reaffirmed the Liberal Party’s bipartisan policy with the ALP on foreign aid levels.

Somehow I don’t think his comparison of Australian with Saudi Arabia, Chile and Finland is going to last much longer than those two previous policy efforts. Though I bet the ALP will bring it up every now and then…

40 comments:

Nicholas Gruen said...

Hi there - the figure for 'tax' as a share of GDP should be 'Federal Tax' as a share. You haven't counted state or local taxes.

Anonymous said...

Interesting fact I found from Lindsay Tanner's Sideshow. The Whitlam government had no net debt.

I couldn't believe what I was reading so I checked his reference and sure enough he was telling the truth.

Table D4: Australian Government general government sector net debt and
net interest payments

http://www.budget.gov.au/2010-11/content/myefo/html/appendix_d.htm

Now that doesn't mean that the Whitlam government was good with the economy (they were a complete shambles) and there are other factors involved, but it's a fun fact to note none the less when someone like Hockey goes on about the Coalition having no net debt.

vp said...

If you get the full Q & A you might say what you think.

Anonymous said...

I assume the net debt comparison is the deficit / surplus for the calendar year 2011 only. A press release from the Swedish National Debt Office today 18/5/11 says the national debt by the end of 2011 will be 30% of GDP, falling to 27% in 2012. The surplus in the 2011 budget of 99 billion SEK (=AUD15b) includes 38 billion SEK of sale of assets (sales of finance and telecommunication shares). https://www.riksgalden.se/templates/RGK_Templates/NewsPage____20894.aspx

Alister said...

Julie Bishop, not Julia. Nice work though - facts do indeed have a progressive bias.

Greg Jericho said...

Thanks Nick very good point - the total including states would be about 305% I'll correct it.

Moneypenny said...

That link to the press club Q&A is hilarious. Joe Hockey is speaking gibberish most of the time.

... but I'm now depressed by it. We'll be ruined if this idiot ever gets his hands on the treasury.

Greg Jericho said...

"Julia Bishop" Oh dear. Sorry about that. Thanks Alistar. If there is one true thing about my blogs it is that you can always tell the ones my wife doesn't proof read...

Anonymous said...

The trouble is that no-one, well no-one in the mainstream media, is holding the Opposition to account. I remember when living in Fiji in 1993 reading articles in the Fiji Times (owned by News Ltd) and the Daily Post which reported the most outlandish statements without ever checking the facts or seeking a response from the accused.
I used to joke (and not in humour) that if someone said Rabuka had run naked down the main street last night, the paper would report it as fact.

Dong said...

Hi Grog. True your tax as a share of GDP is only federal tax but it also isn't as high as the figure suggests. The OECD report also shows that with all the cash handbacks we are closer to 7%.

Dong said...

Sorry Grog, forgot the reference. Check out Peter Martin,
http://www.petermartin.com.au/2011/05/wed-be-high-tax-were-it-not-for-amount.html
We go from 3rd highest down to 10th lowest.

Pip said...

Peter Martin also came up with this little doozy a few days ago.
Oddly, I haven't been able to find it in the MSM.

Coalition's "auditors" still under investigation:-
http://www.petermartin.com.au/2011/05/coalitions-auditors-still-under.html
Ahead of tonight’s Budget in Reply speech the Institute of Chartered Accountants has revealed that the two Perth accountants who advised Tony Abbott on the $50 billion of savings he put forward in the last election remain under investigation

Anonymous said...

The Abbott-Robb-Hockey clown show rolls on.

Victoria said...

And what did the ABC find the most newsworthy exerpt from the Joe Hockey NPC appearance? Hockey exclaiming about the NBN mainland switch-on, "And there goes $18Billion out the door" Sheesh! It just goes to show how much this Opposition is being supported by the media. No mention of the Hockey SNAFU, just footage of his cheap shot at the government. A cheap shot from a low rent politician. He, and the rest of the Coalition don't have a clue about economics. They're great at politics though, and that should make them the government because?

Anonymous said...

“Today the Government is rolling out a Bentley to every Australian. We believe that we can as a nation only afford a Commodore at the moment. “

http://www.abc.net.au/news/stories/2011/05/18/3220574.htm

Maybe we do not need a Bentley, the Commodore will do the same job. They hold the same number of people and travel at the same speed.

The comparison between Labor and the Coalition is between the Commodore and the horse and cart. As they say, if something is worth doing, we should do it well. It is much more costly to build a house that is too small and try to enlarge it later by adding extensions. What we will have is a patchwork and inferior product.

Look at how fast our web needs have grown over the last ten years. We have gone from 56k dial up to ADSL2. Each met our needs for a short period. Look at the last couple of years where our access to the internet has gone from our computers to our TV, our games console and to our phones.

For the advances in medicine and doctor supervision to occur over the web, it has to be to our homes. Those opposed to the fibre to home are insisting that it only needs hospitals to be hooked up. This is a use that is beginning to be used today, especially in the bush. It is cheaper in the long run to connect while the fibre is being laid. It will only be a short time before people find they need the connection.

We do not build new homes today without connecting water, sewer, electricity and phone wires when they are being built. We even ensure that the road and foot path are installed. Why should something that is becoming a part of our day to day life be any different. The internet is more than something we like to have. It is essential to our daily life. I have no idea how you search for a job or rent a home without it. Most find it essential to do their banking. If you think the present speed is OK, I suggest you try and do your grocery shopping on the Coles site.

Gordicans said...

Just listened to the Hockey Q&A and frankly I'm quite shocked. It wasn't just his inability to answer questions, but his nervous bumbling delivery. I mean this sort of stuff should be bread and butter to these guys. It was analagous to a child turning up to the Con for his or her piano exams without having done any practice. It was simply awful. If someone in an equivalent senior position in private enterprise performed like that they'd be sacked on the spot.

Ben said...

The reason Hockey performed so poorly is that it seems the general consensus amongst the Coalition is that they're not going to play the game, they're just going to sit on the sidelines and shout "this game sucks, call full time already!" They think they can win an election on politics alone, without any policy, and the sad thing is that with the media unwilling to call them out on their slogans ("bad government", "big new tax", "debt and deficit", "home insulation disaster", etc.) they probably can.

Greg Jericho said...

That's true Dong - but as I don't have the "net" taxation figures for other countries I just wanted to look at actual taxation (gross, if you will).

Anonymous said...

@May 19, 2011 6:50 AM Ben said...
"they're not going to play the game, they're just going to sit on the sidelines and shout 'this game sucks, call full time already!'"

Was it Lindsay Tanner on Q&A a couple of weeks ago that said the Opposition are still living under the delusion that the last election didn't count and they believe the electorate got it totally wrong, so they're angling for a do-over?

rf said...

Listening to Joe Hockey on that link puts me in mind of Mike Moore from Frontline. A child amongst grown-ups.

Austin Lund said...

Do taxes include council rates?! Our rates are about 3% of our income and don't include utilities such as water and sewerage. I've always considered it like land tax because there as there is no direct utility associated with it.

John R said...

Hockey said this
"Treating the NBN spend in this way may well meet the accounting test, but it doesn't meet the credibility test," he said.
When told that the NBN is an asset and therefore spending on it doesn't count as an expense.
I assume this is before he blathered on about 'technical audits', so we know all about his credibility.

Ben said...

@Anonymous - "so they're angling for a do-over?"

Abbott has said (sorry, can't remember date or time) he's going to do whatever it takes to get the government to call an election, so yes. They're not developing policy because policy is too hard: it's far easier to crap on the rug and demand a new one.

Anonymous said...

If a tree falls in the forest and no one hears does it really fall?
If our MSM doesn't get out and report the holes and problems with both sides positions are the public any the wiser.
Sure a few have given up on the MSM with the exception of AM and PM and some read your posts and those of the other perceptive bloggers. But until the blogs become mainstream it doesn't matter a bit.
It's back to my "environment creates the animal" law. Stupid and uncaring public = politicans and media.

Casablanca said...

Grog can hold down a full-time job and still produce a piece with well researched detail and post it by 9.03pm on the day of Hockey's Press Club address.

So why the heck can't some of the mainstream journalists produce something of such quality?

Well done Grog.

Anonymous said...

Because, Casablanca, he no doubt spent all of yesterday afternoon putting it together, using time and equipment paid for by taxpayers.Nice work if you can get it.
Oh, I agree completely Hockey is a clown, but he is not the treasurer. Can't wait for Grog to apply his blowtorch to both sides equally.

Anonymous said...

Someone said: "For the advances in medicine and doctor supervision to occur over the web, it has to be to our homes. Those opposed to the fibre to home are insisting that it only needs hospitals to be hooked up. This is a use that is beginning to be used today, especially in the bush. It is cheaper in the long run to connect while the fibre is being laid. It will only be a short time before people find they need the connection."

Not only to the home, but synchronous (same speed in both directions). ADSL2 wont do it, fibre will.

730reportland said...

(Q) How do you lose a message, look like a fool, and waste a truck load of media time? (A) You send Hockey Joe to the Press Club.

Anonymous said...

Hello Mr Jericho, of Grog's Gamut
Thanks again for allowing anonymous comments on your blog. For what its worth, my feeling is that the eminence grise in all this, from the time of the Turnbull putsch (at least), is Senator Minchin; and, when the Minchin is gone, Abbott will fall. Time will tell. Soon enough. But, on another, though tangentially related, musing, who will make Pell move over, now that the Vatican has spoken out in favour of the planet?
odysseus

730reportland said...

Wonder if the Press Club have learned their lesson? Hockey Joe is usually a flop. Hockey should be sent to Bolt ReportLand where he will be more at home.

Greg Jericho said...

Actually Anon - Wikipedia and Google makes things pretty easy to find. And sitting at home doing it from 6pm to 9pm doesn't really count as being on the taxpayer's clock.

Casablanca said...

Anonymous @ May 19, 2011 5:09 PM.

I'm more than a little annoyed but perhaps should not be surprised that someone should post a cynical and ill-founded remark about when and where Grog composes his articles. If you were around when James Massola of The Australian revealed the identity behind Grog's Gamut then your remark is despicable.

If you are ignorant of this matter you might like to inform yourself before shooting your mouth off again with gratituous insults.

SEE http://blogs.crikey.com.au/purepoison/2010/09/27/the-grogs-gamut-outing-in-whose-interest/; AND ALSO http://grogsgamut.blogspot.com/2010/09/spartacus-no-more.html

Jaeger said...

Anon @ May 19, 2011 7:22 PM:

Yup - about six weeks until the Senate changes hands, I think.

I'd like to think that Turnbull is getting ready for a spill - but he hasn't *quite* denied it yet.
(The First Law of Journalism: "Any official denial is de facto a confirmation" -- John Kifner, NYT, 1969.)

Hockey reckons it's a "beat up", but I think he's just peeved that the media didn't ask him if he was challenging.

Nick said...

@ Anonymous: Wow, a right-wing poster asserting their assumption as fact - who'd have thought? And too gutless to sign their name, to boot. Give yourself a pat on the back, we're all fascinated by your two cents' worth..

Rhiannon said...

Thanks again for a terrific post which I re-posted on FB as usual.

Thanks for using your insight and dedication to make my life more interesting!

(And if anonymous commenters who wish to make rather nasty accusations would accurately review previous posts, you would already know that this blog is written and researched in Grog's 'spare' time.
If you have a criticism to make of the content, that you can back up, I imagine that that is perfectly acceptable. But really, personal insults are pretty pathetic. And it's a BLOG! He can write whatever he damn well pleases! If you don't like it, don't read it!)

Anonymous said...

"The views expressed on this blog are mine and mine alone and in no way reflect the views of the Government nor any Department, nor do they in anyway reflect the work undertaken by me in my capacity as an employee of the Australian Public Service."

If I was Tony Abbott, one of my first acts on assuming government would be to ensure someone as unprofessional as you had a lot more time to work on your private blog.

Jaeger said...

Tony "assumed" government after the last election; that's why he's in Opposition.

Notus said...

Anonymous - I assume you are yet another Liberal Party stooge but hey keep up the (not so) good work.

Patricia WA said...

Hi Grog - The Diary linked me across to The Drum to read this article again. But, CO, the Diary Editor, this week did it in such snarkey tones I wrote a 'pome' for you. You can read it at
http://polliepomes.wordpress.com/2011/05/21/murdoch-battles-with-jericho/

Interestingly when I went back to check her words they'd removed the link and that part of her little sneer, 'now you can look on his face!' and provided the photo themselves. You had a good readership over there at the Drum. I guess she was told not to provide you with any more! So I linked to her comment for the photo and to give an idea of the derogatory tone used earlier. All water off a duck's back, to you, I hope.

PS Your wife would probably agree with me that you look great in that picture and I imagine she doesn't want you to look remotely like 'mile high club' Ralph Feinnes.

Anonymous said...

re NBN

Fiber Optic cable typically uses the visible light spectrum (they can use IR and UV but typically don't if visible light is being used) which has well over 1000 times the available bandwidth that the entire radio spectrum.

So a better analogy than comparing Commodores to Horses and Carts would be to compare walking to the moon and flying there in a Space Shuttle (if the shuttle was capable of traveling 30% faster than they could anyway)