Comments on “The budget that got away”, see Mumble Blog, 10/05/2011 on the day of federal budget, http://blogs.theaustralian.news.com.au/mumble/index.php/theaustralian/comments/tough_budget/
It is hard to understand why we have to had such levels of deficits, to the tune of $51 billion this financial year and $20 billion next financial year, given that, first we didn't experience a recession, second we have very good terms of trade and external demand for our commodities is extremely high, third, we have unemployment rates at or below 5%.
Yes, Rudd/Gillard/Swan didn't have the guts to reduce government expenditure in their first budget and used the GFC as an excuse to ramp up their own spending and wastage.
More ironically and or hypocritically, they didn't dare to stop the tax cuts that Howard/Costello introduced and continued to the Rudd years. Although that may not necessarily have been a bad thing compared to their wastage, they nevertheless blame Howard/Costello for causing the so called structural budget deficits.
The fact is that Howard/Costello had budget surplus, repaid government debts and created future fund, as well as cut taxes.
What Rudd/Gillard/Swan has done? Deficits and large deficits, debts and increased debts. Wait, there are more, new taxes and more new and big taxes.
For them to blame their predecessors is a bit too rich in politics and political incompetence and spin at the extreme!
It is a shame of them. But they don’t have a sense of shame and they don’t and can’t feel it.
That is a government out of touch, and senseless!
Showing posts with label Rudd government. Show all posts
Showing posts with label Rudd government. Show all posts
2011-05-09
Ending government wastage
Comments on Henry Ergas “Ending waste even more important than deficit”, 9/05/2011, http://www.theaustralian.com.au/national-affairs/ending-waste-even-more-important-than-deficit/story-fn59niix-1226052136291
Ergas is obviously correct in stating that ending wastes is more important than ending deficits.
Both are required in general, although the general theory and practice for budget balance is over a reasonable timeframe to achieve.
Most western government, due largely short term politics and irresponsible fiscal policy have abused the general policy prescription and resulted in rather large government debts and persistent budget deficits.
Government wastes should by all means be avoided in the first place and eliminated when they are discovered, even though some would argue that they are impossible to completely avoid in the first place no matter how hard a government may try to do it.
Here the short term politics comes to play. Few governments if any are selflessly working in the interests of their whole nations and virtually all governments have their own political interests that are not necessarily always the same as their national interests.
When the two conflict with each other, many government can pursue their own political interests but do it in the disguise of the national interests, or they say are in the national interests.
Australia has some good examples of government wastes recently – the bungled home insulation programs, the wastes in BER programs, and the NBN is most likely to be a much larger measure of government wastage.
The government, however, have all its reasons. And that is hardly surprising, isn’t it?
In terms of budget deficits, if the benefits to the government of the day outweigh the costs to it, then it is not too difficult to understand the incentive to have it.
Ergas is obviously correct in stating that ending wastes is more important than ending deficits.
Both are required in general, although the general theory and practice for budget balance is over a reasonable timeframe to achieve.
Most western government, due largely short term politics and irresponsible fiscal policy have abused the general policy prescription and resulted in rather large government debts and persistent budget deficits.
Government wastes should by all means be avoided in the first place and eliminated when they are discovered, even though some would argue that they are impossible to completely avoid in the first place no matter how hard a government may try to do it.
Here the short term politics comes to play. Few governments if any are selflessly working in the interests of their whole nations and virtually all governments have their own political interests that are not necessarily always the same as their national interests.
When the two conflict with each other, many government can pursue their own political interests but do it in the disguise of the national interests, or they say are in the national interests.
Australia has some good examples of government wastes recently – the bungled home insulation programs, the wastes in BER programs, and the NBN is most likely to be a much larger measure of government wastage.
The government, however, have all its reasons. And that is hardly surprising, isn’t it?
In terms of budget deficits, if the benefits to the government of the day outweigh the costs to it, then it is not too difficult to understand the incentive to have it.
2010-12-16
More than haste and lack of flexibility in BER wastes
Comments on Justine Ferrari “Haste and lack of flexibility to blame”, 16/12/2010, http://www.theaustralian.com.au/news/opinion/haste-and-lack-of-flexibility-to-blame/story-e6frg6zo-1225971780731
It seems a gloss over a miserably failed public project.
The fact appears to suggest there were failures on both levels of government - Commonwealth and state in the processes.
Why didn't they ever consider what problems could likely occur in the first place and make better public decisions?
Why didn't they correct problems earlier?
Now, what could and can Brad Orgill say, given that he is the government appointed for the task?
It is nothing less than a continuation of the same failed policy/program – not too dissimilar to the saying it is difficult to teach old dogs new tricks.
It is a shame of the government and the person involved in the report.
It seems a gloss over a miserably failed public project.
The fact appears to suggest there were failures on both levels of government - Commonwealth and state in the processes.
Why didn't they ever consider what problems could likely occur in the first place and make better public decisions?
Why didn't they correct problems earlier?
Now, what could and can Brad Orgill say, given that he is the government appointed for the task?
It is nothing less than a continuation of the same failed policy/program – not too dissimilar to the saying it is difficult to teach old dogs new tricks.
It is a shame of the government and the person involved in the report.
2010-07-13
Tanner and Faulkner's actions decent and honourable
Comments on Henry Ergas “Faulkner, Tanner fell short of lofty aims”, 13/07/2010, http://www.theaustralian.com.au/news/opinion/faulkner-tanner-fell-short-of-lofty-aims/story-e6frg6zo-1225890927669
There are two aspects to the story here.
One is that there were inevitable failures of Tanner because he was one of the gang of four that were the core of the Rudd government's decisions, so he cannot escape those responsibilities. But I am not sure about Faulkner's because he was not one of the inner circle decision makers even though he has been a senior minister or ALP politicians.
The other aspect of the story is that both probably felt uncomfortable with the sudden change to the ALP leadership and are willing to show it and to take their shares of responsibility for the failures of the Rudd government as senior ministers to fall together with Rudd in some sort of way.
If the second is true, it indicates at least they have shown some courage to be accountable for their positions.
And that is much more decent action than some who might have done otherwise.
There are two aspects to the story here.
One is that there were inevitable failures of Tanner because he was one of the gang of four that were the core of the Rudd government's decisions, so he cannot escape those responsibilities. But I am not sure about Faulkner's because he was not one of the inner circle decision makers even though he has been a senior minister or ALP politicians.
The other aspect of the story is that both probably felt uncomfortable with the sudden change to the ALP leadership and are willing to show it and to take their shares of responsibility for the failures of the Rudd government as senior ministers to fall together with Rudd in some sort of way.
If the second is true, it indicates at least they have shown some courage to be accountable for their positions.
And that is much more decent action than some who might have done otherwise.
2010-06-27
Wastes in public programs, statistics and GDP in Australia
Comments on Christopher Pearson “Panic in the ranks over whiff of mortality”, 26/06/2010, http://www.theaustralian.com.au/news/opinion/panic-in-the-ranks-over-whiff-of-mortality/story-e6frg6zo-1225884462916
While some credit should be given to the Rudd government in terms of having steered Australia away from a recession, the costs of achieving it are often neglected by many.
We don't really know in totality the triumph of avoiding a recession has outweighed its costs.
Even the wastes of some of the Rudd government's programs, while being counted in the GDP number to form the statistics of no recession, were large enough to change the headline of the story of a recession or no recession.
The values of some of the BER, for example, were inflated by some factors. In real terms, removing their effects could have tipped the statistics the other way.
Even the economics of Australia's having avoided a recession is murky.
In that light and the wastes in the stimulus packages, what roles were Treasury and Henry played in that process?
The past two and half years represents an excellent and rare case of public policy failures, from politicians to some top bureaucrats. It should be wonderful materials for case studies of public policies in Australia for students for the coming decades.
While some credit should be given to the Rudd government in terms of having steered Australia away from a recession, the costs of achieving it are often neglected by many.
We don't really know in totality the triumph of avoiding a recession has outweighed its costs.
Even the wastes of some of the Rudd government's programs, while being counted in the GDP number to form the statistics of no recession, were large enough to change the headline of the story of a recession or no recession.
The values of some of the BER, for example, were inflated by some factors. In real terms, removing their effects could have tipped the statistics the other way.
Even the economics of Australia's having avoided a recession is murky.
In that light and the wastes in the stimulus packages, what roles were Treasury and Henry played in that process?
The past two and half years represents an excellent and rare case of public policy failures, from politicians to some top bureaucrats. It should be wonderful materials for case studies of public policies in Australia for students for the coming decades.
2010-06-24
The price paid by Rudd personally - and taxpayers
Comments on Christopher Joye “How Rudd's bad advice won Gillard power”, 24/06/2010, http://www.businessspectator.com.au/bs.nsf/Article/Rudd-refused-the-best-advice-pd20100624-6PUZL?OpenDocument&src=sph
This rare and useful information provides excellent insights into the pitfalls of decision makings at the top of the national government.
Of course, we can only see how the PMO advisors operated. Some other interesting of the picture would be how Treasury and the Treasurer operated in such an environment.
Ultimately, it was the combination of them, and possibly some other handful people involved in the process.
This is the price Rudd paid, but ultimately the taxpayers have paid for low transparency and mal-management by the government.
PS: I find the information is extremely insightful. In case that the reference would not be available for any reasons in the future, here is a copy of the article:
So Australia has its first female prime minister.
In the inevitable wave of post-mortems written about Kevin Rudd’s prime ministership there will be much made of his political mis-steps.
The absence of a historical constituency of factional support. The school-boy errors committed by his chief of staff, which disenfranchised key powerbrokers when he sought to count numbers on the PM’s behalf – a job typically left to MPs – and then leaked this fact to the media.
Here the lay observer might be confused. Yet to the initiated, Alister Jordan’s actions were insulting to Julia Gillard and her backers, since they insinuated that she’d been seeking to undermine the PM when, in practice, Gillard had been relentless in offering support. In the words of one kingmaker, this was the straw that broke the camel’s back.
Then there was, of course, Rudd’s unilateral decision-making processes, which in the early days of his administration were lauded by the commentariat as commendable reform to the archaic and undemocratic caucus system. In this context, the deliberate centralisation of authority within the closed-circle that was Ruddland was most clearly displayed by Kevin07’s determination to eviscerate caucus’ right to appoint cabinet ministers.
We will doubtlessly hear much talk of the ruthless retribution wrought by the serpentine unions that control caucus, and whose incredibly well-funded campaign against the coalition’s WorkChoices policy were essential ingredients to Rudd’s success at the last election.
Watching the slaying of a Prime Minister on Sky News and in real-time via twitter and text offered political tragics visceral satisfaction rarely experienced since the days of Ancient Rome’s coliseums. The advent of a world enmeshed by the internet has yielded us a new form of gladiatorial bloodsport, which, once shielded by elites behind closed doors, now plays out blow-by-blow in our living rooms.
While there will be many putative victors in this battle, perhaps the most intriguing is the charismatic hitman Paul Howes of the AWU, who in his late twenties is shaping up as the country’s most influential and politically capable union official and an heir to Bob Hawke.
But when all is said and done, the commentariat’s conclusions will miss the point. They will be consumed by the superficial symptoms of Kevin Rudd’s problems, rather than their underlying cause. This was not really about politics. The PM’s political errors were merely visible manifestations of a far deeper and more significant malaise.
At the end of the day, Rudd’s downfall was about leadership in the conventional managerial sense that the owners of small businesses and chief executives understand. And it was about the exceptionally poor preparation professional politics affords one prior to tackling the single most challenging leadership exercise of them all.
The early indication of Rudd’s date with a one-term destiny was his inability to recognise his own shortcomings. In any normal circumstances, the CEO of a major company who lacked experience relevant to his task would promptly compensate for this deficiency by surrounding himself with advisors that possessed the requisite skills. Take James Packer’s decision following his father’s death to immediately establish a council of the most weathered and hard-headed minds in the business. This talent was critical to helping him transition away from the family’s traditional media investments at the best possible point in the cycle.
By way of revealing contrast, Kevin Rudd constructed a benign dictatorship on the back of three influential twenty-somethings with virtually no experience at all. That is to say, his principal political, media and economic advisors had never held down day-jobs in the real world for any meaningful length of time. And how could they have been expected to do so? While brimming with talent, these guys had only been out of university for a handful of years.
Rudd’s decision to surround himself with youngsters who acted as echo chambers of his own opinions was a mistake of both stunning and catastrophic proportions. Having been out of government for a similar period time, his predecessor’s office, which was guided by veterans such as Grahame Morris, Arthur Sinodinos, and Tony Nutt, with decades worth of germane know-how, makes for an awkward comparison.
The composition of Rudd’s office was the most transparent signal that he had no idea what he was doing. If he was indeed a proven managerial maestro, he could have got away with it. (Some argue that Bob Hawke did.) Yet Rudd was none of these things.
Jejune hubris resulted in both Rudd and his advisors attributing their seamless success at the 2007 election to unique political skills, which appeared in no need of support, when, in fact, their ascendancy had more to do with an electorate fatigued with an ageing, multi-term prime minister, and the myopia born from having been inculcated from economic adversity for 18 years.
I was personally exposed to, and could empathise with, Ruddland’s naiveté. After years at Goldman Sachs, the Reserve Bank of Australia, and Sydney and Cambridge Universities, I felt like I could take on the world. I thought that there was really not much more I needed to learn. And it was with this mentality that I decided to start an awesomely ambitious business. Over the ensuing years I would learn that no matter how smart you are, there is simply no substitute for hard won, life experience. Rudd and his advisors will reluctantly arrive at the same conclusion when they reflect on what went wrong.
For better or worse, I also got to see first-hand the writing on the wall. One of Rudd’s consigliere would occasionally call me for economic advice. And these exchanges would reveal the raw inexperience that was driving the country. In the middle of the GFC I fielded a call asking me what the ‘commercial paper’ (CP) market was. Rudd’s office had been accused by the deputy governor of the RBA of inadvertently ‘killing the CP market’ with the government’s bank guarantees. What does all this mean, I was asked.
The commercial paper market provides the short-term funding needs for very highly rated corporations. By offering to lend the Commonwealth’s AAA-rating to banks and building societies with far lesser credit ratings, the government had unwittingly destroyed demand, or liquidity, for debt securities in more highly rated sectors that did not have the benefit of this taxpayer support. This included AAA-rated residential and commercial mortgage-backed securities, mortgage trusts, and highly-rated commercial paper that large companies relied on. I obliged with an explanation while at the same time wondering why I was having to supply one.
Then there was Rudd Bank. Australians were greeted with the surprising news that Rudd had decided to commit $2 billion of taxpayer cash, and nearly $30 billion worth of taxpayer guarantees, to bailing out small commercial property investors on the unstated basis that these assets posed a threat to the major bank’s balance-sheets.
So I asked Rudd’s advisor what their assessment of the risks had been prior to launching this unprecedented and expensive initiative. In particular, I asked what they thought the banks’ loan-to-value ratios (LVRs) were to the commercial property assets in question.
Westpac and ANZ had already had near-death experiences with commercial property in the early 1990s. Since that time all the majors had scaled back their exposures and adopted much more conservative lending practices.
My own intelligence suggested that the vast bulk of the loans were written with low LVRs of 50 per cent of less. This meant that the assets would have to suffer extraordinary hair-cuts in value before the banks were genuinely threatened.
Anyways, the response I received was worrying. The short answer was that the PM’s office did not know. Stunned, I enquired as to how they could possibly have made the decision to commit billions of dollars taxpayer funds without first having this information. After all, it existed—it was just a matter of getting it from the banks.
We cannot make head or tail of APRA’s data, I was told. But mate, you are providing hundreds of billions of dollars worth of taxpayer guarantees to these institutions. Surely you have asked for this directly from them? Nope. We primarily just meet with the chairmen and CEOs.
Shocked, I said, That’s a bit disturbing. The PM’s office should be getting fortnightly or monthly feeds directly from these institutions on all their key operating and risk metrics so long as the insurance is in place.
Backtracking, I was asked whether I could prepare a ‘data request form’ that they could then send to the banks. I naturally obliged and was subsequently told by senior regulators that the PM’s office had implemented the new regime.
The problem for Rudd and his advisors was they did not know what they did not know. The professional inexperience meant that they were being plagued by Rumsfeld’s ‘unknown unknowns’. But this is not the way it had to be. Rudd could have humbly taken the counsel of vastly more learned operators. That he chose not to is precisely why he is no longer Prime Minister today.
The temporary abandonment of the ETS was not the final nail in Rudd’s coffin. It was a politically expedient decision that most thoughtful folks agreed with. Rudd’s ute-gate was the RSPT. The irony of this is that the principle underlying the RSPT had near-universal support from academic and professional experts. The theory was sound. It was once again the ‘execution’, which is the most visible evidence of leadership, that was fatally flawed.
In an election year, Rudd ended up isolating vital nodes of support from the leader of the nation’s sovereign wealth fund, to directors of the central bank, the financially influential resources industry, and even his principal private sector advisor, Rod Eddington.
Perhaps the most unprecedented and withering criticism came from Australia’s most respected macroeconomist and Reserve Bank board member, Professor Warwick McKibbin. Yesterday he laid Rudd’s headstone:
“I also disagreed with the scale of the stimulus package, and I would say I was right... It wasn't evidence-based policy, they panicked…
The government rammed those decisions through the economy even though they were fraught with risk. No-one was consulted about an alternative view and if you did say anything you were attacked by the Treasurer and the Prime Minister in public...
The stimulus created a problem. The government overspent...so they come up with a really badly designed resource tax to try and get the position to look good three years from now, and in the middle of a sovereign risk crisis exposed the economy to a reassessment of sovereign risk...
I am stunned that the Treasury keeps supporting the government. The review of the tax system should have been independent of the Treasury and then critiqued by it and other economic agencies...
The government has ceased to use the Productivity Commission for sensitive questions. It should have been critiquing the National Broadband Network which is a gigantic white elephant waiting to happen.”
This rare and useful information provides excellent insights into the pitfalls of decision makings at the top of the national government.
Of course, we can only see how the PMO advisors operated. Some other interesting of the picture would be how Treasury and the Treasurer operated in such an environment.
Ultimately, it was the combination of them, and possibly some other handful people involved in the process.
This is the price Rudd paid, but ultimately the taxpayers have paid for low transparency and mal-management by the government.
PS: I find the information is extremely insightful. In case that the reference would not be available for any reasons in the future, here is a copy of the article:
So Australia has its first female prime minister.
In the inevitable wave of post-mortems written about Kevin Rudd’s prime ministership there will be much made of his political mis-steps.
The absence of a historical constituency of factional support. The school-boy errors committed by his chief of staff, which disenfranchised key powerbrokers when he sought to count numbers on the PM’s behalf – a job typically left to MPs – and then leaked this fact to the media.
Here the lay observer might be confused. Yet to the initiated, Alister Jordan’s actions were insulting to Julia Gillard and her backers, since they insinuated that she’d been seeking to undermine the PM when, in practice, Gillard had been relentless in offering support. In the words of one kingmaker, this was the straw that broke the camel’s back.
Then there was, of course, Rudd’s unilateral decision-making processes, which in the early days of his administration were lauded by the commentariat as commendable reform to the archaic and undemocratic caucus system. In this context, the deliberate centralisation of authority within the closed-circle that was Ruddland was most clearly displayed by Kevin07’s determination to eviscerate caucus’ right to appoint cabinet ministers.
We will doubtlessly hear much talk of the ruthless retribution wrought by the serpentine unions that control caucus, and whose incredibly well-funded campaign against the coalition’s WorkChoices policy were essential ingredients to Rudd’s success at the last election.
Watching the slaying of a Prime Minister on Sky News and in real-time via twitter and text offered political tragics visceral satisfaction rarely experienced since the days of Ancient Rome’s coliseums. The advent of a world enmeshed by the internet has yielded us a new form of gladiatorial bloodsport, which, once shielded by elites behind closed doors, now plays out blow-by-blow in our living rooms.
While there will be many putative victors in this battle, perhaps the most intriguing is the charismatic hitman Paul Howes of the AWU, who in his late twenties is shaping up as the country’s most influential and politically capable union official and an heir to Bob Hawke.
But when all is said and done, the commentariat’s conclusions will miss the point. They will be consumed by the superficial symptoms of Kevin Rudd’s problems, rather than their underlying cause. This was not really about politics. The PM’s political errors were merely visible manifestations of a far deeper and more significant malaise.
At the end of the day, Rudd’s downfall was about leadership in the conventional managerial sense that the owners of small businesses and chief executives understand. And it was about the exceptionally poor preparation professional politics affords one prior to tackling the single most challenging leadership exercise of them all.
The early indication of Rudd’s date with a one-term destiny was his inability to recognise his own shortcomings. In any normal circumstances, the CEO of a major company who lacked experience relevant to his task would promptly compensate for this deficiency by surrounding himself with advisors that possessed the requisite skills. Take James Packer’s decision following his father’s death to immediately establish a council of the most weathered and hard-headed minds in the business. This talent was critical to helping him transition away from the family’s traditional media investments at the best possible point in the cycle.
By way of revealing contrast, Kevin Rudd constructed a benign dictatorship on the back of three influential twenty-somethings with virtually no experience at all. That is to say, his principal political, media and economic advisors had never held down day-jobs in the real world for any meaningful length of time. And how could they have been expected to do so? While brimming with talent, these guys had only been out of university for a handful of years.
Rudd’s decision to surround himself with youngsters who acted as echo chambers of his own opinions was a mistake of both stunning and catastrophic proportions. Having been out of government for a similar period time, his predecessor’s office, which was guided by veterans such as Grahame Morris, Arthur Sinodinos, and Tony Nutt, with decades worth of germane know-how, makes for an awkward comparison.
The composition of Rudd’s office was the most transparent signal that he had no idea what he was doing. If he was indeed a proven managerial maestro, he could have got away with it. (Some argue that Bob Hawke did.) Yet Rudd was none of these things.
Jejune hubris resulted in both Rudd and his advisors attributing their seamless success at the 2007 election to unique political skills, which appeared in no need of support, when, in fact, their ascendancy had more to do with an electorate fatigued with an ageing, multi-term prime minister, and the myopia born from having been inculcated from economic adversity for 18 years.
I was personally exposed to, and could empathise with, Ruddland’s naiveté. After years at Goldman Sachs, the Reserve Bank of Australia, and Sydney and Cambridge Universities, I felt like I could take on the world. I thought that there was really not much more I needed to learn. And it was with this mentality that I decided to start an awesomely ambitious business. Over the ensuing years I would learn that no matter how smart you are, there is simply no substitute for hard won, life experience. Rudd and his advisors will reluctantly arrive at the same conclusion when they reflect on what went wrong.
For better or worse, I also got to see first-hand the writing on the wall. One of Rudd’s consigliere would occasionally call me for economic advice. And these exchanges would reveal the raw inexperience that was driving the country. In the middle of the GFC I fielded a call asking me what the ‘commercial paper’ (CP) market was. Rudd’s office had been accused by the deputy governor of the RBA of inadvertently ‘killing the CP market’ with the government’s bank guarantees. What does all this mean, I was asked.
The commercial paper market provides the short-term funding needs for very highly rated corporations. By offering to lend the Commonwealth’s AAA-rating to banks and building societies with far lesser credit ratings, the government had unwittingly destroyed demand, or liquidity, for debt securities in more highly rated sectors that did not have the benefit of this taxpayer support. This included AAA-rated residential and commercial mortgage-backed securities, mortgage trusts, and highly-rated commercial paper that large companies relied on. I obliged with an explanation while at the same time wondering why I was having to supply one.
Then there was Rudd Bank. Australians were greeted with the surprising news that Rudd had decided to commit $2 billion of taxpayer cash, and nearly $30 billion worth of taxpayer guarantees, to bailing out small commercial property investors on the unstated basis that these assets posed a threat to the major bank’s balance-sheets.
So I asked Rudd’s advisor what their assessment of the risks had been prior to launching this unprecedented and expensive initiative. In particular, I asked what they thought the banks’ loan-to-value ratios (LVRs) were to the commercial property assets in question.
Westpac and ANZ had already had near-death experiences with commercial property in the early 1990s. Since that time all the majors had scaled back their exposures and adopted much more conservative lending practices.
My own intelligence suggested that the vast bulk of the loans were written with low LVRs of 50 per cent of less. This meant that the assets would have to suffer extraordinary hair-cuts in value before the banks were genuinely threatened.
Anyways, the response I received was worrying. The short answer was that the PM’s office did not know. Stunned, I enquired as to how they could possibly have made the decision to commit billions of dollars taxpayer funds without first having this information. After all, it existed—it was just a matter of getting it from the banks.
We cannot make head or tail of APRA’s data, I was told. But mate, you are providing hundreds of billions of dollars worth of taxpayer guarantees to these institutions. Surely you have asked for this directly from them? Nope. We primarily just meet with the chairmen and CEOs.
Shocked, I said, That’s a bit disturbing. The PM’s office should be getting fortnightly or monthly feeds directly from these institutions on all their key operating and risk metrics so long as the insurance is in place.
Backtracking, I was asked whether I could prepare a ‘data request form’ that they could then send to the banks. I naturally obliged and was subsequently told by senior regulators that the PM’s office had implemented the new regime.
The problem for Rudd and his advisors was they did not know what they did not know. The professional inexperience meant that they were being plagued by Rumsfeld’s ‘unknown unknowns’. But this is not the way it had to be. Rudd could have humbly taken the counsel of vastly more learned operators. That he chose not to is precisely why he is no longer Prime Minister today.
The temporary abandonment of the ETS was not the final nail in Rudd’s coffin. It was a politically expedient decision that most thoughtful folks agreed with. Rudd’s ute-gate was the RSPT. The irony of this is that the principle underlying the RSPT had near-universal support from academic and professional experts. The theory was sound. It was once again the ‘execution’, which is the most visible evidence of leadership, that was fatally flawed.
In an election year, Rudd ended up isolating vital nodes of support from the leader of the nation’s sovereign wealth fund, to directors of the central bank, the financially influential resources industry, and even his principal private sector advisor, Rod Eddington.
Perhaps the most unprecedented and withering criticism came from Australia’s most respected macroeconomist and Reserve Bank board member, Professor Warwick McKibbin. Yesterday he laid Rudd’s headstone:
“I also disagreed with the scale of the stimulus package, and I would say I was right... It wasn't evidence-based policy, they panicked…
The government rammed those decisions through the economy even though they were fraught with risk. No-one was consulted about an alternative view and if you did say anything you were attacked by the Treasurer and the Prime Minister in public...
The stimulus created a problem. The government overspent...so they come up with a really badly designed resource tax to try and get the position to look good three years from now, and in the middle of a sovereign risk crisis exposed the economy to a reassessment of sovereign risk...
I am stunned that the Treasury keeps supporting the government. The review of the tax system should have been independent of the Treasury and then critiqued by it and other economic agencies...
The government has ceased to use the Productivity Commission for sensitive questions. It should have been critiquing the National Broadband Network which is a gigantic white elephant waiting to happen.”
It is imperative for Gillard to change policy tack
Comments on Stephen Bartholomeusz “Gillard's Labor must now change policy tack”, 24/06/2010, http://www.businessspectator.com.au/bs.nsf/Article/Julia-Gillard-Prime-Minister-Kevin-Rudd-leadership-pd20100624-6Q36K?OpenDocument&src=sph
Stephen Bartholomeusz has written an excellent summary of Rudd's and his government's problems and the root of those problems. I agree totally.
While Rudd has seriously flawed leadership style, it is not his communication that has been the problem of his government and his fall from grace from the public, it is his policy designs and his approach to leading the government and managing his ministry and the exclusive processes he preferred.
Gillard has her own challenges, but the likely goodwill from the public towards her and the sympathy for a first term government is likely to afford her an election victory.
She now needs to make changes quickly to three and possibly four important policy areas:
either abandon the RSPT altogether or completely redesign it
recommit to a new climate change policy with possibly a low carbon tax/levy with proceeds returned to everyone residing in Australia
new and urgent guidelines for BER spending that has not been spent yet, and
finally, yes, something on the BNB front: release any relevant information related to the NBN and redesign the NBN package.
Stephen Bartholomeusz has written an excellent summary of Rudd's and his government's problems and the root of those problems. I agree totally.
While Rudd has seriously flawed leadership style, it is not his communication that has been the problem of his government and his fall from grace from the public, it is his policy designs and his approach to leading the government and managing his ministry and the exclusive processes he preferred.
Gillard has her own challenges, but the likely goodwill from the public towards her and the sympathy for a first term government is likely to afford her an election victory.
She now needs to make changes quickly to three and possibly four important policy areas:
either abandon the RSPT altogether or completely redesign it
recommit to a new climate change policy with possibly a low carbon tax/levy with proceeds returned to everyone residing in Australia
new and urgent guidelines for BER spending that has not been spent yet, and
finally, yes, something on the BNB front: release any relevant information related to the NBN and redesign the NBN package.
Congratulations to Ms Gillard our first female prime minister
News broke out that Julia Gillard has been elected unopposed as the ALP caucus leader and the prime minister designate.
Congratulates to Ms Gillard, well done!
Deep appreciation goes to the Prime Minister Mr Rudd for his gracious gesture of moving aside without contesting the ballot, that will leave the ALP in a much better shape to fight the next federal election. Mr Rudd has done the ALP a great service by leading them into the victory in the last election and was a very and in fact the most popular Prime Minister for much of his prime ministership.
Australia will enter into a new era from today, 24 June, 2010.
Bit surprised by the election of Swan as the deputy leader, but that is politics - anything can happen.
Despite that, the government needs to make significant changes to the RSPT, along the line of the existing PRRT.
Also it will need to make a new commitment to climate change policy, preferably a carbon levy/tax negotiated with the Greens. Start with a low carbon levy and return the proceeds to every Australian, so keep the public on side.
Congratulates to Ms Gillard, well done!
Deep appreciation goes to the Prime Minister Mr Rudd for his gracious gesture of moving aside without contesting the ballot, that will leave the ALP in a much better shape to fight the next federal election. Mr Rudd has done the ALP a great service by leading them into the victory in the last election and was a very and in fact the most popular Prime Minister for much of his prime ministership.
Australia will enter into a new era from today, 24 June, 2010.
Bit surprised by the election of Swan as the deputy leader, but that is politics - anything can happen.
Despite that, the government needs to make significant changes to the RSPT, along the line of the existing PRRT.
Also it will need to make a new commitment to climate change policy, preferably a carbon levy/tax negotiated with the Greens. Start with a low carbon levy and return the proceeds to every Australian, so keep the public on side.
2010-06-23
Gillard will be a good prime minister
News broke out that the ALP federal caucus are have a spill and vote for the leadership tomorrow morning. Rudd has called a press conference on that. He said that Gillard asked for a leadership spill and he has called one for that.
The federal government under the Rudd prime ministership has been in a very difficulty position over the past months, starting insulation problems but becoming more pronounced from Rudd's ETS backflip. The RSPT has manifested the difficulties further and the polls show the government has lost the public's trust.
Gillard has been extremely loyal to Rudd. I have argued that it is best for the Labor party if Gillard takes the leadership and it is best for Rudd to step aside for that to happen. It seems Rudd is not going to give up his prime ministership voluntarily and is likely to be forced out.
Should Gillard win the leadership ballot, she will be a very good prime minister for Australia, judged from her performance as the deputy prime minister over the past two and half years. She is competent and confident.
The federal government under the Rudd prime ministership has been in a very difficulty position over the past months, starting insulation problems but becoming more pronounced from Rudd's ETS backflip. The RSPT has manifested the difficulties further and the polls show the government has lost the public's trust.
Gillard has been extremely loyal to Rudd. I have argued that it is best for the Labor party if Gillard takes the leadership and it is best for Rudd to step aside for that to happen. It seems Rudd is not going to give up his prime ministership voluntarily and is likely to be forced out.
Should Gillard win the leadership ballot, she will be a very good prime minister for Australia, judged from her performance as the deputy prime minister over the past two and half years. She is competent and confident.
McKibbin is correct on Rudd government's crisis handling and RSPT
Comments on report "McKibbin slams Rudd's handling of GFC, RSPT", by businessspectator, 23/06/2010, see http://www.businessspectator.com.au/bs.nsf/Article/McKibbin-slams-Rudds-handling-of-GFC-RSPT-pd20100623-6NTTX?OpenDocument&src=hp2
I share McKibbin's view totally, as the indicated in the following report:
"Reserve Bank of Australia board member Warwick McKibbin has slammed the federal government's handling of the global financial crisis, and labelled Prime Minister Kevin Rudd's response to the downturn as "panicked" and "rammed through", according to a Fairfax Media report.
According to the report, Mr McKibbin said the government had overspent on the stimulus package it implemented during the downturn, and was trying to compensate with a "really badly designed" resources super-profits tax.
Mr McKibbin hit out at Treasury Secretary Ken Henry, saying that his fellow RBA member does not consult experts on economic issues and instead attempts to silence them.
He also said Labor's planned $43 billion National Broadband Network was a ''gigantic white elephant waiting to happen''.
The comments come as Kevin Rudd comes under increasing pressure over his leadership, with the PM privately gauging the extent of support for his position among the Labor party."
PS: for a longer report by Stephen Bartholomeusz titled "Warwick the wise", 23/06/2010, see http://www.businessspectator.com.au/bs.nsf/Article/Warwick-McKibbin-RBA-RSPT-mining-tax-resource-supe-pd20100623-6P3K8?OpenDocument&src=sph
To quote the first few paragraphs:
Reserve Bank board member and leading economist Warwick McKibbin has shown some courage in making an explosive contribution to the debate about the Rudd government’s management of the economy and the quality of the design its proposed resource super profits tax.
As McKibbin himself noted in an interview with The Age, the government – he nominated Kevin Rudd and Wayne Swan – has a tendency to attack their critics, vigorously.
The potency in McKibbin’s criticism of the government’s policies is that it isn’t just a critique of a ‘’really badly designed resource tax’’ or of ”a gigantic white elephant waiting to happen" in the $43 billion national broadband network, but a holistic assessment of the government’s economic management credentials that puts the RSPT in context.
He accused the government of panicking in response to the crisis and ramming through decisions "fraught with risk". It had over-spent in its stimulus package (and, indeed, is still stimulating even as the RBA raises official interest rates to control growth) and had then come up with the RSPT to try to compensate.
In order to get that spending back on track and ‘’because of the politics" claim a fiscal surplus – for which he said there was no economic basis – it had come up with a badly designed tax and "in the middle of a sovereign debt crisis exposed the economy to a reassessment of sovereign risk".
I share McKibbin's view totally, as the indicated in the following report:
"Reserve Bank of Australia board member Warwick McKibbin has slammed the federal government's handling of the global financial crisis, and labelled Prime Minister Kevin Rudd's response to the downturn as "panicked" and "rammed through", according to a Fairfax Media report.
According to the report, Mr McKibbin said the government had overspent on the stimulus package it implemented during the downturn, and was trying to compensate with a "really badly designed" resources super-profits tax.
Mr McKibbin hit out at Treasury Secretary Ken Henry, saying that his fellow RBA member does not consult experts on economic issues and instead attempts to silence them.
He also said Labor's planned $43 billion National Broadband Network was a ''gigantic white elephant waiting to happen''.
The comments come as Kevin Rudd comes under increasing pressure over his leadership, with the PM privately gauging the extent of support for his position among the Labor party."
PS: for a longer report by Stephen Bartholomeusz titled "Warwick the wise", 23/06/2010, see http://www.businessspectator.com.au/bs.nsf/Article/Warwick-McKibbin-RBA-RSPT-mining-tax-resource-supe-pd20100623-6P3K8?OpenDocument&src=sph
To quote the first few paragraphs:
Reserve Bank board member and leading economist Warwick McKibbin has shown some courage in making an explosive contribution to the debate about the Rudd government’s management of the economy and the quality of the design its proposed resource super profits tax.
As McKibbin himself noted in an interview with The Age, the government – he nominated Kevin Rudd and Wayne Swan – has a tendency to attack their critics, vigorously.
The potency in McKibbin’s criticism of the government’s policies is that it isn’t just a critique of a ‘’really badly designed resource tax’’ or of ”a gigantic white elephant waiting to happen" in the $43 billion national broadband network, but a holistic assessment of the government’s economic management credentials that puts the RSPT in context.
He accused the government of panicking in response to the crisis and ramming through decisions "fraught with risk". It had over-spent in its stimulus package (and, indeed, is still stimulating even as the RBA raises official interest rates to control growth) and had then come up with the RSPT to try to compensate.
In order to get that spending back on track and ‘’because of the politics" claim a fiscal surplus – for which he said there was no economic basis – it had come up with a badly designed tax and "in the middle of a sovereign debt crisis exposed the economy to a reassessment of sovereign risk".
Timing is essential for Gillard
Comments on Peter van Onselen “Julia may have missed the bus”, 23/06/2010, http://www.theaustralian.com.au/news/opinion/julia-may-have-missed-the-bus/story-e6frg6zo-1225882964227
Gillard has not missed anything!
Anything can happen from now to the polling day.
ALP may still change the leadership at any moment.
I think Gillard's strategy is the correct one, that is, to wait further for Rudd to step aside, or other people to remove him as opposed to her standing up and challenging Rudd. Her strategy would give the voters more sympathy for her. Also voters will not be too harsh on her BER role.
I think Gillard will lead the ALP to the next election and will win it, but not by too many seats probably.
But she will need to change leadership style, be more consultative and inclusive of the whole ministry. That will be assisted by having some more competent advisors.
She will need to build a more effective and cooperative federation. That will require the federal government work with the States on areas where efficiency can be achieved.
There is no need to further centralise powers to Canberra. Every state can contribute to make a better federation.
There is a need to clarify revenue and service responsibility. But that does not mean further centralisation and possibly means decentralisation of revenue powers or sharing revenue.
When differences among the states are detrimental to cooperative and competitive federation priority should be given to encourage harmonising different regulations among them.
It would be better to leave health and public hospitals with the States, but clarify a funding mechanism.
There is a need to have a federal agency for Indigenous people, to work with the States to improve Indigenous wellbeing.
Forget and ignore the Henry Tax Review because it is too damaging. Alternatively, set up a wider and more inclusive panel to study the report and recommendations and start with a new set of recommendations.
Industrial relations need to be more balanced. While workers’ rights need to be protected, efficiency and productivity must be given more weight. That is because in the long run only productivity matters in any given equity considerations.
It is important to aim at small and efficient government. Government spending should be further scaled down and concentrate on essential areas.
More independent public institutions should be encouraged. Those institutions should not be tied to bureaucratic agencies and should be oversight by parliaments.
Another point, deliver more and promise less. That is an important and enduring lesson from Rudd’s Prime Ministership.
Gillard has not missed anything!
Anything can happen from now to the polling day.
ALP may still change the leadership at any moment.
I think Gillard's strategy is the correct one, that is, to wait further for Rudd to step aside, or other people to remove him as opposed to her standing up and challenging Rudd. Her strategy would give the voters more sympathy for her. Also voters will not be too harsh on her BER role.
I think Gillard will lead the ALP to the next election and will win it, but not by too many seats probably.
But she will need to change leadership style, be more consultative and inclusive of the whole ministry. That will be assisted by having some more competent advisors.
She will need to build a more effective and cooperative federation. That will require the federal government work with the States on areas where efficiency can be achieved.
There is no need to further centralise powers to Canberra. Every state can contribute to make a better federation.
There is a need to clarify revenue and service responsibility. But that does not mean further centralisation and possibly means decentralisation of revenue powers or sharing revenue.
When differences among the states are detrimental to cooperative and competitive federation priority should be given to encourage harmonising different regulations among them.
It would be better to leave health and public hospitals with the States, but clarify a funding mechanism.
There is a need to have a federal agency for Indigenous people, to work with the States to improve Indigenous wellbeing.
Forget and ignore the Henry Tax Review because it is too damaging. Alternatively, set up a wider and more inclusive panel to study the report and recommendations and start with a new set of recommendations.
Industrial relations need to be more balanced. While workers’ rights need to be protected, efficiency and productivity must be given more weight. That is because in the long run only productivity matters in any given equity considerations.
It is important to aim at small and efficient government. Government spending should be further scaled down and concentrate on essential areas.
More independent public institutions should be encouraged. Those institutions should not be tied to bureaucratic agencies and should be oversight by parliaments.
Another point, deliver more and promise less. That is an important and enduring lesson from Rudd’s Prime Ministership.
2010-06-19
Be accountable and pay political prices
The policy mistakes and delivery debacles and the associated wastes of taxpayers' money by the Rudd government have to be accounted for by some political leaders from the government. They are inexcusable. Someone or persons have to go.
It may be the PM, or the Treasurer, or both.
For the PM, it is ultimately his responsibility, because he has been the prime minister and many issues of his government had are a reflection at least in part his leadership style.
For the Treasurer, it is some of the economic policy designs. The RSPT is an example because it is from the tax review chaired by his department head and ultimately it is his cabinet recommendation.
The deputy prime minister also has serious responsibility of her own, mainly because her role in the BER wastes. That, I think, is one of the main reasons she has not been ready to challenge the leadership. But she may be excused if either the PM or the Treasurer or both are taking the responsibilities for policy failures.
But if the government is to be serious in wining the coming election within a few months time, it has to change course and change leadership. If the ALP federal MPs and senators are rational, they should take the necessary action to initiate them to allow them the chance to win. The earlier the action being taken, the better the chances for them to change their political fortune. It is in their own hands.
It may be the PM, or the Treasurer, or both.
For the PM, it is ultimately his responsibility, because he has been the prime minister and many issues of his government had are a reflection at least in part his leadership style.
For the Treasurer, it is some of the economic policy designs. The RSPT is an example because it is from the tax review chaired by his department head and ultimately it is his cabinet recommendation.
The deputy prime minister also has serious responsibility of her own, mainly because her role in the BER wastes. That, I think, is one of the main reasons she has not been ready to challenge the leadership. But she may be excused if either the PM or the Treasurer or both are taking the responsibilities for policy failures.
But if the government is to be serious in wining the coming election within a few months time, it has to change course and change leadership. If the ALP federal MPs and senators are rational, they should take the necessary action to initiate them to allow them the chance to win. The earlier the action being taken, the better the chances for them to change their political fortune. It is in their own hands.
2010-06-17
Munif Mohammed's ROCE illustration contributes little to RSPT debate
Comments on Munif Mohammed “The tax is a matter of ROCE”, 17/06/2010, http://www.businessspectator.com.au/bs.nsf/Article/RSPT-ROCE-effective-tax-rate-pd20100617-6FUUB?OpenDocument&src=sph
I am not sure this piece isn't more misleading, in the sense that the impact on the real return to the equity investors can be more pronounced after the RSPT and interest payments to lenders, because the RSPT is based on pre-interest payments earnings?
Besides, what the author shows is no more or less than the effects of the 6% RSPT free effect. The limit (of the trend shown in that graph) is clearly 40%, as the headline of the tax indicates.
One is left with what this piece really contributes to the debate.
It seems only more confusion being produced or generated by it.
A flawed tax is a flawed tax. There is no point to "make-up" it to look good.
I am not sure this piece isn't more misleading, in the sense that the impact on the real return to the equity investors can be more pronounced after the RSPT and interest payments to lenders, because the RSPT is based on pre-interest payments earnings?
Besides, what the author shows is no more or less than the effects of the 6% RSPT free effect. The limit (of the trend shown in that graph) is clearly 40%, as the headline of the tax indicates.
One is left with what this piece really contributes to the debate.
It seems only more confusion being produced or generated by it.
A flawed tax is a flawed tax. There is no point to "make-up" it to look good.
2010-06-16
How to fix the government's proposed RSPT?
There is report that the Rudd government may consider changes to its proposed RSPT. See Dennis Shanahan and Matthew Franklin "Kevin Rudd starts to budge on mine tax", 16/06/2010, http://www.theaustralian.com.au/politics/kevin-rudd-starts-to-budge-on-mine-tax/story-e6frgczf-1225880140102
The report says that "THE Rudd government is considering modifying the resource super-profits tax for the burgeoning coal-seam gas industry and changing the rules on the 40 per cent tax for different minerals - the first sign of compromise in its damaging battle with miners."
A number of broad principles should be adopted to fix the RSPT.
1. Abandon the idea of being an equity partner with mining companies, irrespective the level of partnership. The tax should be a royalty, not a return to equity.
2. Raise the tax free threshold to adequately reflect risks of private capitals in the mining industry, that is, instead of risk free threshold, it should be risk adjsuted tax free threshold.
3. Exempt the existing mining production and already invested and planned investment, with a provision that if the mineral prices are higher relative to some benchmark, then tax on those higher prices.
4. Determine what rate to tax above the risk adjusted tax free threshold.
5. While different minerals should be treated in the same way in principle, low value mineral products should be exempt from the tax. Alternatively, only in extremely rare cases where it is very clear to identify that the risks to private capital are different, a different risk adjustment be applied.
PS: I have developed another idea that may look better than any of the current resources tax proposals or other ideas, see http://mrlincolns.blogspot.com/2010/06/true-super-profits-tax-on-mineral.html
The report says that "THE Rudd government is considering modifying the resource super-profits tax for the burgeoning coal-seam gas industry and changing the rules on the 40 per cent tax for different minerals - the first sign of compromise in its damaging battle with miners."
A number of broad principles should be adopted to fix the RSPT.
1. Abandon the idea of being an equity partner with mining companies, irrespective the level of partnership. The tax should be a royalty, not a return to equity.
2. Raise the tax free threshold to adequately reflect risks of private capitals in the mining industry, that is, instead of risk free threshold, it should be risk adjsuted tax free threshold.
3. Exempt the existing mining production and already invested and planned investment, with a provision that if the mineral prices are higher relative to some benchmark, then tax on those higher prices.
4. Determine what rate to tax above the risk adjusted tax free threshold.
5. While different minerals should be treated in the same way in principle, low value mineral products should be exempt from the tax. Alternatively, only in extremely rare cases where it is very clear to identify that the risks to private capital are different, a different risk adjustment be applied.
PS: I have developed another idea that may look better than any of the current resources tax proposals or other ideas, see http://mrlincolns.blogspot.com/2010/06/true-super-profits-tax-on-mineral.html
2010-06-15
Gang of Two or Gang of Four
Comments on Glenn Milne “Tax backlash leaves Gang of Two isolated”, 15/06/2010, http://www.theaustralian.com.au/news/opinion/tax-backlash-leaves-gang-of-two-isolated/story-e6frg6zo-1225879648020
Gang of Two means Rudd and Swan. Gang of Four also includes Gillard and Tanner. They are all guilty of the significant policy errors and mistakes by the Rudd government, although at the moment, it is the Gang of Two who are in deep trouble because of the RSPT impasse.
In order for the government to survive, it appears that someone or people among the Gang of Four have to be held responsible, because the Rudd government has got to a stage and situation that it has no room to move but to retreat significantly from the RSPT.
It may be Rudd or Swan along, or both. But politics is not necessarily rational.
It will be interesting to see what will happen and when it will happen.
Gang of Two means Rudd and Swan. Gang of Four also includes Gillard and Tanner. They are all guilty of the significant policy errors and mistakes by the Rudd government, although at the moment, it is the Gang of Two who are in deep trouble because of the RSPT impasse.
In order for the government to survive, it appears that someone or people among the Gang of Four have to be held responsible, because the Rudd government has got to a stage and situation that it has no room to move but to retreat significantly from the RSPT.
It may be Rudd or Swan along, or both. But politics is not necessarily rational.
It will be interesting to see what will happen and when it will happen.
Rudd's problems his own making - even Bishop could not help Rudd much
Comments on Peter Beattie “Rudd needs a Bishop to tell him the truth”, 15/06/2010, http://www.theaustralian.com.au/news/opinion/rudd-needs-a-bishop-to-tell-him-the-truth/story-e6frg6zo-1225879621648
If there had been a Bishop with Rudd it could have been a little better but probably by much.
It is not just others but also the main person to be advised to be important in that business.
Rudd's leadership style in combination with his success in the last election has been his own downfall.
If there had been a Bishop with Rudd it could have been a little better but probably by much.
It is not just others but also the main person to be advised to be important in that business.
Rudd's leadership style in combination with his success in the last election has been his own downfall.
2010-06-12
Dump the Treasurer and the RSPT and change tactics
Comments on Paul Kelly “Cornered by his own trap”, 12/06/2010, http://www.theaustralian.com.au/news/opinion/cornered-by-his-own-trap/story-e6frg6zo-1225878635983
The only feasible way solution is to acknowledge that the announced RSPT is flawed and attribute the flaws to its designer, the Henry tax review to distance the government from it or at least to create an acceptable excuse for the government, so it can have some room to manoeuvre and turn its political fortune around.
Either the PM, or the Treasurer should take full responsibility for that, although it is more likely that the Treasurer should, give that the RSPT has been the product of his department.
Then the next step is to replace the RSPT with a similar PRRT and call it MRRT that exempts all existing mining production.
Some other details such as the relationship between the existing state royalties and the federal MRRT can be worked out in negotiations over the next months.
In the media and longer run, the PM needs to change his style of leadership and replace his key advisors.
He needs to be more trustful to other cabinet colleagues. The over centralisation and control freak never work well on very broad tasks like the running a country.
He needs to have more practical advisors with workable policies and policy solutions. The idea to have people work dog years is never to be admired or adopted.
Failing to do that, he has no options by to pass the leadership to another person after the next election.
The only feasible way solution is to acknowledge that the announced RSPT is flawed and attribute the flaws to its designer, the Henry tax review to distance the government from it or at least to create an acceptable excuse for the government, so it can have some room to manoeuvre and turn its political fortune around.
Either the PM, or the Treasurer should take full responsibility for that, although it is more likely that the Treasurer should, give that the RSPT has been the product of his department.
Then the next step is to replace the RSPT with a similar PRRT and call it MRRT that exempts all existing mining production.
Some other details such as the relationship between the existing state royalties and the federal MRRT can be worked out in negotiations over the next months.
In the media and longer run, the PM needs to change his style of leadership and replace his key advisors.
He needs to be more trustful to other cabinet colleagues. The over centralisation and control freak never work well on very broad tasks like the running a country.
He needs to have more practical advisors with workable policies and policy solutions. The idea to have people work dog years is never to be admired or adopted.
Failing to do that, he has no options by to pass the leadership to another person after the next election.
2010-06-07
The RSPT and Brown tax - what are the rationales as a rent tax?
Comments on Ben Smith “Government should pay up front for its share of mining companies' costs”, 7/06/2010, http://www.theaustralian.com.au/news/opinion/government-should-pay-up-front-for-its-share-of-mining-companies-costs/story-e6frg6zo-1225876178390
While the rational and its niceties of a Brown tax may be very clear to some economists, it is unlikely to be so for most people.
Now let's leave the government's proposed RSPT aside and focus completely on the Brown tax argument.
If that is good as it can get as claimed, then why 40%, not any other percent, say 80%, or 10%?
The partner approach of the Brown tax makes the rent argument superfluously unnecessary.
So, in the end, is it a rent tax, or tax, or purely return to a compulsory business partner?
PS: Ben Smith is among the 20 leading economists who made an open statement in support the government's RSPT. It is unclear what relationship of this post to that statement to me now.
PPS: I should point out that Ben was one of my supervisors to my PhD study at the ANU in early 1990s, so I know him well and respect him very much.
While the rational and its niceties of a Brown tax may be very clear to some economists, it is unlikely to be so for most people.
Now let's leave the government's proposed RSPT aside and focus completely on the Brown tax argument.
If that is good as it can get as claimed, then why 40%, not any other percent, say 80%, or 10%?
The partner approach of the Brown tax makes the rent argument superfluously unnecessary.
So, in the end, is it a rent tax, or tax, or purely return to a compulsory business partner?
PS: Ben Smith is among the 20 leading economists who made an open statement in support the government's RSPT. It is unclear what relationship of this post to that statement to me now.
PPS: I should point out that Ben was one of my supervisors to my PhD study at the ANU in early 1990s, so I know him well and respect him very much.
Stop the NBN rot
Comments on Matthew Denholm “Just 16 per cent tipped to take up NBN”, 7/06/2010, http://www.theaustralian.com.au/news/just-16pc-tipped-to-take-up-nbn/story-e6frg6n6-1225876225571
This is why the government is a very poor economic manager and an even worse budget manager.
In that sense, it is encouraging that the government is demonstrating it in full in so many areas full of mistakes, errors and wastes in current projects.
It will be good to stop its further rotting.
That time is coming.
To just quote the first paragraphs from the report:
"ONLY 16 per cent of homes and businesses passed by national broadband network fibre-optic would choose to connect to it, even after 15 years.
The surprisingly low estimates were prepared by the Tasmanian government and have been released to The Australian under Freedom of Information law, in a ruling by state Ombudsman Simon Allston.
Also released are documents showing Tasmania initially wanted the NBN rolled out mostly via wireless technology - rather than fibre - as a more cost-effective delivery method.
This would appear to support criticisms of the Rudd government's eventual NBN plan for relying chiefly on more expensive optic fibre to deliver high-speed internet."
This is why the government is a very poor economic manager and an even worse budget manager.
In that sense, it is encouraging that the government is demonstrating it in full in so many areas full of mistakes, errors and wastes in current projects.
It will be good to stop its further rotting.
That time is coming.
To just quote the first paragraphs from the report:
"ONLY 16 per cent of homes and businesses passed by national broadband network fibre-optic would choose to connect to it, even after 15 years.
The surprisingly low estimates were prepared by the Tasmanian government and have been released to The Australian under Freedom of Information law, in a ruling by state Ombudsman Simon Allston.
Also released are documents showing Tasmania initially wanted the NBN rolled out mostly via wireless technology - rather than fibre - as a more cost-effective delivery method.
This would appear to support criticisms of the Rudd government's eventual NBN plan for relying chiefly on more expensive optic fibre to deliver high-speed internet."
2010-06-05
Falacy of Rudd approach of constant returns to scale
Rudd is reported to be micro-managing, tight personal contral or contral freak, lack of consultation and short term focus of the media and politics.
He was probably successful in that way during his Queensland bureaucracy. He would be successful in many smaller scale projects or businesses.
He, however, has been unssucessful so far in his prime ministership using the same approach.
Is that due to a mechanical application of constant returns to scale?
I think that could be an explanation.
He was probably successful in that way during his Queensland bureaucracy. He would be successful in many smaller scale projects or businesses.
He, however, has been unssucessful so far in his prime ministership using the same approach.
Is that due to a mechanical application of constant returns to scale?
I think that could be an explanation.
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