Comments on Fabrizio Carmignani "Reducing debt without austerity: Queensland govt strikes fair compromise" 15/07/2015
From what you described, it is purely accounting manipulations and tricks that produce the outcome. If my understanding is correct, accrue accounting as opposed to cash accounting, is a better approach to reflect the real costs (and revenue for that matter) of government activities. It seems that the QLD government is relying retreating to the cash accounting to present a good look but a worse accounting performance by the accrue accounting standard, if my understanding of the author is correct.
The debt shifting to corporations, while still tricky, may be acceptable if those debts are really belonging to those corporations. That makes the QLD government's book look better, but it does not change much in terms of QLD's public debts. It is only a separation of state owned corporations from the government and an accounting shift.
It is interesting that the author applaud to QLD government's accounting manipulations as "strikes fair compromise".
This kind of behaviour from government should not win praises as a matter of standard, particularly from an academia.
Showing posts with label government budget. Show all posts
Showing posts with label government budget. Show all posts
2012-12-06
Government must have a budget constraint
Comments on David Uren "No doubt about it, taxes will have to rise", 6/12/2012, http://www.theaustralian.com.au/business/opinion/no-doubt-about-it-taxes-will-have-to-rise/story-e6frg9qo-1226530770321
I think government should establish a law similar to the California's but with a in-build flexibility, that is, to set a maximum percentage of all revenue to GDP, say 30%.
The current political landscape is unfair, with the ALP increasing spending and the size of government with no limit, while when the opposite political party is in government they reduce spending reduce debts.
It will be a fair game for political parties to have a hard budget constraint and it should be the same for both political sides.
If any party wants to go over that limit, it needs a referendum. If any party break the rules, the ministers and the caucus must pay from their own income and assets.
Only in that way, will political parties focus on creativity and innovation in policy to generate the maximum benefit to the nation for the given constraint.
Working families have to live within their means. Government should also live within its means. AND its means should only be a proportion of the size of the economy.
I think government should establish a law similar to the California's but with a in-build flexibility, that is, to set a maximum percentage of all revenue to GDP, say 30%.
The current political landscape is unfair, with the ALP increasing spending and the size of government with no limit, while when the opposite political party is in government they reduce spending reduce debts.
It will be a fair game for political parties to have a hard budget constraint and it should be the same for both political sides.
If any party wants to go over that limit, it needs a referendum. If any party break the rules, the ministers and the caucus must pay from their own income and assets.
Only in that way, will political parties focus on creativity and innovation in policy to generate the maximum benefit to the nation for the given constraint.
Working families have to live within their means. Government should also live within its means. AND its means should only be a proportion of the size of the economy.
2011-04-13
Reforming budgeting processes to raise quality of fiscal policy
Comments on Stephen Kirchner “Trimming to fit budget's reduced revenue”, 13/04/2011, http://www.theaustralian.com.au/national-affairs/commentary/trimming-to-fit-budgets-reduced-revenue/story-e6frgd0x-1226038104396
It is always the case that both the macroeconomic level and balance of a government budget and its content of both expenditure and revenue are important.
Textbook macroeconomics assumes that the content of both expenditure and revenue measures is as good as it could get, then what is left is the level and balance of the budget.
In reality, the content should be more important, since it is there the microeconomic efficiency comes in.
Currently most governments don't publish the real ranking of expenditures in terms of their social and economic benefits, similar to private or government investments.
Maybe a far reaching fiscal reform is to publish estimates of the social and economic benefit of each significant budget expenditure item, including the average and marginal benefits.
Should such a reform is undertaken, then people can scrutinise government budget in a much consistent and transparent way.
More importantly, government has to work hard to get its expenditure right, better or close to best and it has explain major discrepancies or departures from higher social and economic returns expenditure to lower ones.
That will really improve the quality of government fiscal policy.
PS: To be fair to Treasury and Finance departments bureaucrats, they may have done a lot of calculations and estimates (though not necessarily in the explicit concept of social and economic benefits that I just wrote), but not many or much have been published except used by governments in their budget spins.
Secondly, a framework needs to be developed to do the job of estimating social and economic benefits of government expenditures. That framework may evolve and be perfected through practice.
It is always the case that both the macroeconomic level and balance of a government budget and its content of both expenditure and revenue are important.
Textbook macroeconomics assumes that the content of both expenditure and revenue measures is as good as it could get, then what is left is the level and balance of the budget.
In reality, the content should be more important, since it is there the microeconomic efficiency comes in.
Currently most governments don't publish the real ranking of expenditures in terms of their social and economic benefits, similar to private or government investments.
Maybe a far reaching fiscal reform is to publish estimates of the social and economic benefit of each significant budget expenditure item, including the average and marginal benefits.
Should such a reform is undertaken, then people can scrutinise government budget in a much consistent and transparent way.
More importantly, government has to work hard to get its expenditure right, better or close to best and it has explain major discrepancies or departures from higher social and economic returns expenditure to lower ones.
That will really improve the quality of government fiscal policy.
PS: To be fair to Treasury and Finance departments bureaucrats, they may have done a lot of calculations and estimates (though not necessarily in the explicit concept of social and economic benefits that I just wrote), but not many or much have been published except used by governments in their budget spins.
Secondly, a framework needs to be developed to do the job of estimating social and economic benefits of government expenditures. That framework may evolve and be perfected through practice.
2011-03-31
How to fix USA Inc.'s Red
Comments on Mary Meeker “USA Inc.: Red, White, and Very Blue”, 24/02/2011, http://www.businessweek.com/magazine/content/11_10/b4218000828880.htm
It shouldn't be that difficult at all if the USA Inc can change its own thinking and behaviour to a more realistic level.
First, for example, if it does not continue the thinking it still has the means to keep its military dominance to the degree it has got now and reduce its military spending so just to be the same as the current world second largest military spending, then it can save a lot its taxpayer's money and contribute significantly to repairing its budget deficits.
It will not cause any security and defence danger to itself at all.
Secondly, it could take urgent actions in tackling climate change and reducing carbon emissions by applying a carbon tax and gradually increasing the tax.
This tax has dual functions: a. to join the other nations in action to limit adverse climate change or at least to act as insurance for the future of its citizens; b. it can raise revenue and reduce budget deficits.
They are only two of many options that the USA Inc has. The only question is: is it prepared to do the right and reasonable things?
It shouldn't be that difficult at all if the USA Inc can change its own thinking and behaviour to a more realistic level.
First, for example, if it does not continue the thinking it still has the means to keep its military dominance to the degree it has got now and reduce its military spending so just to be the same as the current world second largest military spending, then it can save a lot its taxpayer's money and contribute significantly to repairing its budget deficits.
It will not cause any security and defence danger to itself at all.
Secondly, it could take urgent actions in tackling climate change and reducing carbon emissions by applying a carbon tax and gradually increasing the tax.
This tax has dual functions: a. to join the other nations in action to limit adverse climate change or at least to act as insurance for the future of its citizens; b. it can raise revenue and reduce budget deficits.
They are only two of many options that the USA Inc has. The only question is: is it prepared to do the right and reasonable things?
2009-09-08
Australia should start exit from stimulus now but gradually!
Comments on Michael Stutchbury “Unwind the stimulus”, 8/09/2009, http://blogs.theaustralian.news.com.au/currentaccount/index.php/theaustralian/comments/unwind_the_stimulus/
Michael Stutchbury is completely correct in arguing for unwinding the stimulus. The government should do it now and exit gradually from its stimulus.
The government should and must start to mind down its stimulus to the economy. The Treasurer, the Prime Minister and other government figures are wrong in saying that the opposition leader Turnbull is a loner in arguing for exit.
He is not and whatever the G20 or IMf have said recently cannot be used against him. This is because while the G20 or IMF said may be applicable to the average scenario of the world economy, or most industrialised economies, they are not applicable to every economy and Australia is such an economy.
If the government wants to be economically responsible and conservative, it must act now to exit the stimulus. It must have its own brain as opposed to simply and mechanically follow what the G20 or the IMF say for the world average scenario.
The government should and must put politics aside otherwise its reckless spending will come back and bite it in the future.
While it may not always be very easy to exit, there are ways to do it. Even for the school spending, it can relax the requirement for school halls or libraries and change to other more needy, useful and productive purposes and give schools longer time to complete them without forfeiting any schools' entitlement.
It can adjust its stimulus measures and at least the timing of some projects so to reduce their short term stimulating impact and be also more productive and less costly.
Politically, it would also reduce the government's vulnerability in terms of being attacked for inefficient and wasteful spending, and increasing budget deficits and debts unnecessarily.
Doing exit from stimulus can only benefit Australia and the government and do no harm to either. So why not do it and start now?
That is common sense. The government should heed it closely.
Michael Stutchbury is completely correct in arguing for unwinding the stimulus. The government should do it now and exit gradually from its stimulus.
The government should and must start to mind down its stimulus to the economy. The Treasurer, the Prime Minister and other government figures are wrong in saying that the opposition leader Turnbull is a loner in arguing for exit.
He is not and whatever the G20 or IMf have said recently cannot be used against him. This is because while the G20 or IMF said may be applicable to the average scenario of the world economy, or most industrialised economies, they are not applicable to every economy and Australia is such an economy.
If the government wants to be economically responsible and conservative, it must act now to exit the stimulus. It must have its own brain as opposed to simply and mechanically follow what the G20 or the IMF say for the world average scenario.
The government should and must put politics aside otherwise its reckless spending will come back and bite it in the future.
While it may not always be very easy to exit, there are ways to do it. Even for the school spending, it can relax the requirement for school halls or libraries and change to other more needy, useful and productive purposes and give schools longer time to complete them without forfeiting any schools' entitlement.
It can adjust its stimulus measures and at least the timing of some projects so to reduce their short term stimulating impact and be also more productive and less costly.
Politically, it would also reduce the government's vulnerability in terms of being attacked for inefficient and wasteful spending, and increasing budget deficits and debts unnecessarily.
Doing exit from stimulus can only benefit Australia and the government and do no harm to either. So why not do it and start now?
That is common sense. The government should heed it closely.
2009-09-07
Turnbull may not necessarily paint himself into the coner
Comments on Glenn Milne “Debt rhetoric paints Malcolm Turnbull into a corner”, 7/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26035135-33435,00.html
While there might be a risk, Turnbull should have a strong point to run, not just for now, but also in leading up to the next election and the opposition’s broad budgetary strategy for going to the next election.
It will not be difficult to do it. It needs some prerequisites. The first one is that it needs that the Rudd government could be exposed to budgetary imprudence. That has been and will continue to be exposed from now on. The school’s wasteful spending and costs overrun is a primary example. The federal government’s Indigenous housing fiasco in the Northern Territory is another. So Turnbull and the opposition have got some real facts already on their hands. The question is how to best use them to their greatest political advantage.
The second one is the ability to prepare a broad budget that is within the federal government’s overall spending but in a smarter design either to deliver a better outcome or the same outcome with smaller spending and hence smaller budget deficit and debt implications. It will not be very easy to do it, but should not be too hard for the coalition if they prepare themselves well and start to do it from now.
The key lies that the opposition needs to hammer the government on budget management and spending priority and efficiency. On that one, the opposition has an advantage.
If the opposition uses its advantages in managing budgets and debts well, it has a very good chance to either significantly closing the gap with the government or win the next election.
With due respect to Glenn Milne, he may be wrong on this point.
While there might be a risk, Turnbull should have a strong point to run, not just for now, but also in leading up to the next election and the opposition’s broad budgetary strategy for going to the next election.
It will not be difficult to do it. It needs some prerequisites. The first one is that it needs that the Rudd government could be exposed to budgetary imprudence. That has been and will continue to be exposed from now on. The school’s wasteful spending and costs overrun is a primary example. The federal government’s Indigenous housing fiasco in the Northern Territory is another. So Turnbull and the opposition have got some real facts already on their hands. The question is how to best use them to their greatest political advantage.
The second one is the ability to prepare a broad budget that is within the federal government’s overall spending but in a smarter design either to deliver a better outcome or the same outcome with smaller spending and hence smaller budget deficit and debt implications. It will not be very easy to do it, but should not be too hard for the coalition if they prepare themselves well and start to do it from now.
The key lies that the opposition needs to hammer the government on budget management and spending priority and efficiency. On that one, the opposition has an advantage.
If the opposition uses its advantages in managing budgets and debts well, it has a very good chance to either significantly closing the gap with the government or win the next election.
With due respect to Glenn Milne, he may be wrong on this point.
2009-08-13
Be a responsible government and manage the economy and budget well
Comments on Alan Wood “There's plenty to borrow, but Rudd will need to cut debt”, 13/08/2009, http://www.theaustralian.news.com.au/story/0,25197,25920869-5013578,00.html
There are several issues raised in this article. Firstly, it is not just the level of budget deficit and government debt but also the quality of government spending that leads to the deficits and debts that will matter. While it is difficult to judge the level of the projected budget deficit is the appropriate or not at the time of the budget being made, it has now been shown that some of the government spending in its budget measures are wasteful and could have been better targeted and managed to either reduce the size of deficits or achieve greater and better outcomes.
Secondly, Australia is a small country internationally, so the impact of its borrowing internationally will not have a significant impact on the international capital market, although the costs of borrowing both publicly and privately will be higher due to tightening internationally capital market. That impact may be sizeable in terms of the dollar amount, but that should not be a worry itself.
Thirdly, it is absolutely an imperative for any government especially the Rudd one to guard against unnecessary government spending and be smarter, highly focused and well targeted in its fiscal policy to minimise spending and maximise the budget impact on growth and employment. The government must wind down its deficits and reduce the debts as early as possible and stand ready at any time when and if appropriate to do that.
Rudd and his government, have a huge responsibility to return the trust the Australian public has given them and do a better job than they have done so far. They paid some learning fees in how to manage the economy. They should learn rapidly enough to get on top of their jobs, starting from now.
There are several issues raised in this article. Firstly, it is not just the level of budget deficit and government debt but also the quality of government spending that leads to the deficits and debts that will matter. While it is difficult to judge the level of the projected budget deficit is the appropriate or not at the time of the budget being made, it has now been shown that some of the government spending in its budget measures are wasteful and could have been better targeted and managed to either reduce the size of deficits or achieve greater and better outcomes.
Secondly, Australia is a small country internationally, so the impact of its borrowing internationally will not have a significant impact on the international capital market, although the costs of borrowing both publicly and privately will be higher due to tightening internationally capital market. That impact may be sizeable in terms of the dollar amount, but that should not be a worry itself.
Thirdly, it is absolutely an imperative for any government especially the Rudd one to guard against unnecessary government spending and be smarter, highly focused and well targeted in its fiscal policy to minimise spending and maximise the budget impact on growth and employment. The government must wind down its deficits and reduce the debts as early as possible and stand ready at any time when and if appropriate to do that.
Rudd and his government, have a huge responsibility to return the trust the Australian public has given them and do a better job than they have done so far. They paid some learning fees in how to manage the economy. They should learn rapidly enough to get on top of their jobs, starting from now.
2009-06-19
An urgent need for government accountability to taxpayers money
Comments on Michael Stutchbury “Projects Keynes would approve”, 19/06/2009, http://blogs.theaustralian.news.com.au/currentaccount/index.php/theaustralian/comments/projects_keynes_would_approve/
Michael, it has to be (d). (note: (d) is one of the choices of answers Michael asked in his article. The choices are: whether (a) cynical politics, (b) questionable education policy, (c) guaranteed to produce stuff-ups and, consequently, cover-ups or (d) all of the above? To provide some context, I include quote from his article as follows:)
HOW ironic that the Rudd government’s “education revolution” has been conscripted into its crash-bang budget stimulus.
The short-sighted priority of Julia Gillard’s Building the Education Revolution program is not to ensure that the next generation of kids get better schooling.
Instead, the explicit $14.7billion priority is to hire brickies, chippies and sparkies to build libraries, halls and gyms rapidly at thousands of primary schools in every federal electorate, ASAP.
It’s the classic policy conflict of Keynesian short-term budget stimulus packages.
The demand to boost the economy now means much of the debt-financed investment will be wasted.
John Maynard Keynes even suggested the unemployed could be paid to dig holes and fill them in again.
It should be the second best prize of simplistic Keynesian after the dig and fill best prize. This is another example that Rudd / Swan Labour government is incapable of managing the economy and budget.
Shouldn't we have an economic court to bring the economic vandalisms to justice? They should include some top bureaucrats, probably. Otherwise, taxpayers money will be continue to be wasted, because there are few constraints to a government to do it. We have prosecutions of business people for fraud. Why don’t we have prosecutions of politicians for such obvious public economic fraud?
Michael, it has to be (d). (note: (d) is one of the choices of answers Michael asked in his article. The choices are: whether (a) cynical politics, (b) questionable education policy, (c) guaranteed to produce stuff-ups and, consequently, cover-ups or (d) all of the above? To provide some context, I include quote from his article as follows:)
HOW ironic that the Rudd government’s “education revolution” has been conscripted into its crash-bang budget stimulus.
The short-sighted priority of Julia Gillard’s Building the Education Revolution program is not to ensure that the next generation of kids get better schooling.
Instead, the explicit $14.7billion priority is to hire brickies, chippies and sparkies to build libraries, halls and gyms rapidly at thousands of primary schools in every federal electorate, ASAP.
It’s the classic policy conflict of Keynesian short-term budget stimulus packages.
The demand to boost the economy now means much of the debt-financed investment will be wasted.
John Maynard Keynes even suggested the unemployed could be paid to dig holes and fill them in again.
It should be the second best prize of simplistic Keynesian after the dig and fill best prize. This is another example that Rudd / Swan Labour government is incapable of managing the economy and budget.
Shouldn't we have an economic court to bring the economic vandalisms to justice? They should include some top bureaucrats, probably. Otherwise, taxpayers money will be continue to be wasted, because there are few constraints to a government to do it. We have prosecutions of business people for fraud. Why don’t we have prosecutions of politicians for such obvious public economic fraud?
2009-06-15
Peter Costello - a fine person and excellent Treasurer
Peter Costello, the longest serving former federal Treasurer, is retiring from politics. He will be best remembered for his enormous and unique contributions to managing very successfully the Australian economy and federal budgets during his 12 years as Treasurer.
During their rein, the Howard / Costello government eliminated the federal government's debt of nearly $100 billion they had inherited when they came to power in 1996, and accumulated net assets by the end of the Howard and Costello era.
While there was some luck involved, no one should underestimate Costello’s management of the economy and the budget.
Costello will also be remembered for his lost / foregone opportunities of becoming Prime Minster and the coalition leadership. Judged from his attitude towards a number of issues, such as climate change policies, national reconciliation, republic, Costello seemed to be a fairly moderate conservative and progressive liberal, with sharp intellectuals, though questionable killing political instinct and urge.
The most enduring contributions of the Howard / Costello government to the Australian economy have been the introduction of GST in 2000 that enabled the reduction in personal tax rates and the abolition of a number of State inefficient taxes.
The coalition government also introduced far reaching industrial relations reforms, but they became one of the factors that contributed to the coalition’s election loss in 2007 and the Rudd / Gillard Labour government is dismantling those reforms that are deemed unfair by Labour.
It is nice and pleasing to see that both Rudd and Swan have praised Costello's contributions. When a political figure like Costello is retiring from politics, it is time to put partisan politics aside and give due credit to every politician's contribution to Australian national affairs and welfare. By doing this, they are also doing credit to themselves. I command the Prime Minister and the Treasurer for their acts.
Let’s hope Costello will continue to use his enormous talents and make contributions to whatever he does in his pursuit of a private life and career.
During their rein, the Howard / Costello government eliminated the federal government's debt of nearly $100 billion they had inherited when they came to power in 1996, and accumulated net assets by the end of the Howard and Costello era.
While there was some luck involved, no one should underestimate Costello’s management of the economy and the budget.
Costello will also be remembered for his lost / foregone opportunities of becoming Prime Minster and the coalition leadership. Judged from his attitude towards a number of issues, such as climate change policies, national reconciliation, republic, Costello seemed to be a fairly moderate conservative and progressive liberal, with sharp intellectuals, though questionable killing political instinct and urge.
The most enduring contributions of the Howard / Costello government to the Australian economy have been the introduction of GST in 2000 that enabled the reduction in personal tax rates and the abolition of a number of State inefficient taxes.
The coalition government also introduced far reaching industrial relations reforms, but they became one of the factors that contributed to the coalition’s election loss in 2007 and the Rudd / Gillard Labour government is dismantling those reforms that are deemed unfair by Labour.
It is nice and pleasing to see that both Rudd and Swan have praised Costello's contributions. When a political figure like Costello is retiring from politics, it is time to put partisan politics aside and give due credit to every politician's contribution to Australian national affairs and welfare. By doing this, they are also doing credit to themselves. I command the Prime Minister and the Treasurer for their acts.
Let’s hope Costello will continue to use his enormous talents and make contributions to whatever he does in his pursuit of a private life and career.
2009-05-07
Rudd and Swan should heed this
Comments on Heather Ridout’s “Spend but don't squander”, 7/05/2009, The Australian, http://www.theaustralian.news.com.au/story/0,25197,25439460-5017272,00.html
While basically agree with most arguments of the author’s, I would disagree on one thing. Cash bonus handouts are unlikely to have the desirable effects to stimulate the economy, to minimise budget deficit, or to increase productivity. In other words, they will not achieve any meaningful policy objectives in the current economic environment. To the contrary, they are a inter-generational redistribution, leaving/increasing unnecessary debts burden for future generations.
We all understand that the world economy has been in big trouble and there will be an adverse impact on Australia. However, by its own reckless doing, the government has made its job to frame next Tuesday's federal budget much harder than it could and should be.
Two cash handouts wasting tens of billions taxpayers money are prime examples. The unrealistic and wishful thinking in terms of having a world most advanced national broadband network with ballooning costs to the proposed $43 billion dramatically escalating from its election promised about $4 billion public money is undoubtedly another.
Yes, few people are arguing against meaningful and prudent fiscal stimulus for the economy and jobs. It is right to invest in education, in productive infrastructure, in job creation, in the most productive way. But the public are certainly worrying the government’s poor performance shown so far.
The public has given the Rudd government a rather longer honeymoon period, after a long period of living with the previous stubborn government for its wrong and unforgiving mistakes in taking part in the Iraq war, in refusing to rectifying the Kyoto global agreement on climate change, in swing the industrial relations too far to the right at the neglect of most working people, even though they should be credited with good management of the economy and the budget. It will not take too long for the public to be fed up with an incompetent government if it does not improve its performance and lift its games. It is the public’s hope that the current government learns from its mistakes and does quickly.
While basically agree with most arguments of the author’s, I would disagree on one thing. Cash bonus handouts are unlikely to have the desirable effects to stimulate the economy, to minimise budget deficit, or to increase productivity. In other words, they will not achieve any meaningful policy objectives in the current economic environment. To the contrary, they are a inter-generational redistribution, leaving/increasing unnecessary debts burden for future generations.
We all understand that the world economy has been in big trouble and there will be an adverse impact on Australia. However, by its own reckless doing, the government has made its job to frame next Tuesday's federal budget much harder than it could and should be.
Two cash handouts wasting tens of billions taxpayers money are prime examples. The unrealistic and wishful thinking in terms of having a world most advanced national broadband network with ballooning costs to the proposed $43 billion dramatically escalating from its election promised about $4 billion public money is undoubtedly another.
Yes, few people are arguing against meaningful and prudent fiscal stimulus for the economy and jobs. It is right to invest in education, in productive infrastructure, in job creation, in the most productive way. But the public are certainly worrying the government’s poor performance shown so far.
The public has given the Rudd government a rather longer honeymoon period, after a long period of living with the previous stubborn government for its wrong and unforgiving mistakes in taking part in the Iraq war, in refusing to rectifying the Kyoto global agreement on climate change, in swing the industrial relations too far to the right at the neglect of most working people, even though they should be credited with good management of the economy and the budget. It will not take too long for the public to be fed up with an incompetent government if it does not improve its performance and lift its games. It is the public’s hope that the current government learns from its mistakes and does quickly.
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