Thursday 5 March 2015

How can we take them seriously? - The AIM Network

How can we take them seriously?

March 6, 2015
Written by: John Kelly
6 Replies

The inter-generational report released yesterday
is no more than a crafted opportunity for those on the conservative
side of politics to scaremonger and justify their evil intent. They have
tailored a document to suit their own agenda. Just who do these pompous
pretenders think they are?

The report itself
tells us nothing we didn’t already know, or could not have suspected. It
paints a picture very similar to 2010 when I recall the media went into
hyper drive over the prospect of a BIG Australia. The fact is a larger
world population is inevitable which means our future will be no
different from those experienced in most OECD countries.

Each
nation faces increased health costs and aged care planning. Everything
will increase proportionately including revenues from greater work
participation, all of which will be serviced through innovation,
creativity, new technologies and so on. So what is all the fuss about?

To
suggest that those living in 2055 will somehow have a poorer standard
of living than we do today because we didn’t plan properly, is silly.
Each generation throughout history has enjoyed a better lifestyle than
the one before. Why would the next three generations be any different?
Each generation assumes responsibility for its own destiny and acts
accordingly.

One of the more interesting claims
is that there will be proportionately fewer numbers in the workforce,
thus putting pressure on our ability to provide adequate aged care for
older Australians. That trend has been occurring for decades and is the
product of families having fewer children.

To
compensate for that, it would seem logical to increase the immigration
intake with the emphasis on young families, effectively slowing down the
ratio of those employed to the ageing rate…oops, hang on, that’s what
successive governments have been doing, until now. But not this
government.

It chooses to continue increasing the
numbers of 457 visas for overseas workers, suppressing employment
opportunities for those out of work today and literally contradicting
itself and acting counter productively to its own findings.

It makes it very hard to take anything they say seriously.

While
we clearly need responsible planning to meet the challenges that occur
with what are quite natural demographic shifts, i.e. an ageing
population, that doesn’t mean we must run budget surpluses to achieve
it.

Budget surpluses merely alter the sectoral
balances; in this case, money withdrawn by government results in a
savings reduction and/or increased debt borne by the private domestic
sector.

If governments continue to try to run
budget surpluses to keep public debt low, that strategy will ensure
further deterioration in household savings until such time as aggregate
demand decreases to the point where economic activity slows down,
unemployment increases, revenues fall and real living standards decline.

If
this inter generational report highlights anything it is that this
government has no idea how to address it. Everything the report tells us
contradicts what the government is doing. In effect, we are undermining
our future prosperity and missing a wonderful opportunity to expand our
economy exponentially.

And still, not a word about the impact of climate change. What an incompetent bunch of boofheads.

Monday 2 March 2015

The worst wages growth in 20 years is Joe Hockey's 'good news'

Greg Jericho

The treasurer ignores the fact that the 2.8% growth in average wages
he touted in question time is actually the third-worst annual growth
rate since 1994

**Wage rises below the inflation rate do not provide workers with ‘greater prosperity’. Photograph: Mick Tsikas/AAP**

Monday 2 March 2015 14.54 AEDT

Last modified on Monday 2 March 2015 16.57 AEDT

589

Comments
145

Last Thursday, during question time,
Joe Hockey was asked to “outline how the government is building jobs,
growth and opportunity and how will this assist all Australians.”
Bizarrely, he chose to respond by suggesting “there has been more good
news today” in reference “average weekly earnings”, despite Australians’ earnings growing by less now than they have for more than 20 years.

In delivering the “good news” Hockey told parliament that “the
average wage in Australia has now increased to $76,800 a year. It
increased by 2.8% this year”. He noted this meant the average wage for
Australians “works out at $1,476.30 a week”.

Firstly, Hockey got a bit confused. The 2.8% growth referred to the
original data, while the $1,476.30 referred to the trend data – which
only grew by 2.7%. He was referring to full-time employment only, not
the average earnings of all workers – that is just $1,128.90 a week.

But what is worse is the treasurer’s suggestion that these growth figures were in any way “good news”.

They were, in fact, terrible.

The 2.8% growth (or 2.7%, to use the trend data) was the third-worst
annual growth going back to 1994. And the worst result occurred in the
12 months to May 2014 which saw just 2.4% growth:

And had Hockey referred to the average growth earnings for all
workers, rather than just full-time workers, he would have been boasting
about the “good news” of just 1.3% annual growth – the lowest growth
since August 1999.

But rather than note this poor performance, Hockey instead argued that “with the higher wages comes greater prosperity”.

Now certainly higher wages does as a rule mean greater prosperity –
for generally it will mean there is stronger jobs growth and greater
demand for workers and thus, all in all, a stronger economy.

But right now, by his own definition, Hockey is presiding over the
worst period of rising prosperity this century in over 20 years!

Moreover, the weekly earnings figures that he refers to don’t
actually measure “wages” but “average earnings”. If you work for $15 an
hour and this week you worked five more hours than last week, your
earnings will have risen, but your wage would not.

To look at actual wages growth, the best measure is the ABS’s wages price index – as this attempts to look at actual increases in wage rates rather than earnings which may be affected by hours worked.

The latest figures were also released last week. The annual growth of
2.5% was the lowest since the ABS began calculating the rate in 1998:

If strong wages growth is good news, then Hockey best keep quiet.

To give an idea of how weak wages growth is at the moment, since 1998
quarterly wages growth in trend terms has only been below 0.7% six
times; three of those six times have occurred in the past three
quarters; and five of them have occurred in the past seven:

What is also important when looking at wages is how fast they are
growing compared with inflation. If they are rising faster than
inflation then “real wages” are growing – because it means you are able
to buy more things with your wages than you could a year ago.

Right now real wages are barely growing above inflation and they have
grown by less than the 0.7% along term average since March 2013. This
is important because while Hockey was bizarrely gloating about strong
wages growth, in Senate estimates
last week, senators Abetz and Bernardi were equally bizarrely trying to
suggest that proposed wage rises to public servants – which are well
below inflation – are actually generous.

Public sector wages growth in the past year was 2.7% – the equal
lowest on record. The growth of wages for public servants in the ACT – a
good proxy for commonwealth public servants – was just 1.4%, the second
lowest 12-month period ever (the lowest was recorded three months ago).

During the estimates hearings, Abetz and Bernardi worked with the new
public service commissioner, John Lloyd, to come up with some truly
idiotic short-term logic to calculate inflation and low pay offers for
commonwealth public servants, such as the 3.16% over three years rise offered to those working in the Department of Defence, the 0.8% annual pay rise offered to those working for the Australian Taxation Office, or the mere 1.4% rise over three years offered to those working for Abetz’s own Department of Employment.

Lloyd, who was appointed to the post in December
and who previously worked as a director for the rightwing Institute of
Public Affairs, is not someone you would say unions see eye-to-eye with,
but it was still disappointing to see him go along with the idiocy on
low wages served up to him by senators Bernardi and Abetz last Monday.

Bernardi and Abetz suggested that because the Reserve Bank was
estimating inflation to June this year would grow by just 1.25%, the
government’s policy that no public servant would receive a pay rise over
the next three years of above 1.5% would in some cases see wage rises
that “at least matches inflation” or even “exceed inflation”.

Bernardi even argued that a pay rise of “around 2% or 2.5% would be
substantially in excess of inflation”. “It would,” he argued, “be twice
the inflation rate.”

To this Lloyd replied, “Yes, a 2% increase, of course, is well ahead of inflation, yes.”

The problem for Bernardi, Lloyd and Abetz is that they only bothered
to look forward to the rate of inflation three months to June – ignoring
that three years is rather longer than three months.

Yes, the RBA did indeed predict in its latest Statement on Monetary Policy that inflation in June 2015 would be 1.25%, but a three years wage agreement goes out to the end of 2017 at least.

Conveniently for us, if not for Bernardi, Lloyd and Abetz, the RBA also estimated inflation out to December 2017.

It estimated inflation for both 2016 and 2017 to be between 2.25% and
3.25% – for a mid-point of 2.75%, which means Bernardi’s assertion that
wage rises of “around 2% or 2.5% would be substantially in excess of
inflation” or “twice the inflation rate” is complete crap.

The only reason inflation is so low right now is because in the past
six months petrol prices have fallen around 10%, and because the current
inflation rate includes the fall in power prices due to the removal of
the carbon price in the September 2014 quarter. But after September
2015, that impact will be gone from the annual growth figures – and it
actually has no current impact on quarterly growth.

Most economists expect inflation over the next few years to be below
3%. But suggesting a rise in wages of 1.25% over the next three years
will be in line with inflation is to live in a fantasy world. For a
start, the RBA would not let inflation remain so low for so long as it
is well below its target band of 2%-3%.

Hockey may truly believe that wage rises are good news. If so, I hope
he does something about increasing the current pathetic wage growth. In
the first instance he could have a word with his cabinet colleague and
point out that no matter how much you spin it, wage rises below the
inflation rate do not provide workers with “greater prosperity”.

Saturday 14 February 2015

A leader should not lie - The AIM Network

A leader should not lie

February 15, 2015
Written by:
Kaye Lee
3 Replies

With everyone still reeling from the budget delivered last May,
and distracted by Tony Abbott’s determination to commit political
suicide, Joe Hockey’s MYEFO statement delivered in December passed by with little scrutiny.

In light of recent claims being made by the Prime Minister, the
Treasurer, and the Finance Minister, and in the interest of bringing
some honesty into the discussion, it would be timely to take a closer
look.

The document begins with the statement “Despite a deteriorating
global economy over 2014, the Australian economy continues to grow
solidly.”

This seems completely at odds with the assessment of the Reserve Bank
of Australia whose Governor Glenn Stevens, speaking at a House of
Representatives Economics Committee in Sydney on Friday, said “clear
signs of a near-term strengthening remain unconvincing at this stage.
This is a weaker outcome than we had expected six months ago.”

Joe even contradicts it himself when he says “nominal GDP growth in
2014-15 is expected to be weaker than forecast at Budget, at 1½ per
cent. This would be the weakest nominal GDP growth in a financial year in over 50 years.”

In December 2013, Joe told us in his first MYEFO that “The latest
Private New Capital Expenditure and Expected Expenditure (CAPEX) survey
suggests that resources investment will remain at elevated levels in 2013‑14.”

A year later he is still asserting that “The business environment has
improved since 2013 and costs for all Australians have been reduced as a
result of the abolition of the Carbon Tax and the Minerals Resource
Rent Tax. The abolition of these taxes will encourage investment and job
creation. “

Whilst Joe hopes that eliminating these sources of revenue will
‘encourage’ good results, the reality is that, in Joe’s own words,

“employment growth has not been strong enough to keep up with growth in the labour force.
This has led the unemployment rate to rise slightly. Weaker wage and
employment growth are expected to lower individuals’ income tax receipts
by $2.3 billion in 2014-15 and $8.6 billion over the forward estimates
and increase payments for existing government programmes.

Business investment growth in 2013-14 was weaker than expected, amid a fast decline in resources investment. From
2014‑15, resources investment is expected to start sharply detracting
from growth. The forecast decline in resources investment is now steeper
than it was at the 2013 PEFO, with the sector having become
increasingly focused on containing costs.”

Joe tells us that “The Government has accelerated environmental
assessments and approvals for over 300 major new projects worth over $1
trillion for Australia and these projects are now getting underway” yet
investment projections for future years see a drop of approximately 5%
each year.

Joe reassures us that “Subdued wage growth and the removal of the
carbon tax is helping to contain inflationary pressure, notwithstanding
the inflationary effects of the fall in the Australian dollar. Headline
and underlying inflation are forecast to be 2½ per cent through the year
to both the June quarter of 2015 and the June quarter of 2016.”

In 2012-13, Australia’s first year with a carbon tax ended with underlying inflation of 2.2%.

In August 2013, Treasury released the Pre-Election Economic and
Fiscal Outlook (PEFO), which forecast the budget deficit would hit $30
billion in 2013-14 with deficits totalling $54.6 billion over the
four-year forward estimates. Four months later, Joe Hockey had added
$16.8 billion due to Coalition policy decisions bumping the deficit up
to $47 billion in 2013-14 and $123 billion over the forward estimates.

“The deterioration in the underlying cash balance since the 2013 PEFO is $16.8 billion in the 2013‑14 financial year”

The final budget outcome for 2013-14 turned out to be a deficit of $48.5 billion.

Joe repeatedly tells us that “the budget position is fundamentally
stronger than it would have been under the unsustainable trajectory of
debt and deficits left behind by the former Government.”

Unfortunately for him, due to the Charter of Budget Honesty, he eventually has to state the real figures – since May 2014 there has been a “$43.7 billion deterioration in the budget over the forward estimates. An underlying cash deficit of $40.4 billion is now expected in 2014-15. ”

This compares to PEFO’s forecast of a $24 billion deficit in 2014-15,
$34 billion in MYEFO 2013, and $30 billion in the 2014 budget. Since
May the budget has suffered a further deterioration of $10.4 billion for
the current financial year.

“Total taxation receipts have been revised down by $6.2 billion in
2014-15 and $31.6 billion over the forward estimates. This brings the
total writedown in tax receipts since the Government was elected to over
$70 billion.”

How can this be? Surely eight months into office Joe had access to
the ‘real’ figures? How can he have got his estimates so wrong?

Pages are devoted to this. The short version is

“Declines in commodity prices have resulted in lower forecast company
tax receipts, while weaker wage growth is leading to softer income tax
receipts. These developments have been primarily responsible for the
$31.6 billion write down in tax receipts since Budget.

These commodity price falls have led to a substantial downward
revision to the terms of trade which is now expected to fall by 13½ per
cent in 2014-15 and 3¾ per cent in 2015-16. The forecast
decline in the terms of trade would be the largest fall in the terms of
trade in a financial year since the Australian Bureau of Statistic’s
Annual National Accounts started in 1959-60.”

We contributed to our own demise by flooding the market with iron ore
when demand was low. This drove down the price by 30%, the strategy
being to eliminate some of our competitors. It didn’t work.

“While some unprofitable supply did exit the market, the response has
been surprisingly limited to date, with much of China’s high-cost
production (which accounts for roughly 15 per cent of global production)
remaining in the market.

Whilst low cost mines in Australia and Brazil are expected to
continue to expand global supply, on the demand side, China’s growth
outlook for 2015 has been downgraded from Budget. The associated
weakness in the property sector and the ongoing transition from
resource-intensive growth is expected to constrain Chinese steel
demand.”

Spending has also increased significantly since the Budget.

“The spending decisions that have been taken since the Budget
primarily respond to changes in the international security environment,
or reflect the commitment to drive growth and support a strong economy.

The Government has responded to a rapidly changing security
environment, investing around $1.3 billion to keep Australians safe and
secure. To counter the threat of home-grown terrorism, security and law
enforcement agencies have been given $631.4 million in extra resources
to track, disrupt and prosecute Australians involved in violent
extremism, both at home and overseas. Operations in Iraq are addressing
the enduring threat of terrorism at a cost of $306.4 million.

The Government has also taken further steps to build a stronger, more
prosperous economy. This includes the finalisation of the
Japan-Australia Economic Partnership Agreement.” Paradoxically, “This
measure is estimated to reduce revenue from tariffs by $1,590.0 million
over the forward estimates period.”

Joe then goes on to tell us how we are paying for his decisions.

“the budget costs associated with the Minerals Resource Rent Tax
repeal package were fully offset by the end of 2023 by the decision to
delay the increase in the superannuation guarantee rate until 1 July
2021.”

To increase the profits of foreign mining companies we are going to decrease the retirement savings of every Australian worker.

“… some of the Government’s largest decisions to repair the budget
include the reduction in Official Development Assistance ($7.9 billion
over five years) and changes to welfare and social services totalling
$2.7 billion.”

We slash money from the poorest people in the world to try and achieve a surplus.

“Building on measures in the 2014-15 Budget, the Government has also
agreed to a third tranche of Smaller Government reforms with a further
reduction of 175 bodies. This supplements firm action to restrain the
size of government by achieving necessary wage restraint and reducing
the size of the public service.”

So we address the problem of unemployment and falling income tax receipts by sacking people and paying lower wages?

Despite all the contradictions in this document, where the figures
bear no resemblance to the words, Joe valiantly presses on to tell us
how much things have improved.

“ Compared with the projection of $667 billion in debt inherited just
over a year ago, the 2014-15 Mid-Year Economic and Fiscal Outlook
(MYEFO) shows the Government on track to reduce this by nearly $170
billion. In addition, budget deficits are still forecast to reduce
steadily over the forward estimates and beyond.”

Aside from that debt projection of $667 billion coming from using
Coalition policies and decisions, with what accuracy can Mr Hockey claim
to guess the debt in ten years’ time when 7 months has changed
predictions by over $40 billion? To make up a number and then say you
have made it less is just silly.

And whilst the deficits are predicted to decrease each year, they are
far higher than those predicted in PEFO, with no sight of the promised
surplus (some would say thankfully).

As reported in the Saturday Paper,

“While leaked government speakers’ notes advise Labor
should be blamed for the worst budget mess in history, the facts are
very different. He has been hit by massive revenue write-downs he
himself did not forecast in his budget or midyear review. A total of $56
billion failed to materialise in the 10 months since the budget. This
is the same horrible reality he refused to acknowledge contributed to
his predecessor’s problems. But Hockey himself has been the architect of
much of the fiscal fix he’s in. Unasked, he handed over to the Reserve
Bank $9 billion. Then he’s handed back $12 billion in tax revenue to
wealthy retirees and big mining and power companies. He’s now promising
to give companies running small businesses a tax cut. He is refusing to
dip into the $27 billion available by being less generous with
superannuation tax concessions.”

I will leave the final word to Liberal MP Teresa Gambaro

“Real communication is not a three-word slogan, and talking points
from political staffers should never be substituted for proper policy
development. Equally, policy “initiatives” devised as a spiteful
retribution for stakeholders having an opposing view resulting from a
government’s own failed policy process is deplorable.

Any politician wanting a real conversation with the Australian people
should remember that no-one likes to be talked at. People would rather
be spoken with – knowing how to listen properly and being respectful of
the “punters” views are key components of any such conversation. Any
political figure or party putting political interests ahead of the
wishes of the “punters” will quite rightly be shown the door.

Is it too much to ask for a premier or a prime minister to engage in a
regular conversation with the people? No, it is not. So why doesn’t it
happen?

Voter allegiance should be earned and based on informed dialogue, not by “sloganitis”.

As a federal parliamentarian of the Liberal Party, I despair that the
Liberal Party of today is not the Liberal Party I joined 20 years ago
and is not the Liberal Party I had the honour of serving in the Howard
government.

Open debate is the lifeblood of every democracy, but political
collaboration from opposing parties should not be an anathema. These are
the conversations we need to have, but instead debate is reduced to a
robotic regurgitation of stale talking points that resonate with the
public like an overdose of Mogadon.

It is not enough for leaders to listen: they must also hear. A leader
must create a team and champion the good performances of team members,
not be fearful of them. And finally, a leader should not lie – to their colleagues or the Australian people.”

The message was delivered: no confidence in the Abbott Government whatsoever

In "News and Politics"

The Coalition and Financial Management . . . an Oxymoron

In "News and Politics"

It's official: Joe Hockey has lost the plot!

In "News and Politics"

Thursday 5 February 2015

Joe must go: Hockey is harming the economy and undermining the RBA –

Joe must go: Hockey is harming the economy and undermining the RBA

Glenn Dyer and Bernard Keane
|

Feb 05, 2015 1:04PM

|

Joe Hockey has damaged the independence of the Reserve Bank and left the economy in trouble as bad times loom, Glenn Dyer and Bernard Keane write.

Regardless of when Tony Abbott is dumped as prime minister,
Treasurer Joe Hockey should resign, and the sooner the better. He in
inflicting too much damage on the economy and is undermining the
independence of the Reserve Bank.

An independent RBA is — or should be — one of the
Coalition’s proudest economic achievements. It was Peter Costello who
enshrined the bank’s independence, a key component of Australia’s strong
economic performance since the late 1990s. Now it is being damaged by
Hockey. First there was the $8.8 billion unrequested gift to the RBA
shortly after the election, part of Hockey’s effort to claim, in
defiance of the clear advice of Treasury and the Department of Finance
in the Pre-election Economic and Fiscal Outlook, that Labor had left a
hidden legacy of debt and deficit.

Now, this week, RBA governor Glenn Stevens has been brought
in to address cabinet at the very moment the government is falling apart
and the Prime Minister (how goes Abbott, so goes Hockey) is battling to
keep his job. Labor never brought Stevens into cabinet, out of concern
for the impact on the bank’s independence. No such compunction for
Hockey, apparently. Worse, remarkably he sought to claim it was a good
thing, saying: “we invited the governor of the Reserve Bank into the
cabinet, for the first time he’s visited. He has been governor for
years; it’s the first time any government had asked him into the cabinet
room, which stunned me …”

What’s stunning in fact is that Stevens has been used as a political prop by a desperate government.

Kevin Rudd and Wayne Swan, particularly when they were dealing with the global financial crisis, were accused, including by Crikey,
of using then-Treasury secretary Ken Henry as a kind of human shield as
they sought political cover for a bold, but ultimately very successful,
defence of the Australian economy. But Henry was Treasury secretary.
Treasury isn’t independent, nor is it meant to be — it serves the
government of the day. Using the head of the independent Reserve Bank as
a political shield is very different, and it is dangerous to the
independence of the bank.

It also speaks volumes for how out of his depth new Treasury
secretary John Fraser is. Fraser, a former Treasury official who had
been at Swiss bank UBS for much of the past decade, was brought in to
replace Martin Parkinson, sacked by Abbott over the objections of Hockey
as a demonstration of the kind of small-minded partisan bigotry that
seems to drive conservative politicians. Fraser has been completely out
of the Australian economic policymaking loop, especially in the past
three years, when the revenue crunch, a high dollar and volatile terms
of trade have hit the budget and the standing of Treasury’s forecasting.

Far from it being “stunning” that Stevens has never
addressed cabinet, it’s Fraser’s job to brief cabinet about monetary
policy — he sits, ex officio, on the RBA board and attends
every meeting. That’s what Henry and Parkinson did — attend each RBA
board meeting and then return to Canberra (with their briefing notes)
and brief Hockey and his senior advisers, and cabinet if need be,
through the Treasurer. The last thing that the economy
needs — especially as its political leadership is failing — is a
Treasury secretary with training wheels on, which is what Abbott has
delivered us.

And while the government is now leaking that, guess what, revenue forecasts are going to be too high yet again
— despite Hockey and Mathias Cormann’s claim that the days of dodgy
revenue forecasts were over, lines in the sand, etc, etc — the economic
narrative Hockey is trying to sell is blatantly false. Hockey argues
that the government has “unshackled” the economy compared to the Labor
years and that’s a good thing because it now faces international
“headwinds” from deflation and lower Chinese growth. Listening to
Hockey, you’d think he was a canny mariner who’s trimmed his boat down
to deal with the rough water we’re now in.

Wrong. Completely wrong.

It is Hockey via the 2014-15 budget, his senior ministerial
colleagues who have failed to do the basic job of selling it, and the
Prime Minister via a display of political ineptitude so stunning his
colleagues are likely to dump him barely halfway through his first term,
who have clobbered the economy. Consumer confidence is badly down,
non-mining investment is failing to pick up the slack, and economic
growth is in retreat. Business is in despair about the government, and
that’s feeding through into real-world decisions.

That’s why the Stevens and Co decided that, despite record
low interest rates, a highly stimulatory fiscal policy and a dollar well
below 80 cents, they had to try to jump start the economy this week.
And those international headwinds have only just started to be felt, via
commodity prices. The real impacts of global deflation have yet to be
felt, especially with German policymakers still living in their Weimar
Republic-era fantasy world of inflation dragons.

Far from being in top shape in the face of international
problems, the Australian economy is limping badly before the real
challenges hit. And responsibility for that lies with Hockey. At this
rate, even Scott Morrison couldn’t be any worse.

Monday 2 February 2015

Joe Hockey is either a hypocrite or incompetent, or maybe both - The AIM Network

Joe Hockey is either a hypocrite or incompetent, or maybe both

February 3, 2015
Written by:
The AIM Network
3 Replies

**Joe Hockey is happy to see a rate cut (image from afr.com)**

Today’s interest rate cut have – as cuts do – no doubt been
welcomed by Australians weighed down with a mortgage, but one prominent
and wealthy Australian whose financial security is not under any such
encumbrances has also found the news welcoming: Joe Hockey, our
Treasurer. Here is Mr Hockey’s reaction:

“This is good news for Australian families and it’s good news for Australian business,” Mr Hockey told reporters in Canberra.

“The government is working hard to take the pressure off interest rates by keeping inflation low.”

Mr Hockey said the rates decision would lift business and consumer
confidence. “The shackles are off the Australian economy,” he said.

Joe Hockey says the global economy has become more challenging since the cash rate last changed.

It is a different Mr Hockey now that he’s Treasurer. Under a Labor Government interest rate cuts were considered bad, bad, bad.

I have sifted through the archives at The AIMN to see what Mr
Hockey’s reactions were – and our accompanying commentary – when he was
the Shadow Treasurer to a government who rode us through the Global
Financial Crisis and oversaw numerous rate cuts. One thing stood out: he
is all over the shop when it comes to talking about – or knowing about –
interest rates.

Enjoy the responses . . .

With the announcement that the Reserve Bank is tipped to cut rates today, Joe Hockey has pounced:

Mr Hockey says the expected cut shows Labor has lost control of the economy.

But, he adds:

“Of course interest rates on average should be lower but
if interest rates come down today it is because the economy is
struggling, not because it’s doing well,” he told ABC radio on Tuesday
morning.

Is it just me, or does the above statement make absolutely no sense
or offer no logic whatsoever? Have I missed something? Or has Joe Hockey
finally made it publicly clear that he has well and truly lost the
plot?

I suspected all along that he lost the plot eons ago. His history of
erratic announcements on interest rates confirm this. And no matter what
happens to interest rates today, he will see it as a result of bad
government.

The Prime Minister’s early announcement that the election will be held on September 14 relegates the recent Liberal Party’s Our Plan: Real Solutions for all Australians
to the waste paper basket. It probably belonged there anyway; offering
nothing but statements and bereft of strategies. They’ll be busy coming
up with something more substantial over the coming weeks, one would
expect.

I also expect they will retain this commitment from the Plan:

The Coalition will protect the Australian economy from
economic shocks and create the conditions which keep interest rates as
low as possible . . .

I wonder if Joe Hockey knows about this. Was he even consulted? Is
the party aware that Joe has been telling us for some time now that
interest rate cuts are a bad, bad thing?

Or maybe Joe was consulted about the Plan a couple of years ago when he trumpeted that interest rate cuts were a good thing.

After all, in August 2010 he told us he wanted them to come down:

. . . what I did say is I would want to see the Reserve Bank move further in cutting interest rates.

Then in September 2010 the thought of rising interest rates made him livid and it was all the Government’s fault:

The Gillard Government must accept the blame for higher interest rates.

History tells us that the rates were put on hold that month, incidentally. But Joe was livid nonetheless.

In November 2010 after a rate rise he was still livid:

Australian families were the victims of a government who
was no longer talking about interest rate rises, childcare costs and
other costs of living, Mr Hockey said.

Families would struggle to buy Christmas presents, he said.

“It hasn’t been the usual practice of the Reserve Bank to increase
interest rates in December because that is like a body blow to the heart
of retail in Australia.

“But that body blow has been delivered, it’s been delivered by the
Reserve Bank, by the banks and it’s all come about by this government.”

Fast forward to his 2011 Budget Reply Speech a more relaxed Mr Hockey told Parliament that:

. . . this Budget does nothing to reduce the upward pressure on interest rates.

Funnily, however, there were no rate rises in 2011 up to the day of his reply. But he was about to get livid again.

On Oct 1 2011 in anticipation of an increase he pointed the fickle finger of blame at the Government:

Of course the Reserve Bank should not be increasing
interest rates tomorrow, but if they do then it will be Julia Gillard
and Wayne Swan’s interest rate increase because they have done nothing
to address core underlying inflation pressures.

Guess what? They never went up. Nothing to blame the Government for after all. Good try though.

Like all hard working Australians he announced on Jan 27 2012 he wanted the RBA to cut rates:

“I think the Reserve Bank has the capacity to do much of
the initial heavy lifting and to stimulate economic growth by reducing
interest rates.”

And he alone could save us when on March 27 2012 he proudly announced that:

He would work though on realising lower interest rates that would prop up the finances of many Australian households.

But . . . when they did come down, on May 11 2012 he was back to his livid self:

. . . shadow treasurer Joe Hockey said the rate cut was a sign that the Government had lost control of the economy.

Yet he left us dumfounded on June 4 2012:

Opposition treasury spokesman Joe Hockey has conceded
Australia’s economy is in reasonable shape and endorsed Wayne Swan’s
commitment to returning the budget to surplus.

Speaking to an international audience on Bloomberg TV, Mr Hockey said
Australia was vulnerable “like everyone else”, but its economic
fundamentals were strong.

“Australia is in a better position than most other western nations,” he told Bloomberg’s Asia Edge program.

“We have an unemployment rate of around 5 per cent, we have strong
demand for our commodities and even though they probably won’t get there
we have a government that at least is promising to deliver a surplus
budget.”

[yet] When the Reserve Bank lowered interest rates by 50 basis points
last month, Mr Hockey said it confirmed the “weakness in the Australian
economy”. In his budget reply he said economic growth under Labor had
been “very poor”.

The very next day, after a rate cut he sniggered to the adoring media that:

The Reserve makes clear it is worried about Australia’s underperforming economy and deteriorating international conditions.

But before the month was over they were apparently going up according to Mr Hockey:

Well you know what’s interesting . . . we’ve been saying
this for three years now, that if the government actually delivers a
surplus then it’s going to take upward pressure off interest rates.

Which is good, because it fits in with his Nov 2010 prediction:

Australia is set for high interest rates.

And also in November that year after an increase he declared:

. . . the Gillard government and its ”insipidly weak Treasurer” owned the interest rate rises.

And when we didn’t get a cut he laments in June 2012 that:

“A week ago Australians were expecting an interest rate
cut – now they are facing interest rises. That undermines consumer
confidence, it undermines business confidence and it leaves Australians
fighting higher prices.”

But when the rates went down on Oct 2 2012 it was back to the Government’s fault again:

The Reserve Bank has cut interest rates today not because
the economy is doing well, but because parts of the economy are doing
it tough.

And on Oct 10 last year he took on a dire tone:

Last week’s reduction in the cash rate, to 3.25 per cent,
took it to levels only one cut away from the lows reached during the
financial crisis. The Reserve Bank are cutting interest rates not
because the Australian economy is doing well but because the Australian
economy is deteriorating.

But also in October 2012 we learn he wished for an interest rate cut and his wish was rewarded. And he was happy:

Last Tuesday, at the Elmore Field Days, he called on the Reserve Bank to drop interest rates.

And lo and behold, an hour or so later, that’s just what the bank did.

So chuffed was Big Joe, he grabbed a tractor and raised it above his head, roaring King Kong style.

OK, it’s a toy tractor.

And when they don’t go down we get this statement on Nov 6 2012 to blame the Government for them being put on hold:

Joe Hockey claims the Reserve Bank did not reduce the cash rate because the economy is overheating:

‘This shows it is now manifestly clear that it is the policies of
this government which are pushing up the cost of living and staying the
Reserve’s hand in delivering further interest rate relief to home buyers
and small businesses.’

Again in November last year:

. . . the carbon tax is going to make it harder to cut interest rates.

But he doesn’t like them being cut. Remember? It means the country’s in a mess and it’s all Labor’s fault.

Such as it was with this announcement on Dec 4 2012:

The Reserve Bank has today cut the cash rate from 3.25%
to 3%. Clearly the Reserve Bank is trying to catch a falling Australian
economy . . .

Followed by this the very next day:

The Federal Opposition says the RBA rate cut foreshadows tough times ahead for the Australian economy.

Coalition treasury spokesman Joe Hockey says the move shows the RBA
is intervening to counter Labor’s big spending policies like the
promised Gonski education reforms and the National Disability Insurance
Scheme (NDIS).

But he’s not alone. When joined by his boss in June last year:

Alas, Hockey was (inexplicably) joined at that press
conference by Abbott, which reduced the average economic IQ of the room
by 20 points. Abbott proceeded to lay out his understanding of the rate
cut. Abbott thought the RBA had cut rates because “economic conditions
are soft. The stock market is down. Profits are weak. Retail sales are
weak. The property market is down.” Glenn Stevens’ statement that the
bank had cut rates because of “modest” domestic growth, a weakening
international environment and low inflation was politely ignored.

Yep, it’s all the Government’s fault. It’s only good if cuts come
under a Coalition Government. To repeat the old Liberal meme, here’s
what Joe had to say back on Aug 9 2010:

Mr Hockey also argued “interest rates are always lower”
under the Coalition – an argument described by Mr Swan as one of the
“bigger distortions” he’s heard in recent times.

Laughable, isn’t it?

I like what Leigh Sales asked him on the 7:30 Report on Nov 1 2011:

So, how come when interest rates go down the Government
never gets credit, but when they go up it’s always the Government’s
fault?

Follow the link if you want to see his answer, but don’t expect anything intelligent. You won’t find it.

. . .

See what I mean? He’s all over the shop.

And to think that this hypocritical, incompetent economic buffoon is our Treasurer.

Frightening, isn’t it?

Thursday 5 March 2015