Wednesday, August 14, 2013

The Kouk cracks into the Howard economic legacy

Economist and sometime Labor apparatchik Stephen Koukoulas has put the sword to John Howard's nominally impressive legacy of wiping off government debt today.
So how did the Howard government do it? It was very simple, with a three-pronged approach to debt elimination:
- A record high tax take - the Howard government was the highest taxing government in Australia's history.
- Record low spending on infrastructure - the level of public construction work done as a percentage of GDP reached a record low under Howard.
- A large-scale asset sale and privatisation program.
One thing the Kouk doesn't mention is that Howard was only able to raise the tax take and draw down on investment without causing a demand-side recession because Australia was undergoing a long boom, after Keating had instituted a number of reforms to make the country competitive and open it up to global markets. Howard surfed the tsunami that Keating had started, in short (Bermuda shorts?). But that wasn't necessary to say in the article I suppose, no need to run up the score when the win is so decisive!

Why do we care about this now? Because the prospective Liberal front bench in the current election is made up mostly of Howard era recalcitrants, most notably leader Tony Abbott and treasurer Joe Hockey. Their policy on economics - and pretty much everything else - hasn't changed much since then, due to the failure of Arthur Sinodinos to single-handedly develop new policy as he was parachuted in to do.

This dose of economic reality underpins the recent attacks on the Libs for secretly desiring to raise the GST. There has been no significant renewal of the Liberal caucus to flush out the Howardist mindset, so voters can be excused for refusing to believe the protestations coming from Hockey and Abbott.

The Kouk's point about lack of infrastructure investment causing inflation and lost productivity will most likely be lost behind the shouting about tax increases, but it is no less important. The Libs could even adopt the NBN model of public-private partnerships (albeit once removed via bonds) to keep infrastructure investment off the budget balance sheet, if they want to maintain the fiction that they aren't big-government tax-hungry statists. Abbott has shown a willingness in this campaign already to adopt Labor's policies, but that one might have to wait until after the election.

Or, if Abbott really wants to win big, he could embrace the Howard legacy to the fullest. Advertise himself as the man with the Big New Tax that will fund all of the social programs that Gillard introduced but we can't afford due to revenue problems with the budget. Want Gonski? GST goes up to 11%. Want the NDIS? 12%. Want the full FTTP NBN? 13%. Want the baby bonus back and an increase in the dole up to somewhere near the poverty level? 14%. Want a fair dinkum paid parental leave scheme for everyone, not just the rich? 15%. Want the third airport for Sydney and the East-West Link in Melbourne? Hmm, well maybe not.

Joe Hockey could be the new Oprah Winfrey. "You get a per cent! YOU get a per cent!!" Now that's the Liberal Party I remember.


  1. You fucking moron, Monster. The Greek doesn't understand economics or economic dynamics. The government coffers spilled over because the economy was doing really well, not because the tax take was increased because rates went up.

    Income tax rates fell during the Howard era. Fact. And not even a Greek economist could lie about that.

    All we need now is Nobel prize winner, Homer Paxton to make an appearance.

  2. If you could read JC then you wouldn't make such stupid comments.

    He said a record tax take.

    Duh! That isn't taxes being put up.

    how do we know when JC says something stupid?

    He opens his mouth!

    Privatisation was the major reason Public debt fell.

  3. Shut the fuck up Homer. You know even less about economics than Fatboy and he failed first year Monash.

    Look you Toozer, the Greek economist (which basically means non-economist) attempts to convey the false idea the tax take under the Liars Party is less than the tax take during the libs as a per cent of GDP, which implies deceitfully that the Liars Party aren't as big government spendthrifts.


    Big fucking deal, you moron.It's the spending stupid and the forward spending that gets us up to $100 billion deficits in future years.

    Now fuck off Homer and stop (further) ruining an already moronic blog. Fatboy is more than capable of being a moron without your expert guidance in that regard.

  4. You fucking idiot, Homer.

  5. JC, you're proving Homer right every time you open your mouth. It is simple mathematics, at which you evidently fail.

    Rates did go up, in fact, if you look past the single data line of income taxes. The GST was the primary cause. Howard's GST broadened and deepened the tax take to deliver the greatest tax take the country has ever seen.

    Abbott wants us to conveniently forget this fact, possibly so he can do it all over again if he wins office. He should own it. Stop the lies, bring the tax.

  6. No fatboy, the GST was a neutral tax all things being equal. Revs went up because activity did. GST replaced a load of other taxes.

  7. If revenues had gone up just because GDP did, the ratio of revenues to GDP would have stayed the same. This is basic stuff, anonymous moron. You are failing the most perfunctory of analyses.

  8. That's not correct fatboy, because there was also a big transfer of state based taxes from the states to the Feds. It's not as simple as you try to make out.

  9. Which the Feds largely passed straight back to the states and skimmed off the top to pay off debt, yes JC this is all understood.

  10. No, you don't understand at all, Monster.

    The agreement in regards to the GST was that it would replace state based taxes and numerous inefficient ones and over a period the increase over that would be passed on to the taxpayer in the form of tax cuts. They basically achieved their promise.

    Nice try though, you fat ignoramus.

  11. So what you are saying is that the Kouk was right, the GST was a big new tax designed to massively increase the tax take in the short term to levels never seen before in Australia, but that it would be drawn down once it looked like Labor would win back office. Thanks for playing!


  12. No, you idiot. What I said is that the dishonest Greek willfully ignored the spending and then played make believe.

    You obviously have serious comprehension problems.

    The deficit has gotten bigger and the spending has increased at a rate of knots under this government.

    Nobel prize winner, Homer Paxton ought to be able to explain this to you.

  13. Abbott can solve it all by putting on the Supertax cape and being a hero of taxation and middle class welfare like Jor-El, I mean Howard before him. You know it makes sense, especially to him.

  14. JC,

    It isn't good when you talk abut sinclair's weight issues here,

    go to the nearest ESL class and then you may,I stress May understnd english!

  15. Perhaps JC can get the overweight Catallaxians to explain how cash rates are falling if Spending is the problem.

    Oh I forgot we have stagflation!

    Obviously no-one marks their beliefs to the market overthere!

  16. Just to help out Spending only increased under the ALP because of the GFC something bald bandicoots often 'forget' at Catallaxy.
    If the ALP had the same tax to GDP ratio as howard there would have been one deficit.

    Revenues were destroyed by the GFC and guess who created the problem of the structural deficit.

    The Very people who cut income tax in the expectation company tax would always pay for it!

  17. Homer, appalling ape, the GFC spending was around 40 billion.

    You ought to team up with the kook and start a fishing business. On second thoughts , don't its a bad idea as you'd end up drowning.

  18. err and therefore under your theory the public sector was/is adding to GDP so Nominal GDP should not have fallen below trend.

    wow what a sensational insight fiscal policy has been contractionary for sometime Duh!.

    so we still do not have an answer from Catallaxxian clowns on why the sach rat is falling not rising

  19. make that cash rate though rat and JC is appropriate

  20. Homer

    Are you institutionalized? Fatboy could help as he's a institutionalist.

    Seriously, turn yourself in and whatever you do don't drive to the asylum.

  21. wow another bit of dizzying repartee and you really shouldn't talk about Sinclair like that

  22. Fuckhead, Homer Paxton:

    Why are you bringing Sinclair into this discussion? He as nothing to do with it. Say something to his face, ie converse with him where he can see your comments instead of this hidden unmanly shit you're pulling. You coward.

    Some of us went to dinner only the other night. You came up in the discussion and he actually had good things to say about you- in that some of us were too hard on you. I disagreed with him of course suggesting we haven't been hard enough. Try and figure out who your enemies are, Homer instead of punching in the dark. I am for instance. I'll never forgive your stupidity. Never!

  23. That is nice, JC. Did you wear those nice designer jeans? How nice.

  24. JC you are the one calling him names about his weight problems!

    No a stupid person cannot read english and then lies about it. A stupid person cannot understand simple numbers and lies about it. A really stupid person swears because they have nothing to say.

  25. No, fatboy, I wore a track suit you do according to David J.

    Shut up Homer, you moron.

  26. Don't worry m0nty he will go away

  27. JC won't go away, Homer, because he is working out deep psychological issues. He is a henpecked house husband trying to pretend he's a lone wolf. He is an emasculated metrosexual attempting in desperation to project the image of Tyler Durden, when he's more Mary Tyler Moore. He is a carpetstrolling dilettante hoping like we will respect him for swearing like a sailor. He is a fraud, plain and simple.

  28. and he doesn't like Cricket ( or Castle!)