OK Liberals West Australia, what will you do about it?

 “If, from the more wretched parts of the old world, we look at those which are in an advanced stage of improvement, we still find the greedy hand of government thrusting itself into every corner and crevice of industry, and grasping the spoil of the multitude. Invention is continually exercised, to furnish new pretenses for revenues and taxation. It watches prosperity as its prey and permits none to escape without tribute.” – Thomas Paine

Liberals WA has a posting (below) up on their Facebook page today complaining of the way in which GST revenue from that state is distributed across the nation.  The reality is that of all revenue raised by this tax in the state, 38c (soon to go down to11c) in the dollar goes back there.  The rest goes to other states. 

Being Liberals, they tend to have a short attention span and have not gone on to check just how badly WA is treated by the tax system as a whole.  The same principle applies across the entire system; it is not just GST, but income, company and every other tax that rips them off.  The figure of $3.6 billion is only a small part of it; the total figure is around $20 billion from all taxes.

This issue was first raised by Liberal Democrat senator elect, David Leyonhjelm in the lead up to the West Australian senate election #2.

This welfare system involves two states – Western Australia and New South Wales – transferring funds to the other states and territories. WA transfers $20 billion a year, equivalent to more than $8,000 a year from each West Australian, while NSW transfers more than $2 billion a year, over $300 per person. 

Out of this system Tasmania and the Northern Territory draw nearly $4 billion a year each. That means each Tasmanian, rich or poor, gets nearly $8,000 per year from the people of WA and NSW while Northern Territorians get more than $16,000. 

The state-to-state welfare system is complicated and to unravel it is no easy task. Some think it simply involves the GST, but that only plays a small part. Of the $8,000 a year that each West Australian transfers to the east, only $600 is a result of paying GST to Canberra.

During the senate rerun, Clive Palmer threw huge resources at the issue and made significant inroads as a result.  We all remember those Youtube videos of Canberra snatching bread from hungry babes.  Clive, of course didn’t actually present a policy on the issue and tell the people what he was going to do about it; there was no need.  The implication that he disapproved of it was enough.

In view of this, it’s no wonder the WA Liberals have now found sufficient voice to bitch about it.

The problem they have with this, is that their version of ‘the world’s greatest treasurer’, Joe Hockey ridiculed Palmer for raising the issue and challenged him to say just what he would do about it, given his senators from Tasmania and Queensland.

So dudes, what are you going to do about it given your federal party believe that you have a duty to support the green obsessions of the Apple Isle?

The truth is that out of all the critics of the system, only the Liberal Democrats have a policy against tax transfers: 

The LDP will seek to: 

•                 Limit the federal government to defence, immigration, basic public services (eg passport services, regulation of hazardous materials, air and sea transport regulation), and assistance to the least well off. 

•                Stop all transfers from the federal government to other levels of government, including grants from the pool of GST revenues.

The Liberal Democrat Budget

Image (L) Senator elect, David Leyonhjelm. 
With less than a day left until the release of the Abbott government’s first budget, we are hearing plenty of horror scenarios as to what it will contain.  It appears certain though that it will include tax and excise increases as well as cutbacks in services.

In something of a first for minor parties, the Liberal Democrat Party (Australia’s libertarians) has bitten the bullet and released its own budget, proving that it is a serious player in the nation’s political spectrum.  Significantly, rather than the Liberals continuing deficits, the LDP has come up with a surplus without raising taxes.

This surplus may be a modest $3.1 billion, but it is a lot better than the government is expected to do, and actually lowers taxes on the upper end of the tax scale: 

DAVID LEYONHJELMThe Coalition government will release its first budget on Tuesday which will set the tone for the rest of the time in office. There is speculation that the government will make some difficult decisions to get the budget back on track. I hope those predictions are correct, but I fear they will be wrong. 

The commission of audit was a good start, but it didn’t go far enough in cutting back on government over-spending. Unfortunately, the government is probably going to water down the recommendations even further, announcing yet another budget deficit and (like Labor) making vague promises about a surplus somewhere in the future. 

The budget should be in surplus in 2014-15 and that is what the Liberal ­Democrats’ proposed budget would achieve. Anything less should be considered failure. It is easy (and accurate) to blame our current budget problems on the waste of the previous government, but that does not mean the new government should shirk its responsibility. 

The first budget of a new government speaks volumes about whether it is serious, and if the Liberal/National government does not make the tough decisions now, they never will. …… The current government has spoken at length about the need for economic reform, but has so far been silent on the two most obvious areas where reform would boost economic prosperity – income tax cuts and labour market deregulation. 

Instead, the government is now considering income tax increases, which is not only contrary to previous undertakings but also economic folly since it will raise nearly no revenue while slowing the economy. Tax increases are a step in the wrong direction; we need income tax cuts. 

Tax cuts must be linked with spending cuts. In Australia every year, nearly $200 billion is taken from workers and then given back to the same families in the form of ­government handouts or subsidies. This is wasteful, inefficient and unnecessary. Below I outline various ways to reduce middle class access to government handouts, but the quid pro quo of that must be income tax cuts so that productive people can keep the rewards of their hard work. 

Not only will tax cuts reduce the wasteful tax-welfare churn, but lower income tax rates will encourage investment and innovation, reduce tax avoidance and boost economic growth, resulting in more jobs and higher wages for all Australians. 

The top marginal tax rates in Australia exist mostly because of the politics of envy. It is well known that the top tax rate raises very little revenue while causing significant economic costs, and that the main reason it is retained is to pander to the tall poppy syndrome. We can no longer afford such petty indulgences if we wish to encourage our highly skilled people to direct themselves toward the productive economic service of others, and to reward those efforts. 

The top marginal tax rate (45 per cent) should be abolished, which would mean the second top rate (37 per cent) became the top rate. Going further, a top tax rate of 37 per cent is still too high and causes significant economic damage. This should be cut down to 33 per cent. Once we factor in the falsely named “Medicare levy” this would bring it to 35 per cent. While this is still too high, further cuts should perhaps wait until they can be part of more fundamental tax reform as budgetary circumstances improve. 

These tax cuts will not change revenue by very much, since the lower rates will be offset with a larger tax base . Using mainstream estimates of the “elasticity of taxable income” and measures of income dispersion calculated from ATO statistics, the proposed reform will lead to a relatively modest loss of only $3 billion. The full consequences of the tax changes are shown in the below chart. …

… The relationship between the minimum wage and employment is measured by the “minimum wage elasticity of labour demand”, for which the best estimates in Australia comes from a study done by Andrew Leigh (now a Labor MP) in which he found an elasticity of minus 0.29. 

Using the estimates from Leigh and current inflation figures, it is simple to calculate that a minimum wage freeze would result in about 100,000 new jobs for low-skilled workers, reducing the unemployment rate from 6 per cent down to about 5.5 per cent (depending on participation rate changes). 

While the economic benefits from more work and less welfare are significant, the social consequences of helping people avoid welfare dependence is a potentially larger (though unquantifiable) benefit. The main cause of poverty in Australia is unemployment and anybody who truly cares about combating poverty must celebrate any policy that helps people find a job. … 

… The biggest single cost for the government is direct welfare spending, in particular family payments and pensions. While some people like to complain about so-called “dole bludgers”, the truth is that unemployment allowances are relatively modest ($11 billion) compared with the cost of family payments ($36 billion) and assistance for the aged ($58 billion). In particular, family payments are often not well targeted and amount to middle-class welfare. Both the Centre for Independent Studies and the Commission of Audit suggested removing Family Tax Benefit (part B) and the Schoolkids Bonus, saving about $6 billion. 

Pension reform is necessary, but this is not an area where costs can be decreased quickly. In the short term, the government should introduce a one-year freeze on all increases in welfare payments. This would save about $4 billion a year. …

Read the whole thing at the link above.

Whitehouse satirical post; ‘Helping you budget responsibly’

In a possible effort to inject a little variety into the White House website, or possibly distract people from its own shortcomings, the Obama Administration have moved into satire.  The first post is an offer to help the people to learn the principles of responsible budgeting.

It rather hilariously takes the form of a ‘Presidential Proclamation’ hyping National Financial Credibility Month, which coming from the government has a beautiful irony about it: 

All Americans deserve the chance to turn their hard work into a decent living for their families and a bright future for their children. Seizing that opportunity takes more than drive and initiative -- it also requires smart financial planning. During National Financial Capability Month, we recommit to empowering individuals and families with the knowledge and tools they need to get ahead in today's economy. 

My Administration is dedicated to helping people make sound decisions in the marketplace. Last year, we partnered with businesses and community leaders to roll out new public and private commitments to increasing financial literacy. We released a new financial capability toolkit to help schools and employers as they launch their own initiatives. And with our College Scorecard and Financial Aid Shopping Sheet, we are working to give families clear, transparent information on college costs so they can make good choices when they invest in higher education. Together, we can prepare young people to tackle financial challenges -- from learning how to budget responsibly to saving for college, starting a business, or opening a retirement account.

The idea of teaching the young how to budget responsibly is actually quite a novel one, coming from an administration that has increased the national debt by around 60% in a little over four years and was unable to produce a budget for that time.

Given that one of the current efforts by President Obama is to once again push sub-prime lending, it’s probably fair to ask whether these people have learned anything from the last decade or so: 

The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place. 

President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind including young people looking to buy their first homes and individuals with credit records weakened by the recession. 

In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default. 

Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default. 

Officials are also encouraging lenders to use more subjective judgment in determining whether to offer a loan and are seeking to make it easier for people who owe more than their properties are worth to refinance at todays low interest rates, among other steps. 

Obama pledged in his state of the union address to do more to make sure more Americans can enjoy the benefits of the housing recovery, but critics say encouraging banks to lend as broadly as the administration hopes will sow the seeds of another housing disaster and endanger taxpayer dollars.

Then again; the press release to Washington Post may have been satirical as well.

Mark Stein, Krugman, and the trillion-dollar coin

Mark Stein has an amusing take on the news on arriving back from a trip out of the country.  This includes the media falling for a story about a football player’s imaginary dead girlfriend, 23 executive orders designed by kids, and the rather ludicrous call for the minting of a one trillion dollar coin.

Back in the Reagan era, a Doonesbury strip was published in which Duke has arrived back from one of his mysterious trips away and was being brought up to speed on the Iran Contra affair.  After hearing of illegal arms sales to Iran with the proceeds diverted illegally to fund the Contra militants in Honduras, he rings his PA and asks her to check what medication he is on.

Stein reads it like this: 

While I was abroad, a Nobel Prize–winning economist, a Harvard professor of constitutional law, a prominent congressman, and various other American eminencies apparently had a sober and serious discussion on whether the United States Treasury could circumvent the debt constraints by minting a trillion-dollar platinum coin. Although Joe Weisenthal of Business Insider called the trillion-dollar coin “the most important fiscal policy debate you’ll ever see in your life,” most Democrat pundits appeared to favor the idea for the more straightforward joy it affords in sticking it to the House Republicans. … 

The trillion-dollar-groat fever rang a vague bell with me. Way back in 1893, Mark Twain wrote a short story called “The Million Pound Bank Note,” which in the Fifties Ronald Neame made into a rather droll film. A penniless American down and out in London (Gregory Peck) is presented by two eccentric Englishmen (Ronald Squire and Wilfrid Hyde-White) with a million-pound note which they have persuaded the Bank of England to print in order to settle a wager. One of the English chaps believes that simple possession of the note will allow the destitute Yank to live the high life without ever having to spend a shilling. And so it proves. … I always liked the line Mark Twain’s protagonist uses on a duke’s niece he’s sweet on: He tells her “I hadn’t a cent in the world but just the million pound note.” 

That’s Paul Krugman’s solution for America as it prepares to bust through another laughably named “debt limit”: We’d be a nation that hasn’t a cent in the world but just a trillion-dollar coin — and what more do we need? As with Gregory Peck in the movie, the mere fact of the coin’s existence would ensure we could go on living large. Indeed, aside from inflating a million quid to a trillion bucks, Professor Krugman’s proposal economically prunes the sprawling cast of the film down to an off-Broadway one-man show with Uncle Sam playing every part: A penniless Yank (Uncle Sam) runs into a wealthy benefactor (Uncle Sam) who has persuaded the banking authorities (Uncle Sam) to mint a trillion-dollar coin that will allow Uncle Sam (played by Uncle Sam) to extend an unending line of credit to Uncle Sam (also played by Uncle Sam). 

This seems likely to work. As for the love interest, in the final scene, Paul Krugman takes his fake dead girlfriend (played by Barack Obama’s composite girlfriend) to a swank restaurant and buys her the world’s most expensive bottle of champagne (played by Lance Armstrong’s urine sample). …

In fairness to Krugman, he is a witty satirical writer for the New York Times, who’s rather quirky and off the planet ideas are sometimes taken seriously by political pundits, possibly due to his Nobel Prize in economics.  He is great for filling the gap when The Onion or The People’s Cube don’t post. 

His endorsement of the trillion dollar coin should not be taken too seriously, given the terms he uses to argue for it: 

“It’s easy to make sententious remarks to the effect that we shouldn’t look for gimmicks, we should sit down like serious people and deal with our problems realistically. That may sound reasonable — if you’ve been living in a cave for the past four years.Given the realities of our political situation, and in particular the mixture of ruthlessness and craziness that now characterizes House Republicans, it’s just ridiculous — far more ridiculous than the notion of the coin.”

In other words, he is claiming that the very idea of Republicans opposing the will of President Obama (All heil the great leader) is absolutely ridiculous, and it is therefore sensible to do something ridiculous in response to this.

Farage on Greek default.

Most economic rationalists are favoring the idea of Greece leaving the Euro in order to survive. The EU though and the US are determined that this should not happen, with the result that the world economy is tottering on the brink of the very disaster they hope to avoid. Even if they were, by some miracle, to bail Greece out, Spain, Portugal, and Italy are in the queue to be next, and that’s just for starters.

Meanwhile Australians are outraged that our government is telling us that we have ‘a responsibility’ to assist the World Bank to bail out Europe. US taxpayers feel the same.

Daniel Hannan is a frequent commentator on the issue of forcing more loans onto already insolvent economies, and on this occasion Nigel Farage has weighed in:


The EU is not only undemocratic, but antidemocratic and to continue to prop it up is close to supporting creeping totalitarianism; free societies should welcome its demise. Here is a link to Pat Condell breathing fire on the issue:

And for Ron Paul fans, here is his take on the subject.

Greece fails on austerity measures and entitlement reform.

Cartoon: By Lisa Benson.

Greece is broke to the point where it has had to throw itself on the charity of the Euro zone and IMF to stave off inevitable bankruptcy for another month or so. It seems odd therefore to see reports in the media over the past couple of days that indicate that there is to be an expansion of welfare benefits to some new and interesting categories of disabled.

Some of these are sex offenders, criminals, and weirdos:

Greek disability groups expressed anger Monday at a government decision to expand a list of state-recognized disability categories to include pedophiles, exhibitionists and kleptomaniacs. …

The Labor Ministry said categories added to the expanded list — that also includes pyromaniacs, compulsive gamblers, fetishists and sadomasochists — were included for purposes of medical assessment and used as a gauge for allocating financial assistance.

But NCDP leader Yiannis Vardakastanis, who is blind, warned the new list could create new difficulties for disabled Greeks who are already facing benefit cuts due to the country's financial crisis. …

The new list gives pyromaniacs and pedophiles disability pay up to 35 percent, compared to 80 percent for heart transplant recipients.

"It's really not serious to grant Peeping Toms a 20-30 percent disability rate, and 10 percent to diabetics, who have insulin shots four or five times a day," said Vardakastanis.

The Greek Labour Ministry however is issuing a denial of sorts, claiming that it is only for the purpose of medical evaluation rather than benefits:

The Labour ministry said the new list "solely concerns medical evaluation, not the provision of social benefits." The ministry rushed to clarify the issue after Labour Minister George Koutroumanis was derided in news reports for giving "bonuses" to criminals.

The list released in Greece's official government gazette in November, had included gamblers, pyromaniacs, kleptomaniacs, fetishists, flashers, voyeurs, paedophiles and sadomasochists among the mentally disabled.

Greece is not only overburdened with unsupportable entitlements, but has a somewhat chaotic system mired in fraud and overpayment. Merely fixing this system would not save the Greek economy, but would help to set the nation on the right path as long as a massive reduction in government and public services was included.

Americans and Australians have good reason to take an interest in what is happening in Europe, and especially Greece. The Obama Administration intends to pour billions into rescue funds, and we have been told by Gillard and Treasurer Wayne Swan, that we ‘have a responsibility’ to ensure that the IMF is adequately funded to help struggling Europeans retire at fifty after a life on disability or unemployment benefits.

Understanding that this may be difficult for us, the government is encouraging older workers to stay on the job well after the traditional retirement age of 65. It has not been explained to us just why we are responsible for the Greek economy, nor what Greece has done for us to incur such a debt to them, but it may have something to do with the high proportion of Greeks in Melbourne, which contains Gillard’s electorate.

GOP super committee should embrace the joy of failure.

For those not on WAR’s mailing list, here are his views on the actions of the Republicans on the Super Committee.

By Wayne Allyn Root.

The Congressional "Super Committee" tasked with cutting the debt has failed. Good. Embrace the joy of failure. Sometimes failure works out for the best. Because in this case "failure" leads to the Holy Grail: $1.2 Trillion in forced spending cuts. That's the best thing that could have ever come out of this unconstitutional "Super Committee."



Congress is now forced to accept automatic across the board cuts to spending- including defense spending. This is what the GOP should have been aiming for from day one. Play out the clock and force $1.2 Trillion in spending cuts.



But our GOP friends never miss an opportunity to miss an opportunity. They are scared, spineless weaklings. They are actually panicking because there wasn't a compromise that raised taxes. Could they possibly be this dumb?



The GOP had the perfect campaign message tailor-made for a 2012 landslide. "The GOP stands for smaller government, lower taxes, less spending. Obama is for bigger government, higher taxes, more spending." The same simple clear contrast that led to a historic Tea Party landslide in 2010. All they had to do was play out the clock and let the spending cuts take effect.



Instead the GOP "super committee" members were so scared of actually forcing real, honest-to-goodness, spending cuts that they desperately tried all last week to compromise with Democrats. They practically begged Democrats to increase taxes on the wealthy (by taking away deductions). The GOP was anxious to sell out every small business owner, homeowner, and GOP contributor in America. Listen carefully- it was the GOP who offered a deal based on Obama's philosophy to punish successful Americans for their hard work, sacrifice, and financial risk-taking.



Republicans offered a deal to Democrats that included only slightly larger spending cuts versus tax increases. And guess where all the tax increases were aimed- at wealthy taxpayers. Even as GOP Presidential contenders lied to our faces during televised debates, all agreeing they would not even accept a deal of 10-to-1 spending cuts versus tax increases, the GOP Super Committee members attempted to sell out the entire conservative base for close to 1-to-1.



That is the reason I left the GOP during the Bush reign. Republicans talk a good Tea Party game about smaller government, tax cuts and spending cuts. But as far as actually carrying it out? Not so much. No sooner than the super committee fell apart, the GOP was screaming from the highest rooftops that they will block the automatic defense cuts. They have obviously received too many calls from defense contractor contributors.



This could be one of the most self-destructive game plans in political history. First, we need across-the-board spending cuts to save America from a fate like Greece or Italy. There is no way to cut the debt and avert an economic tragedy without cutting from every department of government- including defense.



Second, these "automatic spending cuts" aren't really even cuts. Not a dollar of today's defense spending will be cut. Not one General or Admiral will lose their job. All that's being cut is future increases in defense spending. If we can't agree on that, America is doomed.



Third, U.S. voters are looking for someone to show they have courage. If the GOP won't cut one dollar of future increases in defense spending, despite the pending insolvency of America, than how can we ever shame the Democrats into cutting domestic spending Social Security, Medicare, or Medicaid? 



Lastly, how could the GOP be so ignorant of history? By compromising on taxes to get spending cuts, they would be cutting their own throats. Ask Ronald Reagan and George H.W. Bush. Both were lied to and fooled by Democrats who promised future spending cuts in return for tax increases, but never delivered. Worse, Reagan and Bush were forever more called "tax raisers" by Democrats. No conservative can ever win by raising taxes, stupid. 



Are Republicans really that tone deaf? Don't they realize the key to winning next November is to stand firm against any tax increases? Don't they realize the "enthusiasm gap" in favor of Republicans is now as large as the Grand Canyon? All because of the Tea Party and the excitement of conservative anti-tax activists.



If the GOP members of the Super Committee had voted for not only "revenue increases"...but increases designed as punishment for wealthy taxpayers, the enthusiasm gap simply vanishes. By limiting the deductions of upper income taxpayers, you are raising taxes and punishing your own supporters and contributors- exactly what Obama wants you to do. Divide, demoralize, and conquer.



Has anyone in the GOP noticed what is happening in Europe? Greece and Italy are insolvent. Yet they have among the highest tax rates in the world. Higher taxes don't save the economy. High taxes don't lower debt. High taxes have destroyed the European economy. We need spending cuts, not "revenue increases."



Here's my message- from a Tea Party American and small business job creator. Embrace the failure of the unconstitutional super committee. Accept the automatic across the board spending cuts as a Christmas gift from the heavens. Stop considering compromises over taxes with Obama. If you accept the notion that the rich should be punished, stop calling Obama a socialist...because you're no better than Obama. With friends like that, who needs enemies?



Compromising with Obama to wreck the finances of your own supporters is only going to kill the enthusiasm of your own base, and get you defeated just like George H.W. Bush.



One last message to the GOP- Grow a spine.

Cameron becomes Euro sceptic, for now.

Cartoon: Rafa Sañudo.

It is difficult to think of any British political leader, left, right, or whatever the hell they call the middle over there, who has not campaigned as a Euro sceptic, only to reverse course later. It’s almost like they think the public will support leaving Europe while they are in opposition, only to realise that the electorate cannot do without all of those directives coming out of Brussels, once in power.

There is another theory that might explain this phenomenon though. There is the possibility that those directives provide the sort of powers loved by politicians on both sides of the divide. By having them created by the European parliament and bureaucracy, British authorities get what they crave yet are able to deflect the blame to those pricks in head office.

PM David Cameron has broken the mould to some extent by claiming to ‘seek powers back’ while in a position to do so. Unfortunately this seems to be a ploy to bet some concessions from the Europeans before slipping back into good little Europhile when it suits him:

The Prime Minister said that the chaos in the eurozone presented Britain with the chance to begin loosening its ties with Brussels. "Change brings opportunities," he said, striking a sceptic tone in the annual foreign policy address to the Lord Mayor's Banquet. "An opportunity, in Britain's case, for powers to ebb back instead of flow away.” …

Mr Cameron used last night's speech to talk of "we sceptics" being right to question "grand plans and Utopian visions."

He is to spend the next three weeks lobbying European leaders to exempt the City of London from a raft of new directives from Brussels as the price of his support for any treaty change to strengthen fiscal ties within the eurozone. The Prime Minister will make whistlestop visits to Berlin and a number of other capitals.

It is possible that the exemption of the city of London is an effort to minimize the damage expected from a proposed financial transactions tax to help deal with the debt crisis. Such a move has been reported as likely to disproportionately affect the market there.

There is little doubt that Cameron would not wish to pull out of Europe. Were he to do so, a certain popular British Conservative MEP might on finding himself redundant, choose to seek a career in politics at home, which could cause discomfort among any number of career politicians at home.

Bligh: $108 million pissed against the wall, saving of $8 mil.

Image: Courier Mail photo ofEducation Minister Cameron Dick describing the 'savings'.

For some years the federal and state governments have been touting the benefits of clean coal technology under which power station emissions are gathered and pumped into the ground. The attraction for governments was that it was unproven technology which existed only in theory which allowed them to claim they were taking the lead at the cutting edge of tomorrows advances.

There were also the side benefits of the ‘green’ mantle, and that it was to cost billions, allowing them to talk about huge ‘investments’ in the future of green technology, for a brighter more sustainable and a few other buzzwords, cleaner, greener lifestyle for future generations. Something like that anyway.

With this in mind the Queensland government raced ahead with massive spending in this area despite the Weller review of government assets in April 2009 described ZeroGen as “speculative” and the Government was told it was considered “very high risk” in 2006. The company has been placed in liquidation after chewing through well over a hundred million from the state, $43 million from the commonwealth, and $50 million from the coal industry.

Apparently though, according to the Bligh government there has been a net saving of eight million dollars on the deal. This is claimed to be on the basis that they were expected to blow $116 million and managed to only spend $108 million. The Education Minister Cameron Dick yesterday trumpeted the saving as he defended Labor's decision to "cut its losses" by shutting down the project two weeks ago:

ZeroGen was set up to be owned by the Government to develop carbon capture technology. Its key project was to be a $4.3 billion clean coal power plant in central Queensland, running by 2015, with the power to capture 90 per cent of coal emissions.

The confirmation of the financial losses come as photos have emerged showing former ZeroGen chiefs living it up in Japan and Singapore as they tried to secure backing of business giant Mitsubishi Corp. Former ZeroGen chief Tony Tarr and the company's corporate affairs manager Heather Brodie were snapped partying in kimonos and horseplaying in Singapore.

After scrapping the key "world-first" $4 billion central Queensland plant, the Bligh Government claimed ZeroGen would be given to the Australian Coal Association to ensure the knowledge it gained lived on.

It appears though that the Coal Association has not been informed of this ‘windfall’ and someone is telling porkies:

Ms Bligh, who had insisted the money was not wasted, had said it would become "an independent entity, owned and run by industry and dedicated to the accelerated development and deployment of carbon capture storage."

But ACA chairman John Pegler yesterday said the group knew nothing of its supposed involvement. "We have never, ever, ever been in negotiations to take over ZeroGen," he said.

Contradiction also emerged in the office of Treasurer Andrew Fraser yesterday, who insisted the intellectual property still belonged to the state and would be used in future. "The Federal Government was an equity partner in the venture and has been actively involved in the wind-up process," he said. The wind-up began in June.

But federal Resources Minister Martin Ferguson said the Commonwealth became aware only "in early October that the board may voluntarily liquidate the company."

Queenslanders are hoping that the government will put an end to these savings before they send us broke.

Why not skip Treasurer of the Year this time?

Cartoon: By Nicholson.

It must be the fiscal silly season, although with Keynesian economics, that is assumed to be a year round thing. There is conjecture that Wayne Swan will be Euromoney's 2011 finance minister of the year:

If Wayne Swan is chosen as Euromoney's 2011 finance minister of the year next week as tipped, it surely won't be because of the glowing endorsement of Australia's top bankers, even if they have performed at least as well as Canada's during the financial crisis.

Nor will it be because Swan has followed last year's winner, Russia's Alexei Kudrin, in quarantining a pre-crisis oil windfall into a budget stabilisation fund that proved "crucial" to Russia weathering the global storm better than most had expected. And neither is Euromoney likely to praise Swan for his "championing of the free market and fiscal prudence", as it suggested of the Russian liberal reformer.

Instead, the accolade would mostly amount to a "being there" award for the ALP operative who climbed up through the party's parliamentary ranks to become Treasurer and clung to his job as the global crisis claimed many of his G20 counterparts and as the local factional warlords claimed Kevin Rudd.

It is difficult to see what, if anything, there is to recommend Swan. He became Treasurer when Labor came to power, and inherited a basically buoyant economy. When the GFC hit, Australia was in a very good condition to handle it without much in the way of government intervention.

Instead of leaving well enough alone he panicked and began a massive stimulus program, which wasted billions. There were the $900 checks sent out with the governments advocacy to spend, spend; spend us into a better future. Those who followed the directions certainly stimulated the Asian manufacturers of electronic and other goods.

Then we had the copy of the US Cash for Clunkers scheme, which had a similar result, a lot of money wasted. Not to be put off by failure, he then backed an insulation scheme, with the primary purpose of getting money spent as fast as possible. The result of this was 200 homes burned down and four deaths. Countless millions have been spent since to undo the damage.

But wait, there’s more. The next grand plan was Building the Education Revolution, (BER). Under this scheme, school halls were to be fast tracked, even where they were not required, with the primary purpose of getting money spent as fast as possible. The result was buildings cost 3-4 times what they could be built for anywhere else. BER is still referred to as the “Builders Early Retirement scheme.”

The National Broadband Network is another grandiose scheme to spend at least $35 billion on a Rolls Royce high-speed broadband scheme, with fiber optic cable right into 95% of Australian homes. No cost benefit has ever been done on it as the government claims that it was an election promise, and is not necessary. One problem is, that by the time it is constructed, mobile devices will deliver better speeds and be more popular than fixed installations.

Since Labor came to power the country has been in the centre of an unprecedented mining boom, with record prices for our commodities, yet Swan has consistently failed to balance a budget. He has in fact run such massive deficits, that borrowings are running at $100 million per day since they gained office. They are introducing two massive taxes, and are holding yet another tax summit to raise others.

Seriously, if this guy is the best Euromoney can come up with; it would be better to simply not award the prize this year.

Solyndra bankruptcy; your tax dollars at work.

Solyndra, a company Obama claimed, “represented the future of American renewable energy innovation” has gone bust, blowing over $500 million of federal loan guarantees from the $862 billion stimulus package.

Sadly, the President’s statement may be correct. The alternative energy industry has risen on the backs of taxpayers through generous subsidies and the brute force of federal and state mandates. If it were not for these market manipulations, most of the billions spent creating an uneconomic industry would be out in the viable area of the economy creating jobs.

The fact that such enterprises are uncompetitive even with generous handouts raises a stark image for the future should the government titty be withdrawn. It has to be, otherwise nations like Australia and the US are too heavily reliant on the most expensive and unreliable power sources known to man.

Probably one of the most disturbing aspects of the issue is that of probable political kickbacks in the process. One of the company's investors, George Kaiser of Oklahoma, helped raised money for Obama's presidential campaign. It should be of concern, but we have long ago come to expect this from the crony capitalist system.

US politics, like ours, are increasingly based on the principle of, “You scratch my back, I’ll scratch yours.” More here:

"The FBI raid further underscores that Solyndra was a bad bet from the beginning and put taxpayers at unnecessary risk," said top Republican leaders on the House Energy and Commerce Committee, Reps. Fred Upton of Michigan and Cliff Stearns of Florida, in a joint statement.

"Irresponsibly choosing winners and losers on projects like Solyndra is a perilous and often doomed method to create jobs," they said.

The bankruptcy announcement was a sharp departure for a company that had been held up as the model for government investment in green technology.

Obama visited Solyndra last year, saying the company represented the future of American renewable energy innovation and noting that it expected to hire 1,000 workers. Other state and federal officials such as former Gov. Arnold Schwarzenegger and Energy Secretary Steven Chu also visited the company's facilities. …

Jobs plan, an exercise in grandstanding.

Cartoon: By Lisa Benson

The much-hyped ‘Jobs Speech’ has been relatively predictable in format. Cuts to payroll tax were unexpected and will have a positive effect but may be worse than negated by his ‘deficit plan’ which he says will include revamping the tax code by eliminating tax breaks for oil and gas companies and the wealthy. Essentially he has not given up on his tax and spend obsession.

This was always going to be an exercise in political posturing, which was emphasized by his attempt to present the speech to coincide with the GOP Presidential debate, which helps to decide his successor. Any real leader who was serious about gaining the sort of consensus needed to move something like this through a hostile Congress would have the smarts to use a little protocol and tact in the process.

There has already been around a $trillion spent in stimulus on his watch, which was supposed to keep unemployment below 8%. It seems incredible that he now wants more of the same, given that the much larger amount has proven ineffective. What is that saying about doing the same thing over and over and expecting to get a different result this time?

A number of states rejected stimulus funding the last time around on the basis that they were designed to create expensive programs that would leave those states with ongoing heavy expenditure after the federal funds cut out. The proposal to grant funds to reverse some of the budget balancing measures that have been taken by the saner states just kicks the can further down the road.

What is needed is tax cuts combined with elimination of the deficit, with a side dressing of the removal of the job killing regulation that has occurred for too long.

Australian national debt tops $200 billion.

Cartoon: By Ramirez

It seems incredible in this age that the Khemlani affair, which set in motion the downfall of the Whitlam government, was over the attempted borrowing of US$4 billion. Back in 1975 though 4 Billion was thought of as big money. To give some idea of the comparative value, it was to be used to fund a number of natural resource and energy projects, a natural gas pipeline, the electrification of interstate railways and (oddly for Labor) a uranium enrichment plant.

It became a scandal owing to the use of backstreet dealers, the bypassing of treasury guidelines, and the secrecy involved, with the Minister for Minerals and Energy raising the loan independent of Treasury.

Now according to Barnaby Joyce the debt level is over $200 billion and moving rapidly upward:

Nation's debt tops $200 billion after Labor borrows $100 million per day

Congratulations Wayne (Swan) on your double century. We knew if you stayed at the crease long enough you would get there. Actually it didn’t take you long at all; you have been doing a "fine job".

I have always had "complete confidence" in your ability to give Australia its largest debt in history.

Today our nation's debt went over $200 billion for the first time ever. We borrowed $3.2 billion over the last week.

Our debt ceiling was $75 billion when this crowd got into government. On 11 March 2009, Wayne Swan invoked "special circumstances" to increase it to a "temporary" level of $200 billion. In the last budget the government has increased it permanently to $250 billion.

If we keep borrowing money like we borrowed last week, we might be able to give this latest ceiling a nudge.

This fiasco that is masquerading as a government has got to end. This relationship cannot go on.

If you go to www.aofm.gov.au you will see that your nation's "Total Commonwealth Government Securities on Issue" as of today sits at $200.242 billion.

The Labor party has increased our gross debt by $140 billion since they came to office in November 2007.

They have been in government for 1371 days and have therefore borrowed over $100 million per day.

There are 12.3 million taxpayers in Australia, so this government has borrowed an extra $11,000 on behalf of each of them.

"What have we got to show for this debt? Fluffy stuff in the ceiling, which burned down 190 homes and billions of dollars on school halls, which haven't made our kids any smarter. The debt didn't save us from a recession, record prices and record volumes of coal and iron ore exports did."

Letting debt burn, while cooling the planet.

Cartoon: Nate Beeler.

Last year Barnaby Joyce was demoted from the Shadow Finance position by an embarrassed opposition for daring to suggest that the US could find itself in the position of defaulting. The government and media went berserk, and most financial commentators agreed, that he was the sort of irresponsible prick who should never be trusted with a position of responsibility.

Over the last few months there have been numerous calls for an apology to him, which have been met with the sound of crickets chirping. Yesterday he had an article in the Australian, “To those who called me fool, who's laughing now?” on the issue of debt, and the paucity of action on it:

… Do not confuse tackling a problem with delaying when it comes to debt. If while out on the tiles on a Friday night you discover a septic gash on your leg, and in response down another five jagermeisters, pain gone, problem gone, keep dancing, that is delay. Going to hospital to avoid amputation is dealing with the problem.

Tim Flannery (government climate frantic) said that the impact of climate change policies won't be felt for at least a thousand years. The impact of a catastrophic default this time was avoided by a mere 10 hours. When prioritising threats I know which one I would be concentrating on.

Swan has given 25 speeches this year and mentioned climate change 24 times. Debt has only been mentioned 16 times, and eight of these in one speech made last month. A year and a half ago I implored the government to prepare contingency plans for the threat of a US default stating the prospect was "distant but real" but if it eventuated the fallout would be a financial Armageddon making the GFC look like a mere preamble. US President Barack Obama also used the term Armageddon in the past month, so if I'm mad, so is he.

When asked on ABC radio whether the government had prepared for a potential US default, our Treasurer could point to no specific actions taken. But we do have parts of Treasury modelling climate change. The Treasurer believes I have been captured by "Tea Partiers". Disagree with him on climate change you're a denier, disagree with him on economics you're a Tea Partier. …

… Rogoff wrote a paper a couple of months ago titled A Decade of Debt in which he measured the increase in public debt in different countries since 2007, when we voted in these current economic luminaries. No surprises, Iceland and Ireland, are one and two but Swan got the bronze, Australia is third, with a 150 per cent increase in our public debt since 2007. As I previously said we can't keep going on like this, but we are. We have just extended our debt ceiling to $250 billion.

In 2008, before the GFC's nadir, Ireland's net public debt was 12.5% of GDP according to the OECD. The Treasurer boasts that our net public debt is low compared with others. The parliamentary library estimated last year our net public debt will be 12.3%of GDP in 2012-13, the same year Swan predicts surplus.

In the political sphere the person who drives via the rear vision mirror, with a wonderful recitation about everywhere you have been and why, but not a clue where you are going, is dangerous. When, with a coterie of bureaucrats, they cannot keep the car on the black stuff but seem to be targeting the trees, you are in for the economic ride of your life.

Things changed for Ireland after it guaranteed the debt of its banks during the GFC. We have done that, too. Three years ago the Treasurer introduced the financial claims scheme, which guarantees $730 billion in deposits. It's up for review in October but there is barely a discussion about how we might mitigate the risks of such taxpayer exposure. We are too busy trying to cool the planet from a room in Canberra.

The whole thing is here.