Think your tax supports dole bludgers? Think again!

Joe-lie

Joe Hockey lied again

I know you may find it surprising, but smokin’ Joe lied again, last night:

…the average working Australian, be they a cleaner, a plumber or a teacher, is working over one month full time each year just to pay for the welfare of another Australian.”

This is an outright lie.

Most Australians get more from the system than they put in!

According to the Australian Bureau of Statistics, unless you’re earning at least $1,174 per week, you’re taking more from the tax system than you’re contributing. Or, to use Joe’s terms, at least 60% of Australians are ‘leaners’!

Actual-net-contribution-to-

So how can the average Australian be paying for the welfare of other people, when they’re actually taking out more than they put in?

And this is how the tax system SHOULD work

People in the top 40% may ask:

Why should I pay taxes to supplement the income of others?”

Well, other than the fact that it’s the law, there are 2 answers to this question:

  1. You can afford to
  2. If you don’t, the whole system will collapse

The top 40% can afford to subsidise the bottom 60%

Income distribution graphs like the above tell only part of the story. When you look at the distribution of wealth (not just income), it’s clear the top 40% can afford to subsidise the bottom 60%:

Wealth-inequality

If they don’t subsidise the less fortunate, the whole system will collapse

It’s all well and good for high income earners to say “I earned it, why should I give it to someone else?” But what do you think will happen if 60% of the population doesn’t earn enough to cover basic needs? If they don’t earn enough to get an education or stay healthy?

Workers will be unhappy, unhealthy and unproductive, and corporate profits will suffer. National education levels will drop, innovation will decline, and, as a result, our gross national income will take a huge hit. Crime, domestic violence, alcoholism, substance abuse, depression, self-harm, suicide and homelessness will increase. These outcomes will impact everyone, not just the poor.

And obviously if things get bad enough, we’ll have a revolution on our hands…

The top 40% only earn a lot because society allows them to earn it. It’s not their God-given right to accumulate wealth; society allows them to accumulate it. Capitalism isn’t a natural state, it’s a social construct. A system of rules condoned by society. If this system stops working for society, society will simply install another system.

I think they also have a social obligation to support the less fortunate

I believe we have a social contract in Australia. An unwritten agreement that we allow some people to get rich, but we provide a safety net for those who struggle to make ends meet. I think if high-income earners and the wealthy don’t adequately support lower income earners, they’re breaking that social contract. And any government that encourages that to happen is breaking the social contract too.

In fact, I’d go a step further. I believe humans form societies purely for protection and community. That’s why we get together in the first place. So if we’re not supporting the less fortunate, and we’re undermining community, our society is failing.

Comments

  1. Pat Gardner says

    This is a very stupid comment, we support our families and are happy to do so, maybe Joe would like our kids to be back working in the coal mines to help the lifters of which I am one and proud to do so to help other Australians.

    • Wayne says

      Coal miners earn over $100,000 p.a, what’s wrong with working in coal mines again, oh your above work right!

      • tracy says

        I think Pat means, the bad of days of working in coal mines, 16 hour days for less than minimal wage, you should think yourself lucky, the unions got miners some great conditions including decent wagers..

        • Susan says

          The sacrifices of generations of Australians created the quality of life we enjoy today in Australia and its infrastructure that includes a social security system. Checks should be tightened and more job creation schemes instead of bringing in immigrants and leaving young Australians behind on the dole. I’d like to ask Mr Hockey who paid for his education at Sydney University and how does an immigrant Armenian Palestinian family end up living on the North Shore?

          • Melissa says

            Susan,
            I think perhaps consider that most of the newer immigrants are not what you describe as” Armenian Palestinian” ,which seems to be a fairly pointed reference.

            This country needs immigration for its economy to thrive and has a history of immigration from the very beginning of its founding. In fact, doesn’t an “Armenian Palestinian” become an Australian, because by the very nature of them moving and choosing to live in Sydney, North Shore Australia, they have chosen a home? How long do you give an immigrant (regardless where they are from, the UK, States, China) before you consider them Australian, and then, who are you to place such judgement?

            Are they not Australian if they choose to make this country their home and contribute to it? Why phrase your comment or perceive immigrants as “us” versus “them”? That was, and never is, the problem.

          • townsvilleblog says

            Susan, I agree. It seems that independently wealthy individuals and families are welcome as immigrants because they bring their wealth with them and live at North Shore. I have noticed this for decades, wealth speaks all languages.

          • Jane says

            Seems like all the Armenian Palestinian immigrants replied to your comment, defending their taking over our country, and they totally missed the point. You are exactly right!

          • townsvilleblog says

            Wayne, that is precisely because unions in other mines achieve higher wage rises for their members, and you get a poultry 4% rise, lol, there are none so blind as those who will not see.

          • Richard says

            4%! Count yourself lucky. I don’t need to tell you who I work for you should be able to guess….we got 1.5% and were lucky not to lose leave. Fortunately public opinion helped us get a review and I think we ended up with 2%. Still I consider myself fortunate.

      • Jamie Gerbes says

        Yes coal miners are well compensated nowadays and definitely lifters. Pat is referring to child labor and indicating that it seems Joe would rather poor children die in mines to support industry than grow up to require welfare.

  2. Grant says

    So some people take more out than they put in, its called socialism. If the welfare burden of the people that are truly taking advantage of the system was less then people in REAL need could get a much higher Newstart or a better disability pension. The door swings both ways on this one. The fact is, the more fraudulent or work capable people we get off welfare the better the bottom line, and the better we can treat our most vulnerable. The fact is we all lose to welfare bludging, either through higher taxes, reduced services or lower welfare payments.

    • says

      Hi Grant. Thanks for your comment. A few things in response:

      Firstly, I think you’ll find socialism is a lot more than the simple redistribution of some wealth through an (allegedly) equitable tax system. Socialism is all about the people owning the means of production, and goods & services being produced in line with human needs, not the need to generate profit. That said, some socialist thinkers believe in taxing the rich to support the poor, but I think you’ll find tax is a feature of most, if not all, capitalist economies, and its purpose is always to provide for individuals that which they can’t provide for themselves.

      Secondly, I agree that if fewer people took advantage of welfare, then we’d all benefit. But there are a few problems with what I understand to be your meaning here (and what I know to be the meaning of our government):

      1) Why point the finger only at the unemployed, pensioners and disability pensioners? What about the corporate and white collar welfare recipients and tax cheats? Like the 83% foreign-owned mining industry that gets $4.5b/year in tax handouts. Like Westfield, Apple and Google, that pay almost no tax here, despite making huge profits here. Like the banks that tax havens to conceal income. Like these 45 multi-millionaires who paid absolutely no tax. Our government’s doing nothing about these things, and in fact, has made life easier for them. It’s abolished the National Steering Committee on Corporate Wrongdoing that made sure the law was effectively enforced on corporate criminals. It’s introduced an amnesty for mega-rich tax cheats, so they don’t have to pay their fair share, and they don’t go to jail. And it’s increased the amount of interest that companies can claim tax deductions on when they borrow money from their own offshore subsidiaries.

      2) And let’s not forget there are 717,100 people looking for work (May), but only 140,800 job vacancies (Feb). So it’s IMPOSSIBLE for 80% of jobseekers to find work!

      3) So of the remaining 20%, how many do you KNOW are bludgers? Remember, skills shortages play a big part in vacancy rates, so we certainly can’t assume there are 140,800 people just sitting on their asses thumbing their noses at work.

      4) Now bearing that in mind (or even ignoring it), will persecuting the unemployed create more jobs? Forgetting the emotional cost and the fact that it violates Article 25 of the Universal Declaration of Human Rights, will denying ALL under-30s jobseekers ALL benefits for 6 months of every year they’re unemployed do anything but create more crime, homelessness, depression, etc., and thus MORE social cost? And that’s just one example!

      5) Of course, none of this or your comment has any bearing on the fact that Hockey lied about average Australians supporting other Australians. That just doesn’t happen.

      • Deb says

        All I can suggest is that maybe you should volunteer your time down at your local centrelink office for a few weeks and then you will see how many actually dole bluggers there are and how they expect it all handed to them. You would be very surprised.

        • Nicole says

          As I have been on both youth allowance and new start I can tell you that most welfare recipients don’t need to go to Centrelink offices very often. It’s not really an accurate cross section of the welfare receiving population.

        • Mumtrader says

          Skewed perspective caused by self selecting sample though. In the Centrelink office you are going to see *all* of the people with what you deem to be a ‘blugging’ (sic) attitude but far from *all* of the people who are sincerely unemployed & looking for work. The actual levels of welfare fraud in Australia are low in the scheme of things & highly dependent upon what you call ‘fraud’ (ie: ridiculously onerous compliance requirements that turn legit people into ‘criminals’). Indeed a far greater expense to the welfare bottom line is screw ups on the part of the Department & review teams all over the country have been shut down by the Department because they aren’t “cost effective” (ie: chasing fraud costs more than the fraud they recover).

          • Kaz says

            Yeah, I spoke to a dole bludger once. It’s a disgrace and the Government is right to do something about it.
            Besides, people like Gina Rinehart worked damn hard for that multi-million dollar inheritance!
            (Sarcasm intended)

        • Flo says

          I can only guess deb that you have never been on centrelink before. I have, I used it to get myself an education and provide my daughter with food and a place to live after I became a single parent. Not all those who are at centrelink are bludgers. Some are legitimely doing it tough. What is the saying? Never judge a book by its cover. That is exactly what you are doing. If you met me today in life you would never have thought I was a so called centrelink bludger because now I live a good life, I can provide for my daughter with good education afterschool activities, have a lifestyle I can enjoy and drive a nice car. I am not apart of the lifters in this community, and I am happy to provide to those who are doing it tough now like I was only a few years ago. I just shake my head at people like you, always ready to assume the worst of people using centrelink without knowing the exact reason as to why someone is using centrelink.

          • says

            i would like.to respond to this countries ongoing immigration policy. as one person has stated we need migration for economkc growth. crap!! migration is a euthemism fo exploiting migrants by the rich, who in turn have more slaves & consumers for their industries. the flow on effect is increased stress on the society at all levels. australian governments are selling our countries assets to subsidise the infrastructure needed. roads, schools, welfare etc. & increasing the cost of housing & other services due to increased demand. immigration ruined america. it will ruin australia.

        • Maeve says

          Deb…. Firstly you can’t volunteer at Centrelink and certainly not on the ‘Frontline’ or customer service counters…. and you’d be mad to volunteer…It’s a very difficult job and thankless, rarely supported by community expectations… Judging those who need help by a small selection of customers in a centrelink office is very naive.

          How ridiculous to demonise those on centrelink, regardless of what you consider to be a valid recipient…if someone is on a centrelink benefit they are already at the bottom. Denying them help or a handout won’t resolve your issue, As a matter of fact it will worsen the issue you see. What do you expect them to do?? Putting them in a situation with nothing will only force them into further peril.

          Walk a mile in their shoes before you label, demonise and discard them because it will be at the expense of the society and the community you live in.

          It’s about time we looked at Corporate Welfare fraud…instead of punishing those who are down…scroll back up and read Glenn’s reply…That’s where the everyday Australian should be focused as they are the real thieves and yet you’re quiet happy to support them… Time to open your eyes and see what’s actually being done and I pray the day never comes where you need centrelink support as your only help, as I doubt you’d survive with the demonised label you support.

        • Terry Trevor says

          Hi Deb . I am an older Australian and have had to resort to welfare ,even though I have worked since 14 years old. That was 54 years ago..I saw mostly true /sad people with young children ,and feeling very low ..I do think that some were abusing the system,but ,all in all ,there was people that needed help ,for themselves or their kids ..
          My thoughts of the politicians ,here ,and previously, is that —–when they were in power ,they should have made this country great ,for all, NOT JUST FOR SOME …I think .we are going backwards….And ……..If there ever is ……..A Sir Tony Abbott……I hope I can pay to die …..

        • Anna says

          The government and their prime supporter, Murdoch, have conned the public into believing that suddenly, under the recent Labor government, Australia became a “welfare nation”. It was front page news! Shock! Horror!

          The figure quoted was that 48% of Australians pay no net tax. Hockey and Abbott make out that this is a terrible, emergency situation cause by the Labor government being irresponsible and incompetent fiscal managers.

          But how about this? Take a look back to the last year of the Howard era, during the run up to the election in 2007, you will find that the then Treasurer Peter Costello announced happily that 60% of Australians pay no net tax.

          Here is the place to see him defending the latest interest rate hike at the time, by claiming credit for this very fact, that 60% of families paid no net tax.

          http://www.abc.net.au/7.30/content/2007/s2000192.htm

          Interesting fact isn’t it, that the Labor government, accused of reckless spending and irresponsibility actually has brought that figure down from 60% when they came to power in 2007, to 48% now.

          You will also see if you listen to Costello in this report, that this welfare they are talking about includes family tax benefit, a benefit which unless cut in this Budget, is welfare available to people earning up to $150,000 per annum. Not exactly the people the government wants everyone hating, the supposed ‘bludger’.

          In Howard’s era, he kept getting re-elected by smear campaigns in the mainstream media against Aboriginal people, and against ‘boat people’. Now it’s anyone receiving ‘welfare’ at all.

          The more things change, the more they stay the same.

          Of course, you won’t find these facts, or the truth about any of this governments other lies, in Murdoch’s News Limited Australia’s newspapers any time soon.

          • Sea-dweller says

            I wonder where the naysayers and finger-pointers suppose ‘welfare’ recipients money is going? Into local businesses which employ local people I expect, rather than hidden in a tin under the bed.
            My take is that society needs a percentage of people who are supported to spend. This needs to happen in any case – single Moms have a hard time of holding down two jobs. Any Negative thinking about that fact, or the fact that pensioners have already contributed via a lifetimeof tax, people on disabilities should be working more, etc is a work ethic that has truly lost sight of the big picture. That’s without evening mentioning the corporate and top end fraud that has already been substantially discussed here.

            Even more serious, to my thinking, is the way in which people behave like hard done by children regarding how the pie is carved up and distributed. This plays directly into the hands of those who benefit from the divide and conquer game – ordinary Australians bickering amongst themselves, instead of seeing the structural nature of the lies being peddled. All I can say is thank goodness for alternative media sources like this which bust through the lies and myths!

      • Wayne says

        We all saw how successful the socialist doctrine was in the United Soviet SOCIALIST Republic, there were no rich just poor struggling to survive but at least they did all get treated the same, a roof over their heads and sometimes 3 meals a day. Let’s face it, why try if you have no chance to get ahead. Socialism now is just an ideal of school kids with no life experience, as we have recently seen on Q&A and in protests.

      • Ginny says

        Thanks Glenn, for rebutting Grant’s remark so considerately and for backing up your point with some solid stats, thus saving me the effort! It seems to me that there is more of an empathy deficit than a budget deficit in this country right now, along with access to unbiased news and information.

        My greatest concern, when I visit these forums, is not just the shocking, factual revelations such as yours about how our money is ACTUALLY divvied up, but how much bickering and fingerpointing is stirred up by the widespread yet inaccurate claims about wealth distribution which typically focus on our least wealthy as the problem. Cheap shots that tap into people’s base fears about a fictitious scarcity and reduce a complex picture to a simplistic moralistic one. Even the terms ‘lifter’ and ‘leaner’ perpetuate this.

        It’s my opinion that this blame game among average Australian works very effectively as a kind of ‘divide and conquer’ strategy, to divert people’s attention away from the real sources of economic drain, such as the corporate tax evasion and favouritism of the extremely wealthy, that you speak of.

        I for one have been deeply grateful for the welfare safety net, can’t imagine what Australian life would look like without one, support other people to continue meet their needs through it when the cost of living and housing relative to income is high. Perspective.

      • says

        Hi Glenn, a well written and explained post. I wish people were given facts like this rather than what the current government feed us. As you rightly point out tax evasion is rife, these companies employ lawyers and top accountants who (in the main) are typically from middle to upper class backgrounds, naturally well educated and comfortable. Ethical decisions to hide the corporate taxes don’t seem to be an issue for this government.
        Thanks again for highlighting.

      • townsvilleblog says

        Glen, well said, but I doubt that Grant understands what you have written, the Grant’s of this world worry about “dole bludgers” yet do not think about tax cheats, both situations affect the budget bottom line, and their are plenty of multimillionaires out these paying little to no tax on their huge incomes thanks to friendly taxation laws. I don’t worry about Billy Bunter getting away with $180 per week, when billionaires are getting away away without paying their fair share of tax (in the hundreds of millions).

    • Cheryl says

      Having worked in welfare for over a decade, i know a very small number of people rort the system. Maybe they have the ethics of bankers and big business execs. They will gouge every last $ whether they are entitled or not. That doesn’t mean all execs are rorting, or does it? After the recent Post Office outcome I’m becoming disillusioned. Hell, if 1 guy can make off with taxpayers millions, (and don’t get me started with R Murdock) then I say to the poor enterprenial joe on benefits, bloomin’ follow your leaders. Chances you might get away with a coupla hundred, or thousand at the most. There is much more taxpayer $ spent on catching the little rorters. They are prosecuted and have to pay it back. The real rorters are applauded and have no consequences at all.

    • KME says

      Hi Grant, there are also a lot of wealthy people (and large corporations) who are evading their tax obligations to society through loop holes and other measures to hide their true income. So for every ‘dole bludger’ as you refer to them, taking advantage of the system, there is equally a ‘tax bludger’ taking advantage of the system – just in a different way. We all lose out to the tax bludgers too Grant and the system doesn’t work as well as it should to support the most vulnerable.

      • Sally says

        Indeed! How many times have you heard someone speak openly about their “tax write off” investment with no shame whatsoever. This is considered CLEVER in many circles, and people BRAG about it! The same people, who would cut off at the knees people doing it tough and declaring them all “bludgers.”

    • I was young once says

      Grant, your reasoning, like Joe Hockey’s, implies that employers are suffering from a labor shortage and that we need a big stick to made people go to work. The labor market is cyclical and at some points in the cycle there aren’t the job. At these times, a draconian and rather punitive unemployment scheme will really increase the financial suffering of young people out of work.

      • townsvilleblog says

        June, once again, I agree with your correct statement, so very true. The Grant’s of this world seem to live in a cocoon and never see the big picture.

  3. Nadi says

    I consider myself lucky to get a decent income, which I worked for (and still do work for) for many years. But it wasn’t always that way. I spent many years studying and looking for better jobs, while raising my child single handed. I never would have made it successfully to something better without benefits and subsidies to help me survive along the way. Without this, I never could have had the opportunity to better my position in life and the opportunities for my child’s future.

    I am extremely grateful for this chance, and look forward to a future of being able to repay some of this back as my income grows. I want to support those who need it – I had my turn, why shouldn’t they have theirs?

    So, as well as your arguments above, I would add the following:
    1. The tax system enables many people in tough circumstances to support themselves well enough and long enough to make better circumstances until they no longer need this kind of support. This is good for all of us – it ultimately avoids the kind of expensive social problems you listed up there. It means more people with a good quality of life and more high paid professionals with a better understanding of those in greater need. And
    it’s fair that we should all get that chance, not just those born to wealthy positions.

    2. Many of those who earn higher incomes will still need benefits and support at other times in their life. Why is it not fair that they should support others they way that they have been supported?

    • Mark says

      Also Brilliant. I am currently applying for Austudy after working and paying tax in menial jobs for 25 years. The support I hope to get will allow me to study, which in turn will help me qualify for better jobs with better pay, at which point I will happily pay more tax to help others. Does it really matter if my taxes go towards helping the next person try to educate themselves or to funding massive handouts for foreign investors, sneaky bankers and tax dodging millionaires? I know what I’d choose, but do I get a choice?
      Perhaps it’s a case of swings and roundabouts?

    • Wayne says

      I’ve never been supported by welfare payments, there were no family tax benifits when I was a kid and I started working at 17, working long hours, night shifts and being away from home days at a time. I’m saving for my own retirement contributing $600 a fortnight myself into my Super so why should I be supporting people to own a car, buy big screen TV’s or pay for some adults University education when they can pay for it themselves through HECS.

      • says

        If you drive on public roads, went to a public school, go to public hospitals, use Medicare, picnic at a local park, enjoy the security provided by the police and our military, get your bins collected, go to the toilet or drink water from a tap, you DO get welfare.

        Australia’s tax payers GIVE you all of those things. Without that support from your fellow citizens, you’d never be able to afford those services on your own wage, nor have the time to build them. And it’s that support that allows you to buy your own car and big-screen tv, and to contribute to your own super.

        Indeed, if you’re in the bottom 60% of income earners, you get more welfare than you pay in taxes.

        Why do you think you’re more entitled to those benefits than someone who can’t find a job (esp when there are approx 500,000 more jobs seekers than jobs)?

        Why are you more entitled than a pensioner who’s worked as hard as, if not harder than, you their whole life, and paid taxes their whole life?

        Or someone who physically or intellectually CAN’T work?

        And uni students? Do you not think our country recoups it’s investment in them after graduation? Why are they less entitled to that investment than you are to the investment we make in you? What’s more, don’t you see the problems that come with putting graduates into crippling debt? It discourages political engagement and dissent, which undermines our democracy.

        • townsvilleblog says

          Wayne just doesn’t get it, he is like many others who go through life with blinkers on and fail to see what taxpayers provide. When I say taxpayers, that is all of us these days with GST on just about everything and plans to introduce it to fresh food, which thankfully now, would not get through as there are now 3 Labor Premiers who would not agree to it. Wayne and others like him never see the big picture, they are at war with the rest of us and don’t even realize what it is that we do for them via the taxation system.

        • Reaperman says

          Bin are collected by council which is paid for by rates and taxes that all homeowners pay you must be a renter and not very well educated not to know this, water (in South Australia ) is paid for by the occupant of the house so no welfare there, roads well we pay registration on our vehicles, we pay GST on our vehicles, again on council roads its the old rates and Taxes again, state roads GST, Rego, Licence fees, FUEL Excise, then on top of that GST on Fuel, please we are over taxed for everything we use and lots of people on welfare of one sort or another pay most of those things the only things the do not pay is Income tax.

      • Jay says

        *cracks up laughing*
        Wayne.
        Single parent and uni student here.
        For starters, you had the physical and mental ability to work. Not everyone does.
        Secondly, you aren’t paying for us welfare recipients to buy flatscreen TV’s. In fact, my TV here cost me a mere $90 on Gumtree and I had to save up for that. This is actually my first TV that I have owned since having to leave home at the age of 16 due to abuse in my home.
        I bought a tablet recently, woohoo! Cost: $500? No. $300? No. $130. It was $130 second hand Nexus 7 (2012) on Gumtree and I only bought it so I can study whilst travelling on public transport or when I am at the park with the children.
        Rent costs me about 60% of my mere $35,000 a year income, and I am one of the lucky ones who receive a bit of child support. Others get less. I then have two children to support on this income, as well as myself.
        I don’t own a car, though I would like to save up for one. It isn’t easy travelling on public transport in order to take the kids to school or to do the shopping, especially when the weather is over 40’C, under 5’C or pouring down with rain.
        Anyone who finds that they can happily live on welfare payments must be mentally ill, no one wants to live on such a small income. Most people on welfare payments would be working (or working more) if their circumstances allowed. I know people who are much worse off than me. The changes won’t affect me personally in any big way, but they will affect many of my peers who can’t even afford to keep the roof over their heads as it is. If these changes go through, they have no hope and not only them but their children will be on the streets too (as is already happening since the changes to PPS a few years back).

  4. Thom says

    I am sick and tired of people lucky enough to have jobs telling me how their taxes are supporting me because they think they’re the only ones paying tax. Try engaging a braincell or two before touching your keyboard. I pay taxes, every time I buy anything from petrol to a bus ticket I pay GST, that’s taxes people, I’m also a smoker which means on a 50 gram packet of tobacco I pay something like 75% tax, that’s approx $30, 2 pkts over the course of a fortnight, that’s $60 in taxes, when I buy a beer 50% of that is tax. So even on a disability pension I am paying as much tax as most low paid workers. Unless you’re dead, a large corporation or very rich you pay taxes in one form or another, the difference being, I won’t get a tax refund at the end of the year.

    • Maeve says

      Good on you Thom for drawing attention to this…. It’s time we focus on Corporate Welfare Fraud instead of labelling, demonising and discarding (regardless of reason) those who receive assistance.

      • Kaz says

        And… When they get all these people off benefits (by taking them away), will I as a wage earner pay less tax as a consequence? Nope.

    • Wayne says

      You don’t get a tax refund BECAUSE YOU LIVE A PARASITIC EXISTANCE and don’t work, a tax refund is only a refund of tax you payed in the course of earning a wage.

        • Vicki Hunter says

          Love your work Glenn :) Wayne … you really have no clue do you. Thom is on a disability pension for a reason. So he can’t work. This does not make him a social parasite…just unfortunate. Way to go Wayne…kick a man while he’s down.

      • townsvilleblog says

        Wayne, I have met a person like you years ago, he was from Zircon, he spoke Zirconese and had trouble relating to the real world, here on Earth. From memory he stayed in a psychiatric institution for quite a while and when he came out of that taxpayer funded institution he became a tory (a member of the LNP) and went mad, so we shot him.

      • Tony says

        The politicians who gain wealth and power at the expense of everyone else are the REAL criminals, but they do everything they can to turn us against each other, blaming the unemployed, the poor, the desperate, in order to divert attention from the fact that they have become rich and secure through systematically exploiting other people.

  5. Suzy Manigian says

    Great analysis Glenn. I agree with everything you said. I want to say two things – beyond the remit of your article – I just want to get it off my chest
    :
    1. People who are on low incomes are often parenting, in which case they’re doing an important unpaid job, many semi-employed and retired people are carers, or they volunteer in their communities in a plethora of ways that Australian society would be bleak without. Their selfless contributions are discounted/uncounted.
    2. Whereas people who are extremely wealthy quite often have got there by appropriating an unfair share of the nation’s wealth. How many jobs have I seen where the people who do the actual work get paid a pittance while the managers/marketing department/HR department/PR people spend their whole days creating tableaux that make them look like they deserve their 10x 20x 40xhigher wages.
    I’m not even going to talk about investment bankers and property investors.
    I’m sure you’ve considered all this – but how are we ever going to have an economy and financial analysis that actually incorporates the worth that people contribute to their community – not just their bank and the ATO?

    • townsvilleblog says

      Suzie, Now you have gone completely over Wayne’s and Grant’s head, they will think that you are speaking in Zulu.

      • Sea-dweller says

        ( after my crash course in Zulu! :-))

        Indeed Suzy! It’s called Social Capital and it’s been thoroguhly left off the GDP map. After a few decades of sort of being put on the map
        (although with pretty poor workplace conditions, if the hourly rate is anything to go by), parenthood is gradually being forcibly and regressively re-assigned to non-workdom.

        Due to this distorted work ethic, single parents are forced to move to Newstart, for less momey, a d look for work, whether ready to or not, and whether indeed jobs exist, amd indeed whether or not they are already employed elsewhere part-time.

        I find it interesting, too, how being a parent or carer at home is not included in the nation’s GDP, but being an employee at a childcare or other care centre is.

  6. Maria says

    As a lifter, paying the additional tax is an imposition, but one I’m glad I can contribute to ensure that we have a society that puts the welfare of the less fortunate & the elderly as a key consideration in policy development…

    I don’t mind admitting that I’m a Liberal voter from waaay back, but I refused to vote at the last election because I had no confidence in either leader of choice.

    I am alarmed at the party line of this current government of supporting “those that create jobs” because they are also making it clear that it’s at the expense of the environment and those on the poverty line.

    Migrating to this country as a child was the luckiest thing that ever happened to me, and my family. But as migrants growing up, we had to work 2 or 3 jobs to make ends meet – so we can speak from experience on what the breadline is all about… Despite all that, we made good – because we were able to tap into government funded migrant support, Medicare & free / subsidised education. Having to pay at the top tax bracket for the last 15 years is a fair exchange for that advantage.

    Although being poor is a distant memory, it doesn’t make you forget the lessons learned and what’s important. You always lend a hand & help out those that need a hand up. Political rhetoric can simplify poverty – but poverty is NEVER that simple.

    What I do know from working in corporate/ govt contracting for the last 20 years is that there are many, many criminal inefficiencies hidden within the organisations “that create the jobs” – executives who refuse to travel on economy class for 1 hour interstate flights – all on company expense, blowing out their travel & meal expense limits into the stratosphere, writing off 6-figure software/ systems purchases that don’t even work and golden handshakes for terminated executives who ran companies to the ground.

    Funnily enough, most of those inefficiencies & blowouts in non-essential spending are in government – on BOTH sides!!

    So let’s get real & put the blame where the blame belongs & cost cuts where they NEED to make the cuts!

    As a lifter, I’m just having a say on where I want my money spent and who gets it & I definitely don’t want it spent on additional corporate subsidies / tax breaks.

    • townsvilleblog says

      Maria, it matters not what you want your taxation money spent on, if you vote Liberal it will be spent on corporate welfare and employing fellow Liberal’s in high ranking government jobs paying extremely high incomes.

  7. megan says

    OMG!!!! Hockey seriously just tried the old …..workers pay for others on welfare bullshit!!!!!………..Every worker in Australia works for one month a year for another persons welfare…………….Really? So if every worker has already payed a months salary in welfare support, then when they themselves become unemployed they will be entitled to have all that welfare back ..surely ?……Oh, and Andrews says, “the best kind of welfare is work”……..HUH? So when the average worker who pays for another persons welfare, who is ‘working for the dole’ the average worker is actually supporting a worker, not a welfare recipient. Therefore when they bring in ‘work for the dole ‘ for private business that average worker will be paying welfare for businesses who do not want to pay workers a fair living wage. Actually they have already brought the “work experience” (work for the dole) in for private business……..I know because I’ve been a victim of it. Apparently an educated, 45 year old woman who has been folding, ironing and washing clothes for her family for over 25 years needs to learn how to fold clothes in a private business for free, for two eight hour shifts. I’m not deliberately leaning on anyone, the government is making me lean. If you receive any work when you’re on Newstart you have to report your ‘Gross earnings to centrelink ……..fair enough you probably say,,,,,,,,,but at the end of that work you now have to wait for your ‘above’ earnings to run out before you can have any newstart payments again. So essentially based on your gross earnings you just worked two weeks to a month for exactly the same rate of pay that you were getting on newstart. but now take in travel expenses, wear and tear on your vehicle ( I was travelling 85 km round trip five days a week on an income of $800 gross a week) food, etc. Every time I worked I became worse off. I am now technically homeless. I know of two other women who are also homeless, both had good careers, both had their health and family but both got sick at certain stages and couldn’t (under our system as it stands ) recoupe. What the hell is going on in this country?
    I want a job ….a permanent job to see me through to retirement if my body holds up that long. I don’t want handouts I WANT A JOB!!! I want my pride back! Instead I’m told I’m behind the eight ball because I had the audacity to be a stay at home mother to my three boys. I’ve given this country three strong, educated with good work ethics, decent, men. Why am I shoved to the sideline?

    • Bronte says

      Well said Megan & I so relate. My circumstances much the same. Basically no Super as spent much of my adult working life in part-time & casual jobs while raising children on my own (was married before becoming a single parent so same deal work wise). Now after losing my job am struggling on a carers allowance while home with an adult child on DSP. Now over 50, I WANT to work. I have good qualifications – which I studied for to ensure I could work for another 20+ years so could build up my Super.
      I totally resent the nation’s treasurer & the government demonising those on welfare; trying to get the Australian people to turn against us in some misguided attempt to blame & shame us into ‘pulling our weight’ in getting the economy back into a surplus which was actually never at risk in the first place.
      Grow up Tony Abbot & Joe Hockey. Maybe you two should include yourselves in those heading for Mars – because you’re obviously not living in reality on this planet!!

  8. Chris says

    Agree with everything here.
    I do wonder though. I can see that it is beneficial for “job creators” to get tax concessions or help from the government (unless you’re spc, Holden, Ford.. etc.. grrr), but the job creators must have to give something back to the community in order to receive those concessions. like, I don’t know, creating jobs!
    Is there anything in place to force a certain number of jobs to be created to receive the concession. If that was in place I would support it.

    • says

      From what I have seen there is a strong incentive in most corporations to employ as few people as possible (can’t have people standing around being unproductive).

      Using the same logic they of course need to keep costs under control so for those below management level the corporation seeks to pay as little as possible.

      The same is applied to production costs – the aim is to produce in the most efficient way and that means driving costs down therefore the product is produced as cheaply as possible.

      When it comes to marketing of course it is a different story – in that scenario the corporation has an obligation to its shareholders to return them the maximum possible on their investment after taking advantage of every possible tax deductions and loop hole.

      That may have something to do with why so many people see the current system as one where corporate executives struggle so hard to get to the top of the heap so that they can apply the above formulas to ensure success for their corporation is nothing more than producing and spending as little as possible on that while knowing that that includes your workforce – the people who are actually productive) while the profits are required to be as high as possible and the taxes paid to be little or wipe them out entirely if possible.

      When our current system finally reaches its peak there will be one person at the top profiting from the entire global production beneath them from the cheapest possible resources paying the lowest possible wages to ensure the maximum profits for the executive at the top of the heap. His job is to simply calculate the best possible way to exploit all those beneath him.

      Curiously there are many people who have no difficulty working this all out yet in their desperation to raise themselves up a very small rung that they too are willing to tromp on and to denigrate people below them.

      I am told by politicians and business managers, CEOs etcetera that is is a fine and wonderful system and that we must not stand in the way of progress as it impedes the development of our democracy which is based on the principal of being a parliamentary democracy which meant that there is democracy for those in the parliament and good luck to the people who are not.

      Thats what I like so much about Australia – beautiful place to be lucky enough to be born here or to get here in some way so long as you don’t come as a refugee by boat or if your were one of the sovereign people who were in this country when we first arrived here, the wrong color or origin [add additional here]. A most wondrous and beautiful place full of spectacular scenery and unique places with a geological history going back before man came into existence. A place filled with wonderful people who think about how they can care for the many who hare not as fortunate as they are; people who want to have and do the best for their children and for the future generations to come. They work hard to make our country better and more equal; just a few of the reasons why I consider I have been so lucky to have been born here.

      The only thing that make me sad and depressed are the people who run the show for their mates and for those of their religion or for some other agenda. If it weren’t for those people Australia would indeed be a great place to raise your children.

    • Thekla says

      Well, Maggie Thatcher tried to say there was no such thing as society. One would imagine these guys think in pretty much the same way. Everyone for himself.

  9. Peter says

    I spent 8 years working for Social Security before it became Centrelink. I have been a student on Austudy and a single parent but only received payments for a short time. I am now 60 and have been working for 43 of the 45 years of my working life, having left school at the age of 15. I am still working and expect to for many years to come. I have never looked down at people receiving benefits. Most people in Australia have at least one or two family members receiving some form of payment from the government. I don’t have a problem with my tax dollars supporting people in need. Yes, there are a few bludgers but not as many as the government and media would have you think. They are no burden. Anyone who complains about supporting the less well off need to grow a heart and get over themselves.

    • Natasja says

      I agree.
      I left school at 16, got an apprenticeship and worked for three years. When I was retrenched, I was on Centerlink while studying for qualifications and working casual jobs. I am more than happy, now that I have a full-time job again, to donate to charitable organisations and have part of my wages go to supporting people who need it, the same way I once did and may again, if I start a family, have to care for a family member or lose my job for some reason, or just get old and retire.

      If it provides a safety net in the future, I am happy to pay for it now.

      I don’t consider it “lifting”, but more “paying it forward”.

  10. Jane Koitka says

    I have a problem with people who rort any system whether it be those in Government, Corporations or on Welfare. However, it is particularly unfair to single out one sector of the community and label them all as being the same when only a small percentage are entitled to that label e.g. dole bluggers.

    For my entire working life I have considered it my responsibility to support people who are in need, be that through the tax system, paying people to help domestically, home maintenance, carers, and so on as well as donating to many charities. I see this as being every human’s being right and responsibility. To believe otherwise, as this current government does, is nothing short of draconian.

  11. Sharyn says

    I think all mothers at home looking after children under 6 should get the single mothers pension so they can rear Australia”s children in the home without having other people rear their children, and also our farmers should get the dole all the year and when it comes tax time and they have made money on the farm pay it back instead of having to struggle and be embarrassed while trying to support Australia with produce, and in bad times becomig so desperate they get suicidal, (eg drought times, etc). Young people could be apprenticed three months at a time to farmers rotated with city apprenticed youth, or healthy older people the same idea, the farms need supporting.

  12. Sharyn says

    To get more Doctors and Nurses into the country after University teams of groups of 4 young doctors and four new nurses could be grouped, and 2 doctors and 2 nurses sent to rural areas for 6 weeks at a time and 2 doctors and 2 nurses into hospital system for 6 weeks and swapped after that time for maybe a period of 2 years or whatever is suitable and if they do that their hex fees are cancelled for their university training. We will get lots more young people to train and study to be doctors and nurses this way.

    • Wayne says

      Yes, because who wants to be a doctor earning $250,000 a year and having to pay $15,000 a year in HECS fees.

      • says

        There’s no denying many/most doctors can afford to pay quite a bit in fees, once they graduate.

        But there’s also no denying additional fees would be a disincentive to do a medical degree, in the first place.

        There’s also no denying we already recoup our investment in doctors. If they’re earning that much, they’re definitely in the top 40% of income earners. So they’re in the minority that ALREADY puts more into the system than it takes out.

        But don’t forget the doctors who choose to work in, or donate their time to, under/un-funded community centres, helping people who need it. More debt will make it less likely they’ll do this. And if they don’t, then the patients at those centres will suffer, that immediate community will suffer, and in the long term we’ll all pay the price, either through additional support/funding being required for them and /or the spread of disease and social unrest.

        Instead of hitting doctors with extra debt, when they’re already more than paying their way and contributing a lot to our country, why don’t we simply make the 83% foreign-owned mining industry pay its fair share? Or the other dodgers I outlined in one of my first comments above?

        • Melissa says

          Hi Glenn,
          Thank you for your measured comments to some of the other commenters. Have agreed with you on many points you’ve made.

          I normally steer clear of anecdotal stories to back beliefs but I do feel that there is a definite exception to be made in this case. I will share mine:

          I come from a single parent family, being the eldest of 3 siblings. My younger brother having a severe intellectual disability, my mother and I have had to care for him in every respect ever since I can recall. My point is this, if my mother and I had not been able to access the Centrelink support in the form of Youth allowance, Carer’s allowance or single parent’s allowance, neither of us would have been able to go to University to further ourselves and our circumstances. It has been an incredibly difficult journey but one, we have been able to do so with the financial assistance we’ve had access to.

          I’m now currently finishing my final year of post-grad medicine in Sydney, having finished a previous degree from which I was able to work for some time to save up prior to entering medicine. I will add that I worked 2-3 jobs in my undergraduate degree and largely did not access youth allowance as it was not even enough at the time to support our needs. My undergraduate skills allowed me to work through the first few years of my current degree, however now, I am accessing youth allowance to get me through financially for my final year of medicine and i’m very thankful for this.

          Education and the ability to access it with the help of some basic financial support, has been key to my family’s journey. It would not have been possible otherwise. Furthermore, my drive to enter medicine has been forged by my family’s circumstances and experiences and I seek to return to contribute back to this society and help bridge some of the inequities i’ve witnessed and experienced.

          None of this would have been possible if my mother and I had not been able to access centrelink and some of the welfare benefits at different time points. Furthermore, the amount of paperwork, the level of screening and testing can be a massive deterrent and I think people underestimate the difficulty involved.

          There may be a small number of ‘dole bludgers’ as some people seem to have a penchant in chanting and pointing their finger at, but these people do not realise how much harm can be done by doing so. To tar everyone else with the same brush (for such a small minority), is not only reprehensible, but also incredibly simplistic.

          Glenn has raised a few points about what we access and use, our infrastructure, parks , community services, clean water, sanitation, public education and up till now, pretty much completely FREE healthcare. These are all things we contribute to and access and take from and individually, we could not hope to ever afford ourselves.

          Finally, all the services and more (I’ve failed to mention because there is many!) adds to social capital, to a functioning, reasonably healthy and progressing community. Peace, common decency and mutual consideration are aspects of social capital, we cannot easily quantify or assess on objective scales, but it is crucial to an existence in this society that is largely peaceful and safe. That, is something I think we largely fail to appreciate.

          As for Wayne’s comment about how much doctors earn, I think your approximation of $250,000 may be true for some disciplines and specialties, but it takes a very, very long time to get there and many specialties don’t necessarily ever pay that much in their career lifetime. Many specialties are also limited by what they can earn as they may only ever work in the public sector and choose to do so, which means that they will put in back into the system, far more than they take out. “Putting in” is not only about the time spent working, but the uncounted, unpaid, years of one’s life spent contributing, researching, teaching and nurturing future generations of other doctors and health professionals.

  13. Theresa Hollis says

    I spent some time reading all the comments posted and some interesting points were raised – and answered – but there is another side to the story also – I am 66 years of age worked all my life and have been divorced for the past 11 years – something that I thought would never happen, I thought that I would continue to live and work on our farm and life would go on I did not for one moment think that I would wind up living – no sorry – barely existing on the Age Pension – when I started work back in the 60’s there was no such thing as ‘the dole’ or other such ‘benefits’ you found a job and worked at it and most people were in employment – there was no such thing as superannuation either – you put some money aside if you could. Now all these years later here I am on the pension – by the time I pay rent, electric, gas, phone and put some petrol in the car it leaves not much to live on, I do not smoke – or go out anywhere – simply can not afford too – I have a dog and a cat which are my life and keep me going. Anyone that thinks living on the Age Pension is bliss should try it. Just this week my gas (I live in the country and have bottled gas) went from 119.6 cents a litre to 136.7 a litre – nearly doubling the cost – and somehow I have to find the extra money to pay this. I do not complain and am thankful that I do indeed have the pension – and can put a roof over my head and food on the table – be it basic food. I too have been a Liberal voter all my life and now hang my head in shame – hundreds of people losing jobs week after week, cuts left right and centre to welfare (and yes I agree that we need to get young people off the dole and into work – but work where??) costs rising each week on food, fuel, gas, electric and the list goes on. – Pensioners are not second class citizens we worked, fought and some died to make this country what it is today – if the ones that fought and died for this country could see what is happening today they would cry.

  14. MargL says

    Great article, thanks Glen. I am a wage earner not receiving any welfare benefits and am very happy for my tax dollars to go those more unfortunate than myself. I want to live in a society not an economy. I think the majority of Australians feel the same and are rightly outraged at this evil, dangerous government’s plans for us. Joe Hockey and cronies are just extreme right wing ideologues that lie and try to confuse people with double speak. They are utterly devoid of any human decency or compassion. The sooner they are kicked out, hopefully never to return the better.

  15. Wendy says

    Greed and power have always been the foundation of society,We still have country leaders wanting to overpower and rule the very people that are the nation. We allow ourselves to be dictated in modern society by age old barbaric laws and history. If we are ever going to survive we have to stop this pampering of the wealthy and keep on trying to balance what is now accepted as normal. The less fortunate need hope to be able to succeed and right now all they are getting is despair. The employment that is available can never sustain our society, we need to stop outsourcing and help our own. The often talked about dole bludgers are often stuck in situations that getting out from is difficult, its very easy to become despondent after looking for work and finding nothing time and time again, very hard to remain positive and not fall victim to crime, drugs, etc. The reality is that there are some people that will never have the ability or social skills to ever find employment , a cycle often repeated for generations because they know no different.

  16. Frederick says

    I believe the current anti government campaign is because too many people have access to information rather than knowledge. However, this government is probably in the same boat as well….Too much information and not enough knowledge to build or support policy for a country shit house

    • says

      Thanks for your comment Frederick. I’d be interested to hear which issues being contested are the result of reliance on information instead of knowledge?

  17. says

    I guess this will come as a shock to most of your readers, and probably yourself Glenn, and will be viewed in an aura of disbelief, but the Government doesn’t need to raise taxes in order to spend. This statement stems from a couple of, virtually, unknown facts – first and foremost, Australia is a monetary sovereign dominion of Great Britain. In other words, the Australian Government has the monopoly authority to create, and legitimise, our total money supply used in the nation. Every Australian “dollar” that exists, whether in hard currency (note and coins), or as it is with the vast amount of the “money supply” , simply as digitised records on some computer account, is classed as “legal tender” via the authority of the Government.
    No “Australian money” can exist unless it is created, and authorised, by the Government.
    While Government spending directly puts money into the national economy, that amount is actually dwarfed by the huge amount of interest bearing credit created by the private banking system. That credit creation is authorised by the Government under what is call the “fractional reserve banking system”. What it does is to allow the private banks to create credit at a ratio of something like 10+ times the amount of money they are required, by law, to hold as their reserve.
    Far too many people believe that the banks operate on lending out the money people place in their bank accounts. That is easily proven as a total myth, because not one person has ever had their bank account reduced because the money had been lent to someone else.
    What the Government allows the private banks to do is to create interest bearing debts to their borrowing customers, virtually, out of thin air.
    For anyone interested, I have provided a detailed summary of how Government financing actually works, and this can be found in my webpage at http://www.aussieindependence.com
    The second major fact that all bankers know, and are very conscientious about keeping hidden, is that the whole of the worlds financial system radically changed in 1971, when Nixon was forced to renege on the promise to convert foreign dollar holdings to gold. This effectively broke the Bretton Woods agreement of 1944 that tied most of the world’s major currencies to gold, by creating the US dollar as the world’s reserve currency, and convertible at a fixed rate per ounce of gold. When that final link was broken in 1971, every currency in the world became what is called, “fiat currencies” linked only to the “full faith and credit” of the Government authorised to issue the currency.
    Unfortunately, it is a truth that anyone who doesn’t understand the difference between monetary sovereignty and monetary non-sovereignty, doesn’t understand economics.
    This places Joe Hockey in the category of incompetence (along with virtually all the rest of the politicians in Parliament), or that of a very devious and dishonest agent of the private banking cartels.
    If you are interested in the real political “power” of this cartel you can read the “Story of the Commonwealth Bank of Australia”, which I have included in my above webpage.
    Mayer Amschel Bauer Rothschild got this right in 1791 when he said, ‘Allow me to issue and control a nation’s currency and I care not who makes its laws’.
    Thus, we come back to my original statement, the Australian Government doesn’t need to raise any taxes at all in order to spend money into the economy. It has the sole monetary authority to create all the money it needs without having to borrow any from the private sector, or even to tax the nation.
    Of course, most people see this as an atrociously frightening situation that must inevitably lead to hyper-inflation when any government is given open slather to create the money supply. That of course, can happen, but it doesn’t need to if there are proper constitutional constraints placed on the Government to restrict the money supply to the growing productive and consumption capacity of an expanding population and its related economy. I suppose one of the major hurdles that needs to be overcome is comparing a Government budget to a household, or company budget, in the private sector. Private and household spending can only occur through earning an income, using savings, and/or borrowing, which means they must finance their spending prior to the fact. Government spending for a monetary sovereign nation, is exactly the opposite because, a Government, as the issuer of the currency, can simply spend without the necessity of seeking funds in advance. This is quite an irresponsible fraud that is deliberately promoted to shore up the status quo and keep the government conditioned to borrowing and raising taxes.

      • says

        Sorry, it had a link so automatically went to moderation. I’m trying not to spend too much time on the weekend addressing comments… My wife gives me the evil eye…

        • says

          Thanks Glenn. I really would like to congratulate you on this post and the really magnificent amount of feedback it has generated – it is such a genuine response and covers so many aspects – it really ought to be required reading for Joe Hockey and his bureaucratic cohorts.

  18. Kezza says

    Apart from the fact that Joe Hockey has a habit of spinning a slogan for political gain (easy to recall) no surprises, the simple folk he thinks most Australians are will not analyse this statement but his examples don’t even begin with fact.
    I am a teacher, like the vast majority of teachers I work overtime. I am on a salary, salaried workers do not get overtime. I wish I was on an hourly rate and able to work overtime so I would receive some recognition for the work that I now do for no remuneration. I am happy nonetheless to help support those Australians and non-Australians who are worse off than I am.

  19. Linda says

    I have enjoyed reading all the thoughtful comments. I wish we could have more light and truth shown onto the budget issue. I am now unable to believe anything that is said about the budget by this government because I know they lie. They lied to be elected and are making drastic changes to health care arrangements, pension and super annuation programs, education, family support, for starters.

    I feel deeply concerned that voters were not informed at voting time of their drastic measures and now I see they are using yet more propaganda to demonise folks who have been assisted with tax money. Instead they are using tax money to help out wealthy fossil fuel mates. They are stirring up hate in our society. Their hearts must be full of it.

    It seems we are loosing fairness in our society, while at the same time taking millions out of the economy. How many small businesses will suffer when and if the effects of this bunch of liar’s budget begins to be realised?

    I feel so encouraged that so many people in Australia are prepared to stand up to this onslaught of mean greed and their bold attempt to recreate Australia as a balance sheet instead of a balanced society.

    The worst injustice, while there are many is the fact that many pensioners paid tax to buy the educations for these leeches, to now be asked to do without the basics of food, shelter, and health care.

    Blaming folks at the bottom, blaming in general speaks of a certain kind of ignorance and lack of insight.

    We are too smart as a nation for spin and slogans.

    I hope…
    All this turmoil is hurtful to people.

    People, like governments and corporations make their forward plans on given circumstances. It is grossly unfair to change the givens of vulnerable people who’s planning options are so limited.

    In life, catastrophes happen, we are not all equal in skill, intellect, health, wealth.
    When we optimise individuals we optimise our whole country.

    The bottom line for all of us is the planet and its well being, in that context the budget or debt is irrelevant. The best gift we can give our grandchildren is clean water and healthy food, and fresh air.

    Coal will not do that for us.

  20. Robin says

    Interesting article, and i strongly agree.

    I think what a lot of rich people and the government don’t seem to understand is that when you give money to the needy/poor, it ends up going back up to the rich anyway. If the poor get richer, the rich get richerer.

    Taking this money out of the system is only going to hurt the economy.
    To put it simply: If I am a business man, and suddenly poor people can’t afford to buy what I’m selling. I lose money, That means I have to fire people to cut costs, the people I fire become poor and can’t find jobs because other businesses aren’t making enough money because poor people can’t afford to spend money. It’s an economic downward spiral. This Budget will destroy our social economy.

    I don’t want to be accosted and asked for money by beggars on the street all the time, I don’t want crime to increase. I want to feel safe when I walk the streets at night.

    Australia don’t become America. Have you been there and seen the amount of poor and homeless people? Economics is a complex and frustrating equation, but I simply believe that giving money to the bottom only helps feed the money at the top because it will end up there anyway, it’s the people at the top hoarding all the money and taking it out of the system that is the problem. psychotic money hoarders addicted to growing a big number of dollars on a computer screen to get there fix. aka the 1%. The distribution of wealth is strongly skewed and only seems to be getting worse. its the worst it ever has been, and something needs to be done about it.

    I am proud of the amount of Australians that are protesting this budget!

  21. JohnB says

    The author of this article is coming at this issue from the fantasy land of socialism.

    Socialism isn’t a “natural state” for humans, although it seems to work for bees and ants. We are not bees or ants.

    Humans are by nature selfish. We work for ourselves and our loved ones. There’s a limit to how much we’ll work for someone else for no personal benefit. This was proven time and time again in the former Soviet Union as well as China. They’ve thrown out socialism because IT DID NOT WORK.
    Socialism of the type apparently advocated by the author, can only be imposed by force as a free society will also allow free enterprise and free enterprise will always be preferred by those with the ability to create products which are in demand.

    The simple facts are that human nature works best with properly regulated capitalism and free enterprise. Not the rampant criminality we see now in China and Russia, but the properly regulated and taxes forms of capitalism we see in most western European democracies where the poor, disabled, sick and elderly are protected by a safety net, and the rest of us do our bit through paying taxes to help those less fortunate.

    This also means that those who are capable of contributing should do so, and if they wish to bludge, then they should be disabused of such notions.

    Oh, and just to recap;

    “The top 40% only earn a lot because society allows them to earn it. It’s not their God-given right to accumulate wealth; society allows them to accumulate it. Capitalism isn’t a natural state, it’s a social construct. A system of rules condoned by society. If this system stops working for society, society will simply install another system.”

    I think you’ll find the socialist systems of Russia and China stopped working for their societies, so they installed another system, capitalism. Capitalism without the checks and balances of western democracies. That’s because their form of socialism did not have the rule of law and other safeguards which would have properly regulated their capitalism.

  22. David Gordon Hill says

    its also true that the money gets recycled say I am on newstart … I spend my $255 dollars each of those dollars goes back into the community and ends up in the pockets of people who work at business’s where i spent my dole money , in turn those people pay tax back into the system which partially ends up paying for people on welfare , its one big money cycle , if all the people on welfare suddenly stopped spending for a month ….we would see a rise in unemployment I would think .

  23. Rhiannon Poole says

    I don;t agree there is an ” unwritten agreement that we allow some people to get rich, but we provide a safety net for those who struggle to make ends meet”. Call me a dirty communist but I don;t agree that we let some people make obscene profits as long as we give the disadvantaged a few crumbs to keep from starving.I reject a two-tier society. The means by which people get rich depend on others being poor, and to design a necessarily unequal society is not acceptable at all to me and I don;t think I’m alone. The lie behind the conservative line is that”anyone can get rich’ and that’s simply not true. Nobody could be a millionaire without masses of others generating the wealth – Capitalism REQUIRES inequality. I don;t suggest we start up a new fascist sate – but I really think we ought to examine if we really do all agree written or not, with a stratified society that requires inequality to function. I think the basic human ideas of fairness don;t fit into that model, and really believe we could democratically come up with a more communal and equal way of living. When being rich requires somebody else being poor enough to be your made, their starts to be a problem with having rich people. If we all shared the labour and the fruits of the labour equally, things would be much better.

  24. says

    “Workers will be unhappy, unhealthy and unproductive, and corporate profits will suffer. National education levels will drop, innovation will decline, and, as a result, our gross national income will take a huge hit. Crime, domestic violence, alcoholism, substance abuse, depression, self-harm, suicide and homelessness will increase. These outcomes will impact everyone, not just the poor.”

    How on Earth can you assert this massive non-sequitur?

    • Kezza says

      How can you not? This is what happens when you overwhelm a workforce with increased work-loads, impossible targets, create stress and distress in your workforce, increase job in-security, reduce wages in real terms by not paying overtime or penalties, reduce their options of finding alternative work, reduce choices in terms of education by simply making it too expensive, leave people with no income, no power and no hope and then blame the victims, of the decisions you (LNP) made, for their own condition. On top of that you label them, dehumanise and demonise them so that the ignorant, selfish, thoughtless and heartless amongst us believe the LNP rhetoric. It is already happening. Just look around you.

  25. says

    With all the talk and comments about the Budget and the tax system, nobody seems at all interested in finding out if there is a more equitable and fairer way to fund the Government spending.
    What if we could come up with a mathematically proven way to show that the imposition of a single, universal charge could eliminate every other form of taxation currently in place, and especially, income tax, do you think people might be interested?
    There is, in fact, such a system available, and all it requires is a half of one percent (0.5%) charge to be placed on every financial transaction that takes place every day in Australia.
    The flow on benefits of this system are
    1. Small businesses would not be hindered by the time consuming, costly and complicated system currently in place. Small business will be encouraged to grow and employ more people.
    2. Big Multi-National Companies will be required to pay their fair share of tax which current legislation allows them to avoid.
    3. No tax cheating or tax avoidance necessary or possible.
    4. It would create a genuine and effective user pays system.
    5. It will also provide a continuous revenue flow to the National Treasury
    6. The application of off balance sheet accounting would be prohibited.

    The other factor that needs to be taken into account when a Debit Tax system is introduced, and thus eliminating all other forms of taxation, is the very significant impact it would have on prices, on all types of costs and the resultant increased purchasing power for the consumers. These factors would result in a dramatic change to the entire economy and the inevitable reduction in the level of budget expenditure.

    Low income people would pay a minimal amount of tax, and there would be no need for any exemptions. Essentially, it is a user pays system based on the level of financial transactions related to an individual or a Corporation.
    To illustrate the effects – a pensioner couple on, say, $600 a week, would pay a total tax of $3 when they convert their pension cheque to cash.
    A coal miner on, say, $2000 a week would pay $10 in taxes if he spent all his pay.
    A millionaire “investor/gambler” who trades on the markets would pay $500 for every million dollars of transactions.
    Bear in mind, there would be no other taxes on anything, no GST, no duty tariffs, no payroll tax. A Corporation would pay the tax on every cheque it writes – in paying its suppliers, its employees and its shareholders. Each of those in turn, would pay the same amount of tax when ever they spent their “money”.
    As I said above, there is mathematical proof, based on the total daily financial transaction data supplied by the Reserve Bank, to show that a 0.5% Debit tax would provide the government with its current level of revenue. The collection of this tax is a simple computer program for the banking system to deduct the tax and automatically transfer it to a Government account on a daily basis.

    • JohnB says

      Like the idea, but the problem is not so much a good idea, but how people can get around it.

      I think, at first blush, that almost everyone will move to a “cash” economy where possible and alternatives to electronic and financial transactions through the system which is involved in collecting the tax, eg Bitcoin and its equivalents.

      Large corporations would probably try to use offshore banking jurisdictions to avoid the local tax on many of their transactions.

      Again, I like the idea, now how do we “proof” it against abuse?

      • says

        A couple of things with regard to your comment John, where would the “cash” come from to begin with? If you read my earlier post about Australia being a monetary sovereign Dominion of Britain, you will see that every single Australian “dollar” can only be “created/authorised” by the Government.
        Virtually, every dollar the government spends is spent in the form of a financial transaction – whether it’s a cheque to a pensioner or an electronic transfer. The same goes for every “dollar” created in the private banking sector. And incidentally, every dollar the government spends directly serves to increase the savings capacity in the private sector.
        As for corporations using offshore accounts, the only way they could do that without using the banking system is to transport physical cash in “suitcases”. But do you really think corporations would need to buck the system if all Company taxes were replaced with a single 0.5% tax. Apart from that, they have to have “money” to pay for their operations and very few would be interested in handling large amounts of “cash” if they can do it by electronic transfer.
        Should there be any real incentive to avoid the system that could easily be discouraged by instituting significant penalties that would make tax dodging not worth the risk.
        Currently, the amount of physical cash floating around the nation is in the order of 3% of the total amount of “money” used in Australia. In actual fact, if everyone in Australia tried to convert their bank accounts to cash, the whole banking system would collapse as it is nothing more than a huge “ponzi” confidence game.

    • says

      Thanks for your comment, mate. I don’t agree that no-one is suggesting alternatives. What’s wrong with teaching this who can afford it, and those who are dodging it?

      • says

        I’m not quite sure what you mean by “teaching this” unless it refers to your very lucid and informative exposition of what;\’s happening under the current tax regime? If that is the case, then it is totally valid to discuss the issues of affordability and avoidance. But there again, there is a huge amount of totally approved and legitimate avoidance schemes authorised by the Government, specifically to look after their mates who support the party.
        But talk about affordability and avoidance only applies if one is prepared to accept the system in place.
        If there are some genuine and practical alternatives being promoted, what are they and how can we generate support for any better system on the table?

    • says

      Just an up date – I left out a couple of zeros – the coal miner would pay $100 on his $2000 a week and the millionaire would pay $5000 for every million he spent.

      • JohnB says

        Oh an order of magnitude with that little mistake. $10 tax turns into $100 tax.

        1000% of what you originally quoted.

        Makes it difficult to take it seriously when you get it wrong by a factor of ten.
        The nonsense about “monetary sovereign dominion” doesn’t help your cause either.

        • says

          OK John, mistakes happen, and they need to be corrected. As for the “monetary sovereign dominion” – it happens to be a fact. Who else has the right and authority to create and/or authorise the Australian dollar currency if it isn’t the Government. If you or I try it we get thrown into gaol for counterfeiting or fraud.
          As for Australia remaining as a Dominion of Britain, what else can we be as long as we continue to use the law of, what the High Court of Australia declared in 1999, to be a “foreign country”? As long as we use the British Act as our Constitution and have to get the Queen’s authority, via her appointed Governors and Governor Generals, to assent to any bills passed by our Parliaments, we must remain subjects of the Britain, despite of what anyone might say, think or wish.
          As for the ridiculous concept of creating a Queen of Australia without having her coronated, or swearing allegiance to the Australian people, it would represent a major change to the Constitution Act and could not become legal unless approved at a referendum – and then – ludicrous as it may seem – be approved by the British Parliament.
          As another interesting point about this Constitution Act, it doesn’t even include the office of a Prime Minister, and that makes a bit of a mockery of the so-called primary law of Australia.
          Have you ever read the Australian Constitution Act – it’s a bit of a 19th century eye-openor?

          • JohnB says

            We are not a dominion of Britain. The Australian Crown is a separate office to the British Crown. We are absolutely, totally and utterly independent of Britain.
            Where we “lack” independence is in adherence to various international and United Nations treaties. Many would argue that those treaties are a good thing, in general.

            I am quite happy with our constitutional arrangements and the lies of republicans does not help their cause.

            As for the money printing, you simply cannot allow the government to go printing money, willy nilly.
            Yeah, it might be OK if it’s done responsibly, but the trouble is you only need one utter fuckwit like Wayne Swan to come along and print money to get himself out of a major deficit problem of his own making and we’re in hyper-inflationary deep shit.

  26. says

    For as long as I can remember Australia has had a constant population of unemployed people. 4% and above. Roughly a million people, for over 40 years.

    So our economy has this standby workforce factored in as a constant. It’s a part of our capitalist model. If it wasn’t the market would have sorted it out at some point over the last 4 decades.

    But just as an experiment, lets starve a million people and see what happens.

    Basic cruelty. Fly or die. I am anticipating escalating civil unrest.

  27. Eric Holtz says

    Regardless of whether you work or don’t work. I think the main point that is being missed here is that the government is purposefully dividing Australia. It’s the oldest trick in the book. Divide and conquer. Australia has been conquered by people with very selfish interests and it is being bled dry under our very noses. While Australians bicker about welfare cheats and the like, this country is actually being ripped up from beneath our feet by the large corporations who have all the power.

    The money spent on welfare actually goes to creating a hell of a lot of jobs within the local communities. The biggest problem is the ill feeling and bickering that all the negative talk generates.

    And the thing that everyone forgets is that the politicians who are bandying around the concept of welfare cheats, are themselves on welfare. They are leeching directly from the coffers, and they get a pretty handsome handout. No one seems to notice this because these people have become like wallpaper, you don’t see them until you actually look hard. And they are so frantically pointing the finger the other way so they don’t get noticed. ~Eric

    • Jo says

      Absolutely right. The Government are the biggest leaches off society, and get all the lurks and perks to boot, and what do they actually do again? I would LOVE to be able to find one of these jobs that they claim are so easy to get. I’m not a single mother by choice. My husband chose to walk out on me and his children, but did he let me know prior so I could at least do a course which would enable me to find some kind of work before he left, since I have been a stay at home mum for 17 years, so I am a tad rusty when it comes to applying for a job. I needed to take care of my boys somehow right? My eldest is doing year 12, so the last thing he needs is to worry about being evicted of having no food to eat. My youngest is in a sports program, which will lead to his career, so should he have just dropped out and given up his dreams, just because I was suddenly forced on to welfare? What was I supposed to do? :Abandon them too? No. I have used the money I have received to keep a roof over their heads and food on the table. I am so sorry that there are Australians who feel that they don’t deserve to be looked after. I am so sorry that I am just a dependent bludger of tax dollars at the moment because finding work to fit around my children’s needs isn’t quite working out as the government planned. I guess since I’m also on Newstart, a move no doubt intended to degrade and humiliate than be of any real benefit, means I have officially been added to the list of “dole bludgers” and so with that shame hanging over my head, coupled with the shame of being a single mother, I guess it won’t matter if I end up living on the streets. After all, I am poor right? And the poor don’t count for anything. The rich, well they just get away with anything, don’t they, and no one bats an eye lid. No one calls them for what they are, and that’s simply because they’re rich. They can do whatever they like, and to hell with the rest of us. Heaven forbid anyone should not have a job to help increase the already over sized bank accounts of politicians. We all know they only have their best interest at heart. I am supposed to hang my head low, and be taunted, teased, laughed at, mocked, degraded, humiliated, labeled, tainted and shamed all because I dared to let my husband who had a good income, walk out on me and his children to shack up with someone else. And I’m now a “dole bludger” thanks to my inability to prevent him from leaving before I could find suitable work. I should never have thrown that crystal ball away. Yes it’s my fault, so please go ahead all you tax payers, and ridicule me to death, if it makes you feel superior to do so. But let me tell you this. When I DO find work in that haystack out there, I will NOT do to you, what you so callously have done to me and countless of others in my situation, similar or worse. Those who either can’t work or can’t FIND work. I will be glad to assist you till you can get back on your feet, because no one can possibly know what we go through, until they themselves have to go through it. It’s not called “bludging” it’s called surviving.

      • says

        Hi Jo. Thanks so much for your comment. I’m sorry to hear of your struggles. It’s realities like these that more people need to become acquainted with. :-\

  28. Eric Holtz says

    The current Government is making a huge effort to kick people when they are down. This is not Australia! What’s happening to this country? It’s frightening really.

    We are being conned and primed for war. No one seems to see this coming. Our beautiful natural forests are being destroyed along with the Barrier reef. The country is turning to dust through bad management. This is our heritage and Australians are so easily stepping aside to let it happen. The money goes overseas or just gets hoarded away by wealthy individuals. This is the biggest farce. We are being conned.

    This is why the government needs us to be bickering over small issues like welfare cheats. So that we don’t wake up and realise what’s happening. But hey, Australia. Wake up!

    • Anna says

      Sadly your insight is correct. Divide and conquer is their way.

      The government is relying on their proven tactic of repeating lies often enough that the majority of people believe the lies. That is how they were able to be voted in, and it is the tactic they are continuing to use now.

      While the people are pointing the finger at each other in growing hatred, the corporations are doing deals and the government continuing to ignore what the public wants.

      Abbott’s meeting with Murdoch while in the US, was very different to either Rudd’s or Gillard’s meeting with him. Their meetings were at his office….Abbott had a private dinner at his home. Also in attendance were editors of Murdoch’s papers, including his right hand man, Col Allen. The same editor who was flown over here last year immediately to run the campaign when the election was announced.

      They are running a full on campaign right now to sway the opinion of the public.

      Front page stories in his papers discrediting the opposition in any way they can. It doesn’t matter if the headlines are misleading, as long as it gets people against the opposition.

      Murdoch owns 70% of newspapers in our country, and his papers systematically character assassinated The Greens, Gillard and Rudd. And at the same time demonised the unions.

      Abbott came out of that cosy dinner meeting with Murdoch with a Cheshire cat grin because he knows he has the media mogul’s full backing with a campaign supporting him while character assassinating the opposition.

      And unlike a normal election campaign, the opposition do not have the resources to counter this one sided campaign.

      Why did the “unelectable” Abbott get voted in so easily? Because he was Murdoch’s preferred leader and future PM, so Murdoch ran a continuous campaign in his media empire.

      Look up the article…”Why Rupert Murdoch Can’t Be Stopped” or read the 2013 book “Murdoch’s World”. You will see the effect his media has had in shaping the US and UK into dog eat dog countries of inequality, and now it’s our turn.

      Murdoch has been trying to make our country into a place where there is a class of working poor. They almost took workers rights away with Howard’s Work Choices, but they underestimated people power back then. I sure hope they are underestimating people power now, too.

      This is why the division and witch hunts are gathering momentum. Front page news of “accusations” of wrongdoing by Julia Gillard in the papers in the last week.

      It doesn’t even matter if the headlines are not true….Murdoch will stop at nothing to discredit and destroy the reputation of anyone else but the one he wants to be victorious, Abbott.

      I have read 100’s of comments lately in the news websites, and it is sad to see that so many people believe the lies being told in the Murdoch media and by this governemnt. Australia is being swindled.

      The carbon tax and the mining tax haven’t hurt industries….automation, new technology, the high Aussie dollar and overseas deflation have hurt our industries. Our car industry employs people to assemble cars….our industry competes with cars assembled by robots.

      The mining industry is set to “progress” to the use of automated drills, diggers, trucks, loaders and trains. There are not even going to be a lot of jobs in the mining industry.

      Australians need to wake up to what the government and their big business cronies are trying to do…..drive wages and conditions down, have people competing for fewer jobs, and have everyone infighting while they live the high life and pay little if any tax.

      The really big end of town are the true “leaners”.

  29. Fred says

    Glen,

    I agree completely with your thoughts about tax obligations and living in a society. Brilliantly written.

    The wealthy tend to resent paying tax believing they have worked hard, taken advantage of their opportunities and that other people should not benefit from that. Of course the reality is that it is not a level playing field and admitting that does not diminish their achievements.

    Warren Buffett said it best when he said he and his children won the ovarian lottery.

    The division and finger pointing is gathering momentum and it is all a bit sad.

  30. mick says

    I heard a quote one day “I pay my taxes so i dont live in a country full of dumbasses” Ill go one further and say i pay my taxes so that our children and the less fortunate (disabled, pensioners etc) dont go hungry, dont go cold dont go without health care. Why? Cause i have a fucking heart thats why!

    Take away education, or the free access to it, from the people and you are taking away one of the fundamental aspects of people power, knowledge, how are the people supposed to have power in a democracy if they dont realize that we are in fact very quickly slipping into an oligarchy or totalitarian society!

      • townsvilleblog says

        Glenn and Mick, being a pensioner I congratulate you both on you compassion and you should know in return that we pensioners who put in our own decades of hard work, appreciate your humanitarian philosophy. I am constantly amazed that those who have so little are prepared to share, while those struck down with the mental illness of insatiable greed are not prepared to share and can never have enough.

  31. Wayne says

    How is this a lie, Plumbers and Teachers DO earn over $1150 p.w, and typical socialist they “allow” people to work hard and earn a good income and be succeful. Why don’t socialists go and live in a socialist country where everyone is treated the same by the Government, Nth Korea comes to mind, the other ones like Russia, Vietnam and China found out socialism doesn’t work.

    • townsvilleblog says

      Wayne, you obviously confuse socialism with democratic socialism as practiced in the Nordic countries all of which have or have had successful economies where big business pay high taxes that they should be paying in Australia.

  32. corinne says

    Glenn, thank you for this- it must be the day for it. I’ve had a huge rant on Facebook today over the disparity and inequality of it all. I’m studying politics and social policy and my current social policy essay question is : “discuss your understanding of the Australian political system and how the government attempts to enhance the wellbeing of its citizens”.

    I expect you’d have a field day answering that. It’s taken me the best part of 8 weeks to summon up the courage to defy my lecturer in 2000 words. I wish you’d written this 9 weeks ago and put me out of my misery sooner!

    Corinne

  33. Frank says

    The focus should not be made about those on welfare, but on governments for not having policies that create jobs.

  34. dev_null says

    The ‘welfare payments’ are endogenous and are not tax revenue.

    If someone is applicable for ‘welfare’ of some kind the federal government deposits a payment in their account CREATING the money it DOES NOT COME FROM TAX.

    What happens at the time of the year when the government releases its fiscal statement as the budget: The fiscal stance can be deliniatedinto two components disctrtionary and non-discretionary spending.

    Welfare payments fall into the non-discretionary category.
    So the government with an aim to achieve some fiscal stance eg: surplus/balance/deficit will not control the amount of welfare payments. It is by design supposed to rise in an economic downturn as more people become unemployed and seek work they will rely on welfare to survive which increases the non-discretionary spending component.

    Now the government may very well foward rationalise and attempt to predict what jobless rate will be over the next period asa budget goal rationalise this AGAINSDT TAX REVENUE.

    But this is not by accounting mechanic ‘spending’ the tax money.

    So as far as any government/person saying welfare recipients are spending tax money its untrue.

  35. corinne says

    Thanks guys, interesting! After many weeks of research since I categorically disagreed with the lecturer that the government ‘enhances’ wellbeing, I have gone with the 5 major tenets of neoliberalism and the fact that it being our hegemonic ideology, the right to profit and accumulate wealth, minimal state, individualism, privatisation and free market principles are all in direct contrast to social policy!

    It’s been a lot of fun since obstinacy is my middle name but also heartbreaking to see the inherent inequality and sheer rottenness of our system. But hey, gotta start as you mean to go on right? Apologist I am not! 😉

  36. J says

    Some excellent points in the article Glenn but you missed a VERY important point. And that is the VALUE of an individual’s contribution to society beyond the tax they pay and benefits they receive. Many in “public service” (including researchers, volunteers, carers etc) arguably contribute well beyond the “average”. Thanks heavens we aren’t all driven by the need for wealth accumulation. People in low-paying jobs aren’t necesarily worth less than better paid people, similarly people whose remuneration GROSSLY outweighs their true worth – most “executives” and company CEOs for example – are actually significant leaners. Employees on low to medium wages also have little opportunity to avoid tax, unlike some tradies and most high income earners.

    • says

      Hi J. Thanks for your comment. It’s a good one, and I completely agree. But my post was more to counter the specific claim continually made by Hockey that we spend half of every year paying for someone else’s welfare payments. The net value of everyone’s individual contribution beyond the economic is another question entirely, and not one I could cover here. :-)

  37. Dean says

    I find it difficult to accept that welfare payments come from taxes. That implies that a government taxes first and spends second. But for a government which issues its own currency that is impossible. How can you tax that which you have yet to issue?

    There must be some other process going on because there is no way the Australian government can be spending tax dollars because it defies logic. What came first, the chicken or the egg? What came first when Australia became a federation, the currency or the tax?

    • says

      Yes! Although the point of this post was that most of us take more in welfare than we pay in tax, you’re completely right about the sovereign currency. This is a great summary: https://youtu.be/qBpm5sVmGYc. And here’s my summary:

      The Australian government prints its own money. It can create as much as it wants and can NEVER run out. Everything else (tax, debt, etc.) is just redistribution of existing money.

      It can ‘earn’ money by taxing individuals and companies. (This isn’t money creation, because it’s merely taking money out of the existing pool.)

      It can ‘borrow’ money by selling ‘treasury bonds’ to institutions and private investors. Investors buy them because they’re a good, stable investment; they want the interest the government pays on the debt, and they can easily sell the bonds to other investors. (This isn’t money creation either, because it’s merely taking money out of the existing pool.)

      It can ‘spend’ money by investing in stuff (roads, hospitals, schools, business grants). It can also spend money paying interest on treasury bonds.

      Government ‘debt’ is the money (principal + interest) it owes to private investors that have bought treasury bonds.

      The government is in ‘deficit’ when it spends more in a year than it raises through tax.

      i.e. SPENDING > TAX REVENUE

      And it’s in ‘surplus’ when it spends less in a year than it raises through tax.

      i.e. SPENDING < TAX REVENUE

      But spending can only be less than tax revenue if the government taxes the private sector a lot or spends very little (‘austerity’). In both cases, the private sector is forced to spend – and ultimately borrow – more. If they’re being taxed a lot, they have less money to spend. And if the government spends less on education, health, etc., the private sector has to pick up the slack. (Collectively, the money individuals and businesses borrow is known as ‘private sector debt’.)

      So government deficit/surplus and private sector debt are inextricably linked. When government operates at a deficit, private sector debt is necessarily low. And when government operates at a surplus, private sector debt is necessarily high.

      But unlike the government, the private sector can’t create money to cover its debts, so there’s a limit to how much debt it can absorb, and thus how long the economy can remain in surplus. If we stay in surplus too long, the private sector simply runs out of money. It stops spending, and we have a recession. (Indeed, the private sector stops spending money before it runs out.)

      Traditional economists and politicians like to say that we need to be in surplus about as often as we’re in deficit, because then we won’t amass too much debt.

      BUT this entire model is based on the assumption that we need to borrow or tax in order to pay for stuff. Obviously, technically we don’t; we can simply create more money.

      Indeed, modern monetary theorists say this how the economy works already. They say it’s better to think of government deficit spending as a funds injection into the economy.

      They say the only reason the government actually borrows (sells treasury bonds) is to reduce the amount of money floating around between the banks, and consequently increase the interest rate the banks charge each other (the ‘cash rate’). When there’s lots of money in the banks, they don’t need to borrow much from each other, and the cash rate naturally drops. When the government sells treasury bonds, they take money out of the banks, so the banks need to borrow more from each other, and the cash rate naturally increases.

      The government does this at the moment because the cash rate ultimately determines consumer and business interest rates (on loans and savings), and interest rates determine private spending and economic growth.

      Modern monetary theorists also say the only reasons the government taxes the private sector is to redistribute wealth and impact private spending and economic growth. It’s simply a way to effectively ‘destroy’ money to ensure there’s enough demand for the currency to drive productivity and to control inflation. It can also be used to modify behaviour, such as making products deemed potentially harmful – like cigarettes and alcohol – less affordable/desirable, or to discourage polluting by producers, etc.

      In other words, they say that tax and borrowing aren’t needed (or currently used) to cover public spending at all. They’re just needed (and currently used) to influence the economy.

      The one common objection to this theory is that if the government creates and spends too much money, everyone in the private sector will have too much to spend, and the money will lose its value (‘hyperinflation’).

      But modern monetary theorists say that this happens only in extreme circumstances, and wouldn’t happen in Australia (I haven’t yet read why not). They say the key is to ensure total spending in the economy (government + private) doesn’t exceed the total productive capacity of the economy (i.e. the maximum amount of goods and services an economy can turn out when it is most efficient). In other words, ensure everyone doesn’t end up with too much money, relative to how much stuff is available to buy.

      • Mitchell says

        The Australian government prints its own money. It can create as much as it wants and can NEVER run out. Everything else (tax, debt, etc.) is just redistribution of existing money.

        If you really believe this Glen the you are deeply ignorant and have no real understanding of how economics actually functions. If you are going to go out there and post on such topics make sure you know what you’re talking about.

          • says

            It’s obvious which bit Michael disagrees with, and the answer to “Why” is because Michael doesn’t know the Commonwealth Constitution that is contained in the current British Act. Section 51(xii) and (xiii) clearly gives the Commonwealth of Australia monetary sovereignty and thus the sole authority to create all the “currency, coin and legal tender” needed, as well as all forms of Banking in the Commonwealth other than State banking within the boundary of the respective states. Hence, your argument is entirely correct. and it is Michael who confirms the statement that if a person doesn’t understand monetary sovereignty, they don’t understand economics. The examply of the original Commonwealth Bank of Australia as it operated from 1911 to 1923 (when the Bruce/Page government effectively destroyed the bank) is a perfect example of how a Government should and can be financed. Every Australia Government has the Constitutional authority to create all the money it needs to function without the need to borrow anything from the private sector, but the Fisher Government is the only one in Australia’s history that had the guts to buck the private banking cartels..

  38. Sam says

    Is it fair that then working people are in poverty aswell as they have to pay for in working people . 1. Most workers actually can’t afford it were forced to pay it & 2. There’s enough jobs out there people just need to stop being lazy & get hand outs . I would love to get free money !!

    • says

      Hi Sam. Thanks for your comment. Everyone in Australia gets welfare support. Public education, roads, infrastructure, hospitals, police, fire fighters, life guards, council gardeners… The list goes on. And if you’re in the bottom 60% of earners in Australia, you actually get more out of the system than you put in. That’s the point of the post.

      Is it fair that working people are in poverty? No! And you’ll note that that’s been a thread through my other posts and comments. But the unemployed aren’t the enemy of workers. We should be targeting tax evasion and austerity politics / trickle-down economics.

      Re enough jobs… That’s actually incorrect. There are approx 5 times as many people looking for work as there are jobs available. And that figure doesn’t include people who are UNDER-employed.

  39. Dean says

    Of course, what this also implies is that all government salaries don’t come from tax payers either.

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