The Pencil Guy: Hourann's illogical blog

Swan and the Ruddster versus the Global Financial Crisis

Tuesday 12 May 2009 at 4:29 pm

Hourann’s Federal Budget verdict: not perfect, but decent, and surprisingly well balanced.

Most of the criticism I’ve read is rubbish — what’s up with Joe Hockey and this “lost control” nonsense, or his constant dummy-spit about taking on some debt? There is a pretty strong global consensus that cutting spending is unwise (witness California, or indeed any American state), and while it’d be lovely and morally pure to remain debt-free, that’s nigh impossible in the current climate. We will at least still be one of the least-indebted OECD members, and unless the recession becomes long-lived and revenues drop sharply again, the proposed debt is quite manageable.

Rather than arguing about how much is spent, though, I think it’s quite fair to entertain criticism on where it’s spent. There is room for decent arguments that this budget does scant little for the environment, that the spending on education is good but not targeted correctly, or that the proposed infrastructure spending is neither big enough nor bold enough. But then again, see above; not going too far into deficit is a pretty important consideration, and on that front I think the general balance looks about right. (Imagine if the spending levels had been Keating-esque!)

Oh, and the budget includes $236 million for the Northbridge Link rail project in Perth (leaving the Sydney Morning Herald to whine on the front page). Again not perfect (it’s not enough to go past Lake Street!), but still, who says the Commonwealth never did anything for WA? ;-)


Fixing the city centre: not a State priority

Friday 11 May 2007 at 7:14 pm

An ugly Perth Rail Yard with lots of construction work

The coverage of the State budget in today’s West Australian looks to me like little more than a jumble of ill-considered low blows — for example, Mike Nahan (who sounds increasingly like a Liberal lackey with every column) criticises it for not being as reformist as the Federal budget, without stopping to note that Tuesday’s biggest reform was allowing the ATO to pre-fill our tax returns so we can file with one click (great though it is, it’s hardly earth-shattering).

But today’s paper did reveal something that I didn’t have time to confirm yesterday: no funding has been allocated for the new footy stadium, the still-under-wraps foreshore development, or most worryingly, the Northbridge Link project. Assuming the project goes ahead, the earliest anything could happen is July 2008. And that would require it to be funded in next year’s budget — which may well focus on vote-buying measures for the February 2009 election instead.

So the vista above is likely to continue looking like that for a while. Possibly a long while. Now I know what Charles Landry was on about when he said that Perth’s immense potential is “blocked in innumerable energy-draining ways”.

(Also in the “budget WTF” category: the $100 million over five years that the Premier promised to deal with climate change looks all the more feeble when you realise that $88 million is to be spent in the next 12 months on our coal-fired power stations. In fairness, some of this will go to efficiency-improving measures, but it still makes the “commitment” look awfully lame.)

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And now for the State Budget

Thursday 10 May 2007 at 2:43 pm

So, Eric Ripper has just finished his State Budget speech. For 2007-08, the total allocation is $16.1 billion for services across WA, but we’ve not been given much in major new funding commitments (after all, the State election is some time away).

The big-ticket item that everyone’s been talking about is tax cuts, and this budget delivers exactly what was predicted: reductions in stamp duty for first homebuyers and for car purchases, and reductions in land tax. This will cost about half a billion dollars per annum.

Health-wise, the investment is all in construction and infrastructure, such as upgrades to various regional hospitals, rather than in any management changes. Half of this year’s surplus is being spent to construct the Fiona Stanley Hospital in Murdoch, that being the fashionable way to fund projects these days as opposed to the traditional issuing of bonds. (Each time the Treasurer mentioned this, the Opposition kicked up quite a ruckus.)

Other than that, most of the announcements aren’t new: the environmental measures announced earlier this week, for instance, will cost a ridiculously generous $20 million per year. Meanwhile, next year will also see $44.5 million spent on improving TAFE colleges — a good sum, to be sure, but just like Tuesday’s budget, this seems like small change in the face of our skills shortage.

$48 million will go to upgrading vehicle licensing services, in the wake of criticism from Today Tonight (et al.). The new Department for Child Protection will be funded with $104 million over four years, and $55.3 million will be spent next year to recruit 260 additional police officers. But all of these figures are dwarfed by recurrent spending, which is about $4 billion for health and $3.3 billion for education.

So in short, this Budget is mostly a business-as-usual affair, with tweaks and increases around the place, plus a bunch of moderate-sized tax cuts, but nothing revolutionary.

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Swimming in the dollars!

Tuesday 8 May 2007 at 7:05 pm

So the 2007 episode of The Peter Costello Budget Show has aired, and my first impression is “wow! the spending’s not as irresponsible as I’d expected!”

Not to say that it is responsible, but I can at least detect miniscule grains of sense in pretty much everything that’s been put forward.

Perhaps because of this, Treasurer-man was at pains to tell journalists that he’s delivering “major reforms” — which is of course nonsense. For instance, rather than tax simplification, there’s a $30 billion tax cut aimed squarely at the voters who haven’t been all that well looked-after by Pete and Johnny thus far. Indeed, that’s the theme of this Budget: try to buy out voters who may be swaying from the Howard school of “keep interest rates low” due to traditional Labor concerns like the environment or education.

Universities get a reasonable boost in the form of a “Higher Education Endowment Fund” equating to about $100 million per campus (UWA’s existing endowment is $450ish million), along with promises of new management policies and more funding for Commonwealth scholarships, but this is relatively small change on the back of long-term declines. The story is likewise for vocational training: any extra funding is great, and this Budget delivers, but it falls far short of what is really needed.

There are a bunch of one-off bribes carefully structured so they’ll arrive right before the election, one of which is a doubling of the superannuation co-contribution for payments made last financial year. It must be said that this policy is a mostly good thing and thus worthy of funding, but a one-off top-up? in an election year? could it be any more blatant?!

On health and the environment, the offerings are pretty lame, apart from small policies like a doubling of the solar panel rebate. The documents quote nice big figures, but most of it was announced before and is spread over many years. Then again, who knows what the “real” election campaign will bring?


Some observations around the Houses

Saturday 28 April 2007 at 9:48 pm

I’m caving into writing a list again: if only I’d had time to develop each of these into posts themselves!

  • The speculation earlier this week about possible tax cuts in the next episode of The Peter Costello Budget Show is amusing in the context of John Howard talking up his economic management credentials in Brisbane. It’s an election year, and you have to be pretty naive to think that the Budget will contain anything other than vote-buying measures. If only we could get some real economic reform out of these guys, like a desperately-needed simplification of the tax system (rather than just tweaking rates and thresholds) to cut down the gigabucks wasted on administration. Or better yet, how about some spending on economic constraints — on upgrading the ports that serve our mines, or on technical education to address skills shortages?
  • Water from the Kimberly is back in the news; forgive me for not being excited. Lots of people are saying things like “forget the cost, we’d never get anywhere if we didn’t build expensive stuff!” … and sure, big visionary projects are wonderful, but there’s a difference between being a visionary and bankrupting the State. The best available assessment suggests that three thousand kilometres of water transport system, be it canal or pipeline or whatever, would fall into the latter category. (For those who failed physics: to move stuff, including water, requires energy. The amount required is directly proportional to the distance travelled. Energy is not free, and the Kimberly is a bloody long way from Perth.)
  • The other part of Omodei’s proposal this week is far more sensible: an irrigation scheme to develop agricultural land near the Fitzroy River. I can see a lot of potential problems (the region’s ecosystems are more fragile than anyone in Perth seems to recognise) but there’s actually hope that these are problems that can be handled. So much so, in fact, that the idea sounds like a copy of what already exists.
  • On the other side of the House, state Labor have always been pretty bad on the self-promoting propaganda front, but why do we need ads during the footy telling us that new liquor laws are coming and we can expect a “change of scene”?! Actions speak louder than words, kids.
  • Finally, a brief mention of federal Labor: I don’t know enough to comment on the merits of the new IR policy, but for crying out loud, this obsession with throwing the term “fair” around whenever workplace relations come up is getting very tired, very fast.
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