Spending strategy a risky path

17/09/2009 - 00:00


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The major political parties in Australia are coming ever closer in their approach to governance.

Spending strategy a risky path

IT didn't need an economist or accountant at the time to point out that the short-lived Whitlam government of 1972-75 was out of its depth when it came to matters financial.

State Scene vividly recalls those years because they were so tumultuous: a minister raided ASIO's headquarters; the prime minister called a premier a "bible bashing b.....d"; there were secret bids to borrow billions of dollars from a fly-by-night financier based on a London back street; big deficits; and inflation.

Little wonder Labor had a reputation for being wasteful and extravagant.

Being viewed as leading a party that cares little for taxpayers' dollars is a debilitating way of going into an election campaign, as Mr Whitlam found after being sacked over what was essentially financial mismanagement.

One rather quick witted writer in either 1973 or 1974 even came up with the idea of publishing a book titled, 'How to Get Money from the Whitlam Government'.

Because it became a manual for those who could come forth with bright ideas to obtain grants for all sorts of silly unnecessary things, the Whitlam government's reputation slumped even further.

Those who best remember such things are, of course, hard-core Liberals who are beginning to feel in their bones that something resembling the early 1970s may be returning under Kevin Rudd, Julia Gillard, and Wayne Swan.

All three should be warned that, if they don't quickly and fundamentally reorient their approach to financial governance they'll be handing over the baton to a very mediocre Liberal Party.

Like so many of today's Liberal and Labor politicians, they believe if you spend and spend, it somehow attracts votes.

There are, in fact, growing numbers of voters who think otherwise - governments that spend are being wasteful and extravagant, two words Mr Whitlam and his ministers and backbenchers became thoroughly sick of hearing, especially during 1975.

That's why when a Labor government or Labor opposition leads in the polls the Liberals, if one looks carefully at other questions also asked, will invariably score better on which party is the best economic manager.

Invariably the Liberals or the coalition leads Labor, even when trailing on overall performance.

And that's not just a legacy of Labor's one-time support for socialising much of the national economy, but those Whitlam years of a third of a century ago.

Surely Messrs Rudd and Swan, and Ms Gillard, are aware of this,

If not, why not? Financial management is a crucial ingredient of Australian national politics, and mismanagement quickly leads to demise.

Why do Labor politicians invariably throw to the wind concern about the public's hard earned tax dollars?

Messrs Rudd and Swan had hardly gained office when they named the Treasury's chief, Ken Henry, to head-up an inquiry into taxation - that is, how to get more money out of working families.

So the inevitable leaks of new taxes emerged - including one on imposition of capital gains tax on the family home once such residences sold for $2 million or more.

The reason given for such a possible move was that, because the family home was presently not taxed at sale - unlike other assets - it was time $2 million-plus homes were so they could no longer be "tax havens".

What no-one in Labor's ranks has ever highlighted, however, is that the family home has become a so-called "tax haven" simply because all else is so heavily taxed.

If, say, one's superannuation was tax free. If, say, the interest on money in a bank or other cash deposits were also not taxed, people would not be so prone to securing their assets by building ever-larger homes.

Labor - and in lots of cases these days, also Liberal - thinking is simply focused on how to extract more tax dollars from working families.

If the electorally struggling Liberal leadership of Malcolm Turnbull and Julie Bishop stopped and thought for a while that the better option was to leave more cash in voters' pockets, they may come forth with such ideas.

Among other things, Australia's savings levels would be boosted.

Unfortunately the Liberals' leadership has opted for the other way; for instance by fully backing the Rudd mania on non-existent climate warming and the imposition of a mega-tax called the Emissions Trading Scheme.

Since there's no hope for the Rudd-Gillard-Swan troika - or Mr Turnbull and Ms Bishop - it's probably futile telling the latter there's a path to power; one that's popular, just, and would help ensure waste and extravagance were confined.

One who has shown this way is Peter Davies, the newly elected mayor of Yorkshire's 250,000-strong city of Doncaster.

According to a recently published interview (journalists are lining up), Mr Davies has slashed his salary from £75,000 to £30,000; and asked the Electoral Commission that two-thirds of Doncaster's 63 council seats be scrapped to save nearly £1 million.

"If Pittsburgh can manage with nine councillors, why do we need 63?" he asks.

"They each get a basic salary of £12,590 and we have only eight council meetings a year anyway."

Mr Davies has indicated he only wants to get rid of 'non-jobs" in his 13,500 workforce - ones like "community cohesion officers".

That would severely embarrass Ms Gillard who, as well as being education minister, is also; wait for it, minister for social inclusion.

She'd have no chance of holding on to that if Mr Davies was Australian PM.

He's also not a fan of paying huge salaries to bureaucrats.

"Don't believe that stuff about 'having to pay the best to get the best'," Mr Davies says.

"It's arrant nonsense - look what it did to the City."

For those unfamiliar with London-speak, City with a capital "C" means London's banking quarter.

How many there know anything about banking despite drawing £1 million plus annual salary?

Not one noticed that so many British banks were set to collapse.

The same applies to the UK's (and Australia's for that matter) well-paid treasury officials.

And like here, where Rudd-led Labor is difficult to distinguish from the Turnbull-led Liberals, England's Conservatives resemble British Labour.

"The [Conservative] Party's gone," Mr Davies says.

"Half of them belong in the Labour Party. They all fish in the same pond anyway."

Exactly like Canberra.

He's scrapped future ratepayers' funding for Doncaster's annual gay pride march.

"I'm not a homophobe, but I don't see why council taxpayers should pay to celebrate anyone's sexuality," Mr Davies says.

He's also abolished the council's translation services because he says people should be encouraged to learn English.

And he's no fan of the word "diversity", which is used to justify all forms of waste.

"Going on about diversity causes racial tension, it doesn't improve it," he adds.

And what would his views be on that Rudd-Turnbull obsession to justify their coming mega-tax called the ETS.

"I'm not green and I'm not conned by global warning," Mr Davies says.

Compare that to Ms Bishop's favourite reply when quizzed on the ETS: "We've decided to give the planet the benefit of the doubt."

Mr Davies is mayor of a town sitting in the middle of Britain's bright red Labour heartland.

Or, as one journalist who gained an interview wrote: "If a man to the right of the Tory leadership can capture a socialist pit town on Arthur Scargill's doorstep, anything is possible."

Not so in Australia, where the Turnbull-Bishop duo is scared stiff of such straight talk and action, which is why they're set to stay right where they are - several rungs below the extravagant and increasingly wasteful Rudd Labor government.


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