Hi Madhava, can I suggest you check out Prosper Australia, if you haven't already. I believe you will find we are an organisation very close to your heart.
The more people that ask the questions you are asking, the closer we may come to one day seeing a push for real tax reform.
Re Greece, yeah Australia’s biggest import is overseas holidays at about $10k pa per Aussie pre Covid (yes it’s an import, but only bring back memories and pictures lol)
I’m sure this will swing down when our mining exports dwindle and dollar falls. Likely we will piss away our windfall resources without any sovereign fund like Norway since royalties to states seem to be pissed away on day to day operations
Alternatively we tax resources more for a sovereign fund, I would have though that has the same effect - weaker dollar and less overseas holidays or nah?
What is the downside to more taxes on exports seriously.. The mining simps say it will make us uncompetitive/inviable. That’s fine, mine it later when prices are up and it is viable
I think severely taxing mining is a no brainer. Taken a step further, is nationalised mining really that bad? From what I understand it works in some places. Iv heard arguments that mining companies would "leave".... sure, please do, I don't see the utility a for profit mining company provides, the end product are minerals and other compounds or elements which are about as apples to apples comparable as anything can get in reality, not the free market innovative competition needed for consumer products. I also imagine a lot of the science required for improved discovery and extraction comes right out of publicly funded university programs. Additionally mining jobs seem to have an outsized effect on politics, perhaps the benefits of outsourcing the responsibility for such a high value commodity as mining invites racketeering into the system creating many more political problems than it solves. But alas, perhaps i'm wrong and us "Oliver Twists", would never have learned to harness the powers of fossil fuels and minerals without our coal kings, iron earls and oil barons to show us the light.
Behind every economic conundrum lies a political problem... or something like that, at least when it comes to Australia. Yeah obviously the whole economy (and public policy) is slanted towards houses and holes, because that's where all the political power is.
Big multinational resource companies (largely US owned) can take down governments. In case anyone has forgotten, when the Whitlam govt tried to nationalise the mines, the PM was removed from office. Kevin Rudd and the mining tax is a similar story.
Big property also killed off any serious reforms to property tax concessions at the federal level for another decade - or perhaps it was just Clive Palmer? Again most voters own land, and so can be rounded up to defend the status quo.
As for Big super, the unions did a deal with the devil and sold their soul to the financial sector in return for something resembling relevancy, not really in a good way. Now we end up the progressive side of politics defending a managerial class of white collar rentiers who "know how use your money better than you do".
We don't have a big enough political power base from tech companies and other innovators etc. to push in the other direction. The US ended up with that in part because of the indirect subsidies that come from externalities of its military R&D spending etc. Not sure about Europe... S.Korea/Japan are a bit different again.
The frustrating thing is a lot of the policy direction of which way we need to go is obvious, but the road blocks are political, especially at the federal level. Strangely state governments seem to have made the most gains in recent times e.g. Windfall gains tax in VIC, QLD coal royalties etc., Contributions reform in NSW (tbc).
Yeah I agree with most of that, although I imagine there are emergent forces now which are both impossible to predict and no longer fixable in the traditional sense of identifying a responsible agent. It does beg question though, road blocks at the federal level seem to fall away in the face of effective lobbying, so if lobbying works so well why don’t “we the people” just crowdfund our own lobbyists. Seems silly to pay twice, but maybe it’s cheaper in the end to embrace the backbench baksheesh.
Crowd funding your own lobbyists is what political parties are supposed to be for, though these days I think political party membership and participation is historically low. But the bigger issue is what Cam highlights in his book. It's not a problem of one off lobbying. The problem is organised interests can provide an ongoing exchange in a game of mates where revolving doors and artificial job offers etc. look after politicians well beyond lobbying in support of a single issue.
I am pro super. It succeeds (or will in a decade when retirees have a full career of super) in its policy goal to eliminate Aged Pensions (aus gov largest expense)
Consumers are pushed to spend as much as possible. No way will they save enough for a retirement potentially longer than their career!
A sovereign fund sounds like one big uncompetitive one. Just force compliance and financial advice so people aren’t fooled by fraudsters like hostplus with their pile of unlisted investments they don’t write down.
I used to think Super was great. But, surely the private sector has already factored super into their wage costs. Take the average income according to the abs of $805 dollars a week and the median rent price of $508 a week (according to the abc 2022), and you have $297 left. After bills and other costs it's easy to see that 10% super is potentially halving many peoples discretionary spending. Think of all the waiters and baristas you could hire to serve flat whites and avocado toast with that money!
More importantly, how much income is wasted on rent while mortgage deposit savings are artificially handicapped? Does squeezing over-mortgaged landlords to shake down their renters work better in regulating inflation than just cutting out the middle man and just giving more renters mortgages of their own?
Now that we barely use cash anymore, can't we just do all of this with dynamic point of sale taxation and leave peoples mortgage heart-strings out of it?
Seriously though, I wonder; doesn't crippling our economic growth from within to prevent a future cost just mean that our economy falls behind relative to our global trade partners in that mean time? Even worse, what geopolitical risks do we face by tying our future retirements to super-stonks invested in a global market we both do not control and is becoming increasingly hostile. Imagine if Russia had superannuation when it invaded Ukraine and was sanctioned? What happens then?
What I can say is that there are many things about super (the forced money saving) which can be done without it being a super-stonks casino. I am no expert and probably have some things wrong here but take Germany as an example. They have a strong pension system, they have mandatory contributions to the pension from your wages (and combined with taxes, they are much higher than Australia!) as well as optional extra contributions, but what they also have is high levels of renting by choice, very strong rent control laws, and more importantly a thing called Wohnungsbaugenossenschaft, or Housing cooperatives which allow people to buy and build housing cheaply and live in it with rules preventing wanna be Monopoly players from flipping them and likely foreign dark money being washed through the system.
Its pretty ironic that we seem to understand the idea of a Credit Union (or community coop bank) to help us borrow money from the government without profit, but the idea of doing the same thing to actually own land, and develop it into housing just seems too much for our "Luxe Listings addled" brains.
So perhaps it's important to look at Super not as an isolated "its just future savings" sense, but in the integrated sense, a potentially harmful runaway effect on the economy.
Germany is also one of the biggest global exporters and have a long history of locally supported innovation in niche industries. Maybe its all those "sehr cool" Berlin hipsters and cheap industrial real estate that are great for Bauhaus innovation. Or maybe it was all the post war Wirtschaftswunder, investments from the UK / Allies in the reconstruction of Germany.
Either way, maybe we do need to stoke a few fights in the Pacific, so that someone else can come and invest in reconstructing our own country properly (since we are unwilling to do so), instead of us just LARPing as wage slaves and rent seekers from the Industrial Revolution.
I'm late to this one ... volume of email ... anyway, interesting rant. Thank you. Lots of things wrapped up in this one ... starting point is perhaps, 'what is the role of government?'
I'd suggest not much beyond border maintenance, law and order, possibly basic hospital and emergency care (they've proven useless an long term illness), and management of monopoly assets. Does this mean mining assets should be owned by 'the people' ... possibly, but would the government be capable of running these assets? I'd doubt it, which leaves a problem without a good solution.
There is a national obsession with real estate speculation. I'm not sure you can force (or necessarily want) the VC funded startup 'Ponzi and risk shifting to retail investors' scheme to replace it, but it seems logical that more energy and capital in building and making things would be preferable to our current setup.
It's a cultural thing in some ways, but we do have a huge small business sector (where most people are employed) that operates reasonably well (if you ignore the 12-15% new starts and failures each year) if these people are left alone to just 'do stuff'. For example, you could not lock them out of the businesses in flu season in case they get the flu ... just a thought.
On property, we are miles outside the long term averages or rent to capital values, or average dwelling cost to average earnings, for example. Watch Australia's 1m landlords start ripping up cash as their negatively geared dwelling cash flows go 'under water'. It will, unfortunately, result in another shift of wealth upwards as distressed assets are bought with cash. In the next period they'll realise that a 22 year upward cycle is not 'normal'. Negative Gearing creates no additional housing stock when it's applied to existing dwellings (nor new houses beyond the first few years), which is required to fix the problem if it's a supply issue ... but is it if there were 1,000,000 dwellings vacant in Australia on census night. I don't know and can't work this out.
On Super, see Kelty and Keating's recent public statements regarding super and influence ... it's not about your retirement, nor was it ever. It's about jobs for people who who leave politics (or support the right team) and the creation or huge amounts of power with ... your money. It's kind of like tithing, but not voluntary and they are probably Atheists.
Hi Madhava, can I suggest you check out Prosper Australia, if you haven't already. I believe you will find we are an organisation very close to your heart.
The more people that ask the questions you are asking, the closer we may come to one day seeing a push for real tax reform.
Super is a con. And just another Polly invention so Australians with super can those of us without super.
Re Greece, yeah Australia’s biggest import is overseas holidays at about $10k pa per Aussie pre Covid (yes it’s an import, but only bring back memories and pictures lol)
I’m sure this will swing down when our mining exports dwindle and dollar falls. Likely we will piss away our windfall resources without any sovereign fund like Norway since royalties to states seem to be pissed away on day to day operations
Alternatively we tax resources more for a sovereign fund, I would have though that has the same effect - weaker dollar and less overseas holidays or nah?
What is the downside to more taxes on exports seriously.. The mining simps say it will make us uncompetitive/inviable. That’s fine, mine it later when prices are up and it is viable
I think severely taxing mining is a no brainer. Taken a step further, is nationalised mining really that bad? From what I understand it works in some places. Iv heard arguments that mining companies would "leave".... sure, please do, I don't see the utility a for profit mining company provides, the end product are minerals and other compounds or elements which are about as apples to apples comparable as anything can get in reality, not the free market innovative competition needed for consumer products. I also imagine a lot of the science required for improved discovery and extraction comes right out of publicly funded university programs. Additionally mining jobs seem to have an outsized effect on politics, perhaps the benefits of outsourcing the responsibility for such a high value commodity as mining invites racketeering into the system creating many more political problems than it solves. But alas, perhaps i'm wrong and us "Oliver Twists", would never have learned to harness the powers of fossil fuels and minerals without our coal kings, iron earls and oil barons to show us the light.
Behind every economic conundrum lies a political problem... or something like that, at least when it comes to Australia. Yeah obviously the whole economy (and public policy) is slanted towards houses and holes, because that's where all the political power is.
Big multinational resource companies (largely US owned) can take down governments. In case anyone has forgotten, when the Whitlam govt tried to nationalise the mines, the PM was removed from office. Kevin Rudd and the mining tax is a similar story.
Big property also killed off any serious reforms to property tax concessions at the federal level for another decade - or perhaps it was just Clive Palmer? Again most voters own land, and so can be rounded up to defend the status quo.
As for Big super, the unions did a deal with the devil and sold their soul to the financial sector in return for something resembling relevancy, not really in a good way. Now we end up the progressive side of politics defending a managerial class of white collar rentiers who "know how use your money better than you do".
We don't have a big enough political power base from tech companies and other innovators etc. to push in the other direction. The US ended up with that in part because of the indirect subsidies that come from externalities of its military R&D spending etc. Not sure about Europe... S.Korea/Japan are a bit different again.
The frustrating thing is a lot of the policy direction of which way we need to go is obvious, but the road blocks are political, especially at the federal level. Strangely state governments seem to have made the most gains in recent times e.g. Windfall gains tax in VIC, QLD coal royalties etc., Contributions reform in NSW (tbc).
Yeah I agree with most of that, although I imagine there are emergent forces now which are both impossible to predict and no longer fixable in the traditional sense of identifying a responsible agent. It does beg question though, road blocks at the federal level seem to fall away in the face of effective lobbying, so if lobbying works so well why don’t “we the people” just crowdfund our own lobbyists. Seems silly to pay twice, but maybe it’s cheaper in the end to embrace the backbench baksheesh.
Crowd funding your own lobbyists is what political parties are supposed to be for, though these days I think political party membership and participation is historically low. But the bigger issue is what Cam highlights in his book. It's not a problem of one off lobbying. The problem is organised interests can provide an ongoing exchange in a game of mates where revolving doors and artificial job offers etc. look after politicians well beyond lobbying in support of a single issue.
Il separate my comments
I am pro super. It succeeds (or will in a decade when retirees have a full career of super) in its policy goal to eliminate Aged Pensions (aus gov largest expense)
Consumers are pushed to spend as much as possible. No way will they save enough for a retirement potentially longer than their career!
A sovereign fund sounds like one big uncompetitive one. Just force compliance and financial advice so people aren’t fooled by fraudsters like hostplus with their pile of unlisted investments they don’t write down.
I used to think Super was great. But, surely the private sector has already factored super into their wage costs. Take the average income according to the abs of $805 dollars a week and the median rent price of $508 a week (according to the abc 2022), and you have $297 left. After bills and other costs it's easy to see that 10% super is potentially halving many peoples discretionary spending. Think of all the waiters and baristas you could hire to serve flat whites and avocado toast with that money!
More importantly, how much income is wasted on rent while mortgage deposit savings are artificially handicapped? Does squeezing over-mortgaged landlords to shake down their renters work better in regulating inflation than just cutting out the middle man and just giving more renters mortgages of their own?
Now that we barely use cash anymore, can't we just do all of this with dynamic point of sale taxation and leave peoples mortgage heart-strings out of it?
Seriously though, I wonder; doesn't crippling our economic growth from within to prevent a future cost just mean that our economy falls behind relative to our global trade partners in that mean time? Even worse, what geopolitical risks do we face by tying our future retirements to super-stonks invested in a global market we both do not control and is becoming increasingly hostile. Imagine if Russia had superannuation when it invaded Ukraine and was sanctioned? What happens then?
What I can say is that there are many things about super (the forced money saving) which can be done without it being a super-stonks casino. I am no expert and probably have some things wrong here but take Germany as an example. They have a strong pension system, they have mandatory contributions to the pension from your wages (and combined with taxes, they are much higher than Australia!) as well as optional extra contributions, but what they also have is high levels of renting by choice, very strong rent control laws, and more importantly a thing called Wohnungsbaugenossenschaft, or Housing cooperatives which allow people to buy and build housing cheaply and live in it with rules preventing wanna be Monopoly players from flipping them and likely foreign dark money being washed through the system.
Read more here:
https://www.wohnungsbaugenossenschaften.de/genossenschaften/how-cooperatives-work
Its pretty ironic that we seem to understand the idea of a Credit Union (or community coop bank) to help us borrow money from the government without profit, but the idea of doing the same thing to actually own land, and develop it into housing just seems too much for our "Luxe Listings addled" brains.
So perhaps it's important to look at Super not as an isolated "its just future savings" sense, but in the integrated sense, a potentially harmful runaway effect on the economy.
Germany is also one of the biggest global exporters and have a long history of locally supported innovation in niche industries. Maybe its all those "sehr cool" Berlin hipsters and cheap industrial real estate that are great for Bauhaus innovation. Or maybe it was all the post war Wirtschaftswunder, investments from the UK / Allies in the reconstruction of Germany.
Either way, maybe we do need to stoke a few fights in the Pacific, so that someone else can come and invest in reconstructing our own country properly (since we are unwilling to do so), instead of us just LARPing as wage slaves and rent seekers from the Industrial Revolution.
I'm late to this one ... volume of email ... anyway, interesting rant. Thank you. Lots of things wrapped up in this one ... starting point is perhaps, 'what is the role of government?'
I'd suggest not much beyond border maintenance, law and order, possibly basic hospital and emergency care (they've proven useless an long term illness), and management of monopoly assets. Does this mean mining assets should be owned by 'the people' ... possibly, but would the government be capable of running these assets? I'd doubt it, which leaves a problem without a good solution.
There is a national obsession with real estate speculation. I'm not sure you can force (or necessarily want) the VC funded startup 'Ponzi and risk shifting to retail investors' scheme to replace it, but it seems logical that more energy and capital in building and making things would be preferable to our current setup.
It's a cultural thing in some ways, but we do have a huge small business sector (where most people are employed) that operates reasonably well (if you ignore the 12-15% new starts and failures each year) if these people are left alone to just 'do stuff'. For example, you could not lock them out of the businesses in flu season in case they get the flu ... just a thought.
On property, we are miles outside the long term averages or rent to capital values, or average dwelling cost to average earnings, for example. Watch Australia's 1m landlords start ripping up cash as their negatively geared dwelling cash flows go 'under water'. It will, unfortunately, result in another shift of wealth upwards as distressed assets are bought with cash. In the next period they'll realise that a 22 year upward cycle is not 'normal'. Negative Gearing creates no additional housing stock when it's applied to existing dwellings (nor new houses beyond the first few years), which is required to fix the problem if it's a supply issue ... but is it if there were 1,000,000 dwellings vacant in Australia on census night. I don't know and can't work this out.
On Super, see Kelty and Keating's recent public statements regarding super and influence ... it's not about your retirement, nor was it ever. It's about jobs for people who who leave politics (or support the right team) and the creation or huge amounts of power with ... your money. It's kind of like tithing, but not voluntary and they are probably Atheists.
More questions than answers, but my 2 cents.
Cheers