You’re making a big mistake, PM Turnbull

From a speech yesterday by PM Turnbull at The Melbourne Institute:

Economics is often said to be the dismal science. Well, there should be nothing dismal about today’s discussions. And that’s not just because we are in Marvellous Melbourne — somewhat damply glowing with joy and pride at the way in which Michelle Payne gloriously dispatched first another glass ceiling and then her detractors with a pithy candour politicians can only envy.

We are living in the most exciting times in human history. Free markets, globalisation, long periods of peace and above all the acceleration of technological change have produced economic and political transformations at a speed never seen before.

In just a generation we’ve seen the internet and the smartphone connect most people in the developed world and before long most people in the entire world to each other and potentially to all the knowledge mankind has accumulated. The first iPhone was released only eight years ago; Google was founded 17 years ago; Facebook with 1.5 billion active users — and YouTube with one billion users — are 10 years old, Twitter is nine years old and Airbnb and Uber are seven and six years old respectively.

The opportunities for Australians have never been greater or the horizons wider. But how do we seize those opportunities, how do we ensure that in the midst of this dynamic region, in the midst of so much growth and change, we are able successfully to transition our economy to one that wins and keeps on winning.

Surely we should continue to be a high wage, generous social welfare safety net, First World economy, a nation that is as fair as it is open to opportunity. And how do we do that? Clearly as an open market economy in a much larger, more competitive world, we must be more productive, more innovative, more competitive. We must acquire not just the skills but the culture of agility that enables us to make volatility our friend, bearing fresh opportunities, not simply a foe brandishing threats.

We need to have a grown-up discussion that first clarifies the policy goals and then identifies and removes any obstacles that may be hampering our capacity to generate growth, productivity, investment and jobs.

Structural shifts in today’s global economy are not dissimilar in scale and scope to the transition from the agrarian to an industrial society, but it is the velocity of change that is unprecedented. The changes that used to take centuries are now taking years, maybe a decade.

Right now there is also the challenge of making the transition to the post-mining-boom era. We’ve seen a sharp fall in our terms of trade. This was always going to happen. We can’t rely on rapid growth in commodity prices to fuel future income growth.

But there are enormous opportunities available to us and, to his great and enduring credit, Andrew Robb has opened up the doors to these markets and in particular the China market with the free-trade agreement. For the first time in 300 years, if you believe Angus Maddison’s work, which of course we must, the number of Asian middle-class consumers equals the number in Europe and North America combined.

We will deliver next month an innovation statement, a set of policies that will focus on how we attract and retain talent, how we support and encourage start-ups. How we encourage a culture of innovation, ensure our children are acquiring the STEM skills that they need, that they have the understanding or familiarity with machine languages they will need.

Let me say a little about tax. The object of the taxation system is plainly to raise the revenue the government needs for the services it provides. But it must do so in a manner that backs Australians to work, save and invest, that backs them in rather than holds them back. That has, in the language of the Melbourne Institute, the ­minimum dead weight loss, the minimum handbrake on economic activity.

A reform package must, at the very least, raise the revenue we need, share the burden fairly across the community and do so in a way that incentivises employment, investment and innovation. Any package of reforms that is not and is not seen as fair will not and cannot achieve the public support without which it simply will not succeed.

There are many other elements of reform and I’ll just touch on one of them: the Ian Harper report — that will not gather dust. It poses important challenges for all government, especially, or including if not especially state governments. There are very big — still very big structural breaks on growth. I heard the chairman of the Productivity Commission talking on the radio about the supply side constraints on development and planning. The federal government’s arms are a long way from those levers. Nonetheless, it is something we have to recognise.

It is one of the reasons why we have a Minister for Cities and the Built Environment, why we are engaging with cities, with states on matters of infrastructure in a thoroughly non-ideological manner. Why we will support and indeed invest in infrastructure based on what it delivers, analysed in a rigorous, cost-benefit manner and without discriminating between one type of infrastructure or another.

The challenge is to do everything we can, with your help, with all of the ideas and the advice, with all of the consideration and thought that you and so many other Australians can muster, to do all we can to ensure that we enable Australians to do their best, enable them to realise those opportunities, seize that future, confident, optimistic, proud and strong. This is a great era of opportunity. We are a great nation with a great future.

It sounds great and it is more or less what is required but it’s not enough. This is the solution before the problem has been explained. The current obsession in Australia with only “positive” discourse – the dumb bubble as we call it at MB – cannot alone carry a reform agenda on its shoulders.

The problem is that the economy is a slow-moving train wreck. Household’s standards of living are falling. There are no wage rises. The price of everything continues to climb. Jobs are not so easy to find. Children can’t buy houses. Everything West of the Great Dividing Range is crashing. The stock market has gone nowhere for ten years. Retirements are in jeopardy. Spruiking innovation and disruption to a population on the receiving end of the above is the equivalent of pouring petrol onto their flaming anxieties.

It’s not that they won’t accept an innovation agenda. They will. But first they need understand what is happening to them. The economy is not some objective machine whirring away above and beyond the above experiences. It is these experiences. The population is dying to know why things are not delivering the on the promise that they expect. They are bewildered and angry that things are not measuring up. The reasons why must be explained at length and without gilding the lily. They need to hear the truth, to understand their disappointment, to know that their pain is being shared in Canberra.

Only then will they accept an agenda for the longer term that risks even more. If they are sold another failing promise, and that is what you are offering Mr Turnbull for the next few years at least, they will only blame the messenger and we’ll be adding you to the prime ministerial scrap heap.

I can see what is happening here. Your advisors (and probably bloody Glenn Stevens as well) are looking back at The Abbottalypse and saying whatever you do don’t turn negative the way he and Joe Hockey did in their first months in office. But they were right to do so. Their problem was that they were negative for the wrong reasons, thinking that all they needed to do was prepare the public for fiscal austerity and blame Labor for it. A little Budget repair and everything would be fine! What they did not understand was that Australia really does have a revenue problem. A gigantic and growing black hole where resources were presumed to be for decades to come. It’s in people’s lives as much as it is in the Budget. So any Budget repair based upon cutting spending was never going to fix anything.

Thus, PM Turnbull, you are misreading their mistake. Lowering expectations was the right thing to do, they just did it for the wrong reasons. You still need to do it, to explicitly pop the dumb bubble, but for the right reasons, to help people understand why their platform is already burning. The economy is going to get worse before it gets better and if you do not explain it advance then your solutions will be blamed for it.

David Llewellyn-Smith
Latest posts by David Llewellyn-Smith (see all)


  1. “Surely we should continue to be a high wage….economy”.
    There’s the problem, right there; head stuck firmly in sand. You can’t, and you won’t. High wages are fine IF productivity; real work effort and risk taking produces them. Speculative enterprises erode real high wages, as we can see everywhere about us, as exampled in the amount of debt that people/the country have to take on to make the financial equations balance. The implied bargain was “We, the Knowledge Economy, will innovate; you, the Developing World, will do the menial work as you progress”. If we were going to become a Knowledge Economy, or whatever the current phraseology is, we would have done by now. Instead, we have sat back; basked in the glory of natural resources good luck, and left the real work to be done by others who were prepared to do the hard yards that we were not. It’s now too late to change that quickly enough to rescue the High Wages economy. One day, those may be appropriate again. But in the immediate and medium term, nominal wages are going to fall, for one of many obvious reasons, and until they do, the population will refuse to see or embrace the inevitability of the changes that MUST be made. The flame under the beaker must be turned up to high if the frog is to avoid being boiled alive……..

    • Prepare ye the way for long term low wage growth and very low (under inflation) growth in the Housing market. The good times are over; the message just has not got to the general populace. Heartily agree Janet.

    • rob barrattMEMBER

      Yeh – sad
      Until we arrive at the point where there is nowhere to go but up, we will continue to change PMs and continue (at least 40% of us) to vote for the union’s political arm – in the teeth of the evidence that they laugh their heads off spending on the credit card while announcing one after the other huge unfunded project (labor) or magical new dirt farm (the other lot). I think (but hesitate to mention it) that the problem might be related to the gene pool….

    • Correct, as always, Janet.

      I found myself swearing at the TV last night while Turnbull was talking. He waffled on about entrepreneurialism, without acknowledging any of the current impediments. How can anyone afford to take a chance on an idea these days, with housing costs, daycare costs, energy costs, etc, where they are?

      When Jobs and Wozniak started Apple, house prices in San Francisco were ~$64k (~$270k in today’s dollars), first time buyers’ incomes were ~$26k (source warning:PDF) – that’s a multiple of 2.5X.

      We don’t need higher wages, we need lower costs!

      • @ gregonomic –” I found myself swearing at the TV last night while Turnbull was talking ”

        Know exactly how you feel – -I’ve found a way of fixing this problem when ANY politician is prattling BS.
        The answer is to record the ABC & 7.30 Report ahead of time while say watching SBS Word News. Start watching the recorded news about 15 min after starting time & fast forward through their stupid monologues. Works for me 🙂

      • Agree: The rising costs of mechanized-production against lower prices have been increasingly squeezing farmers for decades and now other sectors. In response, some farmers are beginning to squeeze the hordes of middle-men (marketers) out and are marketing straight to buyers (thanks to internet technology)…..or go bankrupt. It will take this simple type of entrepreneurial-thinking and risk taking to also survive in other sectors…… that I believe Mr Turnbull is wanting Australians to reach for. And to Mr Turnbull, its not always about code. Farmers surviving without knowing a thing about how to code, by simply using the net to eradicate a part of their production they deem an unnecessary cost have enabled their generational continuance.

    • But wait, are we actually as high wage as people often claim? These days a lot of our taxable income are from speculation gains or income from outside of work. if I earn $100k and get interest of $20k from the bank, my taxable income would be $120k, and many people would think I’m overpaid by $20k. Or if I get capital gains one year of $100k, people would think I’m 100% overpaid.

      Also all our professionals gets paid a lot less than our USA counterparts. It’s only the labourers that gets paid a more than USA, but the gap is a lot less these days with the difference in exchange rates. E.g. our minimum wage of $20AUD/hour = $14.4USD/hour, which may fall below the minimum wage of New York in the future: .

      One can easily see a lot of out ridiculers average income are from:
      * Speculation gains
      * real estate commissions from the above
      * temporary spike of mining income

    • Good observation. Australia has what I call a souffle economy which has been pumped up by debt and debt related transactions. To protect our incomes we need to make and sell products and services of value. Can’t see how that is going to happen.

    • Hi Janet, I like your post. I see some nuance in Turnbull’s comment. He asked “surely we should continue to be a high wage economy?” I interpret this as “be warned – if we want to remain a high wage economy, then we need to start making productivity gains”. In other words, I think he was careful not to say “I promise we will all keep our high wages”.

  2. Wow! If that doesn’t get a print run in all of the MSM then I don’t know what would. MT should get you on his adviser list break some new ground. Great work;

    However, what you suggest will never happen because of the culture and construction of the Liberal Party. It’s purpose that is the reason why the Liberal Party exists is to ‘foster and protect’ an elite rent seeking class.

    Absolute destruction of our economy and our social order are (sadly) the prerequisite to the sensible approaches you suggest.

    • rob barrattMEMBER

      You should take a trip to Eddie Obeid’s ski lodge tonydd. Then you just might see that it’s a lot more than a one sided equation.

      • There is no reason for you to conclude that I don’t already believe that, This is a Liberal PM that we are talking about and LNP plan right? So why should I qualify every statement?

        Yes Eddie is a toad and Ferguson is a dead shit too, doesn’t change my assertion, so I will repeat it for you.

        The purpose of the Liberal Party is to foster and protect the elite rent seeking, crony capitalists.

        And yes they come in many hues.

      • rob barrattMEMBER

        And the purpose of the Labor party is to?? Before answering this, run a check on:
        a) How much they are being paid
        b) Their allowances
        c) Their collective work experience (outside of the union movement of course)
        I think you will find a startling similarity with the other lot. Why? Because, to quote a well known comedian, anyone who wants to get into politics should not be allowed to do so. Don’t ever think there is one iota of difference between them.

      • Mate! the story is about MT not the fucking labor party, who are another bunch or parasites I agree, but that is for another time 🙂

  3. GunnamattaMEMBER

    ……, long winded speeches are so yesterday……

    For the growing part of his economy he needs to start a series of tweets, relating to a music video, with some well presented merchandising (shirts, baseball caps, cups etc) linked to a Facebook page – all linked to a single theme we shall call – #Econofukt

  4. We are living in the most exciting times in human history. Free markets, globalisation, long periods of peace and above all the acceleration of technological change have produced economic and political transformations at a speed never seen before.

    In just a generation we’ve seen the internet and the smartphone connect most people in the developed world and before long most people in the entire world to each other and potentially to all the knowledge mankind has accumulated. The first iPhone was released only eight years ago; Google was founded 17 years ago; Facebook with 1.5 billion active users — and YouTube with one billion users — are 10 years old, Twitter is nine years old and Airbnb and Uber are seven and six years old respectively.

    For him couple of extremely bloody wars in just last decade (some still ongoing) in which Australia actively participates(ed) is “long periods of peace”, crony capitalism completely overtaken by fewer and fewer too big to fail corporations is “exciting period of free markets”, and couple of completely pointless and soon to be discovered mental health hazardous social media websites is example of “the acceleration of technological change”.
    Ultimately he thinks that our age of economic, cultural, technological, moral, political, ideological… decadence is “the most exciting times in human history” of “economic and political transformations at a speed never seen before”.

    WTF is going on in his head? Is he really so blinded by his exceptional “place in history” or simply lying to achieve something?

    I’ll rather have a dumb backwards religious fundamentalist PM who enjoys eating raw onions.

    • Can’t be that exciting if the most recent exciting event he can think of is six years old – and isn’t really that innovative anyway.

    • Haha, cant disagree mate. Spot on. Seems to me like weve almost got our Oz style transition that the US had going from Bush to Obama. The first one dumb as they come, the second one seemingly intelligent and with lots of promises to turn around bad policies. What happened in reality – he continued right on bush’s path and then some.

      Who knows maybe MT and Obama have good intentions but really i dont see how a figurehead at the top can change course of existing powerful currents and established interests supported by decades of corrupted policy.

    • “long periods of peace”

      Well, knifing of 3 incumbent prime ministers occurred in the last 5 years, which was unheard of during the two world wars, so the standard for the term “peace” can be variable.

      • @IP ” given that historically in Western cultures 90% of the population was involved in agriculture, get off your backsides – now – take a PDC if you must and learn to grow stuff whether it is fruit, vegetables, grains, herbs, animals, insects. Just get out and do it.”

        What is a PDC?

      • interested partyMEMBER

        Permaculture Design Certificate course.
        The common thread in most articles here at MB is….wall stuff. There are few if any real answers to the problems society face…..a PDC answers those questions and provides for a bulletproof lifestyle…however…one that is far more modest but absolutely sustainable…in the true sense of the word.

      • Marshy, you may find this interesting:
        From the movie “The First of the Few”, the story of R J Mitchell, at the meeting in Germany with Dr Messerschmitt and German Officers, a German advises Mitchell “Guns always have the last word! Any nation that has forgotten that is finished ”
        Churchill’s also quoted “Study History! Study History! Study History!”

        my family have been doing perma for 70 years..I guess my family are…..freaks. Of course WW would run an ad like that…wouldn’t want “competition” would they……oh wait
        As bill hicks said….

        Actually I have always wondered…after the crash…when growing your own food will be the norm. (and i think it will happen), what action monopolies and corporates will take to either, take advantage of it or try and stop it from happening, as it is a threat to their business model. Or am I being paranoid?

  5. We all know why reforms fail: everyone whose share of the power and money is being crimped by reforms, fights back with everything they’ve got. Reforms that can’t be stopped by the outright purchase of politicos are watered down in committee, and loopholes wide enough for jumbo-jets of cash to fly through are inserted…..Collapse does not need to be complete or sudden. Collapse tends to be a process, not an event…..Collapse begins when real reform becomes impossible.

  6. The Pollyanna platitudes about technology and the endless horizons of good times are sure signifiers of bullshit. The population are quite ready to digest this nonsense, just look at the business media and any business conference which all echo the same views and do not offer clarity of what is going on.

    • I think you are partly right Jake. The focus on technology like Facebook is meaningless. It’s a marketing innovation, but not a technological marvel. But there is good technological innovation happening in some areas. I’d nominate automation and robotics as potentially more significant. So much innovation is spin and marketing gloss though. Most apps are just shiny interfaces for mundane old IT.

      • Some apps aggregate other people’s IP.

        That is to say, they merely leverage off other people’s hard work, and they’re praised as revolutionary.

        Uber. … The hard work is performed by drivers and cars.

        Shopzilla. .. Someone has to make the thing they sell.… need a physical hotel.

        I’d rather applaud the real world supplier.

        Point being – some apps rely on real world stuff.

      • Josh MoorreesMEMBER

        I’d say the other big thing technologically coming is 3D printing, potential to severely disrupt current manufacturing/logistics operations. it definitely feel like the wider public isn’t really aware of it yet though. Obviously driverless cars will be a massive one as well. Keep in mind that the number one profession for men in the US is truck driving. Given the need to drive long distances trucks are ripe for automation.

      • +1 Monkey and Josh. Automation and Robotics are a huge part of our business in Japan and we are starting to get interest from China and Vietnam. We just do the location piece for automation. Partner with Hitachi for the other elements. Huge support in Japan for us, but nothing from the MonkeyMan government here. Until our society reveres business innovation above looking good at BBQ’s, we are going to miss out all these great opportunities. I remember using a 3D printer in 2007 to prototype a case design – useless machine back then. My wife’s Uncle uses a battery of them to produce cases for electronic test equipment at his factory in Shanghai. They customise cases etc for specific clients and offer the service at a slightly higher price than the base model. Machines were always running when I visit the factory. In Paris last year at Printemps ( they had a 3D printer on the top floor where you could make your own christmas decorations (limited designs but still very exciting).

  7. How long do you think he can make long waffling speeches without actually delivering anything?

    • Rent Seeking Missile

      MYEFO will likely provide a nasty interruption to Pollyanna Waffleworth’s ‘everything is awesome!’ musical.

      And the audience will be heading for the doors at Budget time.

    • Like I say, Turnbull is like Bernie Lomax (from Weekend at Bernie’s); do absolutely nothing but with sleight of hand look like the life of the party!

      • Thanks Mav Good one!

        As per my post yesterday where a factory in China, making folding chairs, is automating a bending process to replace eight workers. Next they will automate some other small part of the process. They have something to automate. You don’t suddenly build a new automated factory. Further as China-Bob has said on many occasions factories don’t exist in isolation. You need a network. So, again, this whole ‘our prosperity lies in innovation’ thingy is baloney..
        CB writes
        “Unfortunately we need to go all the way back to primary school and nurture a love for the sciences and a deep-seated societal belief in the value of technical knowledge and its close cousin Mathematics. IF we can find traction in our primary schools we need to properly support that faint glimmer throughout the secondary and tertiary stages of education maybe than we’ll have the depth of skills to talk seriously about an Innovative Australia, but to be honest that’s at least 10 if not 20 years away.”

        Bit over-optimistic Bob. We have to find some teachers to teach primary school children the interest in maths and science. Then we have to get those kids through school and university, then get a section of those and turn them into teachers to teach maths and science through primary and secondary schools.To get a predominance of Maths and science in schools will take three generations – probably four!!
        By then we will long since have sold off every business farm and mine in teh nation to keep ourselves running AND have closed down all productive enterprises – there will be nothing for the newly educated mathematicians and scientists to work on!

      • rob barrattMEMBER

        +1 Flawse
        Having listened to a young person using the word “like” 26 times in less than five minutes on the bus a while back (and yes, I silently counted them), I simply cannot see any serious sings of Reading, Riting or Rithmatic in the overwhelming majority of our younger people. I am the dubious product of a Catholic boarding school (at least for a considerable period of my life before escaping). I have absolutely no doubt that, though an education had to be virtually beaten into me, the alternative would have been a disaster. The current oh so smug Leftie views on education are an unmitigated disaster for this country.

      • We have to find some teachers to teach primary school children the interest in maths and science.

        Could be challenging getting people with some ability in maths and science to spend time teaching primary school kids when there aren’t really enough to go around as it is.
        Might have to take a bit of a different attitude to primary school teaching – somehow transform it into about the most desirable occupation going – if you’re going to achieve that goal.

      • I know the time scales are all wrong Flawse but we’ve got to start somewhere.
        A few months back I tried to convince a bunch of good science and math teachers in NSW to devote their afternoons to helping nurture a love for the sciences. I simplistically thought that if I just agreed to pay them at a typical after school tutoring rate, they’d be rewarded for their time and willing to help …how wrong was I. As it turns out every last one of these teachers owned at least one Investment Property and helped manage/maintain at three other IP’s, their afternoons were fully accounted for….I guess they’re not stupid, so the very reason I choose them is the reason they’re not available …welcome to the Catch22 of education. A couple even told me they simply couldn’t survive without their Equity Income from RE and in a way the time they currently devoted teaching was all the time they had available, it was their contribution…if I wanted their full-time attention I’d need to add about $100Kpa to the tutoring package …putting it a little outside the scope of what I believed I could fund.

      • Why would anyone want to be a maths or science teacher in the contemporary anti-science, anti-intellectual culture the political right has spent the last few decades creating ?

      • Josh MoorreesMEMBER

        What are the details China-Bob? I’m in Newcastle and a scientist interested in science education.

    • And that is written about the USA – an R&D powerhouse. What hope is there for a country like Australia, where corporate boards scratch their heads at the term…..”And what’s the R stand for again? And the D?…”

      • Actually America offshored its R&D due to PE metrics to streamline the balance sheet for quick stock buffing, which then can be looted.

        Skippy…. Twas the rational thing to do…

      • Oh .. they do know what R&D is .. mainly because of the tax deductions they get. A company I worked for blew money on employing people making shitty internal apps for CEO’s use (and called it R&D) and then claimed the tax benefits.

        Even 3d1k knows what R&D is .. mining companies were the largest claimants of the R&D Tax Concession … while digging up dirt.

      • @mav

        Mining probably have the worst IT infrastructure and practices imaginable, so it’s usually a good thing they spend some of it on IT. From a good source, I’ve heard that their system is just a step up from pen and paper (i.e. every thing operational is on someone’s personal excel), and there were huge waste because of no one can ever be sure if what they require is actually where they supposed to be (and dangerous because a lot of the chemicals are hazardous, and often goes missing because the person in charge of the excel wasn’t informed).

        Even if it is a small app, if implemented correctly, it would hugely increase productivity and safety.

  8. After the kick-off with the gold boom of the 1850s and 60s Melbourne started to develop along the lines of an ever accelerating property boom from the 1870s. It overtook its older siblings,Perth, Brisbane and finally Sydney to become the largest city in what was then called Australasia and the second largest in the British Empire. Not bad for a city of just half a century in age. It was a place of immense energy, with a hunger for everything according to the British journo George Sala who coined the expression Marvellous Melbourne in 1885. Six years later the property boom imploded, every financial institution in the colony of Victoria was devastated and the Marvellous Melbourne, with its gilded arcades and neo Gothic bank buildings, was plunged into a deep depression that spread across the whole continent and triggered the tensions between labour and capital, leading to the shearer’s strikes and the formation of the Labor Party in Queensland to represent the working man. The colony lost population and Melbourne, filled with beggars and women driven into prostitution by desperation became the scene of the most cynical sort of politics and criminality that was immortalised in fictional form, Power Without Glory. There were to be two world wars, a great depression and an industrial revolution in Australia before Melbourne property values regained their 1890s peak. Marvellous Melbourne indeed.

      • TailorTrashMEMBER

        “With a smaller real estate footprint in Melbourne, the move will save money which will enable us to provide a more competitive service to our customers,” the company spokesperson said in a statement.
        Hong Kong company owns the electricity generator and sends the customer service jobs to the Phillipines. Great to see that “free market and globalisation” that Malcolm is on about in full operation . Looking forward to the great innovations that will help these 300 people of Victoria (the customers ) pay their electricity bills.

      • ‘Those who forget history are condemned to repeat it” – BS… they are lucky if they get to repeat it. Normally it will bite them in the ass far worse.

      • rob barrattMEMBER

        It’s not ignorance of history DC, it’s the common factor in the equation: Human Nature. The “Me,me,me,me,me” factor can be safely relied upon to propel us into a series of ever repeating disasters. But don’t get me wrong, our nature worked well for us in the early stages of our evolution. It’s only when the sheer numbers of us start to prove an existential problem that it works against us. However, I am happy to report that the Green fear of danger to the planet is entirely unfounded. The planet will be quite OK without us. Evolution is not due to stop before our expanding Sun makes it too hot for organic life forms, and that’s a while away yet.

    • Great stuff.

      On that point WW, speaking to a friend at ANZ recently. Senior role. Reckons the push is for about 80% of jobs to be offshored, including his own!

      • BaldbadgerMEMBER

        Jimbo i too have talked with senior management at a major American bank with a big presence in Australia.
        They want to work on a 40/40/20 breakdown of employment in Asia Pacific. 40% in low cost places like Manilla and Mumbai, 40% in mid cost places like Singapore and the 20% in high cost of employment places like Australia. Currently more than 50% of their staff are in oz.
        The thinking…. Why do the same job in Australia for $70k a year that can be done in Mumbai for$15k a year. Management looks great as they’ve saved money and they get their massive bonuses for reaching targets.
        Don’t worry about the quality of work or the costs of fixing up mistakes. Management will be long gone by then counting their bonus money.

      • Not good news for the Government and banking spivs trying to turn Sydney and Melbourne into these so called Asia Pacific financial hubs. Mate couldn’t care less about exiting, his payout is a tattslotto win.

    • I should of added that in the time of “Marvellous Melbourne” of the 1880s there was free trade and a technological explosion – train lines were being built across countries over ever greater distances, and telegraphs were being built across continents and even the seas, while other inventions of the day, the refrigerator, electric power, the internal combustion engine were causing excitement and just beginning to transform industry and domestic life. Didn’t stop the property crash and depression of the 1890s in Australia Malcolm, and the strife ridden, class politics that followed..

      • the refrigerator, electric power, the internal combustion engine

        A list of innovations which leaves Facebook,Uber and even the PageRank algorithm and smart phones in the dust. Electric light, being able to store meat during summer – those are leaps forward, not the ability to play Angry Birds at a bus stop.

      • + many SJ and Stat.

        As I read somewhere just the other day – “the absurd valuations given to companies like Uber is less a reflection on the brilliance of the idea and more a reflection on the stupidity of the money.” QE makes any dog look like a purebred. Tesla cars will be dead in a decade (Audi/BMW/Merc will beat Elon Musk at his own game). Meanwhile, the internet has already delivered its biggest revolutions: email and the webpage. NBN zealots just don’t get it. Biotech on the other hand…..we ain’t seen nothin’ yet…..

  9. Excellent work HnH – Malcolm and his advisors would be mad to ignore it. That goes for the ALP and the Greens.

    • Yep, I think Australian EGO is also in a huge bubble state :). Nobody in the political Mob will acknowledge it.

  10. You can’t be honest and say the economy is going down the toilet and everyone will have to suck it up.

    Just ask Jimmy Carter.

    • Carter was actually the beginning of neoliberalism in America, after his speech, then with increasing ratchet effect everything was to be privatized.

  11. Unfortunately we have to have the pain, suffering and deleveraging before the rainbow’s end…not so agile…not so exciting….

  12. Firstly economics is not remotely a science, economics is just observation of the consumption, production and transfer of wealth. If Prime Minister Malcolm Turnbull cannot get the first sentence of a speech right, then the rest of the speech is just rubbish, and reads as such.

      • Before all the re-branding to give such academic disciplines move gravitas economics was concidered sociopolitical theory.

        Skippy…. science requires theories to be falsifiable, and conduct examinations with control groups, blinds.

  13. TailorTrashMEMBER

    Ho hum ……I’ll now go back to reading my copy of Kim Kardashian’s best seller …..” How to take the perfect selfie ”
    Call me if anything exciting happens ………………

      • All I read was platitudes, lip service, standard political weasel words and blah blah blah blah blah.
        Actions speak louder than words Malcolm.
        Just be careful on how you act though.

  14. This Macrobusiness article is either very cynical or very naive

    Explain economics to the public will he?
    Explain exactly how private money creation works? That the finance industry clips the ticket? That the government has no need to issue bonds?

    It is all a smoke show. The government is complicit as is the media
    It is about power and keeping the populace under control
    The new religion of economic lies that has replaced the old religion but with the same themes: ephemeral reward for suffering and obedience

    • Gosh Coming, don’t get caught up in that unfortunate tendency of MMT to tend towards pessimism and negativity.

      The changes that are required are not great and not impossible.

      Far bigger changes in attitudes and ‘received wisdom’ have been achieved.

      Plus it is not as though a successful politician will have any choice in the years ahead. A change in our present direction is simply not ‘optional’.

      If Malcolm wins the next election, which appears likely, and Mr Morrison wants to be the next PM they are likely to be the ones who will be forced to bite the bullet.

      And with plenty of people thrashing out the issues to a wider and wider audience – a mainstream change of ‘beliefs’ may be much closer than you think.

      A bit of heat and pain will be necessary to drive the final steps but there is likely to be no shortage of that in the next few years.

      • Eh – ??? – MMT is not a political movement anymore than the physics behind the internal combustion engine, tho it does inform what the operator of the vehicle with the engine running it, can go.

        Skippy…. right now that seems a wall… where most the passengers clinging to the – outside – have no safety equipment, same does not apply for the status quo mob – inside – the vehicle.

      • Skippy,

        When I say political I don’t mean that as a criticism.

        MMT is political when it gets to the role of private banking and credit creation (fiat creation). That much is obvious from the manner in which the discussion of that issue gets very heated very quickly on most MMT blogs and the very antagonistic attitude of many MMT proponents to the various ideas of returning full control of fiat to the elected government.

        The arguments given by many MMT proponents for leaving fiat creation in the hands of the private banks are not very persuasive. The reason seems to be mostly an artifact of US politics where the idea of returning the control of the money supply to the representatives of the people (or their delegates) is considered beyond the pale. Along with some lingering faith in the idea of the ‘market’ has a mechanism for allocation of resources and a belief that bank creation of a fiat equivalent is somehow important to that allocation.

        But as I have said before – I am comfortable with the MMT view that solid regulation of the private banks is sufficient – as we would need to pass through that process anyway before any experiment in completely removing their power to create a fiat equivalent could be undertaken.

        One area of concern for me about MMT has been the somewhat overly relaxed attitude to international capital flows. Too much of that “debts owed in fiat are no problem just print more and let the exchange rate depreciate” – that is too cute because although it is true theoretically in practice it will not happen as the various international agreements TPP and FTA are designed to stop countries like Australia short changing the international ‘investor colonialists’ who are stuffing us with ‘capital flows’ like a foi gras goose.

        But recently I have detected movement in that position and a growing appreciation that unproductive capital inflows from mercantalists in the form of purchases of IOUs will drive up exchange rates and damage the manufacturing sectors of the targets of those flows and thereby generate unstable and unbalanced economies – both for the mercantalist and the target of mercantalism.


        The Russians are having a very lively debate at the highest levels about returning fiat to the control of the people as a result of their concerns about the use of international capital flows as a tool of neo-liberal colonialism. I would provide some links but you are more than likely right across those very interesting developments.

      • I get what your saying and acknowledge the international capital flow dramas [bubbles chasing the next bubble or causing it, seeking high yield (short term to boot – risk bad)]. The argument is… that under a more core Bancor is smaller pops than epic busts, tho the usual suspects like the epic busts, who cares if value of money goes down as long as assets are priced at fire sale… rinse and repeat consolidation. That’s not forgetting the whole argument about unleashing the shadow sector [efficiency of capital allocation w/ lower cost] which inadvertently pushed retail banks to seek profit in the RE – fee striping sector. More of a worry to me is the gigantism going on, grow big or die meme of the last few decades, usurps the political system and without that remedy see history.

        The Fed was a response to the panic of 1907 [America had to be bailed out by you know who] and a hundred years of previous experimentation that blew up as much as it created [mostly little people got the burnt end of it all]. Unfettered wealth took a shellacking post GD and got fat again during and post WWII, everything from that point on was to never experience those nightmares again, including narrowing academic introspection and the slow but deliberate influence on all political and system architecture [Fed, IMF, BIS, et al].

        Yeah have been watching Russia quasi nationalize its oligarchs, resources, capital, and its working for the near term, globalists hate it, screws with the narrative nob.

        Skippy…. hate to have to repeat it… MMT is the operational system, been so for some time, so the argument about implementing it as a palliative is moot, more a question of who controls it and the agenda, the agenda can change imo.

      • “..More of a worry to me is the gigantism going on, grow big or die meme of the last few decades, usurps the political system and without that remedy see history…”

        ++ Yep

  15. This article will not help Australia or Malcolm either in his chase for knowledge innovation;
    (Via Zerohedge)

    “The Trans-Pacific Partnership means that America will write the rules for 21st century trade,” according to President Obama, but as Reuters reports, U.S. unions, lawmakers and interest groups questioned the long-awaited text of a landmark U.S.-backed Pacific trade deal on Thursday. “It’s worse than we thought,” Lori Wallach, director of Public Citizen’s Global Trade Watch, told members and U.S. labor representatives said the agreement contained weak, poorly worded or unenforceable provisions, concluding “we do not believe those improvements are significant or meaningful for workers.” It appears, that ObamaTrade may be a boon for factory and export economies like Malaysia and Vietnam, but – as expected – will achieve little for the average joe in America.

    • The TPP combined with the Trade in Services Agreement (TiSA) will run down living standards in Australia. The philosophy behind these agreements is based on securing the lowest value capital and labour input and not value creation. We are being set up to compete with low cost economies. Not going to end well I would suggest.

      • I thought you were having a (not completely undeserved) go at my bombastic style. Anyway, I must lighten up, contain myself and talk and above all listen. cheers

      • Lol – not sure why you think I would have a problem with bombastic style – I try to avoid being understated myself.

        I like reading things that keep me awake!

        Now I am curious as to what it was that I agreed with – my memory fails me.

  16. Never ceases to amaze me how Australian politicians talk about technology companies’ success (Google, FB, YouTube, Twitter, Uber, etc..) as if they had something to do with it. They keep forgetting that we are consumers of technology and not creators of it. The conditions that allowed these companies to succeed and flourish are not Made in Australia. In fact, we, to a great extent, have the opposite conditions that allowed these companies to be what they are (tax structure, rent seeking, attitude to risks, etc..). You just have to look at the number of Australians working in Silicon Valley to understand that. So, please, let’s stop celebrating technology innovations as if we had something to do with it. I’m beginning to worry that Australians are being sold (again) smoke and mirrors instead of the real thing. The reality is much more ugly than Mr. Turnbull would care to admit. True leadership is about telling it as it is.

      • Atlassian is the exception to the rule. Don’t forget that Atlassian founder said that if he were to do it again, he would not do it in Australia.

      • Even if there were 10 potential Googles seeded in Australia – 9 of them would leave for Asia to avoid 30% tax on their IP and 40% plus on their wages.

        The other one was obviously ill advised and cashed out early to an offshore group. He employs a gardener and someone to knock the barnacles of his 70′ Riviera

      • Even if there were 10 potential Googles seeded in Australia – 9 of them would leave for Asia to avoid 30% tax on their IP and 40% plus on their wages

        Kaggle is an example of an Australian mini-Google. Of course, they left a while ago, but for the US not Asia, presumably in search of a bigger market and a more highly skilled workforce.

      • I note that Altassian have ceased to be an Australian company, having restructured and shifted their HQ to London last year.

      • I note that Altassian have ceased to be an Australian company, having restructured and shifted their HQ to London last year.

        Yep. This was to do with the brain-dead local treatment of stock options.

  17. “We must acquire not just the skills but the culture of agility that enables us to make volatility our friend, bearing fresh opportunities, not simply a foe brandishing threats.”

    Sounds like a good trader.

  18. “Purge the rottenness from the system” haha.
    Seriously though, starting with the banks. They’re a disgrace.

  19. The latest click bait from Bernie Lomax. You guys should focus on macro economics and leave the kabuki to the side.

  20. Whilst were at it China is not included in the TTP which begs the question is the TTP is more political in nature than not, and if so are we all along just for the ride.

    Skippy…. that whole ALEC new American century thingy scares the Bejebus out of me… after the last decade-ish shenanigans… just saying…

  21. What’s not to love about this speech, it’s got all the right words and wraps them up with that believable “vision” thingy.
    Specifics, timelines… aiming ahead of a moving target…wait a minute what was the target again yea a bit weak in those areas but… The problem is that Aussies simply don’t realize they don’t have (on average) the skills to even attempt to execute these 21st century industry plans (a kinda national scale Dunning Kruger effect). As much as the individual Strength of skills is paramount to successful innovation in a knowledge economy, it’s the communal Depth of skills that’s needed to support the Green shoots that brilliance gives birth to. Facebook employ’s all manner of programmers ranging from the best’n’brightest the industry has to offer to the kinda help desk cannon fodder that most of us interact with, having one without the other is pointless because it results in brilliant software designed only for brilliant people (without doubt an exciting segment but unfortunately a tiny market).
    Scaling an idea or a vision is about leveraging that communal depth of skills, if for no other reason than to off load the work so that brilliant idea no.2 has room to mature. You see about the hardest thing for any startup to do is translate their early success with a point product into a financially successful stream supported by continuous innovation.
    Anyway the depth of skills is what’s missing in Australia. Points of brilliance abound but the structure to support these innovative ideas is MIA.
    Unfortunately we need to go all the way back to primary school and nurture a love for the sciences and a deep-seated societal belief in the value of technical knowledge and its close cousin Mathematics. IF we can find traction in our primary schools we need to properly support that faint glimmer throughout the secondary and tertiary stages of education maybe than we’ll have the depth of skills to talk seriously about an Innovative Australia, but to be honest that’s at least 10 if not 20 years away.

  22. Talking of productivity and innovation, and out of curiousity with New Zealands economic data rolling over, are their any manufactured or produced New Zealand made items/products/services that Australians would purchase in preference ?

  23. matthew hoodMEMBER

    Until the pain of not changing is greater than the pain of changing, nothing is going to happen

  24. billygoatMEMBER

    Great article H&H. I was amused by the line ‘children can’t buy houses’
    Anyone over the age of 18 is an adult!
    Anecdotal only but there are many that can’t buy houses’ and many more adults over 30 in reasonable paying jobs compelled to live in ‘share houses’ or ‘share rooms’ – yes adults sharing ROOMS in rental properties at minimum $180 per bed in out of the way suburb & anything from$200 per bed in Eastern suburbs, The model is based on ’90s backpackers at double the cost. Gumtree, flatmate finders, (even domain & advertise these share arrangements and have gall to publish ‘feel good’ articles about joys of ‘adult sharing’ ) Anyone with half a brain and able to read English can do their own economic research. I did in 2006 when I couldn’t fathom price rises in Perth & rent increases in Sydney & found macrobusiness amongst others. Sydney is not a shit hole but the grip of ‘vested interests’ in putting a roof over your head has decimated ‘liveability’ and general good points. I think many people renting or mortgaged would be shocked to work out nightly cost of putting roof over their head. For many – top dollar to sleeping in something akin to crap back packers or for heavily mortgaged a luxury hotel anywhere in the world but reality their sleeping in ordinary triple fronted brick veneer in outer western suburbs of Sydney, Melbourne or any less than ordinary suburb in Australia -for the truly rich with no debt it doesn’t matter.

  25. Hnh, can I get refund? I feel depressed. SERIOUSLY!

    This is why I plan on having a frugal retirement, so I can leave my daughters enough to be able to have a reasonable life regardless of how things pan out.

  26. …Google was founded 17 years ago; Facebook with 1.5 billion active users — and YouTube with one billion users — are 10 years old,

    Love it – like saying in 2000 that it’s an excititing time to be alive because the Commodore 64 came out 17 years ago and VGA graphics have become widely available. There are licenced drivers who have no recollection of a pre-Google world, for God’s sake.

    It’s only an exciiting time to be alive if something came out last week – or, better yet, something is about to happen. Does MT have an example of something like that?

  27. Mining BoganMEMBER

    St Malcolm the Spiv was just on the telly waffling on. The director cut away back to the desk because of some sort of background noise. Apparently this noise was a great big protest but this wasn’t mentioned. This is why Truffles doesn’t have to say anything. The ABC and News are protecting him like they protected ex-our Tony. They’ll never chase the truth of the matter.

    The waffling will continue until our media grows up. Here’s that nice Mr Elder explaining it.

  28. I see that the foundation of WordPress 12 years ago doesn’t rate a mention as an exciting development of recent times – probably because even intelligent tech savvy people are defeated by its comments system, and wind up posting their replies anywhere but where they intended.

  29. “The economy is a slow moving train wreck” Things will speed up when the train goes over the cliff. All jokes aside I am not worried my friends to the left and the ones to the right told me the government is going to fix it.

  30. Good piece, but rather too positive for my way of thinking. Australia has spent thirty years training itself to be useless – except for houses and holes. The whole neoliberal reform agenda was always a load of rubbish and – with the exception of floating the currency which actually worked out in a weird sort of way – can be seen by anyone with the slightest brains to be a disaster.

    – Privatisation was insane, Just created a whole lot of useless extra padding and deadweight on the economy, a lot of low paid deregulated jobs with massive turnover, and a small number of new fat cats with tripled salaries. Necessarily increased prices We are the privatisation and cost recovery capital of the world with agencies panting to collect dribbles of money from every service that is free in any sensible country..
    – Turning the government from providers of services to “compliance managers” was insane. They do that anyway given half a chance, why encourage them by stopping them from doing anything useful so that they can spend their time thinking up new forms of compliance.
    – With no government to assist anyone, startups and innovation have pretty much ground to a halt There is .less money borrowed for small business than for purchasing housing for lease; the figures were once 10:1.
    – Compliance manifests itself at every level – except where it is needed, the financial system and the cores of capitalism. Probably the worst outcome has been the massive magnification of house prices and the beginning of the slide in home ownership
    .- the so called information revolution has been nothing but bad for a small country like Australia. Whatever indigenous culture it had has been lost, we don’t even fight back against the US cultural colossus like the . Kids spend their time aping US celebrities, language and cultural norms. The only time an Australian gets recognised is if they somehow crack the US market and everyone thinks they are Yanks.

    I can go on like this for some time but that is a good start

  31. Ever since I first heard about the “information revolution” from my CSIRO colleagues in 1981, I thought it was a load of crap. The rate of meaningful innovation has been falling steadily since 1970. Innovation used to mean expansion, knowledge and understanding. Now almost everything has moved to dealing with increased congestion costs and therefore has become a response rather than a driver.

    When I look out there and see that ‘data analyst’ now means analysing consumer data to direct advertising, and there are dozens of those parasitical jobs for every job directed to knowledge, understanding the physical world, society or the economy, I just cry. Who would ever have thought it in such a short time, a vibrant society destroyed.