The dills that wrecked Australia try to fix it

Karen Middleton did a good job of rounding up the usual suspects on the weekend to get their views of the future of the Australian economy.

Lost on her, and them, was the irony that this is the same group of dills that got us into a mess in the first place, so their efforts at repair are more amusing than useful:

Beyond the immediate challenges, though, are even more wicked dilemmas about how to restart an economy going into “hibernation” and how it will look when it wakes up.

“We spent money to buy jobs,” says Chris Richardson, partner at Deloitte Access Economics. “As we head into recovery, you don’t want the engine of the economy to go cold. It’s really hard to get that started again.”

A few certainties are emerging. The free movement of people around the globe won’t resume for a long time.

…Are we too reliant on other countries for supplies, especially China? Do we have enough capacity for self-reliance in essential services such as health, energy and transport?

“Do we have a strategic oil reserve?” Richardson asks. Innes Willox, chief executive of the Australian Industry Group, points to a lack of refining capability. He says the crisis has brought all of these questions into stark relief.

“Defence companies were getting very jumpy when China was in the depths of its situation because they weren’t getting supplies of nuts and bolts,” he says. “It’s as simple as that.”

…In these circumstances, the massive spending prompts some to ask: How are we going to pay for it?

…“I don’t give a damn about the government debt number at the moment,” says Stephen Koukoulas, managing director of Market Economics and former adviser to prime minister Julia Gillard. “But when this finishes, we will need to have a bit of a look at it.”

…Innes Willox also sees a need to look at tax. “I think there are going to be radical suggestions, whether we like it or not,” he says.

As the nation tries to pull itself out of a deep recession – some say, depression – there will be no appetite for austerity. The government has vowed to press on with stages two and three of income tax cuts, legislated for two and four years hence.

Both Willox and John Roskam say they could mount an argument for cutting the corporate tax rate to get business moving. Roskam also says this underscores the need to scrap regulatory red tape and that jobs must now be prioritised above all else, including environmental protection. “This has done what Adani couldn’t do: put jobs ahead of the environment,” he says.

…Stephen Koukoulas agrees. “We have a big shift to the left in how things are running,” he says, “because even these rusted-on Thatcherites and Reaganites are saying governments have an important role to play.”

…On Thursday, the government announced childcare would be free for six months for parents working during the crisis. It has also raised the rate of the unemployment benefit with a new supplement – a move economists and analysts across the spectrum say will be virtually impossible to wind back, not least because such a cross-section of interests had been calling for a rise.

“That was our standout failure in the land of the fair go,” says Chris Richardson. “We were spectacularly unfair. I think that will change.”

…Economists are divided on whether partial nationalisation may have to be considered in some sectors. Richardson says under some circumstances it might have to be. “Governments state and federal need to ask what’s strategic, what’s vital, what’s not going to be there on the other side,” he says. “And we should step in … It’s temporary nationalisation.”

…Sally McManus, the secretary of the Australian Council of Trade Unions (ACTU), says they should pay more tax, for a start. “A lot of these big companies don’t actually pay tax in Australia and yet when there’s a crisis, they’re the first people to put their hands out,” she says.

…There is a live debate about whether Australia’s economy will remain as open to the rest of the world after this crisis.

There is now also a question of whether Australia is too reliant on imports and on particular markets for exports. But Stephen Koukoulas doesn’t think the Covid-19 pandemic will dramatically affect globalisation.

“Other than international travel, I don’t know that this is a globalisation question,” he says.

There is consensus that it will prompt a rethink on supply chains.

McManus and Willox want greater focus on self-reliance in manufacturing. “We are an island,” McManus says. “We need to be self-sustaining.”

But Willox says that means people will have to pay more.

McManus says the crisis has also exposed workforce over-casualisation.

She argues nations can get away with it through years of growth but not when there’s a crisis. “Suddenly, all the weaknesses get exposed,” she says. “Hopefully our society is a lot less tolerant of this as well.”

Even the IPA’s John Roskam says the social safety net needs to be expanded and the boost should stay. He argues there should also be a higher age pension – and a lower minimum wage.

Meanwhile, at Domain, comes another member of Team Dill, George Megalogenis:

There is a delicate balance to be struck once the pandemic passes, between re-engagement and a new form of Australian aloofness. The world can’t be the same as it was, because nations will practice a form of self-isolation for a number of years to come. They will want to avoid both reinfection and the loss of sovereignty through dependency on others for basic supplies. This will reduce both the flow of people and goods around the world.

This might inoculate Australia from Chinese overreach, and further American retreat, because we will be forced to make our own luck. The question we have been dreading for the best part of the 21st century – to choose between the US and China – might answer itself for the time being with “none of the above”.

There will be a price to pay whether we know it or not. China’s short-term interests will be to reclaim as many of its citizens from Australia as possible for its reconstruction. Our universities, which have been our third-largest export earner after coal and iron ore, will be the first to feel the loss. In time the exchange of minerals and migrants might work to our advantage again.

And there you have it. If there was ever a sadder sack of pseudo-intellectual gasbags I’m yet to see it!

Collectively this great waste of breath represents a single broken ideology:

  • open borders;
  • extreme immigration;
  • financialisation, Dutch disease and de-industrialisation;
  • wage and industrial relations destruction, and
  • above all, interests!

Not one them can hold his or her head up as the virus exposes the follies of all. It doesn’t matter if they come from the fake left or fake right. It’s the same thing. Failed globalism, property bubbling and de-industrialisation.

All Anglosphere economies have suffered degrees of the disease but nobody but Australia turned it into a radical experiment in economic dependency. Australia’s manufacturing GVA versus GDP is now 5.5%, half or worse of our peers (scroll over to see country names):

So, how do we fix it?

First, sweep this intellectual dross into the sea.

Second, do what we should have been doing all along. Create markets that deliver benefits to Australians via meritocracy, economic diversity and productivity.

Here are a few tips. The Morrison Government will need to work on two fronts, micro and macro. On the micro it must:

  • identify which areas of global supply chains it is no longer tenable to outsource. These segments must be actively incentivised with investment and research tax forgiveness;
  • create industrial relations regimes that do the same with both unions and bosses on board;
  • slash international student intakes and invest in, rather than debauch, education, and
  • rejig bank capital rules to boost business lending over mortgages.

On the macro it must:

  • slash immigration in half and collapse temporary visa categories;
  • deliver cheap energy via tough gas reservation, pipeline regulation and a big green ‘new deal’;
  • adopt an all of government policy for a lower AUD and higher productivity which includes cutting things like franking credits and negative gearing plus having higher mining taxes, and
  • use tariffs or behind the border protections on specific supply chains.

These measures will begin to transition the economy from being overly reliant on Chinese demand and supply plus mortgage credit, to one that has more internal production drivers that are competitive and self-sustaining. The same measures will balance out the benefits to both capital and labour to make it politically viable.

There is no need to disengage further from what is left of retreating globalisation. But we must engage more fully with the US empire and be much more assertive with the Chinese version. Trump will pass. Xi will not. There is no middle course.

You will notice that such a project requires sacrifice by all. Therefore the greatest single challenge to making it work is the communication of the national interest project to the people.

A leader is needed that can win them to the cause, as well as silence the dills.

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

Comments

  1. Boom! There you go Totesbewoke, we have the policy direction. If you really have an “influential australian identity” on board, prime them with this, forget your 100% likely to fail independent in every seat approach. Incorporate a new political party, make everything listed here the key policy platform, sign up 500 legitimate members (I think you’re a tosser but will back you if you’re genuine about real change) and get your influencer to get us one sitting federal MP or Senator to defect and sign up and we’re off and running.

        • Went to school with that guy, few years above me, no recollection of him but a fair few of my older acquaintances bullied him relentlessly, I feel like our town/school owes the whole country an apology for releasing that damaged unit onto our political landscape.

          Les, yeah but nah bloke, her “party” is a joke and she’s a puppet. Maybe if it became Latham’s party and she disappeared forever, maybe, they’d become potentially palatable (highly doubtful).

          • ErmingtonPlumbingMEMBER

            “I feel like our town/school owes the whole country an apology for releasing that damaged unit onto our political landscape.”

            Lol,… Bullying has dire consequences that goes way beyond damage to an individual.
            Who woulda thunk!

      • What has PHON done to reduce immigration in Australia?
        Increase manafacturing self sufficiency?
        She has held a key number in the senate and has negotiated nothing.
        Just enjoying her perks and salary like the rest of them, useless.

      • Mining BoganMEMBER

        They’re about publicity, not solutions.

        She’s had multiple opportunities to vote to do the right thing by Australia. She didn’t. Solutions means she doesn’t get to whine on Sunrise with Kochie.

          • DominicMEMBER

            Hardly a surprise. Once you’ve garnered yourself a degree of power, there’s a fair chance you’ll be showered with gold to trade your, er, ‘principles’.

          • Totes BeWokeMEMBER

            Yes humans are humans.

            Though nothing could get me to trade my country’s future.

            We need patriots running Australia. It’s the only way.

          • Except expecting you to start a political party. That’s too hard.

            Well guess what. That’s partly why patriots and people looking out for the population at large will never have political power under our current system.

          • Totes BeWokeMEMBER

            bjw678

            Correct. Why the fk would I stick my neck out to start a party when this country is chock a block full of delusional and or evil leftists just waiting to cut someone like me down?

            The enemy is the left, MSM and Labor. They have facilitated LNP to destroy us.

          • Yes I agree, she’s a passionate moron who’s not really sure what she’s passionate about, except she knows she passionately dislikes non-white people.

          • I finally understand Totes.
            It’s a full blown case of https://en.wikipedia.org/wiki/Cognitive_dissonance.
            He is a rusted on lib, but the libs are screwing him and the country, since he is a rusted on lib it can’t be the libs fault, therefore it must all be labors fault despite libs being in power for most of the last 20 years,
            simples.

      • Nah… I very much doubt PHON is even remotely on board with these:

        – deliver cheap energy via tough gas reservation, pipeline regulation and a big green ‘new deal’;
        – adopt an all of government policy for a lower AUD and higher productivity which includes cutting things like franking credits and negative gearing plus having higher mining taxes, and

    • Totes BeWokeMEMBER

      You think I’m a tosser because I’m a patriot?

      You and I aren’t made of the same stuff mate (pretty much why you’re losing your country), so FO and back someone else.

      • What makes you think the independent elected in your elect any independent you can find won’t follow the PH path given they are likely even more in it for themselves than her?

        • Totes BeWokeMEMBER

          Disendorsement I guess.

          Happy to hear of any ideas. I just want something to move forward with, so in 40 years I can leave this planet knowing I tried to save my kids country.

          Only one thing I’m certain of. All today’s Labor MPs have to go. They’re not in it for Australia.

          • Lols.
            You can’t. This is the fundamental Flaw of representative democracy. It is about the illusion of representation, and since the majority of the population believe the lies that they’re telling ya, it perpetutes itself.
            Much as economists believe the lies they were told in school, so all make the same mistakes and assumptions in broad strokes.

          • Display NameMEMBER

            And neither are a good number of the LNP. The PM’s office looks like the Canberra office of the Minerals Council or Ruperts Retirement Home. Getting policy that represents the best interests of the country and not just a bunch of globalist mates is not going to happen with this sort of make up. Every decision that can be politically gamed, is , right down to the allocation of sports grants.Only in a crisis might we get sense. Maybe. We are midway into the second crisis Smoko has faced and only now are we getting some bipartisan approach.

            I will be amazed if the leopard has changed its spots. Maybe smoko is just not very bright. This is a real possibility and the reality is only just dawning on him. that the economy is screwed. I am left with the view that Canberra contains the most underwhelming collection of pollies I have ever seen and I am approaching 60 years. The more recent trend of politicians for life is not working out in the average tax payers best interests.

          • Totes BeWokeMEMBER

            bjw

            I’m not following what you mean.

            If Mr X endorsed them (as in recommended them, as opposed to party endorsement), and got them elected, why can’t he have the same influence with disendorsement?

          • Totes BeWokeMEMBER

            Display

            Absolutely, but how do you get rid of them when LNP voters are happy with the grubs?

            Labor voters are being hurt by Labor. That’s the difference IMO.

          • For MR X to endorse them in any meaningful way, you have a defacto political party, not an independent.
            And wsn;t your plan to get any independent you possibly could into parliament, not the ones selling their souls for endorsement?
            Endorsement is the chains that bind the current elected representatives to their political party leaders.

          • Totes BeWokeMEMBER

            “wsn;t your plan to get any independent you possibly could into parliament”

            At this stage my core plan is to get rid of the impediment preventing change. Labor.

            Sure it’d lead to a new party, self serving and nepotism etc, but it’d end LNP and Labor which makes it a step in the correct direction. Surely we can agree on that.

            Open to other ideas. Reality is to fix this situation, Labor and or LNP have to be destroyed.

          • No, reality is that labor and liberal are the inevitable outcome of the westminster democratic system. Please show me where it is leading to the outcomes you actually desire. US? UK? ???

          • drsmithyMEMBER

            No, reality is that labor and liberal are the inevitable outcome of the westminster democratic system. Please show me where it is leading to the outcomes you actually desire. US? UK? ???

            The US is obviously not a Westminster system.

            Many Euro countries do fine with parliaments frequently having substantial representation across, and coalitions between multiple parties, often with quite different ideological outlooks.

            The core of our problem IMHO is a culture that shirks co-operation and compromise in favour of a winner-takes-all (“elective”) dictatorship. For which we can, as usual, thank neoliberalism.

  2. What a frightening mugshot of the ‘Pandemic 6’ who have helped to make Australia a paradise where one man’s bat soup kills people all over the globe and flattens an economy built upon mass people and the eradication of common sense. Never has the expression ‘beware of Greeks bearing gifts’ been more appropriate for two of these Trojan horse builders – but it applies to all 6. Anus Bollox is truly the pandemic poster boy who’s been busy cramming them into dog boxes. As for Sally, I honestly cannot bare to even listen to her as it is unbelievable the the union movement has tied this lump PC lead to its neck. A nightmare.

  3. As with Keating and Howard before them … they are just regurgitating dominate economic orthodoxy with friends in mind, but yes, localism is something that will need to occur – just watch out for those contracts and IP’s.

  4. Totes BeWokeMEMBER

    I can’t stand that Manglename.

    “to choose between the US and China”

    No one but elites and clueless leftists were struggling with that. Fk I hate the left. They’ve wrecked our country.

      • Totes BeWokeMEMBER

        Howard and co can’t believe how fking stupid the left are. They’re still giggling.

        • The so called left you keep wailing about are more accurately described as moderate cosmopolitan republicans in the U.S. sense, never the less the everything is a market camp won.

          Flogging a dead horse is a sight to behold IMO.

          Anywho this whole thing might give some people pause to reconsider the rat race … and who it benefits the most.

          • St JacquesMEMBER

            Moderate cosmopolitan republicans. I like it.
            There may be a pause in the thinking of some, but nothing will fundamentally change imo. They’ll man the bubblo debt pumps to get back to “normal”. It will take a series of failures and a lot of widespread unhappiness to get the established ways thrown out of the window.

          • Totes BeWokeMEMBER

            Today’s left are not the same as years ago where they fought for workers rights, or saved others from persecution.

            Today’s left are elites. They’re weak minded hypocrites. Any sacrifice they talk about is never their own.

            They are a disgusting people and must be removed from media and all other influence if we want to save Australia.

          • Politicians are always elites, left or right, and always have been.This is another flaw for representative democracy.
            Nobody on regular wage can afford to stop working for months to try and run for election in a serious way, and without the means to fund a campaign are unlikely to be successful even if they do put themselves through it.

          • @totes Do you have first hand experience of politicians doing all those things, or are they merely the stories of past times that were much better than today? Similar to the stories of how democracy protects your rights and leads to the best outcomes.

          • Totes BeWokeMEMBER

            bjw

            “Do you have first hand experience of politicians doing all those things”

            I think so.

            Let’s start backwards. Something has profoundly changed hasn’t it!!!!

            Labor’s changed.

          • Something has profoundly changed? since when?
            https://www.macrobusiness.com.au/2018/07/marvelous-melbourne-re-running-1890s-land-bubble-and-bust/
            1930’s the great depression. Putting the wellbeing of the average punter first…

            As they say a rising tide lifts all boats and you only see who is swimming naked when the tide goes out.

            edit: you think the land bubble back then was beneficial to the average man or the wealthy?
            I suspect you have only really lived through a rising tide.

      • drsmithyMEMBER

        So in your opinion Howard and Co were lefties – ????

        Like most conservatives, Rich’s definition of “left” is mostly “boogeyman” and “people I don’t like” rather than anything to do with actual left policies and ideologies.

        Hence the reason he thinks we have the mostest leftist Government evar.

        • Totes BeWokeMEMBER

          I have never said our LNP government is left. Ever.

          My idea of today’s left is a bunch of clueless privileged idiots pretending to care about others, at the same time destroying the futures of their own country men. Not destroying themselves though…..of course. Common theme among the left is entire lack of understanding of cause and effect. They just don’t get it.

          They’re more however, dishonest liars with a self serving agenda.

          • drsmithyMEMBER

            I have never said our LNP government is left. Ever.

            Yes you have. Sometime since you adopted your latest new username, you summed up one of your usual nonsensical rants with something along the lines of Australia being run by leftists. From memory it was alongside the equally hilarious claim that the “real men” were on the cusp of taking back power.

  5. I hear the COVID Commission is developing this amazing new program, Jobs N Growth. All the wealth will trickle down.

    • DominicMEMBER

      You should be aware by now that protecting humanity from the various emergencies that threaten it is going to usher in a new era of economic prosperity ..

  6. “.. These measures will begin to transition the economy from being overly reliant on Chinese demand and supply plus mortgage credit, to one that has more internal production drivers that are competitive and self-sustaining. ..”

    Umm no they will not.

    Yet again you ignore the mechanism at the centre of this failed neoliberal globalist model.

    The financial / banking / monetary sector and the deregulation of credit creation and capital flows.

    Unless unproductive capital flows and unproductive private bank credit creation are regulated / restricted NONE of the above will work. Why? Because the gravity of unproductive capital and credit creation will crush whatever measures are attempted.

    Regulating the movement of capital and the creation of credit by banks is EXACTLY how our trade rivals were able to resist the predatory and parasitical behaviour of their rivals. And this does not even require the sensible more fundamental monetary system reforms that I bang on about.

    The abandonment of appropriate regulation is EXACTLY why Australia has been sold off and hollowed out.

    But you are quite right when you say that circus of clowns featured in that article don’t get it.

    They don’t have a clue because they are economic ideologues who just ignore what does not fit with their free capital flows, deregulated bank credit creation and privatised monetary system ideology even when the evidence proving them wrong is right in front of them.

    • St JacquesMEMBER

      They like to shoot off their ignorant mouths and are paid well for it so why change? That’s how they got ahead, by knowing the “correct” answers.

      • I was listening to Fran Kelly this morning on RN.

        She asked a sensible legitimate question.

        “Where does the money that government is spending come from”

        What followed from her guest was stream of blatant lies and BS including the classic that if the RBA buys a bond from the AOFM it is money printing but not if the RBA buys the bond from a bank in the secondary market.

        Credit to Bank reserve account good ….mokay.

        Credit to govt RBA account bad…….mokay.

        Bald faced lies and hogwash is being peddled in industrial quantities but as usual it gets a free pass in our media even when it so clearly fails the sniff test.

        • DominicMEMBER

          The problem with journos is that they never understand a subject well enough to be able to take the person/s they’re interrogating to task. That was a good question and the bs answer was accepted with challenge. What the fck use is that to anyone watching.

    • fitzroyMEMBER

      Spot on. The polical power in Australia has swung from the Government to the RBA, from the elected to the unelected. The workers wages are diluted by the private bankers power to lend money into existence, boosting asset prices and when the inevitable crash occurs the RBA bails out the bondholders and subsidised the private banks, supporting asset prices, diluting savings. A bucket of poo for the tax paying worker, but great for the bondholders. We know have a RBA with a target of debasing the currency by 2% a year and a government bond that pays 0.25% to keep interest rates down and boost the price of the bond. Wealth is transferred to the bondholders from savers of Aud in the real economy. It is easy to see who the RBA is working for and it isn’t you.

  7. Oh great!! Another treatise on how everyone else is and has been a moron – while we ignore the elephant in the room. What’s more the damned elephant is not standing in the corner. He is standing right in the centre and takes up 90% of the room. All this tripe about an independent Australia and more manufacturing etc etc etc ad nauseum cannot happen with the current economic framework. Many of the core economic theories of the last 50 years, as practised in this country, have to be abandoned. We have to get back to some damned common sense.
    In order to achieve more self-sufficiency, the first thing that has to happen is to crash the A$ to a level where our external account is at least balanced – we consume no more than we produce! In fact, we need to run an external account surplus for some decades. Without dealing with this central issue the rest is a LOAD of CODSWALLOP
    Now, at the same time as we get the A$ down to a competitive value, we need to SAVE so that we can begin to finance our own development, own our own industries and no longer be entirely dependent on China, Japan or any of the great money printers like the US or EU. This means POSITIVE RAT interest rates to give people and enterprises REAL incentive to SAVE. There is NO getting away from positive RAT rates despite the various pea and thimble tricks that are proposed. There IS a case for the RBA being responsible for ALL foreign exchange flows – I am guessing that requires a Banking structure something along the lines pfh proposes. Whether this means some sort of MANAGED FLOAT I’m not sure. I am guessing that, by definition, this is the case. However the A$ still fundamentally must get its value from the ‘market’’ – the demand and supply for the currency as determined by the REAL production and consumption in the economy.
    So, under the current moronic set of economic principles, if we raise interest rates the A$ goes through the roof and makes all our industries uncompetitive. This piece of stupidity has to be broken. As John Stone predicted at the time of the great Keating ‘reforms’ the A$ has become a cork on the great ocean of printed money with the trade in the currency some 140 times what is required for all imports and exports. How can nobody see the idiocy of such a situation? How can we go on ignoring this and letting our country be sold off and destroyed to keep a bunch of parasitic banks, and the associated RE industry, in the nationally unaffordable luxury to which they have become accustomed? Don’t we care at all?
    Of course, as part of these reforms nety immigration must be, immediately, ZERO. Bringing in hundreds of thousands of people every year and parking them in the two great parasitic boils of our nation, Sydney and Melbourne, producing nothing and consuming plenty, cannot continue.
    There are of course a myriad of difficult details to go with this central reform. These include all the issues outlined by DLS in the article. However also we need to understand this will cause a MAJOR redistribution of incomes and MAJOR dislocation of current employment. We need to know how we are going to deal with the MAJOR inflationary dislocation – we don’t compensate tertiary sector wages for inflation. Etc etc etc
    Can any political party in government survive such a programne in amongst an idiotic echo chamber MSM?
    Can any political party in government survive the self-entitled undeserved reward now reaped by the largest and most powerful sections of the Australian population?
    Can the education system reform itself to make the outcomes we desire possible?
    Can the social fabric of the nation survive such reform?
    The answer to all these sorts of questions is NO. The answers lie back in time.
    However, we can never reach our goals if we don’t even properly understand the problems and BEGIN to work towards solutions.

    • robert2013MEMBER

      And ‘we’ means every single one of us. Do not let friends and family get away with spouting crap from the msm. That will probably cost you a few relationships until you work out how to do it tactfully (and irrefutably). Write to at least one politician every week. Give some money to those who are trying to effect change. I’m a big fan of flux party, but this could also include tech and manufacturing start ups. If you’re an employer, treat training as part of your business. Do not employ with temp visas unless you have a plan to train an Australian to do that job. That is exactly what the Japanese did in the late 19th and early 20th centuries when wanted to industrialise. Do not outsource. There’s something that every one of us can do to rebuild Australia.

    • “However the A$ still fundamentally must get its value from the ‘market’’ – the demand and supply for the currency as determined by the REAL production and consumption in the economy.”

      Not gunna happen mate. FX is almost entirely driven by speculation and financial trading. Which in itself is driven by a whole range of other factors (including drawing lines on chart pictures, artificial intelligence bots, media hype, fear, etc.) Demand and supply of currency driven by exports/imports was maybe relevant 40 years ago.

      • Yep! But it’s a demonstrated failure. We need to get back to some real fundamentals rather than the fairyland we now live in. Note this quote from John Stone
        In essence, that was the Treasury policy attitude throughout the 1970s and into the early ‘80s. Pursuant to that attitude the Whitlam government, on Treasury (and particularly my) advice, introduced in 1972 the system of Variable Deposit Requirements. This scheme, which most people today have long forgotten, was administered by the Reserve Bank within the then system of exchange controls. In effect, it imposed a “tax” on purely monetary inflows that varied inversely with the length of time before the inflow was reversed. This was highly unpopular among the investment bankers and foreign exchange traders more generally, and as a result it was suspended in July 1977. Meanwhile it had largely succeeded in quelling “hot money” inflows. (In 1999, an article in the Treasury’s Economic Roundup on Australia’s Experience with the Variable Deposit Requirement [8]noted – among other interesting conclusions – that “the VDR scheme was a more market-based capital control mechanism” than some other forms of exchange controls on capital flows, and that “another benefit was the fact that export and import-competing industries would not have incurred the loss of competitiveness that may have been associated with….a significant appreciation of the exchange rate”).
        Throughout this period the general Treasury policy attitude was that the international monetary system had become little more than a casino; huge volumes of currencies flooded back and forth across the foreign exchanges to the profit of few other than those directing them. Meanwhile, as currency values soared and slumped, people operating in the real economy – manufacturers, miners, tourism operators and the like – had to contend with the unpredictable consequences.””
        We can make the tax on speculative flows 100% 🙂 The continuous over-valuation of the A$ does not make the consequences unpredictable. The results are 100% predictable – the massive foreign debt, the foreign ownership of everything of any real long term value, and the destruction of a productive society.

        • Always good to hear your views flawse. They have to do something about the transfer of wealth off shore in times when our chief trade “partner” indulges in rampant mercantilism it is self defence.

    • bolstroodMEMBER

      +100 Flawse
      I would only disagree wth the answer is NO .
      This virus offers us the chance to Reset. Things will not be the same, we will not Snap Back as Scotty says.
      It will be bumpy with many out of work, but this virus has broken the economic/ political and social neoliberal model that has held us in thrall for 40 years .
      The times are a changin’.

    • Lmmao at trying to lower AUD to make the Australia skirt higher to capital … better yet those still applying hard currency optics to soft currency … look out the window someday fellas ….

      It ain’t the 1800 – 1900 hundreds anymore ….

  8. But Willox says that means people will have to pay more.

    is that a problem? with a safe and well paid manufacturing job that is not going to be a problem

    large majority of people are already willing to pay more for something of a (perceived) better quality or just more recognizable brand.

    One of the biggest lies of neoliberalism has been “cheaper is always better for customers”
    first of all, nominally cheaper is not always cheaper even if it’s of the same quality (e.g. if it makes you earn less,pay more tax, or forces you to pay more somewhere else e.g. infrastructure, environmental costs, other externalities), and also the obvious one if it’s of poorer quality so you have to repeat the purchase more often

    • People will have to pay more is code for living standards will fall dramatically.
      That will be a hard sell.

      • Aren’t we sick of paying for ‘stuff’ that is crap? I am. Happy to pay double if it lasts longer.

    • DominicMEMBER

      Not so. The path to prosperity, doc, is having the dollar you earn buy you more, not less. One’s standard of living couldn’t possibly improve if it were otherwise

      • but what is something costing 20% more makes everyone earn 20% or 50% more?
        So it’s not only what a dollar buys but also how many dollars you have

        • DominicMEMBER

          Ah, the ‘money multiplier’ theory. Complete bullsh!t.

          Think about it – that’s what a ponzi scheme is based on. The multiplier effect – it doesn’t exist in real life.

    • darklydrawlMEMBER

      A classic example of this is the trend of many companies (ISP’s, big 4 banks, telstra, foxtel et al) offshoring their IT and call centres. Yes, the unit cost per employee is much cheaper, but I can speak from personal experience (both as a customer and insider) the overall cost is significantly higher (4x to 5x higher is usual). In the IT space it was hopeless. Every solution needed to be reworked multiple times due the difference in timezones, culture, language and comprehension of the instuctions. Just filling out the scope documents alone could take half a day. Before it was offshored we used to just fix stuff that needed fixing – right there and then.

      Sure – having the team you supported on the same floor / location was more expensive on a pure payroll accounting view, but we could debug issues on the spot, quickly indentify and understand the problem – and if we were having problems you could wander over and see it the issue for yourself and talk to the people. As a result everything was faster, better quality and ultimately less cost. Idiots. Cost does NOT equal value. All offshoring did was drive down costs whilst destroying value.

      As for call centres…. meh.

      • Most of that applies to outsourcing/contracting. Off shoring just exacerbates it with additional timezone/language issues.

      • dd
        I’m always frustrated by the false economy of auto answering services and call centres. It might (perhaps not always as per your post) save the company using the call centre but the enormous waste of time of lots of people sitting on phones across the nation trying to obey the mechanical device on the other end of the phone must be absolutely staggering. Their has to be a PhD in there for some economics bod that can still think. Oh dear! Put my foot in it again!!!

        • Like self serve checkouts at the supermarkets, productivity isn’t the goal, merely increased profits. because that’s how capitalism works so therefore we need to privatise everything for more profits, rather than greater welfare. That would be communist and bad.

          • Exactly bjw. Maybe it was you some time ago who made the point that all it did was transfer the cost from the big companies to people to pack their own groceries! It was a good point.
            I can never figure out why the people who do it seem to think it is such a clever thing to do. If there are no operators I just dump my stuff right there and walk out.

  9. The problem is that no-one is going to provide the credit to us to do anything since they will be hoarding their credits for themselves. This puts it outside anyone’s living experience as we will have to direct and depend on our own credits.

    https://www.bloomberg.com/opinion/articles/2020-04-05/when-plagues-pass-labor-gets-the-upper-hand

    Manufacturing capacity will have to be built up using war time methods ( command and control ) This also means little credit for residential real estate ( ever larger deposits as prices drop ) First we have to get over the immediate shock which is far from certain. People around here are starting to circle the wagons with extended families moving in together as they do the sums on the back of government income of $750 a week. More empty houses as this is happening even before the excess population heads for home.

    • DominicMEMBER

      If the right conditions existed in this country for manufacturing to return then it would happen. There is no need for Govt to do anything proactive in this regard outside of dismantling all existing impediments to that outcome.

      • Absolutely!!!!! We must especially note that Tariffs are NOT the answer except in a very few minor circumstances for a very limited range of items.

      • Venetian Mask

        It seems historically, especially in Asia, governments have created the right circumstances for manufacturing in their country. If you want to depend on wage arbitrage, you’ll only get low-skill manufacturing like in Bangladesh. If you want to be Japan or South Korea then you must implement their policies.

    • Top piece DLS.

      Nyleta. I live in a affluent Northern Beaches area of Sydney. I have noticed plenty of ‘For Lease’ signs out the front of both units and houses. Usually there are none.

  10. BigDuke6MEMBER

    USA manufacturing is greatly represented by their MIC. It’s huge and dominates. No mainstream ammunition is made in Australia anymore. All imported. When I reload The cases are Finnish, with American projectiles/primers and hooray to say it Australian powder.
    Brings me to say to swampy that I was thinking of LSCHPs suggestion of a hornet. Looks nice.

    • The Hornet is one of the great chamberings of all time in my view. Every home should have one. 🙂 They can be tricky to reload though for a number of reasons. If you know the techniques though, you’ll get superb results. My Browning A-Bolt Micro-hunter Hornet will shoot 0.5 moa if I do my bit. I’ve taken rabbits with it at 180m without a problem. Let me know if you pick one up, and I’ll give you the drum on reloading for it.

      • BigDuke6MEMBER

        That’s a deal. I really like that 100m to 200m option and that sort of sub moa accuracy is what I’m after. I’ve a feeling it’ll be my next one and I’ll be after your special recipes!

  11. mikef179MEMBER

    “McManus and Willox want greater focus on self-reliance in manufacturing. “We are an island,” McManus says. “We need to be self-sustaining.”
    But Willox says that means people will have to pay more.”

    That’s OK, we can pay less on rents and mortgages. I’m sure it will more than compensate.

      • mikef179MEMBER

        It all depends exactly what we are talking about. We can never have all manufacturing here, nor should we. But just re-orienting the economy away from financial rent-seeking and towards more productive pursuits will benefit a whole bunch of people more while making things worse for another group of people who were receiving too much benefit anyway.

        • The big problem will be that we will be directing reward away from what are now the big profit centres (govt, RE, Banks, lawyers et al) in the big population cities.
          It isn’t going to be easy.

          • mikef179MEMBER

            I agree. There are no easy solutions at this point. Things just went too far in one direction and now Australia has a heavy dose of medicine to swallow. After that…

  12. “… use tariffs or behind the border protections on specific supply chains.”

    Tariffs to protect exactly what manufacturing industry?

    Australia’s manufacturing industry now only consists of degree certificates, residence permits and home loans.

    Once Aussies will be able to get home loans from Europe or USA through the economic utopia of globohomoism, I mean financial globalisation, perhaps the government will impose tariffs to protect the Aussie banks.

    • Thanks Les.
      Let’s have a quick look at what Tariffs do. So we impose a tariff to protect a particular product or industry in order to produce locally. So, in the final analysis, this results in a value for the A$ that is higher than it would otherwise have been. So, as a result, we apply income/cost pressure to otherwise efficient manufacturing, farming and mining industries and destroy some in the process. Great result!!!! Really sensible rational thinking!!!!! That’s going to bring us to prosperity….Not!!!!

      • Venetian Mask

        Is an industry really “efficient” if a higher AUD can kill it off? Sounds pretty marginal. I don’t think Japan or South Korea are going to lose much of their manufacturing from their currency appreciating.

        • Mask – please think about what you said. If the Australian dollar is over-valued between about 50 and 100% for most of the last 60 years that is a tax of between about 30% and 50% on the GROSS INCOME of the producer – not the NET. The fact that any industry has survived in that environment is a tribute to the people who are involved in it.
          I’m wondering what industry you work in?

          • Venetian Mask

            Why should it be 50% to 100% overvalued? So all other currencies are undervalued against the AUD? Is any other country in such a situation or is it just Australia?

        • Australia is really almost on its own. No other nation in the world has such vast natural resources, especially on a per head basis, that it is more than willing to hand over to many foreign power, for a few more dollars so it can buy consumer goods.
          The over-valued dollar has been stated RBA policy in order to control inflation. They just don’t admit the degree that this is happening AND they don’t admit the connection of selling off the nation to foreigners in order to fund that policy.
          How many people have heard of the Current Account Deficit? When I was a younger man the National accounts were headline news. A CAD was a serious matter for the economy. This was before Overseas Borrowings became Capital Inflow!!!!!

  13. TailorTrashMEMBER

    “Defence companies were getting very jumpy when China was in the depths of its situation because they weren’t getting supplies of nuts and bolts,” he says. “It’s as simple as that.”

    Just as well it’s only a Chinese bat bug that’s invaded the country and not the PLA ……
    If the defense of straya is dependant on Chinese supply chains then there must be great laughter in Beijing

  14. Mr Llewellyn Smith
    Your cause might be better progressed by actually bringing these people onside. You’re unlikely to do that by throwing deranged epithets around.

    • You are also unlikely to do it without paying them more than their current masters.
      Given the badgering over subscriptions around here, i don’t think they quite have the cash to cover it.

  15. Given agriculture and mining are both important industries here, would it make sense to have more heavy machinery manufacturing here? it would have the added benefit of being able to fix our defence vehicles with locally manufactured parts if shit hit the fan.

    • Sure James. There used to be a lot of local engineering businesses serving local agriculture. We had wool scourers and knitters. They are all gone basically speaking. There should be whole sectors in in the regions that service mining and agriculture and other sectors that use and manufacture the product therefrom. We can’t expect to have operations that have a cost penalty of 30, 50, 100% to compete with foreign competition. Many Australian farmers used to own a Chamberlain tractor – good solid old machines. Got squeezed out and bought by John Deere. There are a lot of farm machinery manufacturers that have gone by the wayside. I’m sure many others could quote a lot of machinery companies of various sorts – cars included.
      Unfortunately it’s almost impossible to restart – loss of local suppliers; loss of technical capability; welding for heavy machinery is now very technical – we just don’t have that sort of education process anymore on the scale necessary. Hard road back!

      • bolstroodMEMBER

        Flawse, I turn 70 at the end of the month, I do not have a plan to the future.
        All I can see is the Virus has made change ineveitable, where as before the Virus we were looking down a long road of more of the same planet killing crap.
        It is not for old bu&&ers like me to say it should be thus or this, but at least the road to a different future is now open,
        let the younger generations make of it what they Will.

        • Bols i’m a bit ahead of you – I’m now 71. I agree mostly, especially that really it is no longer our world, except this – the younger generations have learned pretty much nothing from the Boomers and their mistakes. Just look in these pages where everyone thinks they ae enlightened. Yet they propose, fundamentally, the very same policies that Boomers perfected except in a different suit. They are just going to multiply the mistakes to infinity. They are susceptible to mass propaganda machines that did not exist until recently. They seem, generally, to lack the civility necessary for a decent society. The hate that exists around Twitter is beyond my imagination. I know it is not the real world but the Twitface morons think it is and that they will be the entitled leaders of the world they create where everyone else will do what they are told. The society will breakdown into dictatorships, civil wars and wider scale international wars long before the second Garden of Eden arrives.
          NOW – that is just my deep down thinking. It may not be worth much as I shuffle off but there seems no awareness of the path we seem to be on.
          I’d add this, slightly altered, old African proverb “When an old person dies, a library burns down.” I think we don’t learn this until we ourselves are older!

  16. bolstroodMEMBER

    The bit about having to stay glued to the US Empire… The way Trump is going The USof A may devolve into 49 states.
    “Trump won’t be there for ever…” No but by time he goes what will the US look like ?
    Australia can carve it’s own destiny

    • My opinion, fwiw, is that I don’t think that’s particularly Trump’s fault so much as he is the catalyst. (You’re telling me self-entitled pricks like Obama and Clinton were just such lovely folks, going around bombing and destroying, first Libya and then, having learned nothing, set about doing the same to Syria?) What does the rest of America, who grow and produce ‘stuff’, have in common with New York and San Francisco? Nothing! New York is much like Sydney – a giant parasite sucking the life out of the nation – yet it more or less rules. If the rest of Australia could fence off Sydney and Melbourne and say “You’re on your own” we’d be a whole lot better off. Unfortunately the USD is the world reserve currency so NY is a giant parasite on virtually the whole of the planet. Trump was elected because the red, i.e. the vast majority, states had had enough of bring ruled by NYBS. Not sure who will win – the Deep State New York propaganda machine controlling California and New York or the rest of the USA.

      • bolstroodMEMBER

        Re Trump, it is his mishandling of the Virus that could cause a devolution of the US into 49 sovereign states, his denying the states access to the Federal Reserve of contamination suits, masks and ventilators,and making them purchase these same articles thru a private company where the states are left bidding against each other, and this during the worst epidemic they have had since the Spanish Flu.The severity of the Virus in the US is largely due to Trumps unwillingness to take the situation seriously it will damage him in the red states as well as the blue if they cannot tame the contagion.
        I hold no torch for Obama or Clinton any modern President or US Foreign policy.
        I would Australia made it’s own way in the world ( but there is that US foreign policy again.)

        • bols I’m not up to speed on what the military has. However this much I DO know. There are a lot of medical people, not just in the US but also here in Aus, who should be convicted of mass murder. The denial of Hydrochloroquin, just to protect their own dung hill is criminal. I see it in my own industry with Standards. The US and Europe have tested a product to the extreme. Yet – O no! Australia has to have a different standard the EU and US Standard isn’t good enough!!! QN “” how many people have been killed or injured as a result of what you see as a defect in their standard”” There is NEVER an answer because the answer is zero. It’s BS. But guess who comprise the committees? Mostly reps of the testing labs!
          The BS over Hydrochloroquin has been exactly the same. They want to delay its use in Aus for 12 months while they test it “”We can’t be handing this stuff out willy-niilly”” – that’s a direct quote btw.
          Anyway enough of my rant for the day!!! Thanks for your tolerance!!! 🙂