Economy XVI

Well, what a dud this new president had turned out to be. He gets elected and the Dow falls by 1.65%, the FTSE falls by 2.3%. 😛

The AllOrds was up 2.82% yesterday, but the feeling is that we are in for another fall today.

Yesterday – the federal government has announced that up to $40 billion will be gone from this year budget, leaving the government with some hard decisions to make.

So – keep all economy talk here (previous thread now closed).

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40 Responses

  1. Heard something on SBS last night about a supposed clumsy stumble on figures yesterday by Swann; they seemed to think that there would be fallout & Turncoat & the Basilisk had already pounced on the news.
    I guess we know what the wingnut press corps will be soiling themselves over today.

  2. One is not amused:

    Prof Garicano said afterwards: “The Queen asked me: ‘If these things were so large, how come everyone missed them? Why did nobody notice it’?”

    When Garicano explained that at “every stage, someone was relying on somebody else and everyone thought they were doing the right thing”, she commented: “Awful.”

  3. The OO has already slobbered over it, with Turnbull saying that this was proof that Swan is incapable of manageing the economy and look what’s happened to the surplus blah, blah, blah.

  4. There is plenty to learn from history.

    When Whitlam became Prime Minister in 1972 the economy was turning. Inflation was increasing due to the oil cartel. But Whitlam elected with a strong mandate for change, and after 23 years of stifling conservatism, there was no way he would change the predetermined program.

    The problem was that business lost confidence, high spending fuelled inflation. Whitlam burned successive Treasurers, in hindsight anyone would have to question the capability of Cairns to be Treasurer, particularly during such challenging times. The ALP lost government and failed to have the longevity required to implement the program.

    The reputation of the ALP as economic managers, rightly of wrongly, was trashed.

    Rudd has similar challenges. This government will need to be careful in implementation of its program (IR particularly), business confidence is low, and increased industrial activity in WA mining is evident. His Treasurer is not up to the job in these challenging times.

    Though it needs to be said that Rudd is no Whitlam!

  5. I had a meeting today with someone from the Federal government and Mr Turnbull came up…interesting.

    I’ll just say that if you have nothing good to say about him, then say nothing!

    It seems to be working nicely as is evident by Turnbull’s shrill due to being basically ignored…he hates that.

    I know people here liked to bag Nelson but he was a person that wanted to advance Australia but was constantly back stabbed by that person that I have nothing to say about.

  6. Tend to agree scaper. How many months, how many reams of paper and how much ink has so far been wasted on Turnbull. Well, ok Mal got his own way and what has he done with it since? Sweet B-A except a few mostly sulky comments how I could have done it better.

    Turnbull has it but doesn’t know what to do with it. Agreed, everyone should be paying Turnbull attention, according to Turnbull that is and when he is ignored he doesn’t know what to do next.

  7. Min, that is the modus operandi and it is certainly effective.

    Quite a few of my concerns were explained today concerning non-GSC issues, which raises my confidence in the governments performance.

  8. I see the stock market has taken a 4% dive today…I bet the prudent players are making a nice earn out of this at other’s expense.

    I also see that the employment rate has not risen as predicted by many.

    I was talking to a past client today who is a high profile developer and he says it is tough out there at the moment, he is an operator and says it is a matter of consolidation and sitting on the prime parcels of lots until the market improves.

    As I said yesterday…this is a multi speed economy and from what I can gauge, it seems to be survival of the fittest.

  9. Scaper:

    “I see the stock market has taken a 4% dive today…I bet the prudent players are making a nice earn out of this at other’s expense.”

    I wouldn’t be so sure scaper. Many ‘wealthy’ people are geared up to the hilt, and are now having to sell their primary residences in traditionally affluent suburbs due to margin calls on their now fairly worthless investment portfolios.

    Everybody is feeling the pinch, even those who were previously well off.

    A couple of high flying stockbrokers I know of are now out of work and looking at new careers…

  10. Reb, obviously these stockbrokers were not prudent as they should have seen this coming.

    I don’t consider people that are geared up to the hilt as wealthy and as I said…”survival of the fittest.”

  11. 4. Tom of Melbourne | November 6, 2008 at 3:22 pm

    There is plenty to learn from history.

    There is also plenty to learn from history when looking at the Liberal governments, the Fraser government with Howard as treasurer should have taught us a lot about ever thinking of Howard as PM, yet more than a decade later he was elected and through the use of a variety of fears managed to remain in power because events fell into his lap.

    His Liberal government reign was a long period of wasted opportunities, wasted money and disregarding important warnings that were a portent of times to come. Yet his government was self labelled “great economic managers” which turned out to be as false as the way they ran their government of division.

    Howard’s treasurer wasn’t up to the job, more interested in self aggrandisement and image than in finance. So it needs to be said that Rudd is no Howard.

  12. Possibly Adrian. Howard will though be remembered for causing a seismic shift in industrial relations, to the extent that many of the reforms have been accepted by the ALP.

    The label of “presided over a period of wasted opportunities” actually belongs to Fraser. He has spent the past 25 years advocating every issue he acted against in government.

    He does this to gain the respectability he never had and never deserved as Prime Minister. I think this is normally known as great hypocrisy.

    Apparently he defends this period of complete inertia by suggesting that he did not wish to further divide the country.

    It was him that caused the deep divisions to start with.

    The most immoral action ever undertaken by Howard was agreeing to serve as Treasurer in Fraser’s Cabinet.

    Upon the demise of Fraser I intend to plagiarise the “eulogy” that Hunter S Thompson wrote of Richard Nixon (I referred to it in another post).

    I always like to give credit where it is due.

  13. Nah Tom, Howard will forever be condemned for WorkChoices and what its intention was. Some of the things left over from his failed IR policy will eventually be modified and done away with for certain. The few sensible things which would have been done by any half decent government will remain, and they didn’t take any great seismic shift or change in thinking, just a little CDF, and even Howard had just a tinsy bit of that.

    So Howard will be remembered for a seismic shift in IR but it won’t be good memories but lots of condemnation of what might have been if he was allowed to continue with that damned experiment with human lives. His IR policy will not be remembered for the little remnants of it that are left behind in about a decade or so, but for just how bad it was, how it bought down his government and how lucky as a nation we were that it was destroyed before it was allowed to grow roots and become ingrained in the Australian way of work.

  14. The most immoral action ever undertaken by Howard was agreeing to serve as Treasurer in Fraser’s Cabinet.

    …a Cabinet that should never have existed because the most immoral act ever undertaken by Fraser was to manipulate Sir (puh!) John Kerr into The Dismissal a most traitorous act worthy of the The Firm over centuries of intrigue…

    Link The Firm – http://us.macmillan.com/thefirm

  15. Adrian, I don’t wish (seriously) to turn this into a discussion about IR, but…

    The ALP would never have accepted a secret ballot before protected industrial action. They would have no sense that pattern or industry wide bargaining was wrong. There would never have been an industry watch dog for building and construction. There would have been greater tolerance for the outrageous behaviour occurring in that industry. There would be no limitation on matters unions could bargain over. There would still be union preference clauses in awards and agreements.

    To their shame, the ALP opposed every one of these reforms, which are now considered mainstream. They have had to be pushed every step of the way. The only reason for the mindless opposition of the ALP to these types of reform is the affiliation of self interested unions.

    Without union affiliation, the ALP would look like a progressive, responsive centre left party, like the US Democrats for example.

    TB – of course Kerr was easily manipulated by Fraser. He aspired to be a toff. The fawning over Fraser these days makes me puke.

    Kerr made his career as a union lawyer. Obviously a man without a moral compass.

    Kerr and Fraser, both with a sense of destiny, but without morals. Both craving respectability that their actions would never warrant.

  16. Oh c’mon off it Tom, the ALP would never have… all conjecture based on your bias and ideology.

    Remember it was the ALP that bought in the industrial reforms of the 90’s that was stated they never would because of their union affiliation.

    Never is a long time and from what I have seen it appears to be the Liberals who are stuck way back in the past of the 50’s and the ALP who are the ones willing to progress and change. Look at how they are now mostly a conservative party of the middle ground, even moving right of centre. On the other hand the Libs mostly want to move back to the far right and have trouble occupying the middle the ground which means they must change every now and again. This is why Turnbull is so on the nose with many in the party, he wants the middle.

    An industry watchdog for construction my arse. It was a union busting black shirt brigade dressed up as a legal overseer given unprecedented powers that many police forces would love to have. The fact it applied to just one select industry with ties to the Liberal Party shows what it was really about. The sooner this undemocratic monstrosity is disbanded the better.

    Sorry Tom you look at everything from an obvious union hate perspective and it shades just about everyone of your observations. On the odd occasion you make a propitiation about not all unions being bad and unions having a place, but I don’t think anyone who reads your posts is under any illusion that if all workers unions were banned tomorrow you would be celebrating for all its worth.

  17. Tom, didn’t you tell me the other day to stop obsessing about unions?

    What about yourself.

    Fancy someone so consumed with hatred for what are, essentially, organisations of advocacy for working men and women.

    I know you’ll dispute my thumbnail definition of what unions are, but that doesn’t worry me because that’s how I see them. And I’m fairly sure that’s how most people out there see them. The days of fear and loathing of unions in Australia were over decades ago. It seems to be generally accepted (not only here but in most civilised countries) that unions have a place in a democracy / economy, without the vilification and outlandish prickliness from the likes of you.

    Of course there are the hardcore Liberal / National Party cranks who hate unions. They do so because unions financially underpin the Labor Party, and are the only thing standing between business and the unbridled exploitation of wage slaves.

    Personally I suspect you’re in one of those two camps: Either a Liberal Party fanatic with an uncommonly virulent case of anti-union zealotry … or an employer who resents them (obsessively, what’s more) because of their role advocating for workers.

    Either way or neither way, it’s tragic to see a grown man go on and on and on and on and on and on about simple groupings of people with common interests.

    Tragic for you and so bloody tedious for us.

  18. Adrian, you seem reasonable well read on most political issues, other than this one.

    The ALP did introduce industrial reform in the 90s. I always provide great credit to the Hawke and Keating Governments. I don’t think you will find a single post from me that questions the outstanding capability and reform zeal of that period.

    I think the ALP was a different party then, and I won’t bother to repeat my reasons for this view right now.

    Nonetheless, historical accuracy is important. Hawke came to office with union membership at around 40% of the workforce (? – top of my head recollection), centralised wage fixation was necessary to deal with the inflation/wages spiral. This was a time when unions could actually deliver on commitments and outcomes. In return for restraint they basically became part of the cabinet. Bill Kelty was just about joint Treasurer. There was a social wage, and improvements were made to the superannuation, Medicare, social support, in return for the wage restraint.

    The problem was that while the ACTU had a seat at the table of government, individual unions had little influence, little relevance to outcomes. People started to drop off membership – they got the benefits of the social wage and centralised wage fixation regardless of the efforts of unionism.

    In the early 90s, there was a convergence of interests. Unions needed to be more relevant in getting benefits for their members to stop the slide in numbers. Central wage fixation had run its course, and business wanted to be able to obtain more variable wages outcomes through bargaining. The recession meant decentralised wage claim driven inflation was unlikely.

    The convergence of interests, and union support, allowed the reform. The government worked hard and effectively to reform the system, but there were various other factors helping, as outlined above.

    With regard to building and construction, I have previously cited various examples of union behaviour that would be regarded as outrageous in any other circumstance, bordering of those usually associated with standover men and gangsters.

    While some may criticise the Royal Commission as political, there is plenty of sworn evidence to justify it and the recommendations it made. Have you had a look at it? Have you bothered to go to the Royal Commission or ABCC site and have a look at the actual data on investigations and prosecutions? Or do you simply prefer to read the propaganda put out by the usual suspects? Do you get your information on this subject from the union TV ads?

    The construction of the Saizeriya food plant was a prominent and publically available example. The big mistake they made was to accept the advice of the Victorian Government on which union to deal with for a production agreement, and then suffer the endless industrial problems during construction, because the construction unions also wanted coverage of production! There are plenty of other examples.

    Saizeriya had planned to build multiple processing plants in Victoria. Victoria has a natural advantage in land, transport infrastructure available skilled workforce. It looked like an outstanding fit for the state. But unions cruelled it over disputed coverage!!! The plans for another 5 were cancelled, and who can blame them?

    In whose interests were the unions acting???

    Turf wars in WA mining, and mining projects were costly and common. When will these start again? Probably already positioning given the increasing level of industrial activity.

    There is plenty of evidence to support the establishment and retention of a watchdog for this industry.

    I note that you didn’t bother to deal with the secret ballot etc. The fact is that the Howard government will be remembered for enduring industrial reform, some of it was even positive.

    But there we are, you choosing to defend the indefensible, me simply presenting rational, well informed and balanced information and opinion. Again.

  19. Gee Caney Adrian led me to the discussion!! And you are wrong in your speculation.

  20. Not pertaining to anything in this thread, but just while I’ve got Adrian’s attention…

    Adrian, I’d like to contact you about something off-blog, if you don’t mind, and I’m trying to think of a way to do this without you or I publishing our email addresses publicly.

    Reb, Joni, can you guys help in any way? Could I get you to send Adrian my email addy so he could contact me? That’s if he doesn’t mind.

    Thanks.

  21. I will do that Caney…

  22. Thanks a lot, Joni.

    Joni: email sent

  23. #19. Tom of Melbourne | November 7, 2008 at 11:12 am

    Gee Caney Adrian led me to the discussion!! And you are wrong in your speculation
    .

    Not really Tom.

    I was initially going to say I did and apologise but when I went back through the posts it was you who first bought up Howard being remembered for IR reform and I countered with WorkChoices, the worst piece of IR legislation foisted upon a population outside of NZ.

    Sorry Tom as much as you keep saying Howard will be remembered for IR, it won’t ever be positive. He is forever stained with the word he tried to ban, “WorkChoices”, and the other remnants that remain are under the surface to the that one headline word. Also what will occur over time is these bits and pieces will be changed, rearranged, reworded, replaced and evolve with successive governments and so they will no longer belong to Howard.

  24. email sent Caney

  25. Adrian, occasionally i do need an excuse for my obsessive behaviour.

  26. … And email returned.

    Thanks again guys.

    And now back to scheduled programming ….

  27. #25. Tom of Melbourne | November 7, 2008 at 12:15 pm

    Adrian, occasionally i do need an excuse for my obsessive behaviour
    .

    …and me for my obstinacy, though the family and partner don’t let me get away with it for too long, which is why I probably hunker down in blogs and forums.

    In the Navy though always immediately stood down to a superior rank no matter how wrong I thought they were. That turned out to be a good career move but I guess now I have to make up for doing it for 22 years. See another excuse, are you listening family?

  28. Hmmmm…….what are Adrian and Caney whispering about? It’s about me isn’t it???

  29. Nup, not at all. Caney was pointing me to another debate he rightly thought I would be interested in.

  30. #27 – Adrian

    no worries Adrian. I’m both obstinate and obsessive. But on this occasion perhaps you would be so kind as to email Caney and let him know that this is your fault!!

  31. Tom, you’ve got a sense of humour so that’s a compensation.

    James, just because you’re paranoid doesn’t mean they’re not out to get you.

  32. Thanks Caney. Others have said that a sense of humour is the only sense that I retain these days.

  33. “They would have no sense that pattern or industry wide bargaining was wrong. ”

    Odd comment considering it was an ALP government that introduced the Enterprise Bargaining system (ie non pattern, non industry wide agreements) in 1991.

    Sorry Tom, but your hatred of unions is no excuse for attempting to rewrite history.

  34. …and its not the first time, Tom’s done that, PollyT…

  35. “…and its not the first time, Tom’s done that, PollyT…’

    Of course it isn’t and I doubt it will be the last. Just because Tom likes to be dishonest is no reason to let him get away with it. His hatred of unions I can live with but his dishonesty in his attempts to paint them all black is just too much.

  36. I’m very rarely picky about such points, but I think you’ll find that –

    1. I gave plenty of credit to the Keating Government regarding industrial reform – above.
    2. The original enterprise bargaining system did not contain the specific provisions about pattern and industry bargaining you seems to be attributing to it.
    3. Pattern bargaining was uncommon during Keating’s government, there was no specific legislative limitation required
    4. Enterprise bargaining was introduced by the Keating Government in 1992, not 1991 as you incorrectly suggest.

    Generally your comments about my posts are inaccurate or misrepresentative, yet another example.

    Congratulations on your continued display of ignorance.

    You really ought to do a little more research before making such a tool of yourself!!

  37. By the way PTO & TB – perhaps you would like to identify which part of my comments are incorrect or inaccurate.

    If you find yourselves unable to do this, it says plenty about the narrow perspective and limited knowledge you possess, certainly on this subject.

  38. Tom is right. Introduced by Keating in 1992 but not enacted until 1993. From the Australian Bulletin of Labour, Goliath Business Knowledge:

    The first legislative manifestations of substantial change to the industrial relations system occurred under the federal Labor government, with the Commonwealth Industrial Relations Act 1988, followed by the Industrial Relations Reform Act 1993. These Acts provided for collective enterprise bargaining through Certified Agreements. The 1993 Act also introduced non-union Enterprise Flexibility Agreements (EFAs). All agreements were to be certified by the AIRC and involved a ‘no disadvantage’ test against the relevant award as a benchmark. The Reform Actrelied on the external affairs power in the Commonwealth Constitution to enshrine compliance with Inernational Labour Organisation conventions relating to the right to strike, freedom of association, fair minimum wages, protection against unfair dismissal and parental leave (ACIRRT 1999: 36-40; Dabscheck 1995: 51-114; Reitano 1994, Mortimer 1999; Wooden 2000: 26-30).

    By the mid 1990s, although the earlier sustained improvements in labour productivity had flattened out, economic growth remained high, wage increases and inflation were constrained and industrial disputes reached a historically low level (EPAC 1996; Wooden 2000: 16-17; Morris and Wilson 2000). Thus, support declined for the Labor government’s ‘managed decentralism’ policy for retaining centralised control of industrial relations as part of microeconomic reform policy. A number of employer associations advocated radical change to the institutional framework to enhance labour market deregulation, including agreements to override awards, stripping back of awards to a set of ‘safety net’ minimum conditions, enterprise agreements becoming the main means for wage increases, prohibiting pattern bargaining by unions, and excluding unions from negotiations in workplaces where they lacked members. There was also general employer criticism of the unfair dismissal provisions in the Reform Act (Hamilton 1993; Sheldon and Thornthwaite 1999a: 58-63; Dabscheck 1995: 94-100).

    Now this is the interesting bit from their historic article ($4.95 to purchase), highlight mine.

    In the 1996 election, the Liberal/National coalition parties adopted an industrial relations platform similar to that being advanced by these employer associations. On election to government, they attempted to implement this program in the new Workplace Relations Act 1996 (WRA), which came into effect in March 1997. Nevertheless, this Act was significantly revised in the Senate by Labor and Democrat members.

    It was some of these changes forced by the opposition that have been retained. This bit is also interesting and telling:

    The WRA reforms, however, fell well short of those sought by employer associations and the Liberal/National coalition government.

    It goes on abut how Peter Reith encouraged employers to take full advantage of these laws to renegotiate employee relationships and to exclude or minimise unions from the workplace.

  39. Fair points Adrian. The Workchoices legislation is remarkably similar to the legislation presented to parliament by the Liberals following their election.

    In hindsight it is really no surprise that they tried it again when in control of the senate.

  40. Yeah Tom and its no surprise the Kevin kept those good parts of Howard’s IR legislation, not that Howard will end up getting the kudos for them. As I said history and a plethora of minor and major changes will make them unrecognisable as ever having been framed by Howard.

    It is a pity Howard let ideology and an unreasonable hatred of unions get the better of him so he ended up going several steps too far too quickly. If you look at the history of Howard and WorkChoices (and especially WC MkII) it is not something Howard came up with immediately prior to 2005 and his original Workplace Relations Act 1996 was remarkably well formed and mature when he introduced it. Pity WorkChoices wasn’t ans was very poorly framed and written, full of holes and bad law. I think Howard was caught out on getting the power of both houses and knowing he couldn’t immediately bring in WorkChoices MkII (which was fairly well framed and mature having had it in plan for well over 20 years) he hastily cobbled together IR legislation as a stepping stone to WC MkII.

    In a 2005 ABC interview Howard said WorkChoices was a great piece of unfinished business in the structural transformation of the Australian economy. It had been his goal for more than 20 years. Howard was always pissed off that when Fraser had control of both houses he wouldn’t crush the unions and bring in what would have been a form of WorkChoices MkII.

    That statement on the unfinished business of the structural transformation of the Australian economy has me thinking just what did he have planned for us?

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