Five years too late

It is so depressing to read such stuff. From The AFR today:

Dr Banks suggests with monetary and fiscal policy no longer able to spur additional economic growth, it is time for other changes that can spur activity.

This was the former head of the Productivity Commission lamenting that we have run out of the ability to use monetary and fiscal policy to generate higher levels of economic activity. The depressing part is, of course, that anyone ever thought we could. What we are seeing today is the end game in having wasted our resources in various loss-making stimulus projects. But he is the same as the rest of the economics fraternity. They are genuinely mystified by the deepening downturn that should have gone away with all their public spending.

Possibly even more irritating is to find the former Secretary of the Treasury, Martin Parkinson, on the front page of The OZ discussing Slow growth the reason to reform not delay. He was not just the Secretary when Labor was in government creating the problems, he continued as Secretary well into the present government’s period in office. Tell me again, Joe, how reformist you are. Well, now, way too late, we hear this:

“You will never be able to ­increase the potential growth rate without increasing productivity, and at the moment our performance on that is terrible. That is the starting point for the argument on reform.”

Is that so? So tell me, Martin, about all the public spending you signed up on as part of our stimulus and all the cuts that were never made.

Then there’s this: Labor takes aim at Malcolm Turnbull as NBN cost blows out by $15bn. The subhead:

The Labor leader, Bill Shorten, says communication minister ‘hasn’t been doing his day job properly’ as negative polls hint at Coalition leadership change

At least someone is pointing out just how bad a Minister he’s been. And with no little thanks to Malcolm, Bill Shorten is now preferred PM.

The GST will not be raised


DEPUTY Liberal leader Julie Bishop has ruled out accepting Treasury advice to expand the GST or re-index the fuel excise, as former treasurer Chris Bowen claimed the department “never” advised him to increase the consumption tax.

Treasury secretary Martin Parkinson last night warned that Australia must be prepared for a recession in the next decade and cannot rely on rising income taxes to restore budget health.

Dr Parkinson, whose term as Treasury secretary has been extended by Tony Abbott for six months to the end of the year, also argued for increases in the GST to ease the burden on personal and company income taxes.

So the question remains, why is Martin Parkinson being kept around till November? Is there really no one the Coalition can think of to put in his place? It is a worry that Treasury, as in all departments, promote clones of the people at the top so where are they going to find someone who has a feel for the private sector. Still, Peter Costello was Treasurer as recently as 2007 so there must be some plant of his that has grown into the job and can be put into this slot

Parkinsons’s disease

If you keep a Keynesian as Treasury secretary you are going to get Keynesian advice. If you take advice from a Keynesian, you will never get the economy working properly again.

I have just seen this story at Andrew Bolt and it is a report of a speech given by the Treasury Secretary, Martin Parkinson, on what the government needs to do. Here is how it starts.

Treasury boss Martin Parkinson says the goods and services tax will have to be boosted or broadened if the budget is to have any hope of returning to surplus.

He must be from the same school of advisors who told the first President Bush to break his “no new taxes” promise. Paying for public service waste with higher tax revenues is both an economic loser and even worse, a political loser.

Stop fixating on the deficit. Do the specific things that make the economy work better. Lower public spending. Reduce regulation. Fix up IR. Encourage private industry in every way you can.

If you start raising taxes you will be out on your ear at the next election.