Tuesday, August 17, 2010

The Hon. Wayne Swan MP, BA (Hons)

Much of the focus of this election has been on Tony Abbott and Julia Gillard, and rightly so. The ALP, Julia Gillard and Wayne Swan in particular, have continuously mocked and ridiculed the Coalition’s economic credentials. In fact, Messr Wayne Swan has been quick and swift to describe almost all Coalition policies as “comical” or “farcical”. A fairly limited vocabulary it seems.


Wayne Swan has a Bachelor of Arts majoring in Public Administration. More specifically, a Bachelor of Arts with Second Class Honours from the University of Queensland. Julia Gillard has a Bachelor of Arts and a Bachelor of Laws. Outside of public office, these credentials would not get either employed at any bank. Yet the Australian public have been asked to believe that Ms Gillard and Mr Swan have the “economic credentials” to lead Australia into the future. In fact, just two Labor ministers hold degrees in either economics or commerce: Chris Bowen and Craig Emerson.

On the contrary, Tony Abbott has Bachelor of Economics and a Bachelor of Law and was a Rhode Scholar. Joe Hockey has a Bachelor of Law and a Bachelor of Arts and worked as a banking and finance lawyer. Andrew Robb has a degree in economics and agricultural science. If anything, on paper at least, the Coalition boasts a stronger economics prowess. Unsurprisingly, these are backed up with their stronger economic policies.

Let us consider a fundamental principle of allocative efficiency. We live in a  capitalist and free market world. Competition drives out inefficiency and a free market is (or should be) allocatively efficient. That is, productivity is maximised as the capital is allocated to those who are able to deliver the best product for the lowest price. In simple terms, a market where companies can compete to provide services (for example broadband infrastructure) will deliver the “best bang for your buck”.

This fundamental principle is reflected in Coalition policy. Mr Abbott has revealed that major infrastructure projects such as broadband infrastructure would be partly funded by private sector investment or private enterprise. The private sector investment would be allocated to a company or syndicate that could deliver the same infrastructure asset for the lowest price. The fact that an Abbott Government would fund part of the project enables and gives Government a monitoring role over the project, while allowing private enterprise to utilise their competitive advantage in building of project specific infrastructure.

The alternative is for a government funded investment, such as the Building Education Revolution (School Halls program) and the Home Insulation Program (Pink Batts program), where fully funded government investment result in ripoffs of the Australian people because this form of investment simply isn’t allocatively efficient. In effect, tax payer money is being put on the table inviting every Tom, Dick and Harry, who may or may not be qualified builders or insulation installers, to take as much of this money as they can. The fact that the government put money on the table as an invitation for Australian tax payers to get ripped off.

Today, Mr Abbott unveiled a plan for the use of infrastructure bonds to fund infrastructure projects. Mr Swan, as usual, described this as comical. I would implore Mr Swan to consider the ingenuity of the Coalition’s policy before making such off-hand remarks. Infrastructure bonds would allow Government to finance projects at a fraction (being the coupon payments) of the price. Furthermore, this would entitle investors in such bonds to a tax rebate plus the added security of an almost risk-free investment. It also adds liquidity and size to the Australian Debt Market. How, possibly, could such a policy be comical?

So what we have is a second class liberal arts student in Wayne Swan purporting to govern US$1 trillion Australian economy who does not understand fundamental economics and does not understand the basic finance theory. Is this someone we can trust to lead Australia into the future? Mr Swan, the only thing that is farcical and comical is your lack of economic credentials.

Wednesday, August 4, 2010

Et tu, Julia Gillard? An Australian tragedy

"Et tu, Brute?", Caesar uttered as Brutus delivered the final blow to Julius Caesar.  Welcome to the Australian Labor Party's depiction of the Greek tragedy starring Kevin Rudd as Julius Caesar, Julia Gillard as Marcus Brutus and the "faceless men" of the Australian Labor Party.

As the Journal of Farcical Exuberance campaigned for Kevin Rudd's removal from office, it seems that Julia Gillard and the "faceless men" of the Labor Party were plotting Kevin Rudd's dismissal as well. At the time, the government faced criticisms on, amongst other things, immigration, the Resource Super Profits Tax (RSPT), climate change and excessive government spending.  Unable to "stand idly by", Julia Gillard felt it necessary to get the government (and Labor Party) back on track.
"I came to the view that for the Australian nation I had a responsibility to step up, to take control and to make sure that this government got back on track ... I have taken control for that precise reason."
Ms Gillard and the rest of the Labor Party feigned their support for Kevin Rudd while they secretly conspired against the then Prime Minister, elected by the Australian people. In response to continued questioning about potential leadership changes, Ms Gillard responded that those rumours were "completely riduculous". Ironically, as the plot unfolded, Gillard emerged victorious as Rudd lay sick in hospital.

If information leaked to Laurie Oakes are to be believed, Ms Gillard's betrayal of Kevin Rudd may be more dramatic than that of Julius Caesar. Ms Gillard remains tight lipped as "an appropriate mark of respect between colleagues".  

The more pressing point, however, is whether Julia Gillard can be trusted to take Australia into the future.  

Recent events suggest that Julia Gillard may be the new queen of spin.  In attempts to seem real and for Australians to connect with the new Prime Minister, Ms Gillard stated that she would ensure the "real Julia" would be on display for the Australian people. 
"It's time for me to make sure the real Julia is well and truly on display, so I'm going to step up and take personal charge of what we do" (emphasis added)
A simple contextual analysis of Ms Gillard's words reveals several pertinent issues. "Real Julia" implies that there is more than one Julia Gillard persona.  "Display" suggests that Ms Gillard has been putting on a "face" or "show" to mask her true persona.  "Personal charge"  indicates that decision making and statements by Ms Gillard have been driven by other person(s) behind the scenes.  More bluntly, is Ms Gillard is a puppet for "faceless men" of the Australian Labor Party?
Labor's re-election bid may indeed be in "deep-trouble". Ms Gillard is up against a Coalition leader who has already claimed two scalps; Malcolm Turnbull and Kevin Rudd.  Tony Abbott's campaign against Kevin Rudd's "great big tax(es)" and the labelling of the Labor Party as being "more spin than substance" brought about the subsequent downfall of Kevin Rudd.  Mr Abbott opened the eyes of working families to the unfulfilled promises and excessive spending by the Labor Party, which as to be funded by two potential great big taxes on Australian people and businesses.

Kevin Rudd's ousting may not have changed much about the Labor Party.  As the new Mining Resource Rent Tax (MRRT) reveals, the Labor Party is content to purchase the support of Rio Tinto, BHP Billiton and Xstrata while disregarding the interests of emerging Australian mid-cap or small-cap resource companies.  Ms Gillard opposed paid parental leave and questioned increases in pension payments to the elderly as "elderly voters did not support Labor".  A recent Australian National Audit Office report revealed that the government's stimulus package spending had been skewed in favour of Labor electorates.

One can only quesiton whether this government is truly concerned about the well-being of working families.