From: chris@suite.sw.oz.au (Chris Maltby)
Newsgroups: aus.politics
Subject: Re: Australia's "foreign" debt...
Date: 15 Oct 92 02:31:45 GMT
Distribution: aus
Organization: Softway Pty Ltd

In <1992Oct14.070515.1923@cs.su.oz.au> mrj@cs.su.oz.au (Mark James) writes:

>In article <chris.719034840@suite.sw.oz.au> chris@suite.sw.oz.au (Chris Maltby) writes:
>>
>>In other words, you can't blame the massive foreign debt on those
>>corporate cowboys alone. Everyone has to take responsibility for
>>the problem. If we all stopped pointing the finger and started
>>consuming less and saving more we could go a long way toward fixing
>>Australia's foreign debt problems as well as its competitiveness.
>>If you don't do it voluntarily, one or another future government will
>>tax it out of you instead - but the result may not be as good.
>
>The corporate cowboys should get most of the blame because if the
>funds they borrowed were used wisely (generated a level of exports or
>import replacement greater that their interest bill), the fact that
>the capital was imported would matter little.  (Even investment in
>productive non-export replacing industries is not too bad.)

Don't get me wrong. I don't think that the Bond, Skase, Connell and
the nameless folk at TriCon or Pyramid are blameless. We certainly
had a crisis of regulation over much of the 80's (like most other
western countries). While we needed to eliminate many business
controls, we also needed to set up more overview bodies. The intervening
time saw most of the trouble occur. The "we" above includes both
Government and bankers. Perhaps we had to learn this lesson this way,
but we as voters should be cautious of deregulation for its own sake
in future. As an example, if we privatise (say) waste disposal, how
should we set and maintain standards on toxic emissions etc. Market
forces certainly won't do this. I'm not suggesting that Government
ownership makes things better by itself - but political accountability
is vital for some things. Anyway...

>Increasing our savings ratio has the disadvantage of deferring
>consumption, which is dangerous in a recession.  However, considering
>our huge foreign debt and the fact that the large capital inflows
>overvalue our dollar, harming exporters, saving more would
>probably be the best move.  It means a drop in current standard of
>living --  but we are living beyond our means!

Absolutely. But "Honest John" isn't telling us this message, is he.
He's talking the old Liberal bullshit about taxes reducing incentive,
and why we should cut taxes on the rich...

>What is the best way to encourage savings?  The Labor Party
>always baulks at doing anything to avoid accusations that they
>are giving people with invested wealth (especially inherited)
>a free ride.  Remember the Liberals under Peacock looked at
>this in late 1989 and decided that it couldn't easily be done.
>Anyone seen the advice given to him (Access Economics I think)?

It is a problem. Just cutting income tax on interest earnings will
not necessarily even achieve a reduction in consumption. It depends
on how the banks use the increased savings - say by lowering credit
card rates.

>Does anyone have workable ideas to encourage savings?  The GST has
>the potential, but inequitable compensation rules out Hewson's model
>(in my eyes at least).  Will superannuation do the job?

Taxation is not a bad way when the Governement is a net borrower. It
could use the extra revenue to retire its own borrowings and to inject
capital instead of loans into its business enterprises (before it
sells them). When the government is a net lender, we could then change
the emphasis to boost private saving. Another advantage of taxation
(especially income tax) is that you can easily make the burden fall
where you want it to - progressive, flat or regressive.

Superannuation may be a way - the risk is that the super fund money
will attract sharks smarter than the fund managers, or worse, it will
become a political slush fund to be spent by governments picking winners.
What was that about Victoria?

Chris
-- 
Chris Maltby - Softway Pty Ltd		Internet: chris@softway.sw.oz.au

PHONE:	+61-2-698-2322	"I'm waiting for X-Windows to become just that;
FAX:	+61-2-699-9174	 Ex-Windows" - A McGrath.
Newsgroups: aus.politics