From: suter@fawlty8.eng.monash.edu.au (Mr D. Suter)
Subject: Re: Vic Ministers Get $20,000 pay rise.
Keywords: ministerial salaries
Organization: Monash University
Distribution: aus
Date: Thu, 5 Nov 1992 06:48:17 GMT

In article <1992Nov5.091522.164991@dstos3.dsto.gov.au> mjp@itd.dsto.gov.au writes:
>suter@fawlty8.eng.monash.edu.au (Mr D. Suter) writes:
>
>>I really can't believe that intelligent "socialists" can't understand
>>that this is the inevitable long term effect of indulging your
>>social compassion and simply borrowing money on behalf of
>>the poor souls you claim to be protecting. It's exactly akin
>>to advising someone on the breadline to live on bankcard without
>>considering that they will be FAR worse off a few years later
>>when the debt and interest has accumulated. Unfortunately,
>>such simple economics appears not in Cain or Kirners grasp.
>
>I happen to agree with this with some provisos.
>Firstly you have to take into account the true cost to the
>economy of not helping the poor (a marraige breakup costs
>the community over 60k, increased crime, law enforcement,
>prisons, lack of productivity) which can be very expensive
>and are certainly totally unproductive. It is cheaper to pay
>unemployment (especially since people on subsistence put it
>all back into the economy straight away and so unemployment
>benifits prevents further job loss flowon effects) than to
>pay for the costs of ensuing social dislocation. Also there
>are times when borrowing money does make sense e.g.
>borrowing to build an efficient railway system that will
>save you a lot more in the future. I couldn't think of
>anything worse than preventing borrowings, the problem is
>having borrowings for things that don't make a long term
>improvement.
But its stupid to be continually funding things out of
debt. Govt (state/national/local) seem to accept a situation
where around 20% of income goes to debt servicing (in
Victoria we currently dream of even that good). For example,
my local council just rported it is spending 21c in the dollar
on debt. They claim this is not so bad because only 11c is
in interest and the other 10c is in retiring debt. They then talk
of taking out further borrowings so that the actuall level
of debt is the same (i.e., replacing retired debt with new debt).
To be continually running such debt is STUPID. It's like
continually having a $1000 balance on bankcard. Sure I
accept debt can be a way of financing urgent problems.
But to be continually pouring 10% straight down the drain
in interest is stupid. If we stopped for just one year then
we'd have the 10c in the dollar (in saved interest) to
pay the 10c in the dollar that we are now having to cover by taking
out new debt. What's wrong with us as a nation? Why can't we
take a firm decision to live within our means (state, federal,
and local). I'm not happy that 10% of my rates disappers
into the interest drain (likewise 25%+ of my state taxes and,
presumably a similar amount by the Federal govt.). It's no
wonder we seem to get little value in the dollar for our
taxes - it diminishes by between 20 and 30% automatically in
interest payments! No wonder the govt never has any money to
fund research <insert your favourite cause here> etc. It's all
gone in interest!
>
>Given that what you call social compassion is also
>economically sound, the economically sound thing to do is to
>fund it as needed or from surpluses which is why the tax
>cuts (in this already 3rd lowest taxed country in the world)
>offed in One Nation and Fightback are grossly irresponsible.
Agreed. The trouble is I'm only happy to pay more taxes if
I know we will use it to ACTUALLY retire debt (that STAYS
retired) but more than likely the reaction is going
to be OH GOODY WE"VE NOW GOT MORE INCOME TO SERVICE EVEN LARGER
BORROWINGS - let's borrow some more, increase my staff tenfold
so that when the next squeeze comes I can borrow some more to
fund their redundancies. It really is a tragedy.
Sadly, though its early days yet, I hear a resonance with
the above echoing through Kennett's office.
d.s.


-- 
David Suter - Dept. of Electrical and
Computer Systems Engineering, Monash University,
Clayton, Vic. 3168, Australia
ph 565 5682 Fax 565 3454
Newsgroups: aus.followup