From: suter@fawlty8.eng.monash.edu.au (Mr D. Suter)
Newsgroups: aus.politics
Subject: Re: Australia's "foreign" debt...
Date: 15 Oct 92 01:22:59 GMT
Distribution: aus
Organization: Monash University

In article <chris.719034840@suite.sw.oz.au> chris@suite.sw.oz.au (Chris Maltby) writes:
>Many people point out that a majority of our borrowings from outside
>Australia are held by the private sector, especially the larger
>corporations (or what remains of them). Without passing a judgement
>on the uses of those funds, it is also fair to say that the borrowings
>would have been made in Australia if there had been the pool of funds
>available to do it.
>
>So what happened to that potential pool of funds? Well, people like
>you and me ran it up on our Bankcards and on home mortgages and
>all sorts of worthwhile purposes (call it consumption if you like).
>The other symptom of this problem is that small (and riskier) enterprises
>in Australia can't raise either equity or debt finance for their
>activities at reasonable rates or at all.
>
>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 government should make moves to MAKE IT ATTRACTIVE to save more.
They should totally remove all govt charges from savings accounts,
they should make interest earnings up to XXX tax free (where XXX
is, I would suggest, about $10,000), and , most importantly
they should remove all incentives to borrow - nagative gearing on
rental propoerty in particular. It's as obvious as dogs balls
but the present govt (nor, I suspect, the libs) doesn't
have the guts to do it.
BTW, not only would the abolition of negative gearing remove
a primary source of debt, it would also depress house prices
which would have a secondary effect of people having to
borrow less to get out of the rental trap.
The measures above would go a long way to restoring a community
attitude that it's not stupid to have untied capital in the bank.
Currently, though, all they see is their savings eroded by govt
thieving (chack your bank statement carefully if you don't believe
me) and their neighbors supposedly getting rich by getting into
higher debt on rental propertiy investment.
Negative gearing (in addition to the GST) is one issue that good
old Paul K himself agreed with my sentiments above but
he has been pressured to reverse his stance. And he called Hawke
"jellyback"!
BTW (2) The GST itself will *possibly* have a positive impact
on savings by making the consumer more aware of the effect
their consumption has on topping the govt's coffers. I think
(and hope) it will actually be neutral in this respect but if
it does have any impact at all it will be positive.
d.s.
-- 
David Suter - Dept. of Electrical and
Computer Systems Engineering, Monash University,
Clayton, Vic. 3168, Australia
ph 565 5682 Fax 565 3454