From: c.oneill@trl.oz.au (Chris O'Neill)
Subject: Re: Vic Ministers Get $20,000 pay rise.
Organization: Telecom Australia Research Laboratories, Melbourne, Australia
Date: Fri, 6 Nov 1992 00:48:45 GMT

In article <1992Nov5.064817.24016@monu6.cc.monash.edu.au>
suter@fawlty8.eng.monash.edu.au (Mr D. Suter) writes:
>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. 

Thanks for the biassed choice of term (bankcard).  Don't you think your
argument would have had much weight if you had said:

"Its like continually having a $1000 balance on your home loan."

>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). 

So you're saying we should have no new roads (or repair old ones) or other
government assets such as hospitals or schools until our governments have paid
off all their debts.  Our country should be a shambles by then.

>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.). 

Did you live in a tent before you had enough money to buy your house?

>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! 

Don't you ever drive anywhere?

>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.

Chris O'Neill

Newsgroups: aus.followup