KJCherokee

Please define the difference, and explain how a state can continually spend more money than it earns without ending up like Greece, Spain, Italy and other European countries.

And if you think the "focus has to be elsewhere", where do you think it should be?

Amazulu

Agree. A government department/company/organisation employs, say 100 people. They decide to get more efficient so change their working practices, IT, policies etc. They now only need 75 employees. What do they do with the 25 employees no longer required?

I know some of these cuts have probably not been directed to the right areas, but I bet a lot of them have. In 2016 the people of Qld will decide whether they agree with what Newman is doing. Until then, there's that pesky little issue of a mandate........

GarryP

Here's a quick grounding on some of the differences :
http://econogirl.wordpress.com/2011/...ehold-budgets/
http://professionalmanager.co.uk/deb...lders-at-home/
http://www.nytimes.com/2012/06/01/op...ty-agenda.html

Principle problem is that in a household economy if you cut back in spend, your wages don't reduce. However if a state cuts back in spending, history shows it's followed by a recession and thus a reduction in tax income. So if you continue to want to balance the budget you have to cut spending more, and revenues fall - a classic downwards spiral.

In addition, a state's government doesn't exist to make money or play accountants games. It exists to support the standard of living/welfare of it's citizens. Failure it not doing that. Otherwise the simplest thing would be to cut ALL services and continue to tax - it would make a huge profit.

From the above, you have to deliver and support your citizens. That's the focus.

From a less esoteric standpoint, you need to support the society; tend and shape it, such that its people (and thus businesses) can be a success. The first stage of that is to understand "what it does best" and what are the threats coming round the corner. You then have to add imagination, and creativity to 'engineer' the complex adaptive system to optimise that for the benefit of all.

If you take Queensland as the example, it majors on tourism, resources, and agriculture. It has threats derived from an ageing population (a common one), increasing air fares, natural disasters, and long distances. It might like to have lots of high tech manufacturing industry - because of the high tax revenue and the generally educated workforce that comes with it. However even though it has a nice environment, it has high wages and fixed costs.


PS Greece's problem is lack of control of its currency and tax system - not over spending as such. Austerity isn't making things better, quite the reverse

GarryP

Do you actually have a mandate, if you told blatant lies to get in, then went and did something totally opposite? Sounds like fraud to me.

At least in Gillard's case she had a coalition to negotiate, so the situation was not as planned - Newman has no such excuse - he lied, pure and simple.

IvanM

There is a similarity however states have more tools to borrow and devalue wealth at the same time. If a house hold borrows too much then a rise in rates stuffs them. If a state borrows too much then it can inflate its way out and devalue its currency. This does make subsequent borrowing more expensive when the market believes the state is puttings itself more at risk. Greece and Ireland do not have the tools at hand. Argentina and Zimbabwe have used those tools to the extreme and one had hyper inflation and the other booted out of the debt markets.

The established thinking is that a state borrows in bad times and pays back in the good. Politicians spend too much or drop taxes for short term popularity to get in power. People like yourself then create myths the money can be created by spending money. The right believes tax cuts generate wealth.

Until the media, unions and politicians are honest there is little hope for an truthful debate. Australia is not in economic dire straights and needs to be topping up the piggy bank for its aging population and future downturns.

All debt has to be repaid by the taxpayer.

The honest debate is when people talk about what they are willing to be taxed on.

IvanM

State spending is counted as part of GDP so it is not rocket science that cutting state spending cuts GDP. Budgets have to be controlled in all times and then you do not need austerity. If a state has over reached itself then the cutbacks hurt more. Best not to get there in the first place by spending what is unsustainable.

Shock cuts are dangerous but they fit the electoral cycle. More honesty from all stakeholders is needed.

What taxes would you raise?

Amazulu

Damn straight. Something the UK, Italy, Greece, Spain, USA, Qld should have taken on board years ago.

Amazulu

I don't know if he lied as I did not follow his campaign, but a politician lying? There's a never heard before concept.

Still, he was democratically elected with a massive majority, and if the people over there decide he's done the wrong thing, he'll be kicked out on his ass in 2016. Until then.........

fish.01

And the people don't decide on the day of the vote. They decide through discussions like this.

Amazulu

Sure. Election day 2016 you will have your say.

fish.01

Exactly, after robust community discussion in the meantime. We will not be silenced

Amazulu

Party on champ

GarryP

Evidentially, that's not true, at least as far as the wealthy are concerned, and not when those tax cuts are created from spending cuts - which creates recessions.
http://miami.cbslocal.com/2012/09/17...boost-economy/

Too right. Now is when it should be investing.

Actually, state debt is generally speaking never repaid (as I showed, states and households run on different rules). What it needs is for the debt to be managed.

The main discussion really needs to be on making those who currently don't pay their fair share to pay up...

GarryP

You said he had a mandate - and I pointed out he doesn't.

What should be the fate of a politician that blatantly lied to get elected?
Should they be allowed to continue, or should that fraud be answered by immediate transportation to a prison cell, and a new election?

Amazulu

Politicians sometimes lie to get elected (and I'm not saying that Newman did as I don't know, and don't care either way) - always have, always will. Gillard lied to us (and I'm not going to debate this) but I accept the legitimacy of her government. Next year we all decide if she should stay. These cuts are one issue in many that Newman will have to deal with over the next 4 years. In 2016, people in Qld will decide if he has done a good job.

BTW He does have a mandate (these cuts are one part of it)