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A few counter points: - Manufacturing in general in the developed world is in serious trouble. I'm not sure anything could really reverse that; - I agree abou

• spangry 10y ago
  I think many of your points have merit, although there are a few I disagree with. I think you're right about the construction input costs: the 'initial phase' of any mining boom is characterised by lots of capital investment and the construction projects that go with it. So that definitely did bid up the cost of construction project inputs, and also contributed to a (transient) increase in employment and wages in the industry. Unfortunately, mining is a very capital intensive activity. So now that the capital projects are done and we're transitioning to the 'volume production phase', the effect on employment, wages and costs of construction inputs are receding. And it sounds like we're in agreement on the national interest re: finite resource extraction. Thank goodness we had the foresight to tax some of the rents derived from the extraction of our finite natural resources... no wait... As for hollowing out of manufacturing, it's definitely a debatable point and I think reasonable people can arrive at different views on this one. Honestly, it's a difficult proposition to prove in either direction. I guess I'm saying I don't have very strong views here, other than we didn't exactly take many (or really any) prudent actions here. As an interesting aside, multi-factor productivity should naturally rise (particularly now that world commodity prices have come back down a bit, so its no longer profitable to extract marginal deposits). I'm sure whoever happens to be in government at the time will figure out a way to claim the credit. I can't fault you for ignoring SMH when searching for truthful information. Frankly, anything that comes out of Fairfax (even the AFR) these days is highly suspect. Around 80% of Fairfax's revenues come from Domain property advertising, making SMH the most widely read real-estate agent newsletter in the country. But the IMF study is solid, and I can't see any reason why they'd have a bias one way or the other (especially since Australia was just 1 of about 200 countries studied). If you have a critique of that study, I'd be interested to hear it. Otherwise I stand by my assertion about the structural deficit. GST distribution is a bit of a vexed issue (some of which is too complicated to go into here, but is comprehensively discussed here: http://gstdistributionreview.gov.au http://gstdistributionreview.gov.au ). The EU is an example of a monetary union without a system of horizontal fiscal equalisation. Hasn't worked out that great for some of their members who have had a 'slower' economy than the average EU member, but nonetheless faced a non-stimulatory central bank cash rate (e.g. Greece). On the other hand, it seems to have worked out pretty good for members like Germany. WA also seems to have a curiously short memory on this issue. Commonwealth to State fiscal transfers have been going on since federation (as opposed to since the introduction of the GST). I'm pretty sure that, even though recently they've been getting a 'raw deal', on a per capita basis over the life of the Australian federation WA has actually been a net recipient state. Certainly over the past 30 years or so this has been the case (see: https://www.cgc.gov.au/index.php?option=com_docman&view=download&alias=939-fiscal-equalisation-relativities-used-for-distribution-of-general-revenue-payments-to-states-xlsx&category_slug=history&Itemid=292 https://www.cgc.gov.au/index.php?option=com_docman&view=down...), where WA has been a net recipient in ~53% of the years since 1981. I suppose they can pay the other States back, if they really feel that strongly about it... As for stamp duty, in fairness to the States, removal was part of the original inter-governmental agreement but was removed after the GST tax base got smaller (thanks to the Democrats, who only passed the GST legislation after negotiating with Howard to exclude certain goods and services from the consumption tax base, reducing the efficiency of the tax in the process). Although they might have had good intentions, there are more efficient ways to offset the regressive effects of a broad-based consumption tax (e.g. reduce low income earner income tax, increase 'hardship' transfer payment amounts etc.). Whether things like the Future Fund were paid for from the 'rivers of gold' (i.e. general tax revenue) or asset sales is really neither here nor there since it's all just 'one big bucket' from government's perspective. There are only a few situations where it might make sense to hypothecate revenue to a particular expenditure (note: the medicare levy is not one of these; the revenue from this additional income tax just goes in to the 'big bucket'). At a basic level, it only makes sense to sell an asset if you can earn a higher rate of return on the proceeds. It gets a bit more complicated when talking in the context of government, as 'rate of return' should factor in things like public/consumer welfare (i.e. it's usually a bad idea for governments to privatise natural monopolies like Telstra, as the subsequent monopolist price gouging effectively functions as an inefficient tax). The fact still remains that they squandered an enormous but temporary increase in government revenues on permanent middle-class welfare outlays and tax reductions. And I agree with you on the influence of foreign money (hell, let's come right out and say it: Chinese money). Canada appear to have had similar issues. And the Commonwealth has been outright negligent in enforcing its own laws regarding foreign purchase of residential real estate. And FIRB are goddamn useless to the point where one has to wonder if it's incompetence, or incompetence like a fox... As for the effect of tax policy on house prices, they appear to have shot up right around here: http://i.imgur.com/4VUGfPz.png http://i.imgur.com/4VUGfPz.png