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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

economic reform, foreign debt, health « Previous | |Next »
August 3, 2006

I don't have tme to read the OECD's 2006 Economic Survey of Australia whilst I'm on holidays on the Limestone Coast. However, Kenneth Davidson has an op.ed. in The Age that addreses the Coalition's long term economic policies.

He says that whilst the OECD's 2006 Economic Survey of Australia is the formal provenance is the OECD's economics department, it is very much the work of the Australian Treasury working according to the dictates of the Howard-Costello Government. It spells out the neo-liberal agenda of the Government to the next election and beyond.

His comments on Treasury's agenda are to the point.

It is most significant for what it doesn't mention: the foreign debt that is now equal to more than 50 per cent of GDP and, in proportion to the economy, almost twice as big as the foreign debt of the United States. The reason? The foreign debt is the elephant that is now so large that it can't be removed from the room without wrecking the house. The Government cannot acknowledge the extent to which economic growth over the past decade has been financed by foreign debt, or why the debt has been used to finance a real estate and share price bubble rather than new export and import replacement industries that could repay it.

Davidson says that recognition of the problem would require the admission that it is the Government's fault that interest rates are rising because foreign lenders are demanding bigger and bigger risk premiums to finance the debt.

Davidson adds that the Treasury's brief warns that long-term fiscal pressures will come from rising Government health spending, particularly through the Pharmaceutical Benefits Scheme. He adds that:

Nobody could argue with the proposition that "an increased focus should be placed on preventive health measures to minimise future growth in health care costs and reduce long-term fiscal pressures", but it is meaningless except in the context of the contribution that public health programs such as Medicare or PBS contribute to preventive medicine and understanding the contribution that social and economic policies contribute to health outcomes.

Morbidity is a socioeconomic issue and the main way to improve the health of the community is through more egalitarian income distribution and greater security for low-income groups that have worse health outcomes than the rich. However, the brief argues for more inequality and less security in the workplace and the interface between welfare and work despite the adverse impacts on productivity.

Treasury proposes to deal with increasing inequality and the working poor not with minimium wage but with other social policy instruments such as changes in tax rates and thresholds at lower incomes or an employment-conditional tax credit.

| Posted by Gary Sauer-Thompson at 10:36 AM | | Comments (2)


I just came from Davidson's article and he has nailed it perfectly. There is an Australian government rep at the OECD and evidently the riding instructions are to get policy 'harmonisation' so that OECD's annual report supports current government policy, and ensure that any inconvenient facts are left out. Anywhere else, this would be called corruption. It's a bloody cartel. Also, so much for 'whole of government'. That would produce too many inconvenient policy dilemmas. Gotta keep it simple for the plebs. Pack of scum. Sorry, gotta go, blood pressure up again.

Considering that around 99% of any increase in minimum wage to a single earner couple with kids will be clawed back by the Government, Treasury is right to think that it needs to do something in the tax transfer system.