Two tax changes announced in Tuesday’s Federal Budget actually work against business innovation. Businesses must now depreciate their computer software over 4 years, not 2.5. This pulls in $1.3b in tax but discourages upgrading. (However it might be good news for vendors of software as a service and proponents of open source software.) Similarly, Fringe Benefits Tax rules for laptops and PDAs given to employees have been tightened, discouraging a more flexible, mobile workforce. I thought we were meant to be building for the future…
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This cute iconographic image is actually a visualisation of consumer spending in the US economy. The full version is at The New York Times, where you can learn that housing makes up 42%. Hat-tip to Sean C.
Yesterday I said I write follow-ups to my recent pieces on housing affordability and the Australia 2020 Summit. I decided to relax last night instead, and today I’ll concentrate on some client work and the gym first. Meanwhile, you can always read part 2 of Possum Comitatus’ housing policy analysis and Guy Rundle’s negative perspective on the summit.
At some point we will have to stop blaming John Winston Howard for every problem we face. For the moment, though, it does seem that whenever we lift the lid on some important issue we find something smelly whose cause was inaction or ineptitude on JHo’s watch.
Yesterday it was how we’re stuck with the Super Hornets thanks to “a lack of sound, long-term… planning decisions by the former Government over the course of the last decade”. Today let’s look at Chairman Rudd’s theme of the week, housing affordability.
It’s now more expensive to live in Sydney than in New York.
[P]roperty prices have jumped 400 per cent since 1986, while income has increased by only 120 per cent.
The mysterious but awesomely-brained Possum Comitatus explains how he ran the numbers, leading to this graph.
It’s worth reading the full analysis, but his conclusion is blunt:
[R]eal house prices remained virtually frozen over the period from 1990 through to 2000. It wasn’t until Howard started stuffing around with halving the capital gains rate and things like the first home buyers grant that real house prices started to accelerate…
It also highlights in real terms just how much the NSW market has dropped over the last couple of years.
Possum’s going to look at our policy options in part 2, coming soon. However The Australian’s George Megalogenis has already started down that path — from the suitably cynical viewpoint of which options generate the most votes for whom.
Catching up on news from earlier this week, I’m astounded to read the real reason the US stock market rallied: “The US Taxpayers just lent the Biggest Banks and Hedge Funds in New York $400 Billion in exchange for ‘mark to market valued’ sub prime mortgage securities that are probably nearly worthless (being so far down on the claims chart in a bankruptcy). This is a ’silent bailout’ of the Republican’s biggest contributors that is going to be much more expensive than the S&L Rescue package of the early 90s. At least Bush Sr proposed the S&L bailout in the sunlight. Bush Jr, Paulson and the Fed are doing the bailout without asking our permission. What does ‘pork barrel’ John McCain think of this corporate welfare?”
“The [stock] market in the short run is a voting machine, but in the long run it is a weighing machine.” So said Benjamin Graham (1894-1976), economist, professional investor and mentor of Warren Buffett. Hat-tip to Memex 1.1.
Yes, there was a 7.1% drop in the ASX All Ordinaries yesterday, the 4th biggest one-day fall in our history. But before you throw yourself out of the window, let’s put that in context.
That’s a graph of the All Ordinaries for the last 20 years, thanks to Robert Merkel in Lavartus Prodeo. See that little wiggle at the far right-hand side? That’s yesterday. Short-term thinking is perilous.
Just heard on CNN, a Beijing woman brandishing a lettuce and complaining that “the government has lost control of prices”. Yes, dear, that’s called a “free market economy”. Get used to it.
The Labor party a risk to the economy? Perhaps not, since eight of their front bench have degrees in economics — including Craig Emerson with a PhD — while only three Coalition ministers have the qualifications.
I’m a big fan of joined-up thinking. You know, not just looking at each individual piece, but looking at how they fit together (or not) and what that tells us about The Big Picture. But there doesn’t seem to be much joined-up thinking in contemporary Australian politics.
Take, for example, “economic management”. Senator Andrew Bartlett wrote about this very point yesterday:
The battle for bragging rights about which party is supposedly the best economic manager is faintly ludicrous, given that both sides at various times have made a point of emphasising how similar their basic tax and economic policies are to the other – with the partial exception of workplace relations. The posturing about supposedly conservative good economic management is even more absurd – and indeed somewhat alarming – when one realises that these almost identical economic policies are neither conservative nor even very coherent.
Yes. I don’t understand how these facts all fit into one coherent picture:
- Lots of money coming in from big mining boom.
- Schools, hospitals, roads, trains, ports all in need of “urgent” fixes.
- Reserve Bank worried about inflationary measures.
- $34 billion in tax cuts! Spend, spend, spend!
Bartlett quotes a piece from George Megalogenis in The Australian which ends:
The task for Australia’s political class is to rediscover the language of moderation. Leadership at this stage of a 17-year growth cycle means telling voters that they can’t have it all.
But how do you tell Howard’s Battlers, the Kath & Kims of Australia, they they can’t have it all, and that the world isn’t just about them repeating the mantra of “I want! I want!”? The answers, it seems, is that you don’t. You just stay in your state of denial and hope for the best.
The Coalition launches its re-election campaign today — yes, I know that the entire year so far therefore has not been a campaign, just some sort of cheese grater. So it’ll be interesting to see whether they’ll propose a coherent plan for Australia’s future that actually addresses these core economic issues. My money is on the “No” vote for that one.
About 5pm this afternoon I overheard the following conversation on a train approaching Central station. I’m guessing these two guys were in their mid-20s, and weren’t merchant bankers.
Lad #1: Interest rates have gone up 25% today. So your rent’s going to go up.
Lad #2: What the fuck?
Lad #1: Yeah, I heard it on the radio. The guy who owns your place has to pay 25% more, so you’ll have to pay 25% more rent.
Lad #2: Fuck that! That’s what? Fuck! That’s $75 [presumably a fortnight]. No fuckin’ way! No cunt’s charging me any fuckin’ more for that fuckin’ crack den I live in.
And you thought you had it tough…
If “economic management” is a key factor in the election campaign, then I’m hoping someone manages to finally explode this myth that the Howard government is a good economic manager.
Yes, unemployment is low. Yes, interest rates have been low. Yes, there’s been a mining boom. But after (supposedly) 11 boom years under the Truthful Rodent, what have we got to show for it apart from huge credit card balances and a series of “emergencies”? What have we actually built for the future, as opposed to aspired to do?
I’ve been looking at this photograph for hours, scattered over the last few days.
It was apparently taken from the space shuttle Columbia. No it wasn’t, scroll down for the comments. I shouldn’t need to point out that the big lumpy thing in the foreground is called Africa, and further back there’s the thing they call Europe.
It fascinates me because it — literally! — puts things in perspective. Some of the world’s greatest cities are invisible, at least in daylight. The Low Countries are just starting to blaze in artificial light. But the brightest lights are the flares of oil wells in the deserts of Algeria and Libya, and off the coast of Nigeria.
Hey, aren’t the people there starving? That can’t be right, if they’ve got all that oil, surely?
Thanks to Memex 1.1 for the pointer.
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