My previous post Time to hold the QLD government to account seems to have been on the money with commentators echoing my sentiments. S and P has said if the federal government does not get spending under control then they may loose the credit rating. The QLD government has now said that if something is not done we may get downgraded yet again. So there are good signs with the new government lets hope it is carried through with.

A recent study has found the source of missing sea water level rises.

The study indicates that human use of water could account for 42% of the observed sealevel rises from 1961 to 2003. Building dams has somewhat reduced this effect so maybe we should build more of them.

My cab with some handsome guy next to it.

People often react in favour of what should be seen as a red flag when a government carries it out. If industries are calling for something and the unions agree this is an extreme red flag event. Examples of this are foreign car manufacturers operating in Australia and the unions come out in full support then our PM says oh we hope the gas guzzlers can be produced here for a long long time even calling on nationalism when the company is not Australian. Whenever unions agree with the bosses it is a red flag. Another example is when companies come out in support of a tax that they will pass onto their customers supported by unions yet again. The gas companies/electrical retailers (one and the same) and carbon tax support is this example. Another one that is almost always overlooked is the perception of competition like with Lindsay Fox saying more trains are good, of course it is good for his business the short haul from the rail yard to the factory or other business is far more profitable. I will have a taxi soon and the more public transport the better so long as the method of issuance of new licences remains the same (is based on peak waiting times so far as I know) as it will even out the work during the day making an individual taxi much more profitable. More public transport will reduce the peaks meaning fewer extra taxis while the offpeak work will remain the same as it is completely uneconomical to run mass public transport systems in quiet times.

Premier Campbell Newman said he would hit the ground running and as such so should objections to the excessive spending. Based on current policies the plan is to run up debt by about $20 billion (about $4500 per person on top of $13000 debt already) in the next 4 years  and this should be of concern to all Queenslanders. If this is done and the revenue numbers are correct it could lead to further downgrades of our debt rating leading to higher interest on our enlarged debt. Sale of the remaining $3 billion approx of QR National is probably a good idea but hardly puts a dint in our debt. If the projections of the coal price and production are not correct it is fair to say that debt will rise much quicker. This is a serious situation even more serious than the federal debt as we must pay it back for real where as federal debt can be paid back by just printing money and eventually causing high inflation. If we do get in a much worse position the federal government may not bail us out if it then threatens their credit rating. With all this debt now it is not the time to run it up quicker and this is a risk with the Premier as he has form in this area with Brisbane City Council being a high taxing high spending government willing to run up debt when he was mayor. So the question is do you want small pain now for more gain later and more gain overall or do you want to run up the credit card now so that potentially we will have much more pain in the future. A hiring freeze should be implemented in the public service with the new bureaucracies which are to be created to obtain workers from within the existing workforce. So when you go asking the current government for more money consider the debt to be your own as it will be passed on to you one day unless you leave QLD of course. Do you want that extra bit of road or an extra teacher for $4500 for every member of your family. With education the teacher student ratio is not the main reason for a good or bad outcome as Shanghai apparently scores better than us but has a 1 to 40 ratio. Of course things like health or policing it is advisable to keep the number of frontline staff but it is almost certain that the health bureaucracy is bloated so less spending on health might be possible with slightly higher outcomes.

To be fair to the new government I do accept that it is possible that they might be fiscal conservatives and get serious now that the vote buying activities involved in the election process are over. I think it is important that you send an email to your local member stating that you want debt reduction not more and more spending until debt is under control and they are more likely to do it than if nobody says anything. If you happen to have  a Labor member in your seat they might be useful because despite their record it will not take them long to start criticising the government if they are pushed along a bit. I do have slightly more faith that the LNP will listen to you than an ALP government would.

It is interesting that Bob Carr has said previously that the US is a bit paranoid and should not be relied on for intelligence based on past performance. Now he says ignore all my real opinions I am part of the Labor machine. I am paraphrasing of course but this is about what he has said. I happen to agree with the real Bob Carr but as a puppet he will be worse than Kevin Rudd at least he was autonomous possibly too much as he did not make a phone call to Indonesia while we cut off a significant part of their food supply probably meaning he was not even told. So to summarize it goes from bad to worse. Even should you not agree with me and the real Bob Carr I think you can agree that having a human doing the job is better than a puppet.

With the release of the important Finkelstein report into media inquiry we need to be realistic and accept that it indicates we should be censored (Winston Smith would understand). These are the reasons why:

• It would be fair to say that we would be campaigning against a policy rather than covering it? We lack sufficient resources to completely cover a topic and are only able to indicate what is wrong with a presented policy.
• We believe in free and open markets especially of the ideas kind. We are very unlikely to simply support a government because they are in charge or to be loyal to the government in the national interest based on their self serving opinion.
• We are not funded via the tax payer or friends of those in the media enquiry or indeed in the likely make up of the News Media Council
• We could have a yearly hit rate in excess of the threshold. I’m not sure why they would use an arbitrary and non-representative indicator such as that, what does it include reloading a page, web crawlers, images…
• Our political views are unlikely to ever completely match the government of the day so we would always be at odds with the current policies
• We have a problem with propaganda, deception and lies instead preferring an open media that will cover many topics from all angles.
• We believe in science and a rigorous approach to evidence and holding organisations to account

So we will await the letter from the Media Council indicating the reason from above about why we should be censored.

None of the political parties act on a pragmatic and in an evidence based way. Just to give some examples.

Industrial relations about 80% of workers are on award or work based on some award or in the case of high skilled employees receive offers high enough to attract them and this works but both parties want to change this and encourage unions and negotiations. So the idea of getting paid for what you do now is not favourable by either major party. I don’t know but for me getting paid for the work you do seems fair enough and it reduces costs as no need for paying unions or negotiators or public servants to oversee it. But apparently I am crazy in modern Australia. The fact is employees can’t negotiate and that is why we have an award system unless you consider extortion at bottle necks and essential services negotiation when the jobs are protected. This costs all Australians money in various ways as mentioned above and also reducing productivity through strikes and poor allocation of labour. Also is leading to run away wages in the public sector with public servants (many of whom don’t have to be there) being paid about 10% above average. This is not to say the pay of all public servants is too high and some might even be underpaid as it will depend on the union representation etc. The concept that they are called public servants yet they are willing to extort money is terrible. I was particularly disgusted about the teachers in QLD a few years ago. These people were almost saying if you don’t give us more money then your kids won’t be looked after. They receive about an average wage and 10 weeks holiday and 5 and half hour working day. So they are not getting low pay and considering the amount of time off nobody is stopping them doing other jobs. They might say oh but all that work marking papers etc. well I am pretty sure that the extent is exaggerated.

Healthcare works well but both parties in different ways are intent on increasing the costs for all of us. healthcare and schooling should be viewed as infrastructure as they are like roads with known and predictable needs so it is about as simple as you know how much is needed just do it. Where it falls down is probably that governments don’t just do it. The Labor Party wants to stuff it up by involving the federal government in state hospitals which is madness and the Liberal Party sees corporate welfare by forcing those who earn too much to take out insurance which only benefits the insurance company and if someone wants private healthcare then they can get it up to them but don’t force them. If in both of these cases the government offers some subsidy for any services performed that is fair enough but should be based on government costs of the same service and save the public money. Eg if someone privately has a hip replaced then pay one half of what it would cost the government to do that service and also offer private services in the public system or in other words allow people to queue jump if they pay for all or some of the cost and this is not a burden on those receiving the treatment for free as the extra monies recieved can pay for more services at lower costs to the public. Same applies to schools can offer a certain percentage of what it would cost the public system. With both cases should be one price per service and have nothing to do with means tests etc. otherwise it destroys the whole purpose and also is much easier and less bureaucratic. There is no evidence that privatising hospitals or schools would save money in the long run. It is all about cost controls and as the system would still be regulated by the government if it was privatised it still comes down to cost controls which governments if they can’t control costs themselves will fail at controlling costs in the private sector where essential services must have heavy regulation to ensure continuity of service.

Both parties actually claim that there energy policies will not lead to costs high enough to be a consideration for industry. This is absurd the only difference being the extent of the cost increases with MRET being bi-partisan method of increasing costs and the carbon tax tacked on for Labor. So one policy is better only because it is not as bad, not that it is good.

Both parties don’t like to stick to the spirit of the constitution which is that the federal government as a rule only becomes involved in interstate or national issues (not schools and hospitals). The extent and bias towards which state responsibilities to get involved in may vary but the trend is still there in both cases and I consider this to be part of the continuous increases in taxes to pay for all the duplication and also the increased costs associated with people and companies knowing they can extract money out of governments.

Some small points about tax which affect me personally. I have some investments overseas so pay tax on them twice. If someone did exactly the same thing as me with someone else’s money and got a wage they don’t pay tax twice.  With the US they don’t tax overseas investments unless the money is repatriated and then tax it at 15%. Australia does not tax people who work overseas, US does. Both these systems are not right and should have a low rate of tax for all overseas income. The current situation in Australia leads to many people working overseas making it hard for Australian industry and Australian industry being put at a disadvantage if they want to become a multinational. Another gripe I have with Australia is having tax breaks for foreigners such as with capital gains meaning we are a tax haven so long as you are a foreigner. Can guarantee that many of the foreign investors are located in small no tax jurisdictions paying no tax there either. With capital gains tax which in general I think is a good idea if an asset is sold due to compulsory acquisition then it should be tax free as it was not the investors choice and they are unlikely to be able to replace the asset due to having less money after tax has been taken out. This applies to real estate and shares.

The example I will give is our car industry as this has been a topic of discussion lately. Is subsidising a gas guzzler such as a Falcon or Commodore a good idea? And is it buying Australian or just giving people a false idea.

We do know that peak conventional oil (oil from conventional wells on land and shallow water) has peaked and we also know that if fossil fuel use continues at trend of 3% growth per year we would need to produce around 4 to 5 times our current production by 2100. Current production of oil and gas is a bit over a billion BOE (billion times 150 litres of oil equivalent) per week. So if trend happens this amount has to increase to lets say 4 or 5 billion BOE per week. So the question is will the trend continue with population and fuel use. I have heard hear say from one of the major miners a few years ago that peak coal is expected to be around 2060. So coal to liquids is unlikely to fill the gap. So population or living standards on a world basis, at some stage once all efficiencies have been found will need to give assuming no major breakthroughs in energy production and storage are made.

So our federal government is taking money off the northern states to redistribute to Victoria and South Australia in the form of car subsidies. I am a Queenslander and I say bugger that, why should I be paying for some southerner.

So using ball park figures lets see if buying a Falcon is buying Australian? It uses around 9l/100km and will use lets say around 25 000 litres of fuel in its life time. This will cost around $25 000 sent overseas to an oil exporting country. Now lets take a Toyota Yaris bought from Thailand and converted to natural gas as Thailand is way ahead of us in this and can do it cheaply. So the total cost of the car around $18 000 already converted and will use only $1000 worth of petrol in its life with the rest being natural gas. So the money sent overseas will be $15 000 for the wholesale value of the car and $1000 for the fuel which is a total of $16 000. Seems to me if you really want to buy Australian you are better of buying a small imported car that runs on natural gas (note our government has not arranged so a converted vehicle can be imported yet). Even if it is not converted less money might go overseas due to less national borrowings plus around $12 500 for fuel as the vehicle is about twice as efficient. So one of the end beneficiaries from the subsidies is actually oil exporting countries.

It is a trend in the most developed countries for the government to act against the national interest of their own country in favour of special interest groups. Versus a country like Thailand which in this case recognises the importance and cost of fuel.

So from my point of view subsidising large cars has the following points. Sending money out of Queensland , sending money out of Australia, putting pressure on skilled wages when these workers if they do actually have skills could work in mining or elsewhere, otherwise is just having low skilled workers being overpaid and  why should a Queensland low skilled worker be paying tax to subsidise someone who can earn more than them. So is lose lose all the way.

This is not to say any subsidy is bad but that this subsidy is bad. If Victoria and South Australia want to reduce taxes on those industries then it is up to them if they consider that a good idea, but if they subsidise what by world standards is luxury car manufacture not small a to b cars running on natural gas or LPG seems like it is doomed to fail. If the car companies can make money out of selling them, then great but as they are luxury items the market will be volatile and may disappear altogether if oil prices do rise sharply. This also includes the idea that states should be given money from the federal government on a per capita basis to stop any wealth transfer between states other than to even them out to some extent as a rich state will naturally pay more tax. This is ok and will help a state that is doing it tough. When states get offered money based on making a case for special interests they will behave in such a way as to get the money not what is best for the state. Lets say for example South Australia thinks it is a good idea to build a dam for a billion dollars but the federal government has already decided they care about union jobs instead of infrastructure so of course South Australia will say hey we have a car industry send us some money for that then in simplistic terms.

I just found it quite amusing the number of government banks and how the social and business welfare system works in the US. The first thing that comes up in Australia when any government wants to set up a bank is pointing out how bad governments are at lending like with the current government about to set up a “Green Bank”

(numbers in millions for year 2012 estimate from the USA Budget 2012 or here if link not working)

Department of Agriculture

Direct Loan Disbursements:
Farm Loans ………………………………………………………………………… 1,904
Commodity Credit Corporation ……………………………………………… 7,884
Rural Utilities Service …………………………………………………………… 8,810
Rural Housing Service …………………………………………………………. 1,437
Rural Business Service …………………………………………………………  19
P.L. 480 ……………………………………………………………………………… 0
All other programs ……………………………………………………………………… 79
Total, Direct loan disbursements ……………………………………………………. 20,133
Guaranteed Loan Disbursements:
Farm Loans ………………………………………………………………………… 3,097
Commodity Credit Corporation ………………………………………………  5,500
Rural Utilities Service ……………………………………………………. 1
Rural Housing Service …………………………………………………………. 24,395
Rural Business Service ………………………………………………………… 1,937
All other programs ……………………………………………………………….. 21
Total, Guaranteed loan disbursements ……………………………………………34,951

Department of Commerce

Direct Loan Disbursements:
Fisheries Finance Direct Loan Financing account ……………………………… 52
Total, Direct loan disbursements ……………………………………………………….. 52
Guaranteed Loan Disbursements:
Economic Development Assistance Programs account ………………………. 45
Total, Guaranteed loan disbursements ………………………………………………… 45

Department of Defense

Credit activity
Total, Direct loan disbursements ……………………………………………………………. 194

Department of Education

Direct Loan Disbursements:
Historically Black College and University Capital Financing ………………… 186
Federal Direct Student Loans (FDSL) ………………………………………………. 145,129
TEACH Grants ……………………………………………………………………………… 107
Student Loan Acquisition ……………………………………………………………….. 37,704
Federal Perkins Loans …………………………………………………………………… 2,167
Total, Direct loan disbursements ……………………………………………………………. 185,293

Department of Energy

Direct Loan Disbursements:
Title 17 Innovative Technology Direct Loan Financing Account …………… 16,958
Advanced Technology Vehicles Manufacturing Direct Loan
Financing Account …………………………………………………………………….. 2,786
Total, Direct loan disbursements …………………………………………………………… 19,744
Guaranteed Loan Commitments:
Title 17 Innovative Technology Loan Guarantee Financing Account 1 …. 3,713
Better Buildings Pilot Loan Guarantee Initiative for Universities,
Schools, and Hospitals ………………………………………………………………. 2,000
Total, Guaranteed loan commitments ……………………………………………………. 5,713

Department of Health and Human Services

Direct Loan Disbursements:
Consumer Operated and Oriented Plan Financing ……………………………… 593
Total, Direct loan disbursements …………………………………………………………….593
Guaranteed Loan Disbursements:
Health Center Guaranteed Loan Finance ………………………………………….. 17
Total, Guaranteed loan commitments ……………………………………………………..  17

Department of Housing and Urban Developements

Direct Loan Disbursements:
Emergency Homeowners’ Relief ……………………………………………………… 229
FHA …………………………………………………………………………………………….. 50
Government National Mortgage Association …………………………………….. 9
Green Retrofit Program for Multifamily Housing ………………………………… 0
Total, Direct loan disbursements ………………………………………………………………  288
Guaranteed Loan Commitments:
FHA ……………………………………………………………………………………………… 344,375
Government National Mortgage Association ……………………………………  278,000
All other ……………………………………………………………………………………….. 674
Total, Guaranteed loan commitments ………………………………………………………. 623,049

The Department of the Interior

Credit activity
Guaranteed Loan Commitments:
Indian Guaranteed Loan Program …………………………………………………….. 45
Total, Guaranteed loan commitments ……………………………………………………… 45

Department of State and other International Programs

Credit activity
Direct Loan Disbursements:
Export-Import Bank ……………………………………………………………………….. 25
All other programs …………………………………………………………………………. 6,203
Total, Direct loan disbursements ……………………………………………………………. 6,228

Guaranteed Loan Commitments:
Export-Import Bank ……………………………………………………………………….. 21,500
All other programs …………………………………………………………………………. 3,558
Total, Guaranteed loan commitments …………………………………………………….. 25,058

Department of Transportation

Direct Loan Disbursements:
Transportation Infrastructure Financing and Innovation Program ………….  2,337
Railroad Rehabilitation and Improvement Financing Program ……………… 600
National Infrastructure Bank …………………………………………………………… 25
Total, Direct loan disbursements ………………………………………………………… 2,962
Guaranteed Loan Commitments:
Transportation Infrastructure Financing and Innovation Program …………. 80
Railroad Rehabilitation and Improvement Financing Program ………………  100
Minority Business Resource Centers ……………………………………………….. 18
Maritime Guaranteed Loans ……………………………………………………………. 182
Total, Guaranteed loan commitments ……………………………………………………..  380

Department of Treasury

Guaranteed Loan Commitments:
Troubled Asset Relief Program ………………………………………………………….83,681
Total, Guaranteed loan commitments ………………………………………………………83,681

Department of Veterans Affairs

Direct Loan Disbursements:
Vendee and Acquired Loans …………………………………………………………… 1,236
All other programs …………………………………………………………………………. 13
Total, Direct loan disbursements ……………………………………………………………… 1,249
Guaranteed Loan Commitments:
Veterans Home Loans ……………………………………………………………………  57,575

Small Business Administration

Direct Loan Disbursements:
Direct Disaster Loans …………………………………………………………………….. 1,100
Direct Business Loans ……………………………………………………………………  33
Total, Direct loan disbursements …………………………………………………………….  1,133
Guaranteed Loan Commitments:
Guaranteed Business Loans …………………………………………………………… 23,900
Guaranteed Disaster Loans ……………………………………………………………. 63
Total, Guaranteed loan commitments ……………………………………………………..  23,963

So the US government will have about $1.1 Trillion on their books as direct loans or as an insurer of  loans. This seems to be a business the government should not be in. In the case of the Veteran Loans for example it would be better to provide a direct pension. The homeless rates of Veterans in the US is high and giving out money in this manner does not help the most vulnerable who might be better off renting. Pretty much all the other groups should be using commercial loans. Disaster assistance should be the same using some direct payments if necessary that are not based on the business choices made, for example if they had insurance or not. Government banks are notorious for not doing due diligence and they are also subject to corruption.