At 4.00am this morning I was woken – again – by my friendly family of five magpies warbling in the tree outside the window. As is my routine, I opened my iPad to the CNBC webpage and started reading an article that was headed “The Biggest Economic Horror Story Is Real according to a new Fed paper”.
The first paragraph in this summary report states “the slow growth the US economy has experienced since the recent recession (GFC) is not a fleeting condition, rather it’s the result with a serious demographic problem that is poised to dampen economic growth for years…”. The article suggests “real GDP growth and interest rates will remain low in the coming decades consistent with the US economy having reached a ‘new normal’ “. Refer to our previous Newsletters going back to 2008.
The research paper was prepared by three Federal Reserve economists who studied the demographic trends of Baby Boomers from 1960. They concluded that “the issue boils down to a huge swathe of Americans (Baby Boomers) retiring and staying retired for longer leaving a smaller pool of workers. This means that an increasing amount of capital is sitting around looking for investment opportunities, while the group of workers who want to use that capital is diminishing. Simple supply and demand tells us that in this situation, the cost of that capital – interest rates – will fall”. They go on to say that the diminishing labour supply is also to blame for low GDP growth and, in turn, lower economic growth. The paper concludes that “the scope to use conventional monetary policy to stimulate the economy during typical cyclical downturns will be more limited than it has been”.
The message to Jay and Tom is clear that “unconventional policy options may be the only way to resolve the issues that currently prevail in our bankrupt State of South Australia”.
The recent “blackout” was the final straw in a sequence of events that have occurred over the last 20 years, starting with the failure of the State Bank in the mid 1990s. The closure of the Holden plant and the scale down of the Whyalla steelworks in 2017, will bring to an end the legacies that SA has enjoyed from the golden era of the Tom Playford Premiership years. Sadly, the tide has now gone out and our Labour Government has been totally exposed. Even the dopes at the Malaysian Grand Prix were not found to be knickerless.
Our financial catastrophe is so drastic that we can afford and need to be bold. All South Australians are prepared to pay more to sustain the lifestyle they currently enjoy. Businesses create jobs, not Governments. If there is no business growth, there are no new jobs being created. Barriers must be eliminated and points of difference must be created. Jay and Tom, I put the following ideas to you for your consideration.
Abolish ALL property based taxes and introduce a new Property Tax (PT)
A new PT must be spread across the broadest base in order that the load is shared to the max. Apply a rating on the Site Value of every registered title in the State to cover the abolished taxes, and add $500 million to create a reserve for much needed and immediate projects. The taxes include Stamp Duty on all property transactions, Land Tax, Emergency Services Levy and others. This PT will eliminate the assumptions that “turnover in property transactions never fall and prices never drop”. We are 8 years into our 2nd lost decade in the last 26 years to know that the assumptions are no longer relevant and have resulted in Budget “blackholes” that have never been recovered. It also allows you to eliminate Grants and Concessions that never reach the targeted beneficiary. The winners of this new PT will be First Home Buyers who will find a cheaper entry into home ownership. It will lower the cost of business in setting up in South Australia compared with other States. The building industry will be revitalised because the Baby Boomers will be encouraged to sell out of their oversized homes and move in to retirement housing that will not have the disincentive of Stamp Duty payable on the transfer. The basis of the PT will also allow you the scope to adjust the rate upward in times of need and downward in times of sufficiency. The cost savings in collecting a single PT will be in the 10’s of millions. There will be a consistent and higher outlay with a new PT but there needs to be and SA is ready for it.
Rationalise the structure of Local Government
The focus in the Inner Metropolitan area should be 4 Councils in the North, South, East and West, leaving the A.C.C. as is and Onkaparinga in the south and Playford in the north. Planning needs to be taken out of the control of Councils with a single Planning Office administered in an expanded form of the Development Assessment Commission. This will provide a more consistent, predictable and transparent process to planning approvals and eliminate the collusive and politically biased inefficiencies that currently prevail. The greater efficiency of a single planning office will have a significant economic benefit in greater adherence to timeliness and will generate significant savings for developers and householders alike. The rationalisation will allow excess assets to be sold off to pay down debt. Local Government should concentrate on community needs and not waste money on extravagant projects. Money saved in this rationalisation will allow massive reductions in Council Rates and put an end to the intolerable annual rate increases that sit uncomfortably above the Inflation Rate. The multi millions saved will help households and businesses to afford the new PT.
Declare Every Day a Workday
The scourge of penalty rates must end. The argument used by Peter Malinauskas that penalty rates compensate for the loss of family time is the talk of troglodytes. My family has 2 daughters, one living in New York City and the other in London. They do not live in Adelaide because there are no jobs that suit nor challenges that excite. The loss to our family is NO family time. We are typical of an ever increasing number of families and it has nothing to do with the 7 days of the week or the relevance of weekends v weekdays. If every day was deemed a work day, then penalty rates would not apply and businesses would boom. Workers would work when work was needing to be done. Businesses should decide that, not Unions nor Governments. Why should a university student who can only work on weekends in a part time capacity be paid 1 ½ to 2 times more than a family man who only wants to work Monday to Friday?
The problem today is not unemployment but underemployment. Refer to the CNBC article.
I know that people will look at this Blog selfishly, thinking of no-one but themselves. And that is one of the major issues that we have to deal with – the Me/I attitude. This bold change must be viewed in a broader perspective with the negatives being traded off by the positives, the costs versus the benefits, the jobs versus no jobs.
We are a State of over 1.5 million people and within that there is the capacity to generate enthusiasm and a cooperative effort that will have South Australia return to being the best place to live in this country. Rather than being a pit for uranium waste or the promoter of a driverless car, let’s focus on the matters that are more immediate and can be activated within an instant.
Let’s face it Jay, if you’re bold enough and successful enough you could be in power for another 18 years. For once in your life, put your political career on the line for the sake of all we South Australians.