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Category: Economics

07/03/2025

Anti-Semitism- a perspective

6 March 2025

There is currently a rush towards the banning of hate speech and a demand for action on antisemitism, but far less emphasis on Islamophobia.

In Australia, we have been a relatively wealthy country where everyone has had a fair go. With a large number of migrants relative to most counties we have been seen as a relatively tolerant society by world standards.

When I grew up, there were large numbers of ‘displaced persons’ (refugees) who had come from Europe after the war. They were from Greece, Italy, Turkey, the Baltic states, the Balkans and Eastern Europe, as well as ‘ten pound Poms’. Anglo-Australians called them ‘wogs’, ‘wops’, ‘Eyties’, Poms or various other names. There were no anti-discrimination laws, so the migrants mainly copped the abuse and worked hard in their new land so that their children would have all the opportunities.

Australia was welcoming in the sense that behind our tariff barriers everyone had jobs at the level that mostly only the father had to work, though women mostly could if they wanted to. There were few private schools, so most kids went to public schools and grew up together and prejudice mostly died out amongst them because of their common experiences. The government Housing department built whole suburbs of houses and leased them at reasonable rents and later they could buy the houses that they had lived in for years. Some migrants set up ethnic clubs based on their homelands and soccer teams were initially racially based as Australia played cricket or rugby. There was some trouble between Serbs and Croats with a shop in Western Sydney memorably burned down, and Sydney Water knew not to have Serb and Croat gangs in the same depots, but mostly things were peaceful.

Other notable migrant groups have been Vietnamese after the Vietnam war and Chinese after Tiananmen Square, but these were on a lesser scale.

Jews were mostly not noticed, but they set up their own Schools, which sang the national anthem of Israel and hoisted an Israeli flag. They were also quietly active in politics, working against any politician who took a pro-Palestinian line.

I can tell my own story here. I spoke at a refugee rally in Hornsby when I was an Australian Democrat in NSW Parliament and pointed out that terrorism was a political and military technique used generally by the weaker side against the stronger, and who was the terrorist depended on the time and your perspective. The political Zionist movement had grown up in the 1890s and managed to get the Balfour Declaration in 1917, which promised a “national home for the Jewish people” in what was then Ottoman-controlled Palestine. After WW2 there were many displaced Jews and the Zionists did terror raids against the British who had inherited control of Palestine. Famously, they bombed the King David Hotel, killing the British general there and destroying all the records of the Zionists terrorists that were stored there. The war-weary British, having nowhere else to put the Jewish refugees, gave up and let them go to Palestine in 1946, despite the objections of the Palestinians, who did not actually have their own government, having been a colony ceded from Turkey to Britain. The Zionists then organised, and ‘Declared the State of Israel’ in 1948, even though Jews were still only 36% of the population. The surrounding nations declared war on the new state and the UN did not recognise it, but they were well organised, bought some leftover tanks from Romania and repelled their attackers. They also killed some Palestinians causing many others (about 750,000) to flee. This was termed the Nakba in the Arab world and is considered ethnic cleansing and equivalent to the Holocaust. The Israeli government then declared that any unoccupied land belonged to the State and could be given to whomever the State wanted. Palestinian land title was not recognised and land was given for ‘settlements’ to Jews who came to Israel and who were willing to take this land and fight the Palestinians who might resist the loss of land that was formerly theirs. The Palestinians were then termed terrorists, and this nomenclature has persisted in Western political definitions and media ever since, as Israel has progressively taken over land formerly owned by Palestinians.

The Jewish lobby in Australia has been very pro-Zionist. After my speech in Hornsby, at which I said some of the above, I was approached by a person who still posts pro-Israel messages on my FB page. He told me that I was quite wrong, but did not elaborate why.

Some time later, a State by-election was held in Tamworth, a safe National party seat, (rendered even safer by optional preferential voting). A couple of rival local councillors stood as Independents, but without preferences flowing were unlikely to knock off the National. The Democrats had a local candidate, so it was an opportunity to get our name out, so we put her up. We discussed our ‘How to Vote’ card preferences and decided we would put the more favoured of the local rival counsellors, then the other Independents, then the National last. We decided to contact the other 3 independents to decide what order to put them in.

Our ‘How to Votes’ were not going to make much difference, the National was going to get in. We contacted 2 of the independents, but despite our best efforts could not find the third, so we gave up, put him second last and went ahead. The National got in, we got a few percent and the Independent in question got 7 votes.

I was then flabbergasted to see a headline in the Jewish Times, ‘Democrats Support Neo Nazis’. The uncontactable independent had apparently attended an Neo-Nazi rally in Melbourne 20 years before and had not been seen since, and we had put him ahead of the Nationals. But the Jewish lobby had kept track of him as well as my speeches and it was pay-back time.

Another example of their power was in 2003. Both the Sydney Peace Foundation and the Dept of Peace and Conflict studies at the University of Sydney advocated the BDS (Boycott, Divestment and Sanctions) campaign against Israel. The Sydney Peace Foundation awarded the Sydney Peace Prize to Hanan Ashrawi, a Palestinian who had worked for peace in Israel. The head of the Foundation, Prof Stuart Rees contacted all his sponsoring companies to tell them that he intended to do this to be sure that they did not pull their sponsorship. They all assured him it was up to him to award the prize, they would not interfere. When it was announced the Jewish lobby was very upset and said that he had to withdraw the prize and give it to someone else. Rees refused, saying that Foundation would have no credibility at all if he did this. Bob Carr, the Premier, awarded the Prize, but all the sponsoring companies left. Some apologised, some did not. When Rees stepped down, new Board members ended the BDS campaign. The Dept of Peace and Conflict Studies at Sydney University was degraded from a Department to a course within the Arts faculty after it also supported Palestine.

The Greens have been relatively pro-Palestine and ran a BDS campaign associated with the local Council elections in Marrickville. The Green candidate for mayor had done quite well and was tipped as quite likely to beat the Labor candidate. They had enough money for a billboard campaign. Zionists defaced all their posters. The vandal was caught, but had a clever lawyer who found some previously unnoticed problem with the billboard and got off on a technicality. Vandalism not terrorism? Labor won narrowly.

The IDF, Israeli ‘Defence Force’ has flattened Gaza to a demolition site and killed an estimated 49,000 Palestinans, and now have been attacking Palestinans on the West Bank. Most recently they are stopping food aid getting into Gaza because the Palestinans want a lasting peace, rather than just a ceasefire extension, which would give the Israeli hostages back, but without a guarantee that the one-sided fighting would not resume.

Hamas fighters are always referred to as Hamas militants; even on the ABC because the Americans have classified Hamas as a terrorist organisation and our government has followed. I wonder if our major political parties would have dared not to. Hamas is the legitimately elected government of Gaza because the Palestinian Authority was justly seen as corrupt and unwilling to stand up to Israel. It seems that the kickbacks from property development in Ramallah were too great a temptation.

Recently we have seen some examples to the Jewish lobby pulling Australian society into line:

Antoinette Lattouf was taken off the air by the ABC 2 days into a 5 day contract because she had done a pro-Palestinian social media post. It seems that there was a tsunami of complaints that went right to the top of the ABC within 2 days! I wonder who coordinated that? The case continues in Court- she will probably win her unjust dismissal case. (ABC News 27/2/25)

The artist selected by Creative Australia for the 2026 Venice Biennale, Khaled Sabsabi was dropped because he had made an artwork in 2006 about the Sept 11 attacks in New York and in 2007 a video about a Hezbollah leader. Artists like to think that they can make political statements as part of their work, rather than Art having a purely decorative function. It seems not. (ABC News 14/2/25)

The Australian Research Council (ARC) has suspended an $870,00 grant to pro-Palestinian academic, Randa Abdel-Fatteh, who was given the money for her study, ’Arab/Muslim Australian Social Movements since 1970’. She had made recent anti-Israel comments. No lesser person than Federal Arts Minister, Jason Clare, contacted the ARC. (SMH 1/2/25)

Two nurses, Ahmad Rashad Nadir and Sarah Abu Lebdehon were stood down and charged for allegedly ‘wanting to kill Israeli patients’. It is, of course, not at all in keeping with the medical tradition, which is to treat your enemies the same as you treat your own side. Their social media video came to light and was given publicity by an Israeli ‘social media influencer’, Max Veifer. (SBS News 26/2/25)

The National Gallery of Australia had a display of indigenous art and part of the display including suppressed indigenous peoples had a Palestinian flag. The Palestinian flag was covered after complaints. Some in the arts community were offended by this official censorship. (www.pedestrian.tv/news/nga-covers-palestinian-flags-in-artwork/).

You might ask who kept track of the Independent candidate for theTamworth by-election for 10 years and arranged the story about the Democrats, who pressured the companies to stop sponsoring the Sydney Peace Foundation, who made the phone calls to high places to complain about journalist Lattouf, artist Sabsabi and researcher Abdel-Fatteh, who found the social media post of the nurses and amplified it, and who complained about the Palestinian flag in an indigenous art exhibition at the National Gallery?

Clearly there is a lot of money and effort going into pressuring politicians and civil organisations that dare to take an anti-Israeli perspective, no matter how Israel behaves. There has been not a word from the Jewish establishment in Australia in favour of the Palestinians. Some of my Jewish friends who have urged reconciliation with the Palestinians have been quite outcast from mainstream Jewish society in Australia, and called names like ‘self-hating Jews’. Being a long way from the action, Australian Jewry seems to echo the most militant elements of Zionism, and are quick to play the ‘anti-semitism’ card with politicians, without acknowledging why anti-Israel sentiment might be rising. The Palestinian death toll in Gaza and now the West bank and the International Criminal Court talking of war crimes and genocide seems to make no difference. The Holocaust ended 80 years ago, the Nakba was 77 years ago, but has continued to a lesser extent until this Gaza war which is a real and ongoing problem. Australia’s politicians are very afraid of the Jewish lobby, and as in the US, it may be the case that no party can win without its support. One does not have to be a conspiracy theorist to see that systematic funded interference in the way Australia is governed is likely. Will I be safe after writing this piece? Is a fatal car accident more likely?

Australia’s neoliberalism, which seems determined to keep government interference to a minimum, makes us a relatively low taxing country. So there is not enough money for realistic welfare, unemployment benefits, Gonski’s plan for equality of educational opportunity, universal health care, or building public housing. Yet we subsidise negative gearing for middle class property speculators, private health insurance and private education for those who can afford it, in the land of the supposed ‘fair go for all’. We give tax breaks to religious institutions. Jewish schools raise the Israeli flag and sing the national anthem of Israel. I wonder how a Muslim school would fare if it raised a Palestinian flag? Is there a Palestinian national anthem?

The reason I make the point about our welfare system is because Australia managed to absorb huge numbers of post WW2 migrants because everyone had a job and housing, and nearly all the children went to public schools and had similar early life experiences. There were no anti discrimination laws or commissioners but minimal problems. This assimilation was not merely because we are all nice people and have a nice climate. Social policies promoted inclusion. We have now moved away from inclusive policies to ones that cheerfully tolerate disadvantage and the segregation of society into advantaged and disadvantaged groups, which are likely to be divided by race and religion as well as by economic factors.

There is increasing ghettoisation in western Sydney and pro-Islamic groups are looking at standing Federal election candidates to counteract what they see as pro-Israeli views in the Australian political system. There seems that there is a lot more concern about anti-Semitism than Islamophobia, though this is rising similarly.

It is all very well to pass anti-hate laws and ban Nazi salutes to control extremist political rallies, but to get a harmonious egalitarian society we need to stop subsidising things that divide us, and start paying for things that will lessen division and give equal opportunities for all in a secular society.

27/01/2025

NDIS and Health System in Crisis- what is the answer?

27 January 2025

The health system has been in crisis for years and now NDIS is the same.
State and Federal governments are locked in crisis talks, and now the NDIS is over budget and looking to ‘transfer services’ to other parts of the health system.
Why does all this go on, and what is the solution?
The short answer is that there are many sources of health funding and the main policy objective of all of them is to transfer the cost to someone else, and if they are a private source, to maximise the profit.
This ‘transfer costs’ imperative means that no one is concerned about the overall cost, merely their bit of it.
The major players are still the State and Federal government. In simple terms the States look after the hospitals and the Federal government looks after non-hospital services.
Medicare is being starved and pays less and less to doctors relative to inflation. The private health funds pay what they have to, the CTP (Motor Accidents) and Workers comp systems are either private or use a private model and pay as little as they can get away with and the patient pays the gap, unless they decide that private health insurance is not worth the money, which in most cases is true, and get a bit of Medicare and pay the rest.

Examples of cost shifting are easy to find. The Federal government has let Medicare rebates to GP fall to 46% of the AMA fee. It was 85% when Medicare started, so many doctors simply don’t bulk bill and charge a fee. So people go to the Emergency Departments that are free, but funded by the States. A visit to the ED is 6x more expensive than a GP visit, but the Federal government has shifted the cost to the States, so they don’t care. When you go to the ED and get a script, the hospital used to give you all the drug course. Now they give you a few tablets and a script for a pharmacy outside. The script was needless, and generates the costs of the trip to the pharmacy, the pharmacists fee, the PBS Federal government contribution and the patients script fee. A lot of wasted time and money, but the State saved a bit. When you went to the ED, you used to be followed up in a hospital outpatient clinic where the consultant was paid a sessional fee and oversaw registrars checking the cases and learning. You could also just book and go to a specialist clinic. These have largely been stopped to save the State money. Now you go to the specialists’ rooms and the State saves money, but the total cost per visit is much more.

If you look at the overall efficiency of health systems, Medicare as a universal system has overheads of about 5% counting the cost of collecting tax generally. Private health insurance overheads in Australia are about 12%, Workers comp 30% and CTP over 40%. These figures are approximate and very hard to get, because the dogma is that competition drives down prices, when clearly the system is more efficient if there is a single paying entity. Interestingly, the Productivity Commission made no attempt to quantify these overheads when it looked at the cost of the health system- you may ask why. The point is if you take out profits, which are the same as overheads from the patients’ point of view, and make everyone eligible, you do not have to have armies of insurance doctors, investigators, lawyers and tribunals to see if the insurer has to pay or if it can be dumped on Medicare and the patient.
As far as foreign people using the system are concerned, universal Medicare for people living in Australia is administratively simple, and the cost of treating tourists who have accidents is cheaper than policing the whole system. Enforcement has quite high costs.

In terms of the cost of insurance, US schemes vary from 12-35%R, with the high costs ones being most profitable as they police payouts more thoroughly and naturally refuse more treatments. Note that the CEO of Unitedhealthcare in the US was recently shot, with the words ‘deny’ and ‘delay’ on the cartridges used. Surveys have shown that 36% of people in the US have had a claim denied. Claims are accepted here, but in a survey of my patients 60% of my scans and referrals of CTP patients were denied by NRMA. i.e, We accept the claim, but deny the treatment.

What Is needed is a universal system, free at the point of delivery.
What about over-servicing? The current system makes trivial problems of people with money more important than major problems of people without money. Underservicing is the major problem with ambulance ramping at EDs and long waiting lists.
In a universal system, which doctor is doing what is immediately accessible, with comparisons to every other doctor doing similar work. It is just a matter of checking up on the statistical outliers.

The problem is simple. The major political parties are given donations by private health interests to let Medicare die. Combine this with the Federal/State rivalry that makes cooperation very difficult and a reluctance to collect tax and you have the recipe for an ongoing mess.

The NDIS is an even bigger mess. It is a privatised unsupervised welfare system that arbitrarily gives out money and is subject to massive rorting.

The welfare system that looked after people with disabilities, both congenital and acquired by age or circumstance had grown up historically in institutions that were fossilised in their activities and underfunded to prevent expansion or innovation. People with disabled children looked after them with whatever support they could find. As these disabled cohorts reached middle age, their parents, who were old, were worried about what would happen when they died and wanted to lock in funding for their adult children before they died. They were an articulate lobby group with real problems and were quick to point out the flaws in the existing systems. They visited institutions that had no vacancies and thought that they had put their names on waiting lists. But no central list existed, and the institutions tended to give their beds to whoever came first when a death created a vacancy. ‘Just give us a package, and we will decide how to spend it’ was the parents’ cry. But then NDIS experts came in and interviewed people and gave away ‘packages’ based on an interview. A new layer of experts was created. District nurses or others who might have been able to think of more innovative or flexible options, or who could judge who in their area needed more than someone else had no input. People with real disabilities were given money, but did not know how to assess providers, so dodgy operators snapped up the packages, delivering dubious benefits. The government had no serious regulation or control system. Now the cost of NDIS has blown out, so the solution is to narrow eligibility and force people off the NDIS and onto other parts of the health system. Sound familiar? People with disabilities and their relatives are naturally worried; and rightly so. The lack of these services was why the NDIS was created. The answer is to have universal services. Set a standard, make it available and police quality in the system. Private interests may have a place, but there is no need for profits, non-profit organisations have been the mainstay of providers for years. For profit providers tend to cut costs, which in practical terms means either services or wages or both to concentrate on shareholder returns. The best way to allocate resources optimally is to empower the people actually doing the job, who also have the advantage of being able to see relative needs as they go about their routine work.

An interesting tome on the subject is ‘The Political Economy of Health Care’ by Julian Tudor-Hart, which looked at the changes in the British National Health System from when it started as an idealist post-war initiative run by those working in it with management overheads of about 0.5%, to when it was fully bureaucratised with overheads of about 36%. He was also responsible for the ‘’Inverse care law’ which is the principle that the availability of good medical or social care tends to vary inversely with the need of the population served. This inverse care law operates more completely where medical care is most exposed to market forces, and less so where such exposure is reduced.

The key point of that people have been taught that governments are hopeless and that you should pay as little tax as possible, so instead of good universal services being developed, a market has developed which is on its way to an American system.. People all agree that the US has the worst system in the developed world at delivering health care. But they overlook the fact that the US health system is the world’s best at turning sickness into money. That is what it was designed to do and that is why it is sustained and maintained. The same drivers are all here.

Note the Federal/State bickering in the article below (and weep).

My recipe for change is to have a Swiss style of government where the people can initiate binding referenda on governments and could simply answer a question like ‘Do you want to pay 5% more tax to have a universal health and welfare system?’ If a question like this got up against the doomsayers, we might have a chance. But of course the change to the constitution to get the referenda in the Swiss model is almost impossible to achieve, the Swiss having been discarded when the Australian Constitution was written in about 1900.

www.thesaturdaypaper.com.au/news/politics/2025/01/25/exclusive-albanese-shut-down-hospital-talks-pressure-states?utm_campaign=SharedArticle&utm_source=share&utm_medium=link&utm_term=VT5jI6Zo&token=Z3cA3Py

15/12/2024

Banks Charging $3 a withdrawal- the logical end of capitalist thinking?

11 December 2024
Once upon a time banks functioned to store your money safely giving you some interest for the use of it or lending it to you for a bit more interest.
Then the government made a quick buck by selling the bank to people who had the money to buy shares.
Then the concentration of wealth changed so that most of the money was held by fewer people. And technology changed and the people with the most money used the new higher tech ways of banking.
And then there was less profit in the little people.
And the accounting changed, the CEO salaries went from several tens of multiples of the normal people’s salaries to hundreds of times. But they had to show results to the shareholders to justify this.
So they closed most of the branches and replaced them by Automatic Teller Machines to save all those rents and staff salaries.
And they decided that even to stock the ATMs was too expensive so they put fees on them to use them, but they got criticised for that, so they lessened the number of ATMs, which saved even more.
A few people actually still wanted to go to the few branches left and wait until they could get to the reduced service, but the accountants said that the return on capital to the shareholders from this aspect of operations was not as much as the returns on internet transactions. Clearly the shareholders wanted ‘user pays’ in every aspect of the business so the banks decided to make these little folk pay a fee to get their own money, as had been so successful with the ATMs.
And no one even commented that the function of banks was to provide a service of looking after people’s money, the question was really how to ensure that the shareholders’ returns could be maintained.
And they all lived happily ever after.
THE END

31/10/2024

Why Trump May Win

31 October 2024

The situation is the logical consequence of turning the world into a ‘market’. This was always favoured by big business, but it got turbocharged by the idea that competition for markets caused the two World Wars. Thus the object of world political policy was to turn the world into a market, so that the rich could get richer without wars over markets and virtue would be rewarded.

The US had a huge percentage of world markets and a huge say over it all- what could possibly go wrong?

In a hierarchical system, those at the top set the prices and the wages, whereas those at the bottom are in a perfect market of labour, so take whatever prices and wages they can get. Money therefore movies upwards as in a Monopoly game.

The whole situation was turbocharged by a number of factors. As trade became cheaper, goods travelled and workers competed with workers from other countries, so workers in more developed countries were not able to compete on price and the owners of capital moved their industries to cheaper countries, which gave these countries something of a leg-up, but most of the profit went to the owners of capital. Technology also advanced, so fewer workers were needed to produce anything- mechanisation was here. We could produce much more than we could ever consume. Business developed built-in obsolescence, so goods would wear out or become unfashionable, so they needed to be bought again. Marketing became immensely significant, so we were no longer to consider what we needed, but what we wanted.

Increasingly most of the goods being manufactured needed to be sold, but did not need to be bought. Western consumers were actually in the box seat with all their needs met, so needed to be persuaded to consume for status or whim. Marketing was largely up to the challenge. As Dave Ramsay famously put it, ‘We buy things we don’t need with money we don’t have to impress people we don’t like’.

Meanwhile the gap between rich and poor continued to grow between countries and within countries, a general recipe for social and international malaise. The residue of colonialism remains. Nigeria is oil rich, yet its resources are foreign-owned and its main employment industry is scamming. South America has had its governments frequently act on behalf of foreign companies. The result of the problem is seen as ‘illegal migration.’

So just as the inexplicable ‘Brexit’ vote was a longing for an earlier time and a rejection of the Establishment and the status quo, so Trump is seen as a disruptor. He wil tell them all to ‘get fu..ed’ That is enough. He speaks to the pain of rust belt Americans who saw their jobs in steel, cars or manufacturing disappearing through no fault of their own and their standard of living falling. He is a demagogue who tells them what they want to hear. The migrants caused the drug problem, and every other problem. If it is not consistent or even coherent, it does not matter; they listen to the shock jock. Again, technology is relevant. Policy is no longer broadcast, it is selectively narrowcast with truth an early casualty. Trump ads tell Jewish voters that Harris is pro-Palestine while other Trump ads tell Muslim voters that she is pro-Israel. Whatever it takes. The country is very polarised and there is even talk of civil war. Marx believed that revolution would happen in an advanced capitalist system because the logical end point of unfettered capitalism was that a few people would end up with all the money and the majority would be unhappy. (We had better not mention who said this).

The American voting system is as bad as its health and welfare systems. The politicians set the electoral boundaries in a huge gerrymander, and the electoral college gives each state the same voting rights, whether they have large or small populations. The Constitution is fossilised, with 36 Tasmanias, states that are declining relatively or cannot pay their way. These are the States that will determine the election.

The polls are neck and neck in these ‘swing states’, but the betting favours Trump, and the betting has been generally more correct than the polls. A financial friend of mine told me that the bond market is behaving in anticipation of a Trump victory.

Things are not always pleasant, but there is usually an explanation.

20/04/2024

Cheaper EVs?

20 April 2024

Here is an article praising China’s Electric Vehicle industry and noting that Apple gave up trying to do EVs and China has successfully taken up the slack.

It also boasts that Chinese EV technology is excellent and that they have not lowered prices, and it warns that trade tariffs to stop Chinese exports will be counterproductive.

More conventional views are that China has a glut of EVs and a coming economic crisis due to their property bubble.

Australia has no tariffs on EVs and is currently paying too much for them. Despite the tone of this article, China must want to dump EVs somewhere.

I am still not sure that EVs are good for the environment in that the carbon footprint from mining and processing their components is much greater than the simpler components of internal combustion engines, and the factories that manufacture them are mainly powered by coal-generated power. It takes many km of petrol saved to overcome this initial deficit. Hopefully this situation will gradually improve in time, but in the shorter term, will Chinese EVs be cheaper here?

What does China’s electric vehicle rise mean for the global market?

17/03/2024

The Australia Card and Data

16 March 2024

The Australia Card debate, which was from 1985-7 was whether we should all carry a card that would link all the information about us.

I was in favour of it because my concerns at that time in occupational health and safety was as to whether exposure to various workplace chemicals had an adverse effect on health.

The best data came from Sweden, where people’s occupation was on a database and their mortalities could be compared. Nowhere else had comparable data.

It seemed to me that the data was going to be collected inevitably and we should have a debate then and there as to who would collect it and what could be done with it.

I was in the Australian Democrats, who were usually quite sensible and given to rational argument, but the view was that people would be safer if the data was not collected at all so they opposed the card and the naysayers won the day in the Party and the nation.

The Credit Reference Association was already collecting data about unpaid bills and there was a debate as to whether the subject of the data, (who was usually only alerted to its existence when they could not get a loan), could have access to their own record to respond with reasons for whatever was on it.

Naturally financial data was of use to the tax office and now buying habits, web-search histories and emails result in changes to the feed of ads on social media.

Now that financial data is collected, the discussion can move on to more socially helpful data. Apparently Facebook can announce a flu epidemic earlier than the public register of viral tests or hospital admissions just from reading the frequency of the words ‘flu or sick’ on the posts.

In life I have progressed from dealing with acute diseases in heroic medicine and intensive care settings to looking at how to do prevention. Prevention is always the poor cousin, because if you spend money on it is hard to show results in the short time frame that accountants and politicians want.

As I moved from medicine to social policy and tried to advocate for ‘preventive social policy’ the situation became even more difficult, despite the well known fact that increasingly social disadvantage gives rise to poorer health outcomes. This is acknowledged with lip service, but the late-stage capitalist growth in inequality powers on regardless.

In 2001 as a NSW MLC I initiated an inquiry into DoCS (Dept of Community Services), which was then called FACS (Family and Community Services), and is now called DCJ (Dept of Communities and Justice). My inquiry showed that the Dept was dysfunctional, which we knew already, and the changes since have not helped much. Initially the problem was that they wanted to concentrate on the children most at risk, which meant still minimal supportive prevention for cases that were not at risk yet. Then the Department became even more defensive and privatised cases, so the kids became a commodity with NGO and ‘for profit’ corporations getting packages to look after kids with problems and then giving them to carer families for about a third of the money that they were given. ‘Management’, it seems, is a very expensive and lucrative business.

Obviously looking after kids whose parents are dysfunctional is a very difficult undertaking. Does one take the child and give it a good foster care family? What is a good foster care family? How much do you support dysfunctional parents? Are the grandparents, who presumably brought up the dysfunctional parents a good bet? Who makes the decision and what appeal mechanisms are there? Presumably all this is rendered ever more difficult by the fact that the gap between rich and poor is rising, there is no longer anywhere near enough public housing, and welfare payments are not really enough to live on.

It seems that the best way to see what policy works is to follow the kids in a lifetime study and see how they turn out. The criticism is that the OOHC (Out of Home Care) system has a hugely higher percentage of kids graduating to juvenile justice and then adult prisons. But data is hard to get as the Department, despite its numerous renamings, will not release the information as it is politically embarrassing. Naturally the privacy of the children is cited, but the data could easily be de-identified as much epidemiological data is.

We need to get data to make better decisions, ones based on facts as far as possible, with transparent assessment procedures with honest assessments of what is happening and a minimum of political or bureaucratic interference. With ‘issues management’ aka PR BS getting more sophisticated all the time, it will be an increasing struggle. The Aust Bureau of Statistics, which tries to produce facts, but can only work with the data it is given and presumably cannot be political in trying to get better data, was significantly defunded by Tony Abbott as part of his war on facts. Meanwhile the private sector hoovers up personal data and a few diehards try to keep using cash.

Ross Gittins, the SMH Economic Editor who generally writes good commonsense in a digestible form and has recently been recognised for his good work, has penned the article below in today’s SMH.

Australia Card anyone?

How the digital world is getting better at measuring us up

Ross Gittins, Economics Editor

SMH March 15, 2024

These days we hear incessantly about “data”. The media is full of reports of new data about this or that, and there’s a new and growing occupation of data analysts and even data scientists. So, what is data, where does it come from, what are people doing with it, and why should I care?

Google “data” and you find it’s “facts and statistics collected together for reference or analysis”. The advent of computers has allowed businesses and governments to record, calculate, play with and store huge amounts of data.

Businesses have data about what goods and services they’re making, buying and selling, importing or exporting, and paying their workers, going back for 30 or 40 years.

Our banks have data about what we earn and what we spend it on, especially when we use a credit or debit card – or our phone – to pay for something.

Much of this data is required to be supplied to government agencies. If you ever go onto the Australia Taxation Office’s website to do your annual tax return, it will offer to “pre-fill” your return with stuff it already knows about your income from wages, bank interest and dividends.

Try it sometime. You’ll be amazed by how much the taxman knows and how accurate his data are.

Another dimension of the “information revolution” is how advances in international telecommunications – including via satellites – have allowed us to be in touch with people and institutions around the world in real-time via email and the web – news, entertainment, social media, whatever.

Last month, the Australian Statistician – aka the boss of the Australian Bureau of Statistics – Dr David Gruen, gave a speech outlining some of the ways these huge banks of “big data” about the economic activities of the nation’s businesses, workers, consumers and governments can be used to improve the way we measure the economy in all its aspects: employment, inflation, gross domestic product and the rest.

We’re getting more information and more accurate information, and we’re getting it much sooner than we used to. But we’re still in the early days of exploiting this opportunity to be better informed about what’s happening in the economy and to have better information to guide the government’s decisions about its policies to improve the economy’s performance.

Gruen starts by describing the Tax Office’s “single-touch” payroll system, software that automatically receives information about employees’ payments every time an employer runs its payroll program.

Not all employers have the software, but those who do account for more than 10 million of our 14 million employees.

Gruen says the arrival of the pandemic in early 2020 made access to this “rich vein of near real-time information” an urgent priority. The taxman pulled out the stops, and the stats bureau began receiving these data in early April 2020.

With a virus spreading through the land and governments ordering lockdowns and border closures, they couldn’t afford to wait a month or more to find out what was happening in the economy. Thus, the whole project of using big data to help measure the economy received an enormous kick along – here and in all the other rich economies.

So, in addition to the longstanding monthly sample survey of the labour force, we now have a new publication: Weekly Payroll Jobs and Wages Australia. These data allowed the “econocrats”—and the rest of us—to chart the dramatic collapse in jobs across the economy over the three weeks from mid-March 2020.

They show employment in the accommodation and food services industry falling by more than a quarter in just three weeks. Employment in the arts and recreation services industry fell by almost 20 per cent. By contrast, falls in utilities and education and training were minor.

The monthly labour force survey has a sample size of about 50,000 people, compared with the payroll program’s 10 million-plus people, meaning it provides information on far more dimensions of the workforce than the old way does.

So, the bureau’s access to payroll data taught it new ways of doing things. And the pandemic increased econocrats’ appetite for more info about the economy that was available in real-time.

With household consumption – consumer spending – accounting for about half of gross domestic product, improving the timeliness and detail of the data was a great idea.

So, in February 2022, the bureau released the first monthly household spending indicator using (note this) aggregated and de-identified data on credit and debit card transactions supplied by the major banks. This indicator provides two-thirds coverage of household consumption, compared with the less than one-third coverage provided by the usual survey of retail trade.

The bureau has also begun publishing a monthly consumer price index in addition to the usual quarterly index. This is possible because big data – in the form of data from scanners at checkout counters and data scraped from the websites of supermarket chains – is much cheaper to gather than the old way.

The bureau has also started integrating different but related sets of big data from several sources, so analysts can study the behaviour of individual consumers or businesses. It has developed two large integrated data assets.

The one for individuals links families and households with data sets on income and taxation, social support, education, health, migrants and disability.

The one for businesses links them with a host of surveys of aspects of business activity, income and taxation, overseas trade, intellectual property and insolvency.

The purpose is to allow analysts from government departments, universities or think tanks to shed light on policy problems from multiple dimensions.

For instance, one study showed that people over 65 who’d had their third COVID vaccination within the previous three months were 93 per cent less likely to die from the virus than an unvaccinated person. But that’s just the tiniest example of what we’ll be able to find out.

07/12/2023

Hospital Crisis is just part of the story.

6 November 2023

The hospital crisis is partly because General Practice has been so downgraded that more cases go to hospital than need to. The Federal government starving Medicare has a number of consequences:
Many GPs are simply retiring and there are no enough new ones taking their place, so we are getting towards a serious shortage
GPs cannot survive on the Medicare rebate, so now charge a co-payment.
Since Emergency departments are free, people wait until the situation gets worse then go there.
Emergency Depts are about 6 times the cost of GP visits, so the total cost of the Health Care system rises.
The other part of the Federal government starving Medicare is that the State governments pay for the emergency departments, so it is a case of the Federal government saving money by making it a lot more difficult for the States.
But an overriding fact is that Australia has been convinced by the neo-liberals that tax is a bad thing and government spending must be a small percentage of GDP. Currently this is about 38.4% of GDP, slightly less than the USA, which has very poor welfare and health systems. This means that the governments cannot actually afford to do anything, and behave like a corporation, cutting employee wages and making cuts wherever it thinks no one will notice, or it has the power to do so. Now if Labor ever tries to raise taxes, the Liberals, who are great exponents of small government accuse Labor of being ‘tax and spend’, and Labor, rather than have a serious debate merely retreats. The fact that he Scandinavian countries have government as close to half of GDP and have their citizens much better off never gets mentioned. Denmark is at 49.9%, Germany 49%, Finland 54% and France at 54%. The UK is at 45%.
We now have a failing GP sector, a problem in aged care, a shortage of nurses, paramedics on strike, a hollowed out public service that merely awards its former tasks to private sector operators that it cannot even monitor and Australia falling down the World educational standards table is not a coincidence. The governments have a virtual monopoly of these jobs. They have deliberately let wages fall, so that now people simply will not do them.
We need to stop privatising, rebuild that public sector so that it can deliver services that we need. Profit is merely another unnecessary overhead. We need to decide what needs to be done, and raise enough tax to pay the people to stay in their public service jobs. Education, health and aged care do not need a ‘market’ to function/. If one exists for comparison purposes, that is fine, but there is no actual virtue in having most of the services delivered by corporations that have the choice of good service or good profits. It is a con, and it is time we forced the government to give us Medicare and a health system that actually works for all, and education for all.
Here is a letter from my Medical partner in today’s Sydney Morning Herald.

The horror stories now emerging about overloaded public hospitals, ambulances and emergency departments comes as no surprise to anyone following the downgrading of Medicare to a ‘‘mixed billing’’ system. This has made it unaffordable for many people to see a GP. But the real cost of turning Medicare into a two-tier system has been to the public hospital system. The only winners are private corporations, private hospitals, private health insurance funds and their many lobbyists in Canberra. We are going the way of the US, and if people don’t fight for Medicare, we are all doomed.
Con Costa, Hurlstone Park:

Here is today’s Herald Editorial

Health system needs its own emergency care
The state of health of the health system has dominated the lives of Australians for four years, but it has never been in such need of urgent care. Indicative of how working conditions for frontline healthcare workers have deteriorated, people now spend a median of three hours and 36 minutes in NSW hospital emergency departments, the longest wait ever. It’s little wonder that health workers are suffering burnout, stress and bullying and are leaving the industry in record numbers.
The COVID-19 pandemic sharpened awareness of our vulnerabilities and forced extra spending on hospitals, clinical responses, vaccinations and prevention measures.
And when we emerged from the pandemic’s worst days it became evident the health system too was experiencing difficulty recovering from years of stress. It had been deteriorating for a long time already, but post-pandemic we became uncomfortably aware that ambulances were queueing for hours to offload emergency patients and hospitals were under enormous pressure with lengthy wait times in emergency and admission.
GPs bumped up fees, forcing people who could not afford the $11-a-visit hike into hospital emergency departments. The industry is being further destabilised by the exodus of 6500 nurses and midwives a year.
If anything, the situation is worse outside the big cities. Last year, for instance, five deaths in regional hospitals could potentially have been prevented, but not in an overworked hospital system with staff shortages that make mistakes even more likely. The NSW parliament’s health portfolio committee report on rural, regional and remote health 18 months ago found a ‘‘culture of fear’’ which did not encourage or value feedback and complaints. Some workers say they were even punished for making complaints.
Now an investigation by the Herald has revealed a health system sinking further into crisis. Eight nurses and midwives have taken their lives in the past three years, while nearly 2000 NSW Health workers have lodged compensation claims for psychological injuries over the past two years. More than 33,500 NSW Health employees have also claimed they are burnt out, while 21,000 workers say they have witnessed bullying in the workplace. One in 12 ambulance employees hold a compensation claim for a psychological injury.
Experts and unions warn that the data, drawn from documents obtained exclusively under freedom of information laws and the state government’s recently released annual employee survey, People Matter, shows a workplace struggling with staff mental health concerns.
Further illustrating the stress, NSW Ambulance fielded a record 363,251 calls and fired up the lights and sirens for more than 181,000 emergency call-outs between July and September, the most of any three-month period since the Bureau of Health Information began taking records in 2010.
Money seems to be the root cause of health’s problems. Today’s national cabinet meeting will address the rampant cost blowouts in the NDIS and Canberra wants the states to take responsibility for funding treatments. On Friday, Premier Chris Minns and Treasurer Daniel Mookhey meet the Health Services Union over a protracted pay dispute threatening to collapse the NSW triple zero call system on New Year’s Eve. Minns said the money is not available.
The future funding and structure of our health systems concerns us all. It is an area where the federal and state governments share responsibility. The solution to the healthcare crisis is complex and will take time, but it is an area where increased funding must be found.
That clearly calls for a better national approach and the states responding with an end to parochial wheelbarrowpushing and finger-pointing.

31/03/2023

The Arms Industry Distorts US and the World’s Priorities

31 March 2023

The word ‘defence’ seems innocuous enough, and discussion about is generally starts with a diatribe about the threat of Russia or China.

But just as the tobacco industry was responsible for the smoking epidemic, so the Arms industry is responsible for military spending and the consequent need to have wars to justify that expenditure.

The US has had continuous wars for many years; when one ends, another starts. The wars are not because of a threat to the US, but represent the US exerting global influence, and selling weapons to itself and others.

US foreign policy is hugely affected by its military and a perceived need for global hegemony. There is pressure on countries that seem susceptible (like Australia) to buy weapons systems (like AUKUS) to fit into this hegemonic world view. How long this can be afforded by US taxpayers is a key question; the Roman Empire imploded when its tax base could not pay for the mercenary armies that guarded its frontiers.

A list of some of the wars is; The Cold War 1945-1989, Korean War 1950-55, Vietnam 1955-75, Lebanon 1982-84, Libya 1986, Panama invasion 1989-90, 1^st Gulf War 1990-91, Somalia 1992-95 and 2007, Bosnia and Croatia 1992-95, Kosovo 1998-99, Iraq War 2003-2010, Afghan war 2001-2021, North West Pakistan 2004-2018, Libya 2011 and 2015-19, Iraq intervention against ISIL 2014-2021, and now Ukraine 2022-.

Obviously one can argue about the merits of any of these wars, but the success rate of them is not good from a US foreign policy perspective. The returns to the arms industry, however, are always positive.

But the opportunity cost of these wars in terms of the possibility of diplomatic settlement or the use of monies to address the problems in the warring parties is considerable. The loss of social services and infrastructure to the US population is probably the most critical part from a political level. Inequality and polarisation in the US are increasing with consequent social disharmony.

The arms industry has to be reined in. Its subsidies to the Australian War Memorial have tended to make this a temple of militarism rather than a place for regret and remembrance.

There was a book, ‘The Secret State- Australia’s Spy Industry’, by Richard Hall which came out in 1978 and compared the reports of the intelligence agencies of 25 years previously with the current affairs commentaries of the major daily newspapers of the same time. (The 25 years was the time for the release of the spy agency documents). The rants of the intelligence agencies and their fear-mongering were almost comic and the predictions of the major newspaper editorials were largely proved correct.

It seems that as ‘Security studies’ replace ‘History ‘ in university courses likely to result in graduates getting jobs, the people who teach world events are changing their perspectives, and not for the better. Our current policies with AUKUS would seem to derive from a believing a current spy’s paranoid world view. The Arms Industry is to be feared and opposed in Australia as well as the US.

Congress Has Been Captured by the Arms Industry

18/12/2022

Trust – a letter to Ross Gittins, who wrote the below article on Trust

18 December 2022

Dear Ross,

I congratulate you on your article on ‘Trust’. It is the glue that holds society together, and when it is broken there are huge consequences.

Since the first plane hijacking in 1970 checking people onto planes is a growth industry. Years ago you could walk into any office building, take the lift to the top floor and ask the General Manager’s secretary if you could speak to (almost always) him. Now everyone carries tags even to get in the front door or the lift. This may all be related to inequality or only mostly.

But it is also the rise of the manager. The best expose of this I have read is ‘The Political Economy of Health’ by Julian Tudor-Hart. He follows the British NHS from its founding till 1998. At first it was a noble experiment with all those in it paid adequately and trying to give health for all as well as they could. The whole thing was self-governing, and everyone was trusted to procure things as cheaply as possible and look after each other and the patients. Then managers came and asked ‘What is the cost of a day in hospital?’ or’ What is the cost of an X-Ray?’ Some said that it was unwise to ask this, as keeping records that detailed would simply add to costs, which everyone was reasonably sure were as low as possible already. Hart details successive management demands and consequent cost increases until the cost of management became about 35% of the total, without any apparent improvement in the service.

Managers do not trust people to do their jobs, so they insist on KPIs, which then become more important than the job itself, distort the tasks done and kill any initiative that might have been used by the staff. Since the task are all defined to be as simple as possible the staff are de-skilled or not allowed to use any initiative and the managers award themselves a pay rise, so the gap between the lowest and highest paid reaches its current obsene level.

We now have a situation where most people work down to their station rather than up to their ability. We have a huge workforce in security and no one is allowed to use their own initiative beyond their management defined protocols as they pour time into producing KPIs so that they can be checked up on. Management has created immense overheads, even on top of their own inflated salaries. And no one can figure out why productivity growth is stalled! More trust is one solution. I can think of others.

2022: The year our trust was abused to breaking point

Ross Gittins Economics Editor SMH

December 14, 2022

As the summer break draws near, many will be glad to see the back of 2022. But there’s something important to be remembered about this year before we bid it good riddance. Much more than most years, it’s reminded us of something we know, but keep forgetting: the central importance of trust – and the consternation when we discover it’s been abused.

Every aspect of our lives depends on trust. Spouses must be able to trust each other. Children need parents they can trust and, when the children become teenagers, parents need to be able to trust them. Friendships rely on mutual trust.

Trust is just as important to the smooth functioning of the economy. Bosses need to be able to trust their workers; workers need bosses they can trust. The banking system runs on trust because the banks lend out the money we deposit with them; should all the depositors demand their money back at the same time, the bank risks collapse.

Just buying stuff in a shop involves trust that you won’t be taken down. Buying stuff on the internet requires much more trust. Tradies call on our trust when they demand payment before they start the job.

Our democracy runs on trust. We trust the leaders we elect to act in our best interests, not their own. Our country’s co-operation with other countries rests on trust. Of late, our relations with China, our major trading partner, have become mutually distrustful.

The trouble with trust, however, is that it can make us susceptible. And, as Melbourne University’s Tony Ward reminds us, it can be just too tempting to the less scrupulous to take advantage of our trusting nature.

They can get away with a lot before we wake up. But when we do, there are serious repercussions. Much worse, the loss of trust – some of it warranted; much of it not – makes our lives run a lot less smoothly.

The truth is that, as a nation, we’ve slowly become less trusting of those around us. But this year is notable for events where trust – or the lack of it – was central.

It’s widely agreed that the main reason the federal Coalition government was tossed out in May was the unpopularity of Scott Morrison. The Australian National University’s Australian Election Study has found that the two most important factors influencing political leaders’ popularity are perceived honesty and trustworthiness.

Its polling showed Morrison 29 percentage points behind Anthony Albanese on honesty, and 28 points behind on trustworthiness.

By contrast, many were expecting Daniel Andrews to be punished at the recent Victorian election for the harsh measures he insisted on during the pandemic. It didn’t happen. We don’t have fancy studies to prove it, but my guess is he retained the trust of the majority of voters.

The ANU study always asks questions about trust in government. This year it found 70 per cent of respondents agreeing that “people in government look after themselves” and only 30 per cent agreeing that “people in government can be trusted to do the right thing”.

This helps explain why the federal election was no triumph for Labor. The combined primary vote for the major parties fell to 68 per cent, the lowest since the 1930s. Labor’s own election report explains this as “part of a long-term trend driven by declining trust in government, politics and politicians”.

Related Article

Jessica Irvine

Senior economics writer SMH

Ward reminds us of the benefits of a high level of trust. It reduces “transaction costs” – the cost of doing business. “Profits and investments are higher if you don’t have to spend lots of time and money checking whether other parties are honest or not,” he says.

“People invest more in their own education if they believe a fair system will reward their efforts. If you think the system is rigged, why bother?”

Comparing countries, economists have found strong links between more social trust and higher levels of income. Trust is one of the top determinants of long-term economic growth.

And high-trust societies, with less distrust of science, had better outcomes in tackling COVID. That’s one respect in which we didn’t do too badly this year.

19/11/2022

The Myth of Liberal Competence-1

19 November 2022

One of the enduring myths of politics is that conservatives are better money managers. This is the case in the US, where the Republicans, who enthusiastically dismantle government programs that help poor people and the UK Conservatries who do the same. And it is the case here with the Liberals.

Perhaps the logic is that since they are rich, they must be better with money. But I wonder at the influence of Christianity. The key message is that you must suffer to be redeemed. Suffering is worthy and will later be rewarded. This seems to play into notions that the country will benefit if we all suffer now, ‘we’ in this case being those more dependent on welfare, or those at the bottom of the heap.

The other overarching fact in a market economy the more wealthy people can set the prices, which effectively means they set their incomes. At the bottom of the social pyramid, those at the bottom compete for the jobs and wages set by others. In short, the rich get richer and the poor get poorer. The game ‘Monopoly’ was designed to illustrate this. People play Monopoly, and when they win or lose, they stop the game and go on with life. But what is the game were real and never ended? The losers would get poorer and poorer until they had nothing else to give. That arguably is what a market economy will do without some intervention from an outside force, like a government, to intervene in the cause of those going backward.

Arguably the world’s leading economist is Thomas Piketty. He is a Frenchman who, as he rose, was offered a post in Harvard. He did not take it, opining that economics in the US was theoretical and not based on hard data, as a science should be. Records of national income and death duties going back for 400 years in 4 countries had been put together and he analysed it. His book, ‘Capitalism in the 21^st Century’ is a towering work. It is long, but it is very well-structured with concise conclusions at the beginning and the proof in the later chapters for those who want to read more. He observed that the wages of the population go up at the inflation rate, and the income of the rich who loaned money go up at the interest rate, but the interest rate was always higher than the inflation rate, otherwise there would be no profit in lending. So the income of the rich would always go up faster than the rest of the population, so social inequality would increase in the absence of other interference.

It has always been known that money goes round, and to stimulate the economy people have to spend more. But Piketty points out that poor people spend a greater percentage of their money than rich people. Very poor people spend all the money they have, rich people save about a third. So if you want to stimulate an economy, you should give money to poor people. This is of course not what conservative governments do. They give money to infrastructure, which these days means big private contractors or have industry assistance packages. But these initiatives are giving money to the rich, on the assumption that it will generate more jobs in the long term than the extra consumption would have generated.

(You might ask why Piketty has not got a Nobel Prize for being the first economist to use real data over centuries and come to such a profound conclusion. If you did ask that you might wonder if the Nobel prize economics committee are all neo-liberal economists and you might be right).

The point is without government intervention, the rich will get richer and the poor will get poorer. The best way to minimise this is to have as much shared wealth as possible in the form of park and public facilities, such as transport, health, education and essential services that blunt the significance of income disparities, as a base-line is set without it having the stigma of charity.

But conservative governments, like the Nobel committee want to ignore Piketty and the obvious facts as they do not suit their ideological agenda. A cynic would say that the ideological agenda from right wing ‘think tanks is merely an endless list of convenient reasons to keep the money flowing to the top end of town, to lessen government ‘interference’ which might act for fairness, and to commodify everything such as housing, transport and education so they can become profitable, increase inequality and profit those at the top. How can this agenda ever be considered the foundation of good financial management?

But as Treasurer, Morrison was not even clever in his management of his own revenue. Here is a tale of how his GST deal with Western Australia was out by a factor of almost 10 times over 3 years. Yet the legacy of this shambles is contracts and deal that other have to grapple with.

One of the modest contributions that I am seeking to make to political discourse is to sheet home the blame for failures to the people responsible for them. Here is a start, from the SMH:

Cost of Morrison’s WA GST deal blows out by $20 billion as debt hits record high

By Shane Wright SMH November 14, 2022 — 5.00am

A deal put in place to placate Western Australia when its share of GST revenue was tumbling is on track to cost the nation’s taxpayers 10 times more than originally forecast, helping drive up federal government debt and interest payments to record levels.

Pulled together by then-treasurer Scott Morrison in 2018 before being put through parliament by his successor, Josh Frydenberg, the deal that was originally expected to cost $2.3 billion is now on track to cost more than $24 billion.

WA, which delivered four seats to Labor at the May election on the back of a 10.6 per cent swing, is vowing to fight to keep the arrangement, due to expire in 2026-27.

Morrison struck the deal at a time WA’s share of the tax pool had fallen to an all-time low of 30 cents for every dollar of GST raised within the state. Its iron ore royalties were effectively being redistributed among the other states and territories based on a Commonwealth Grants Commission formula that takes into account each state’s revenue sources and expenses.

Under Morrison’s deal, from 2022-23 WA must receive a minimum of 70 cents in the dollar before increasing to 75 cents in 2024-25. When the policy was put in place, it was expected iron ore prices would fall and WA’s share of the GST pool would therefore rise. Instead, prices have soared.

The Morrison government ensured other states and territories wouldn’t be worse off, which requires the top-up funding for the deal to come from outside the $82.5 billion GST pool.

It was originally forecast to cost federal taxpayers $2.3 billion over three years, including just $293 million in 2021-22, but the surge in iron ore prices has meant more top-ups and for longer.

The October budget revealed that last year, the deal cost $2.1 billion and is forecast to jump to $4.2 billion this financial year. By 2025-26, the cost of the entire deal is on track to reach $22.5 billion, with another $2-3 billion likely the year after that.

Throughout the entire period, the budget is expected to be in deficit, forcing the extra cash to be borrowed. In percentage terms, the blowout in cost is larger than the NDIS, aged care, health or defence.

Independent economist Chris Richardson said the deal had been ill-conceived from the beginning with the cost to be borne by future taxpayers.

He said all significant spending programs needed to be properly assessed, including the GST deal.

“Yes, the politics of it are difficult. But we have a whole host of other issues, like the NDIS, and the economics of them have to be dealt with,” he said.

Any change to the GST deal would create enormous political problems in WA which is likely to gain more political power with an additional seat in a looming federal electorate redistribution.

WA Premier and Treasurer Mark McGowan, who reported a $5.6 billion budget surplus for the 2021-22 financial year, told this masthead he expected the GST deal to remain.

“I have made it very clear that West Australians will not accept any changes to the GST distribution,” he said.

“Those on the east coast who are demanding WA lose out still do not realise that under the reforms, WA will receive 70 per cent of its population share of the GST next financial year. In complete contrast, no other state has ever received a share of the GST lower than 83 per cent.

“WA will continue to subsidise all the other states into the future under this arrangement. No state has lost a dollar under these reforms.”

The extra borrowing for the GST deal has contributed to the lift in gross debt, which on Friday reached a record $909.4 billion.

Ahead of the COVID-pandemic, gross debt was expected to reach $576 billion this financial year. Instead, it is now forecast to reach $927 billion before reaching $1 trillion in 2023-24.

Treasurer Jim Chalmers said the cost of servicing the debt was getting more expensive and was now the budget’s fastest-growing expense.

“We’ve made good progress in a very short space of time. We’ve found $22 billion in savings and kept real spending growth flat across the forward estimates,” he said.

“[But] it will take more than one budget and more than one term of government to make up for a decade of missed opportunities and messed-up priorities.”