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The state of the state

In the lead up to the November state election, Brody Viney takes a look at how the Victorian economy is tracking.

The ReTurnbull Movement – the future of the Liberal Party?

Now that Kevin Rudd has regained his position at the helm of the Australian Labor Party, the soap opera that is Australian politics has almost immediately turned itself to the future of the relatively stable Liberal Party. Specifically, rumours are now flying about the unsung ambitions of shadow communications spokesman Malcolm Turnbull to topple Tony Abbott before the election, and ride on a wave of popular admiration to the Prime Ministership. At least, that’s what the media seems to think.

Questions now arise however – who is this man, and what does he want? And, possibly more importantly, what impact would his return to the leadership of the Liberal Party (if it ever occurred) have on its policies, prospects and the public?

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The economics behind the politics of the federal budget

The Federal Budget is fundamentally – perhaps with a bit of accounting incorporated – an economic conception, right? Wrong. While in an ideal world the political implications of fiscal budgetary processes would be disregarded, the reality is that politics ultimately determines the economics of all government budgets – albeit to various extents. Perhaps paradoxically, however, economics still trumps out in the end. How so? Because the use of economics is often the best way to explain the politics behind the economics.

While last year the use of accounting manipulations was the most demonstrable element of the Federal Budget assailable for extensive analysis, this year there are myriad of components. These will now be explored – largely within the context of the economic concept of private interest theory. This theory is essentially that politicians, including Wayne Swan when preparing the budget, will make rational choices based on their own objectives when in a decision-making position. The primary objective pertaining to the budget for Swan, and by extension the Gillard Government, would ostensibly have been to deliver a well-received budget that will maximise their chances of being re-elected (or at least minimise the number of seats they lose) on September 14.

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Labor’s National Disability Insurance Scheme (NDIS)

The Coalition’s conditional support for the Labor proposed National Disability Insurance Scheme (NDIS) has sparked media frenzy and has dominated domestic news headlines this past week due to the wide and deep affects this will have on the community at large. The scheme, funded in part by revenue raised through an increase in the Medicare levy, represents a tax hike of 0.5% to the average taxpayer. However, for the 410,000 Australians and their families suffering from a congenital or acquired permanent disability, the NDIS embodies the much-needed lifeline that will assist in alleviating the financial burden imposed by their disability.

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Why we sometimes have to rob Peter to pay Paul

Critics have called it “incoherent” and “schizophrenic” [1].

It sounds alarming on its own, but the Federal Government’s $2.3bn proposed cuts to funding for tertiary education is not the be-all and end-all to signing off David Gonski’s school funding deal. And while less spending money is never a good thing, opponents of the funding cuts are sounding the alarmist gong too soon.

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Chinese GDP and growth: What’s in a number?

Recently China’s president Xi Jinping was quoted in saying that China’s GDP growth will be subdued in the foreseeable future, relative to the rapid growth in the past decade. China’s official newspaper Xinhua has put the internal target at 7.5% p.a. for 2013 from a 7.8% p.a. actual figure achieved in 2012, and many are undoubtedly aware that this is a 13-year record low. Exactly how much has the world’s second largest economy grown by and how has China done it?

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Superannuation: an incentive to save or upper-class welfare?

Superannuation reform – how boring, right?

I suspect you aren’t aware of this fundamental loophole though. Consider this. Currently, the Australian superannuation system allows an individual who has (a) reached 60 years of age and (b) decided to permanently retire to simply withdraw all of their funds from super – completely tax free – and then to splurge it all on whatever they like. It’s important to note that this amount could have been just a few thousand dollars or, alternatively, many millions and that despite the lump sum withdrawal ‘belonging’ to the individual, a large part of it would have been brought about through the subsidised nature of Australia’s superannuation framework. Here’s the real kicker though: having enjoyed a period of superfluous spending – potentially with millions of dollars – that same individual, provided that they were now aged 67 or older, would then be eligible to receive a full aged pension (and its many associated ancillary benefits) courtesy of the federal government for the rest of their life as long as they didn’t earn more than about $3,952 in a year (from interest on their now non-existent savings!) or have greater than $192,500 in assets, excluding their home. Does that sound reasonable to you?

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Two Sides of Politics – A Fiscal Tug of War

swan hockeyWith the September Federal election looming, both Labor and the Coalition are expected to use every political weapon in their arsenal, aimed at capturing every possible vote. Undoubtedly some of the most lethal are fiscal policies offering the highest possible marginal political benefit. Already, treasurer Wayne Swan’s decision to rescind the long held promise of a budget surplus has captured headlines in almost every major print newspaper in Australia. In contrast, the Coalition remains loyal to a surplus even though the budget’s automatic stabilisers are dragging it into a deficit. Juxtaposing these two budgetary stances, it is important to ask: which of the two is the better policy?

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