Aussies & NZ: You're the Voice Try and Understand It

[Skyrazer]

Honestly, I can't wait for the vote to be done with and the thing settled. The amount of vitriol and bullshit being flung around over the Voice has just been nauseating.

From the moment it was announced, I knew skeletons would start pouring out of the closet. I can't help but stand back, watch it all happen and think "FFS we need to grow the fuck up!"

[Jeor]

14 hours ago, Skyrazer said:

Honestly, I can't wait for the vote to be done with and the thing settled. The amount of vitriol and bullshit being flung around over the Voice has just been nauseating.

From the moment it was announced, I knew skeletons would start pouring out of the closet. I can't help but stand back, watch it all happen and think "FFS we need to grow the fuck up!"

I agree, I hope it all settles down quickly. People aren't likely to be surprised if the result is No, and it might start looking like a foregone conclusion, which may lower the stakes a bit and keep it lower-key.

[Paxter]

Much like during the same-sex marriage "postal survey", Australia is not really grown up enough to have a civilized debate that doesn't involve the marginalized group in question feeling even more hurt.

The whole debate is as grubby and embarrassing as our Opposition Leader.

Edited September 16, 2023 by Paxter

[Jeor]

On 9/17/2023 at 9:47 AM, Paxter said:

Much like during the same-sex marriage "postal survey", Australia is not really grown up enough to have a civilized debate that doesn't involve the marginalized group in question feeling even more hurt.

The whole debate is as grubby and embarrassing as our Opposition Leader.

It's one of the issues with referendums, I guess. Constitutional recognition couldn't happen any other way, but a Voice could have been legislated and I doubt anyone would have been particularly surprised if Albanese had done that. Labor won the election, they were very clear about having a Voice as part of their platform, so it would have been a relatively simple matter of legislating one. Now unfortunately it looks like they aimed too high for what the Australian public are ready for.

It's a bit like tax reform in that what's good for the country is not necessarily appreciated by the Australian population as a whole. So a government will hope to win an election in spite of it and implement it, then hope that after it happens people will realise it's not that bad. BTW I realise this is a higher order issue than tax reform, so the analogy isn't meant to be 100%...but it's the signature dilemma of government - popular policies aren't necessarily good ones and vice versa.

[The Anti-Targ]

17 hours ago, Jeor said:

It's a bit like tax reform in that what's good for the country is not necessarily appreciated by the Australian population as a whole. So a government will hope to win an election in spite of it and implement it, then hope that after it happens people will realise it's not that bad. BTW I realise this is a higher order issue than tax reform, so the analogy isn't meant to be 100%...but it's the signature dilemma of government - popular policies aren't necessarily good ones and vice versa.

NZ labour has tried that a few times with a capital gains tax, and always lost the election. Whether it was because of bad timing, that they were always going to lose that particular election, or if the electorate generally is so opposed that any party proposing CGT would lose I'm not sure. Certainly a lot of tax experts think lack of a CGT it a significant hole in out tax system.

[Paxter]

On 9/18/2023 at 8:00 AM, Jeor said:

It's one of the issues with referendums, I guess.

Not necessarily. We didn't have this issue in 1967. The Opposition was on board and it sailed through.

[Paxter]

The monthly inflation indicator in Aus has jumped again. 

Unless we start to see some unemployment, I'm banking on continued sticky inflation as:

• In a debt-laden economy, some key cost pressures actually increase (rather than decrease) when interest rates rise (e.g., rent pressures due to inability to secure a mortgage)
• Petrol prices are out of domestic control (and not helped by the Ukraine war)
• Many other prices (e.g., food, travel) are driven by the oil price
• The AUD is fairly weak and weakening, driving up the price of imported goods (including petrol, which is usually bought in USD)
• There are still some wage pressures out there, though so far there isn't evidence of the dreaded wage-price spiral

All this means that the central bank may have to resort to its blunt tool of monetary policy again before too long. The RBA lags the Fed still by around 100 basis points. 

[Jeor]

10 hours ago, Paxter said:

• There are still some wage pressures out there, though so far there isn't evidence of the dreaded wage-price spiral

I don't know, I think a wage-price spiral is starting. I'm in the education sector and this is definitely happening. Public schools in NSW recently got a (deserved) annual pay rise of approximately 12% at the lower end (75K moving to 85K for a grad teacher) and 8% at the top end (113K moving to 122K). Teachers have been voting with their feet and leaving the profession in droves because the cost of living is biting chunks out of their pay, especially if you live in Sydney.

This is scaring the independent sector (schools which pay above the public school rates) and many of them are moving unilaterally to raise teacher pay even though the independent schools MEA doesn't expire until the end of 2024. Anecdotally I've heard some independent schools are going up by 10% as of Term 4 to hang onto their staff. Education is a different sector to most and the teacher shortages are very acute, which puts all the bargaining in the hands of the workers. So it's not surprising they're getting large pay bumps. But it's definitely happening sector-wide.

I can understand in some white collar financial/consulting-type industries there might not be as much of this effect happening as they cut costs etc, but I think the large public sector jobs, and more heavily unionised industries are going to drive up wages by a fair bit.

[Paxter]

4 hours ago, Jeor said:

I don't know, I think a wage-price spiral is starting. I'm in the education sector and this is definitely happening. Public schools in NSW recently got a (deserved) annual pay rise of approximately 12% at the lower end (75K moving to 85K for a grad teacher) and 8% at the top end (113K moving to 122K). Teachers have been voting with their feet and leaving the profession in droves because the cost of living is biting chunks out of their pay, especially if you live in Sydney.

This is scaring the independent sector (schools which pay above the public school rates) and many of them are moving unilaterally to raise teacher pay even though the independent schools MEA doesn't expire until the end of 2024. Anecdotally I've heard some independent schools are going up by 10% as of Term 4 to hang onto their staff. Education is a different sector to most and the teacher shortages are very acute, which puts all the bargaining in the hands of the workers. So it's not surprising they're getting large pay bumps. But it's definitely happening sector-wide.

I can understand in some white collar financial/consulting-type industries there might not be as much of this effect happening as they cut costs etc, but I think the large public sector jobs, and more heavily unionised industries are going to drive up wages by a fair bit.

I don't dispute the wage pressures. But for the wage-price spiral hypothesis to hold, you really need to see wages emerge as a leading indicator of future inflation. Right now, wages are playing catch-up, with many service providers having already raised prices before rising wage costs hit their bottom line. If wages are simply lagging price increases, we don't have a spiral. 

Now that's not to rule out the possibility of a spiral in the future, but I don't see evidence of it yet. 

Edited September 27, 2023 by Paxter

[The Anti-Targ]

Wage-price spiral is a bullshit myth to scare people into not demanding pay increases to cope with price inflation. At worst increasing wages slightly prolongs the inflation cycle, but it doesn't cause an economic death spiral. Increasing wages as mildly contributory to inflation doesn't really matter since if wages are going up people are able to cope with prices going up.

No surprise that raising interest rates has had an inflationary effect, plenty of economists said it would have that effect when reserve banks started doing it.

[Jeor]

I think we're seeing that rates are a poor tool for controlling inflation. And it also hurts a specific portion of the population (mortgage holders) who can least afford it while leaving vast tracts of the country untouched (wealthy retirees with paid off homes). However, controlling inflation is a devilishly difficult task as it has so many different causes and the government and RBA are not always able to control any of them.

However, I do think the ultra-low 0.1% interest rates were not a healthy option for the economy and normalising rates is better in the long term (although I think we can all agree the infamous forward guidance and the speed of the rises have left a lot to be desired). Having the cost of borrowing so low encouraged people to take on too much debt and caused various asset prices (particularly housing) to soar too high.

Petrol prices are an interesting one. I think the current rise in prices actually helps the RBA as it has the same type of effect of rising interest rates - as a general fixed cost in household budgets it takes away spending power from other things.

[Paxter]

On 9/28/2023 at 9:56 AM, Jeor said:

I think we're seeing that rates are a poor tool for controlling inflation.

For sure, but there aren't many other options out there. 

Fiscal policy is notoriously bad at controlling inflation, not least because it is owned by politicians. But even putting aside the poor stewardship of our politicians, it tends to take years for government spending and taxation changes to work their way through the economy, and it's in any case very difficult to calibrate the budget balance in the same way as interest rates. 

Then there's aggregate supply. Economists obsess over the way in which this could be expanded in different sectors to reduce price pressures. But it's notoriously hard to increase aggregate supply in a services-oriented economy. Material increases in productivity are not likely in this area until the AI revolution begins in earnest. 

Not sure what other options we have!

Edited September 29, 2023 by Paxter

[Jeor]

10 hours ago, Paxter said:

For sure, but there aren't many other options out there. 

Fiscal policy is notoriously bad at controlling inflation, not least because it is owned by politicians. But even putting aside the poor stewardship of our politicians, it tends to take years for government spending and taxation changes to work their way through the economy, and it's in any case very difficult to calibrate the budget balance in the same way as interest rates. 

Then there's aggregate supply. Economists obsess over the way in which this could be expanded in different sectors to reduce price pressures. But it's notoriously hard to increase aggregate supply in a services-oriented economy. Material increases in productivity are not likely in this area until the AI revolution begins in earnest. 

Not sure what other options we have!

Yes, I agree there still aren't many options for controlling inflation. Price controls are far worse than raising rates as it has the end-result of constraining supply even further as businesses decide it's not worth producing.

Rising rates really split the economy into winners and losers depending on who has debt or not. I know Philip Lowe gets a lot of flak for making the (blatantly incorrect) call that rates wouldn't go up until 2024, which goaded households into taking on more debt (to buy property etc). However, to play devil's advocate, if you took Lowe at his word, the error is not that rates went up, but that rates went up this early.

In all cases, households should have planned for rates to rise (you shouldn't really plan your finances around a 0.1% cash rate) at the very least in three years' time as Lowe said. Unless they were planning to pay off a massive chunk of their debt in those three years grace period they thought they had, I think a lot of these overextended households would have been in trouble regardless, maybe just a bit later on in the piece.

One situation that I'd have sympathy for is a family who had just had children, wanted to buy a bigger house and had the 2nd parent not working, figured this was their chance to get on the property ladder, and then figured that after 3 years the second parent could go back to work and double their income. That won't have worked out well now.

[Paxter]

16 hours ago, Jeor said:

Yes, I agree there still aren't many options for controlling inflation. Price controls are far worse than raising rates as it has the end-result of constraining supply even further as businesses decide it's not worth producing.

Price controls is getting to developing-world crackpot for me. I don't even entertain that as an option. 

[Jeor]

16 hours ago, Paxter said:

Price controls is getting to developing-world crackpot for me. I don't even entertain that as an option. 

No one sensible would. But then again, the Greens proposed just as much when they spoke of freezing rent...one reason why they still can't quite be viewed as a mainstream party.

[karaddin]

The luxury of not being a party of standalone government is the ability to advocate for things that might not be entirely feasible but support the values of your party. I don't think its actually reasonable to assume that they wouldn't develop more pragmatism if suddenly finding themselves in Labor's position just because they avail themselves of that luxury - there are pros and cons to being in their situation.

[Jeor]

On 10/3/2023 at 11:19 AM, karaddin said:

The luxury of not being a party of standalone government is the ability to advocate for things that might not be entirely feasible but support the values of your party. I don't think its actually reasonable to assume that they wouldn't develop more pragmatism if suddenly finding themselves in Labor's position just because they avail themselves of that luxury - there are pros and cons to being in their situation.

It's one way of doing things, and a legitimate way to build the political brand, but I think the Greens still throwing out the odd kooky policy will prevent them from being a mainstream party. To be fair, the two-party system is fairly entrenched in Australia so it's not the only thing holding them back.

However, at a moment when the primary vote in the two major parties seems at a low ebb, and when climate change becomes more and more in-your-face, we need the Greens to knuckle down and force some progress, so my personal view is they should consider seizing the day by adjusting the way they operate and presenting themselves as a serious, practical alternative.

[karaddin]

Can you talk them into dropping the NIMBY shit at the state level if you manage to get them to listen to your advice?

[Paxter]

4 hours ago, Jeor said:

It's one way of doing things, and a legitimate way to build the political brand, but I think the Greens still throwing out the odd kooky policy will prevent them from being a mainstream party.

Personally, I think the upcoming income tax cuts are pretty kooky policy. That hasn't stopped the two mainstream parties. 

[Jeor]

18 hours ago, Paxter said:

Personally, I think the upcoming income tax cuts are pretty kooky policy. That hasn't stopped the two mainstream parties. 

The Stage 3 tax cuts might be disagreeable but I wouldn't consider them kooky. Modifications to income tax cuts are commonly debated and implemented. Rent freezes don't really fall into that category. Now, franking credits...that might potentially fall into the kooky category.