Walt Secord pushes for Medicare levy increase to bridge NSW health funding gap

Date
    November 2, 2015
    Sydney Morning Herald

NSW opposition health spokesman Walt Secord is calling for a doubling of the Medicare levy to help cover the multibillion dollar shortfall in health funding faced by NSW under cuts to Commonwealth payments in the federal government's 2014 budget.   :-?

Mr Secord said a doubling of the Medicare levy to 4 per cent was a fairer solution than Premier Mike Baird's proposal for an increase in the GST to 15 per cent.

"Furthermore, it would raise more funds and would mean that those with the highest means would make the highest contribution," he said.

Mr Baird and NSW Treasurer Gladys Berejiklian have said they favour the GST increase to cover an estimated $35 billion national health funding shortfall by 2030.   :(

There would be no broadening of the GST base to include fresh food or education. Those earning below $100,000 would be compensated through income tax cuts and other payments.

Opposition Leader Luke Foley has previously rejected the proposal as "lazy" and said state governments should raise extra money by agreeing to set taxes at the same rate to eliminate the competition between them that erodes all their revenue bases.

The doubling of the Medicare rebate has been proposed by Victorian Premier Daniel Andrews. But NSW has rejected the option as it is an increase to income tax.

However, Mr Secord said doubling the Medicare levy to 4 per cent "would raise $29 billion of which more than $21 billion would remain after protections to lower incomes".

In a speech to the NSW Parliament last week he noted that the surcharge is not paid on a taxable income equal to or less than $20,896 or $33,044 for pensioners and it is only partly paid by those with a taxable income between $20,896 and $26,121 or $33,044 and $41,306, for pensioners.

"With our ageing population and the rising costs of health and hospitals, we need a funding model that responds to the real costs of healthcare in Australia," he said on Sunday.

"Increasing the GST is a very unfair model and it is a more regressive form of taxation as it has a higher marginal effect on lower income earners than it does on higher income earners.   :(

"Unfortunately, the increase of the GST would hit Australian families the hardest. The fairest approach is to increase the Medicare levy."

Halve the private health refund and use that income on Medicare

Redmond Neck wrote on Nov 2^nd, 2015 at 6:53am:

Halve the private health refund and use that income on Medicare

Wouldn't people pull out of private cover?

It would hardly be worth it for them and that would put a strain on an already burdened public health system.

Redmond Neck wrote on Nov 2^nd, 2015 at 6:53am:

Halve the private health refund and use that income on Medicare

So people who reduce the burden on the public health system should be further penalised?

Redmond Neck wrote on Nov 2^nd, 2015 at 6:53am:

Halve Abolish the private health refund and use that income on Medicare

fixed

crocodile wrote on Nov 2^nd, 2015 at 7:43am:

Redmond Neck wrote on Nov 2nd, 2015 at 6:53am: Halve Abolish the private health refund and use that income on Medicare fixed

That will just send low-income people who have forked out a good portion of their wage on health insurance back to the public system in droves, putting further strain on an already over-stressed system. Result: not fixed.

Ex Dame Pansi wrote on Nov 2^nd, 2015 at 7:08am:

Redmond Neck wrote on Nov 2nd, 2015 at 6:53am: Halve the private health refund and use that income on Medicare Wouldn't people pull out of private cover? It would hardly be worth it for them and that would put a strain on an already burdened public health system.

Some might pull out, but lets face it all those funds are just parasites bleeding the public purse with regular rises in charges to make massive profits. There is no real incentive for them to operate efficiently as the government will cough up 30% of any increases,

also the subsidy should be restricted to basic hospital cover why cover BS lifestyle crap

Even better still would be to shut it down completely and put all the money into Medicare

Armchair_Politician wrote on Nov 2^nd, 2015 at 7:47am:

crocodile wrote on Nov 2nd, 2015 at 7:43am: Redmond Neck wrote on Nov 2nd, 2015 at 6:53am: Halve Abolish the private health refund and use that income on Medicare fixed That will just send low-income people who have forked out a good portion of their wage on health insurance back to the public system in droves, putting further strain on an already over-stressed system. Result: not fixed.

Do the maths dope!

Ex Dame Pansi wrote on Nov 2^nd, 2015 at 7:08am:

Redmond Neck wrote on Nov 2nd, 2015 at 6:53am: Halve the private health refund and use that income on Medicare Wouldn't people pull out of private cover? It would hardly be worth it for them and that would put a strain on an already burdened public health system.

Probably at first. Then the fees come down. The rebate was no more than a vote buying tool. It made no difference to the cost of cover. Adding a subsidy just places more demand on a product before the supply side can match it. The end result is that the price rises, usually by the amount of the subsidy. A really good example of the poorest of public policy by about 6 billion bucks and rising. Absolutely brilliant as a vote buying carrot while the punters think they're getting something for nothing.

crocodile wrote on Nov 2^nd, 2015 at 7:50am:

Ex Dame Pansi wrote on Nov 2nd, 2015 at 7:08am: Redmond Neck wrote on Nov 2nd, 2015 at 6:53am: Halve the private health refund and use that income on Medicare Wouldn't people pull out of private cover? It would hardly be worth it for them and that would put a strain on an already burdened public health system. Probably at first. Then the fees come down. The rebate was no more than a vote buying tool. It made no difference to the cost of cover. Adding a subsidy just places more demand on a product before the supply side can match it. The end result is that the price rises, usually by the amount of the subsidy. A really good example of the poorest of public policy by about 6 billion bucks and rising. Absolutely brilliant as a vote buying carrot while the punters think they're getting something for nothing.

The rebate was more of a relief tool, for providing relief to an over-burdened public health system. It got people on low incomes into private health care for the first time, thereby reducing the load on the public health system.

Nah, just vote buying by Howard.

We cant all afford private health insurance.   :( 

Armchair_Politician wrote on Nov 2^nd, 2015 at 7:47am:

crocodile wrote on Nov 2nd, 2015 at 7:43am: Redmond Neck wrote on Nov 2nd, 2015 at 6:53am: Halve Abolish the private health refund and use that income on Medicare fixed That will just send low-income people who have forked out a good portion of their wage on health insurance back to the public system in droves, putting further strain on an already over-stressed system. Result: not fixed.

That's the problem with the never ending subsidy. The originator at the time being more interested in buying votes than achieving health cover outcomes. The cost of private health care is no cheaper as a result with the final nail being that all private health insurers obtain a third of their income directly from the gummint coffers to the tune of $6 billion and counting. Truly dumb policy. Ditto child care rebates.

Armchair_Politician wrote on Nov 2^nd, 2015 at 7:52am:

crocodile wrote on Nov 2nd, 2015 at 7:50am: Ex Dame Pansi wrote on Nov 2nd, 2015 at 7:08am: Redmond Neck wrote on Nov 2nd, 2015 at 6:53am: Halve the private health refund and use that income on Medicare Wouldn't people pull out of private cover? It would hardly be worth it for them and that would put a strain on an already burdened public health system. Probably at first. Then the fees come down. The rebate was no more than a vote buying tool. It made no difference to the cost of cover. Adding a subsidy just places more demand on a product before the supply side can match it. The end result is that the price rises, usually by the amount of the subsidy. A really good example of the poorest of public policy by about 6 billion bucks and rising. Absolutely brilliant as a vote buying carrot while the punters think they're getting something for nothing. The rebate was more of a relief tool, for providing relief to an over-burdened public health system. It got people on low incomes into private health care for the first time, thereby reducing the load on the public health system.

Crap. The prices have all risen faster than inflation by the amount of the subsidy.

crocodile wrote on Nov 2^nd, 2015 at 7:57am:

Armchair_Politician wrote on Nov 2nd, 2015 at 7:52am: crocodile wrote on Nov 2nd, 2015 at 7:50am: Ex Dame Pansi wrote on Nov 2nd, 2015 at 7:08am: Redmond Neck wrote on Nov 2nd, 2015 at 6:53am: Halve the private health refund and use that income on Medicare Wouldn't people pull out of private cover? It would hardly be worth it for them and that would put a strain on an already burdened public health system. Probably at first. Then the fees come down. The rebate was no more than a vote buying tool. It made no difference to the cost of cover. Adding a subsidy just places more demand on a product before the supply side can match it. The end result is that the price rises, usually by the amount of the subsidy. A really good example of the poorest of public policy by about 6 billion bucks and rising. Absolutely brilliant as a vote buying carrot while the punters think they're getting something for nothing. The rebate was more of a relief tool, for providing relief to an over-burdened public health system. It got people on low incomes into private health care for the first time, thereby reducing the load on the public health system. Crap. The prices have all risen faster than inflation by the amount of the subsidy.

Yet membership of health insurance companies is increasing.

We don't want the GST to go up to 15 percent.  Maybe we should double the Medicare levy.   :(

wrote on Nov 2^nd, 2015 at 8:03am:

We don't want the GST to go up to 15 percent.  Maybe we should double the Medicare levy.   :(

That would just hurt those who can afford it least, while leaving the well-off pretty much untouched.

Increasing the tax on consumption now is the act of a more on.

Armchair_Politician wrote on Nov 2^nd, 2015 at 7:58am:

Yet membership of health insurance companies is increasing.

while medical cover is reducing :D :D


most of the 'basic memberships' are useless. .. good for getting you a new pair of shoes or gym membership,  but no good if you get sick. People only sign up to it to avoid the higher taxes. Why should taxpayers subsidise your gym fees or new shoes?

Armchair_Politician wrote on Nov 2^nd, 2015 at 8:06am:

wrote on Nov 2nd, 2015 at 8:03am: We don't want the GST to go up to 15 percent.  Maybe we should double the Medicare levy.   :( That would just hurt those who can afford it least, while leaving the well-off pretty much untouched.

those that can't afford it don't pay a medicare levy ...  :D :D :D

Yup. The companies put up policies that are cheap—cover for gangrene of your little toe say—but get you out of paying higher levy etc.

If it is a Howard measure you can be sure it is crap.

Armchair_Politician wrote on Nov 2^nd, 2015 at 7:58am:

crocodile wrote on Nov 2nd, 2015 at 7:57am: Armchair_Politician wrote on Nov 2nd, 2015 at 7:52am: crocodile wrote on Nov 2nd, 2015 at 7:50am: Ex Dame Pansi wrote on Nov 2nd, 2015 at 7:08am: Redmond Neck wrote on Nov 2nd, 2015 at 6:53am: Halve the private health refund and use that income on Medicare Wouldn't people pull out of private cover? It would hardly be worth it for them and that would put a strain on an already burdened public health system. Probably at first. Then the fees come down. The rebate was no more than a vote buying tool. It made no difference to the cost of cover. Adding a subsidy just places more demand on a product before the supply side can match it. The end result is that the price rises, usually by the amount of the subsidy. A really good example of the poorest of public policy by about 6 billion bucks and rising. Absolutely brilliant as a vote buying carrot while the punters think they're getting something for nothing. The rebate was more of a relief tool, for providing relief to an over-burdened public health system. It got people on low incomes into private health care for the first time, thereby reducing the load on the public health system. Crap. The prices have all risen faster than inflation by the amount of the subsidy. Yet membership of health insurance companies is increasing.

More analysis required there Armie. How much is the small rise due to the iniquitous surcharge of 1% on the medicare levy above a certain income threshold. Says nothing about the type of cover either. How many are like me and just take the absolute minimum  to avoid that extra 1%.

crocodile wrote on Nov 2^nd, 2015 at 7:50am:

Ex Dame Pansi wrote on Nov 2nd, 2015 at 7:08am: Redmond Neck wrote on Nov 2nd, 2015 at 6:53am: Halve the private health refund and use that income on Medicare Wouldn't people pull out of private cover? It would hardly be worth it for them and that would put a strain on an already burdened public health system. Probably at first. Then the fees come down. The rebate was no more than a vote buying tool. It made no difference to the cost of cover. Adding a subsidy just places more demand on a product before the supply side can match it. The end result is that the price rises, usually by the amount of the subsidy. A really good example of the poorest of public policy by about 6 billion bucks and rising. Absolutely brilliant as a vote buying carrot while the punters think they're getting something for nothing.

Sometimes you come across as a theorist with zero practical experience. This is a classic example of that. Health Fees DROP????

Try again.

mariacostel wrote on Nov 2^nd, 2015 at 8:36am:

crocodile wrote on Nov 2nd, 2015 at 7:50am: Ex Dame Pansi wrote on Nov 2nd, 2015 at 7:08am: Redmond Neck wrote on Nov 2nd, 2015 at 6:53am: Halve the private health refund and use that income on Medicare Wouldn't people pull out of private cover? It would hardly be worth it for them and that would put a strain on an already burdened public health system. Probably at first. Then the fees come down. The rebate was no more than a vote buying tool. It made no difference to the cost of cover. Adding a subsidy just places more demand on a product before the supply side can match it. The end result is that the price rises, usually by the amount of the subsidy. A really good example of the poorest of public policy by about 6 billion bucks and rising. Absolutely brilliant as a vote buying carrot while the punters think they're getting something for nothing. Sometimes you come across as a theorist with zero practical experience. This is a classic example of that. Health Fees DROP???? Try again.

If they start losing customers the fees will come down quick smart. It's only mandated legislation that keeps them high. The good ol' supply and demand situation works every time except when legislators, monopolies and rent seekers get in the way and distort the market.

crocodile wrote on Nov 2^nd, 2015 at 9:33am:

The good ol' supply and demand situation works every time except when legislators, monopolies and rent seekers get in the way and distort the market.

...and unions

Swagman wrote on Nov 2^nd, 2015 at 9:36am:

crocodile wrote on Nov 2nd, 2015 at 9:33am: The good ol' supply and demand situation works every time except when legislators, monopolies and rent seekers get in the way and distort the market. ...and unions

Unions are a form of rent seekers. They can only exist in an imperfect market.

crocodile wrote on Nov 2^nd, 2015 at 7:43am:

Redmond Neck wrote on Nov 2nd, 2015 at 6:53am: Halve Abolish the private health refund and use that income on Medicare fixed

Fair enough, but we need a more complete review of health policy.

* Double the Medicare levy.
* Abolish the private health insurance rebate.
* Abolish the Medicare surcharge for high income earners without private health insurance.
* Put the savings into Medicare.
* Extend Medicare to include basic dental.
* Remove the Health Minister's price control powers over private health insurance.

Why should the levy be changed? What is the point of specific funding of Medicare in this manner as opposed to via general taxation.

I am not totally against removal of private health insurance rebate, as long as they make corresponding decrease in medicare surcharge and penalties for not having private health insurance.    And also the following reasons: 

1) Many people on private health insurance, do not get rebate anyway. (e.g. those with incomes > 200k)
2) A study somewhere showed that most young people or lower income people who takes up private health insurance, do so to dodge the penalties.  And so, a review showed most of these people have covers so basic, that they are looking at a cost so high ( through high excess charge, and low co payments), such that most of them choice public hospital treatment any way.
3) Most severe emergency cases - goes to public hospital / major trauma centres where they are more better equipped.
4) Emergency department visits are NOT covered with private health insurance.  They can charge anywhere from $200 to $400 for a visit.  So, must people with private health insurance, in an emergency goes to public hospital ED, and be transferred later if their condition is not so serious.  Serious cases like heart attack, people wheel them into the catheter lab immediately anyway.
5) The only thing that helps  with private health insurance, is those with chronic illness / injury requirement elective surgery / or not so serious medical condition.   It is very difficult to quantify. 

My recommendation:
1) Remove private health insurance rebate, direct funding back into the public health system.
2) Increase medicare surcharge for those who choose not have private insurance, but keep the charges around 75% of they would if they take out a medium level private health cover.
3) Remove lifetime loading - to facilitate people moving back to private health insurance, and let markets do their job. 

That way, you create a sort of national health cover premium for those who can afford, but also an mechanism for them to move into private cover should they choose to.   And let the market force make the private sector more efficient and competitive (e.g. less abnormal premium increases).     The public sector would also get more money from those intended for rebate. 

crocodile wrote on Nov 2^nd, 2015 at 10:07am:

Swagman wrote on Nov 2nd, 2015 at 9:36am: crocodile wrote on Nov 2nd, 2015 at 9:33am: The good ol' supply and demand situation works every time except when legislators, monopolies and rent seekers get in the way and distort the market. ...and unions Unions are a form of rent seekers. They can only exist in an imperfect market.

Which is to say, all of them

Kytro wrote on Nov 2^nd, 2015 at 1:08pm:

Why should the levy be changed? What is the point of specific funding of Medicare in this manner as opposed to via general taxation.

medicare finding has to be spent on health, doesn't it?

John Smith wrote on Nov 2^nd, 2015 at 2:22pm:

Kytro wrote on Nov 2nd, 2015 at 1:08pm: Why should the levy be changed? What is the point of specific funding of Medicare in this manner as opposed to via general taxation. medicare finding has to be spent on health, doesn't it?

No, they can do what they like with it.


Quote:

Australian Constitution - Section 81 - Consolidated Revenue Fund All revenues or moneys raised or received by the Executive Government of the Commonwealth shall form one Consolidated Revenue Fund, to be appropriated for the purposes of the Commonwealth in the manner and subject to the charges and liabilities imposed by this Constitution.

crocodile wrote on Nov 2^nd, 2015 at 4:45pm:

No, they can do what they like with it.

then why give it a different label? they should just be honest about the tax rate and be done with it.

John Smith wrote on Nov 2^nd, 2015 at 2:22pm:

medicare finding has to be spent on health, doesn't it?

Howard was able to increase the levy to buy back 640,000 guns, it's not unprecedented for medicare money to be wasted.

John Smith wrote on Nov 2^nd, 2015 at 4:47pm:

crocodile wrote on Nov 2nd, 2015 at 4:45pm: No, they can do what they like with it. then why give it a different label? they should just be honest about the tax rate and be done with it.

Best ask the spivs, urgers and horse thieves that perambulate around the grounds of parliament house.

crocodile wrote on Nov 2^nd, 2015 at 9:33am:

mariacostel wrote on Nov 2nd, 2015 at 8:36am: crocodile wrote on Nov 2nd, 2015 at 7:50am: Ex Dame Pansi wrote on Nov 2nd, 2015 at 7:08am: Redmond Neck wrote on Nov 2nd, 2015 at 6:53am: Halve the private health refund and use that income on Medicare Wouldn't people pull out of private cover? It would hardly be worth it for them and that would put a strain on an already burdened public health system. Absolutely brilliant as a vote buying carrot while the punters think they're getting something for nothing. Sometimes you come across as a theorist with zero practical experience. This is a classic example of that. Health Fees DROP???? Try again. If they start losing customers the fees will come down quick smart. It's only mandated legislation that keeps them high. The good ol' supply and demand situation works every time except when legislators, monopolies and rent seekers get in the way and distort the market.

I would love to think it was that simple and so would the government and health funds and everybody else. Of course you will be unable to show a single example of that working because it never has. Your economics knowledge is undeniably substantial but entirely theoretical. I sense not a single real-world modification of any of your ideas.

crocodile wrote on Nov 2^nd, 2015 at 4:52pm:

Best ask the spivs, urgers and horse thieves that perambulate around the grounds of parliament house.

gumpy ....  over to you!

Quote:

NSW opposition health spokesman Walt Secord is calling for a doubling of the Medicare levy to help cover the multibillion dollar shortfall in health funding faced by NSW under cuts to Commonwealth payments in the federal government's 2014 budget.

Both the increase to the GST and now this support to double the Medicare levy are only the result of the federal Liberal governments budget cuts.

The better solution is to force the feds to give the money back and to stop them from forcing the states into asking for tax increases to cover up for federal government nastiness and incompetence.

Dnarever wrote on Nov 2^nd, 2015 at 6:03pm:

Quote: NSW opposition health spokesman Walt Secord is calling for a doubling of the Medicare levy to help cover the multibillion dollar shortfall in health funding faced by NSW under cuts to Commonwealth payments in the federal government's 2014 budget. Both the increase to the GST and now this support to double the Medicare levy are only the result of the federal Liberal governments budget cuts. The better solution is to force the feds to give the money back and to stop them from forcing the states into asking for tax increases to cover up for federal government nastiness and incompetence.

Deficit? Debt?  Heard of those?  Your leftly-losers gave us that and a sinking economy to make fixing it harder along with a senate that insists on being part of the problem.

mariacostel wrote on Nov 2^nd, 2015 at 7:31pm:

Dnarever wrote on Nov 2nd, 2015 at 6:03pm: Quote: NSW opposition health spokesman Walt Secord is calling for a doubling of the Medicare levy to help cover the multibillion dollar shortfall in health funding faced by NSW under cuts to Commonwealth payments in the federal government's 2014 budget. Both the increase to the GST and now this support to double the Medicare levy are only the result of the federal Liberal governments budget cuts. The better solution is to force the feds to give the money back and to stop them from forcing the states into asking for tax increases to cover up for federal government nastiness and incompetence. Deficit? Debt?  Heard of those?  Your leftly-losers gave us that and a sinking economy to make fixing it harder along with a senate that insists on being part of the problem.

No. We didn't.

If you believe that, it only reinforces your ignorance and/or stupidity.

mariacostel wrote on Nov 2^nd, 2015 at 5:53pm:

crocodile wrote on Nov 2nd, 2015 at 9:33am: mariacostel wrote on Nov 2nd, 2015 at 8:36am: crocodile wrote on Nov 2nd, 2015 at 7:50am: Ex Dame Pansi wrote on Nov 2nd, 2015 at 7:08am: Redmond Neck wrote on Nov 2nd, 2015 at 6:53am: Halve the private health refund and use that income on Medicare Wouldn't people pull out of private cover? It would hardly be worth it for them and that would put a strain on an already burdened public health system. Absolutely brilliant as a vote buying carrot while the punters think they're getting something for nothing. Sometimes you come across as a theorist with zero practical experience. This is a classic example of that. Health Fees DROP???? Try again. If they start losing customers the fees will come down quick smart. It's only mandated legislation that keeps them high. The good ol' supply and demand situation works every time except when legislators, monopolies and rent seekers get in the way and distort the market. I would love to think it was that simple and so would the government and health funds and everybody else. Of course you will be unable to show a single example of that working because it never has. Your economics knowledge is undeniably substantial but entirely theoretical. I sense not a single real-world modification of any of your ideas.

Not so sure about the substantial bit. It may appear theoretical sometimes. Mostly that is deliberate in order to avoid the relativism argument. Economic theories aren't generally hypothesised to form some predictive outcome. Instead they are generally formed after collecting past data, analysing and modelling it and then looking for explanations. The theory is based on past events so if something turns up that has a new set of parameters the theories aren't of much help.

The case of falling demand and it's effect on retail prices is already well understood. However, markets can be skewed by the actions that have been stated. In the case of private health, with the removal of subsidies it is given that demand will drop. Retailers have little choice but to reduce entry costs in a market without other interventions.

Of course there are possible interventions that may prop up the cost such as concerted effort and bullying tactics from the medical professional bodies. This form of rent seeking is not new as demonstrated by the AMA 30 odd years ago when Brendan Nelson still had an earing.

mariacostel wrote on Nov 2^nd, 2015 at 7:31pm:

Dnarever wrote on Nov 2nd, 2015 at 6:03pm: Quote: NSW opposition health spokesman Walt Secord is calling for a doubling of the Medicare levy to help cover the multibillion dollar shortfall in health funding faced by NSW under cuts to Commonwealth payments in the federal government's 2014 budget. Both the increase to the GST and now this support to double the Medicare levy are only the result of the federal Liberal governments budget cuts. The better solution is to force the feds to give the money back and to stop them from forcing the states into asking for tax increases to cover up for federal government nastiness and incompetence. Deficit? Debt?  Heard of those?  Your leftly-losers gave us that and a sinking economy to make fixing it harder along with a senate that insists on being part of the problem.

In reality it is all brinkmanship. They really don't matter as much as our dear leaders carry on about. Every surplus budget creates dollar for dollar deficits on the private side of the ledger anyway.

crocodile wrote on Nov 2^nd, 2015 at 9:17pm:

mariacostel wrote on Nov 2nd, 2015 at 5:53pm: crocodile wrote on Nov 2nd, 2015 at 9:33am: mariacostel wrote on Nov 2nd, 2015 at 8:36am: crocodile wrote on Nov 2nd, 2015 at 7:50am: Ex Dame Pansi wrote on Nov 2nd, 2015 at 7:08am: Redmond Neck wrote on Nov 2nd, 2015 at 6:53am: Halve the private health refund and use that income on Medicare Wouldn't people pull out of private cover? It would hardly be worth it for them and that would put a strain on an already burdened public health system. Absolutely brilliant as a vote buying carrot while the punters think they're getting something for nothing. Sometimes you come across as a theorist with zero practical experience. This is a classic example of that. Health Fees DROP???? Try again. If they start losing customers the fees will come down quick smart. It's only mandated legislation that keeps them high. The good ol' supply and demand situation works every time except when legislators, monopolies and rent seekers get in the way and distort the market. I would love to think it was that simple and so would the government and health funds and everybody else. Of course you will be unable to show a single example of that working because it never has. Your economics knowledge is undeniably substantial but entirely theoretical. I sense not a single real-world modification of any of your ideas. Not so sure about the substantial bit. It may appear theoretical sometimes. Mostly that is deliberate in order to avoid the relativism argument. Economic theories aren't generally hypothesised to form some predictive outcome. Instead they are generally formed after collecting past data, analysing and modelling it and then looking for explanations. The theory is based on past events so if something turns up that has a new set of parameters the theories aren't of much help. The case of falling demand and it's effect on retail prices is already well understood. However, markets can be skewed by the actions that have been stated. In the case of private health, with the removal of subsidies it is given that demand will drop. Retailers have little choice but to reduce entry costs in a market without other interventions. Of course there are possible interventions that may prop up the cost such as concerted effort and bullying tactics from the medical professional bodies. This form of rent seeking is not new as demonstrated by the AMA 30 odd years ago when Brendan Nelson still had an earing.

Even this reply is almost entirely theoretical. Healthcare costs would NOT drop as you say they would. If that were the case don't you think the millions of economists and politicians struggling with rapidly rising health costs might have tried this out?

crocodile wrote on Nov 2^nd, 2015 at 9:34pm:

mariacostel wrote on Nov 2nd, 2015 at 7:31pm: Dnarever wrote on Nov 2nd, 2015 at 6:03pm: Quote: NSW opposition health spokesman Walt Secord is calling for a doubling of the Medicare levy to help cover the multibillion dollar shortfall in health funding faced by NSW under cuts to Commonwealth payments in the federal government's 2014 budget. Both the increase to the GST and now this support to double the Medicare levy are only the result of the federal Liberal governments budget cuts. The better solution is to force the feds to give the money back and to stop them from forcing the states into asking for tax increases to cover up for federal government nastiness and incompetence. Deficit? Debt?  Heard of those?  Your leftly-losers gave us that and a sinking economy to make fixing it harder along with a senate that insists on being part of the problem. In reality it is all brinkmanship. They really don't matter as much as our dear leaders carry on about. Every surplus budget creates dollar for dollar deficits on the private side of the ledger anyway.

Good old theory once again. Deficits don't matter, surpluses don't matter.  Your real-life experience appears to be deeply lacking.

mariacostel wrote on Nov 3^rd, 2015 at 7:59am:

crocodile wrote on Nov 2nd, 2015 at 9:17pm: mariacostel wrote on Nov 2nd, 2015 at 5:53pm: crocodile wrote on Nov 2nd, 2015 at 9:33am: mariacostel wrote on Nov 2nd, 2015 at 8:36am: crocodile wrote on Nov 2nd, 2015 at 7:50am: Ex Dame Pansi wrote on Nov 2nd, 2015 at 7:08am: Redmond Neck wrote on Nov 2nd, 2015 at 6:53am: Halve the private health refund and use that income on Medicare Wouldn't people pull out of private cover? It would hardly be worth it for them and that would put a strain on an already burdened public health system. Absolutely brilliant as a vote buying carrot while the punters think they're getting something for nothing. Sometimes you come across as a theorist with zero practical experience. This is a classic example of that. Health Fees DROP???? Try again. If they start losing customers the fees will come down quick smart. It's only mandated legislation that keeps them high. The good ol' supply and demand situation works every time except when legislators, monopolies and rent seekers get in the way and distort the market. I would love to think it was that simple and so would the government and health funds and everybody else. Of course you will be unable to show a single example of that working because it never has. Your economics knowledge is undeniably substantial but entirely theoretical. I sense not a single real-world modification of any of your ideas. Not so sure about the substantial bit. It may appear theoretical sometimes. Mostly that is deliberate in order to avoid the relativism argument. Economic theories aren't generally hypothesised to form some predictive outcome. Instead they are generally formed after collecting past data, analysing and modelling it and then looking for explanations. The theory is based on past events so if something turns up that has a new set of parameters the theories aren't of much help. The case of falling demand and it's effect on retail prices is already well understood. However, markets can be skewed by the actions that have been stated. In the case of private health, with the removal of subsidies it is given that demand will drop. Retailers have little choice but to reduce entry costs in a market without other interventions. Of course there are possible interventions that may prop up the cost such as concerted effort and bullying tactics from the medical professional bodies. This form of rent seeking is not new as demonstrated by the AMA 30 odd years ago when Brendan Nelson still had an earing. Even this reply is almost entirely theoretical. Healthcare costs would NOT drop as you say they would. If that were the case don't you think the millions of economists and politicians struggling with rapidly rising health costs might have tried this out?

The rebate has been derided by just about every economist on the planet. It is still in place because like most subsidies the political fallout from it's removal would be catastrophic.

The rebate is not the only factor that drives health care costs either. The work of the AMA and College of Surgeons in keeping tight wraps on their numbers ensuring supply is always short and prices consequently inflated can't be underestimated.

The uncompetitive structure of doctors' insurance programs doesn't help either.

mariacostel wrote on Nov 3^rd, 2015 at 8:01am:

crocodile wrote on Nov 2nd, 2015 at 9:34pm: mariacostel wrote on Nov 2nd, 2015 at 7:31pm: Dnarever wrote on Nov 2nd, 2015 at 6:03pm: Quote: NSW opposition health spokesman Walt Secord is calling for a doubling of the Medicare levy to help cover the multibillion dollar shortfall in health funding faced by NSW under cuts to Commonwealth payments in the federal government's 2014 budget. Both the increase to the GST and now this support to double the Medicare levy are only the result of the federal Liberal governments budget cuts. The better solution is to force the feds to give the money back and to stop them from forcing the states into asking for tax increases to cover up for federal government nastiness and incompetence. Deficit? Debt?  Heard of those?  Your leftly-losers gave us that and a sinking economy to make fixing it harder along with a senate that insists on being part of the problem. In reality it is all brinkmanship. They really don't matter as much as our dear leaders carry on about. Every surplus budget creates dollar for dollar deficits on the private side of the ledger anyway. Good old theory once again. Deficits don't matter, surpluses don't matter.  Your real-life experience appears to be deeply lacking.

Are you suggesting that a surplus on the government side of the ledger does not show as a deficit on the private side. If so then I suggest your own real-life experiences are misunderstood.

crocodile wrote on Nov 3^rd, 2015 at 8:20am:

Are you suggesting that a surplus on the government side of the ledger does not show as a deficit on the private side. If so then I suggest your own real-life experiences are misunderstood.

I'm assuming you mean if tax was lower the people would have kept more income. Clearly this is by definition.

crocodile wrote on Nov 3^rd, 2015 at 8:16am:

mariacostel wrote on Nov 3rd, 2015 at 7:59am: crocodile wrote on Nov 2nd, 2015 at 9:17pm: mariacostel wrote on Nov 2nd, 2015 at 5:53pm: crocodile wrote on Nov 2nd, 2015 at 9:33am: mariacostel wrote on Nov 2nd, 2015 at 8:36am: crocodile wrote on Nov 2nd, 2015 at 7:50am: Ex Dame Pansi wrote on Nov 2nd, 2015 at 7:08am: Redmond Neck wrote on Nov 2nd, 2015 at 6:53am: Halve the private health refund and use that income on Medicare Wouldn't people pull out of private cover? It would hardly be worth it for them and that would put a strain on an already burdened public health system. Absolutely brilliant as a vote buying carrot while the punters think they're getting something for nothing. Sometimes you come across as a theorist with zero practical experience. This is a classic example of that. Health Fees DROP???? Try again. If they start losing customers the fees will come down quick smart. It's only mandated legislation that keeps them high. The good ol' supply and demand situation works every time except when legislators, monopolies and rent seekers get in the way and distort the market. I would love to think it was that simple and so would the government and health funds and everybody else. Of course you will be unable to show a single example of that working because it never has. Your economics knowledge is undeniably substantial but entirely theoretical. I sense not a single real-world modification of any of your ideas. Not so sure about the substantial bit. It may appear theoretical sometimes. Mostly that is deliberate in order to avoid the relativism argument. Economic theories aren't generally hypothesised to form some predictive outcome. Instead they are generally formed after collecting past data, analysing and modelling it and then looking for explanations. The theory is based on past events so if something turns up that has a new set of parameters the theories aren't of much help. The case of falling demand and it's effect on retail prices is already well understood. However, markets can be skewed by the actions that have been stated. In the case of private health, with the removal of subsidies it is given that demand will drop. Retailers have little choice but to reduce entry costs in a market without other interventions. Of course there are possible interventions that may prop up the cost such as concerted effort and bullying tactics from the medical professional bodies. This form of rent seeking is not new as demonstrated by the AMA 30 odd years ago when Brendan Nelson still had an earing. Even this reply is almost entirely theoretical. Healthcare costs would NOT drop as you say they would. If that were the case don't you think the millions of economists and politicians struggling with rapidly rising health costs might have tried this out? The rebate has been derided by just about every economist on the planet. It is still in place because like most subsidies the political fallout from it's removal would be catastrophic. The rebate is not the only factor that drives health care costs either. The work of the AMA and College of Surgeons in keeping tight wraps on their numbers ensuring supply is always short and prices consequently inflated can't be underestimated. The uncompetitive structure of doctors' insurance programs doesn't help either.

Every economist on the planet? Firstly, you cant even make that claim about every economist in Australia nevermind the rest who don't give a crap about Australia anyhow. And that is before we talk about how reliable economists are in the first place.

Kytro wrote on Nov 3^rd, 2015 at 10:00am:

crocodile wrote on Nov 3rd, 2015 at 8:20am: Are you suggesting that a surplus on the government side of the ledger does not show as a deficit on the private side. If so then I suggest your own real-life experiences are misunderstood. I'm assuming you mean if tax was lower the people would have kept more income. Clearly this is by definition.

In a nutshell, yes. It's amazing how this rather simple accounting measure is not understood more widely. The effects on savings, private debt and investment is important. If you are really interested then google "sectoral balances". There you will find that long runs of government surpluses effectively decrease private sector savings and add to private debt. There is little point in looking only at the government debt levels without consideration to the level of private debt.

This is a medicare thread so its probably the wrong thread to carry on. Suffice to say that the 10 years of surplus simply moved the debt from the public sector to the private sector. Great for electioneering but the nation is actually still carrying the debt but privately. The reality is that small deficits should be the ongoing default position.

mariacostel wrote on Nov 3^rd, 2015 at 10:14am:

crocodile wrote on Nov 3rd, 2015 at 8:16am: mariacostel wrote on Nov 3rd, 2015 at 7:59am: crocodile wrote on Nov 2nd, 2015 at 9:17pm: mariacostel wrote on Nov 2nd, 2015 at 5:53pm: crocodile wrote on Nov 2nd, 2015 at 9:33am: mariacostel wrote on Nov 2nd, 2015 at 8:36am: crocodile wrote on Nov 2nd, 2015 at 7:50am: Ex Dame Pansi wrote on Nov 2nd, 2015 at 7:08am: Redmond Neck wrote on Nov 2nd, 2015 at 6:53am: Halve the private health refund and use that income on Medicare Wouldn't people pull out of private cover? It would hardly be worth it for them and that would put a strain on an already burdened public health system. Absolutely brilliant as a vote buying carrot while the punters think they're getting something for nothing. Sometimes you come across as a theorist with zero practical experience. This is a classic example of that. Health Fees DROP???? Try again. If they start losing customers the fees will come down quick smart. It's only mandated legislation that keeps them high. The good ol' supply and demand situation works every time except when legislators, monopolies and rent seekers get in the way and distort the market. I would love to think it was that simple and so would the government and health funds and everybody else. Of course you will be unable to show a single example of that working because it never has. Your economics knowledge is undeniably substantial but entirely theoretical. I sense not a single real-world modification of any of your ideas. Not so sure about the substantial bit. It may appear theoretical sometimes. Mostly that is deliberate in order to avoid the relativism argument. Economic theories aren't generally hypothesised to form some predictive outcome. Instead they are generally formed after collecting past data, analysing and modelling it and then looking for explanations. The theory is based on past events so if something turns up that has a new set of parameters the theories aren't of much help. The case of falling demand and it's effect on retail prices is already well understood. However, markets can be skewed by the actions that have been stated. In the case of private health, with the removal of subsidies it is given that demand will drop. Retailers have little choice but to reduce entry costs in a market without other interventions. Of course there are possible interventions that may prop up the cost such as concerted effort and bullying tactics from the medical professional bodies. This form of rent seeking is not new as demonstrated by the AMA 30 odd years ago when Brendan Nelson still had an earing. Even this reply is almost entirely theoretical. Healthcare costs would NOT drop as you say they would. If that were the case don't you think the millions of economists and politicians struggling with rapidly rising health costs might have tried this out? The rebate has been derided by just about every economist on the planet. It is still in place because like most subsidies the political fallout from it's removal would be catastrophic. The rebate is not the only factor that drives health care costs either. The work of the AMA and College of Surgeons in keeping tight wraps on their numbers ensuring supply is always short and prices consequently inflated can't be underestimated. The uncompetitive structure of doctors' insurance programs doesn't help either. Every economist on the planet? Firstly, you cant even make that claim about every economist in Australia nevermind the rest who don't give a crap about Australia anyhow. And that is before we talk about how reliable economists are in the first place.

OK. Probably a bit over the top but the points remain.

crocodile wrote on Nov 3^rd, 2015 at 8:16am:

The rebate has been derided by just about every economist on the planet. It is still in place because like most subsidies the political fallout from it's removal would be catastrophic. The rebate is not the only factor that drives health care costs either. The work of the AMA and College of Surgeons in keeping tight wraps on their numbers ensuring supply is always short and prices consequently inflated can't be underestimated. The uncompetitive structure of doctors' insurance programs doesn't help either.

The private health insurance industry has grown fat, bloated and inefficient due to the health insurance rebate and the Medicare surcharge for high-income earners without private health insurance. Removing these measures will make that industry more efficient.

Many private health insurance policies cover matters that have nothing to do with health and this causes health money to be wasted. Another source of waste is the Medicare surcharge, which makes some people take out useless policies just to dodge the punitive tax. Neither of these are efficient use of health money.

Bam wrote on Nov 3^rd, 2015 at 4:35pm:

crocodile wrote on Nov 3rd, 2015 at 8:16am: The rebate has been derided by just about every economist on the planet. It is still in place because like most subsidies the political fallout from it's removal would be catastrophic. The rebate is not the only factor that drives health care costs either. The work of the AMA and College of Surgeons in keeping tight wraps on their numbers ensuring supply is always short and prices consequently inflated can't be underestimated. The uncompetitive structure of doctors' insurance programs doesn't help either. The private health insurance industry has grown fat, bloated and inefficient due to the health insurance rebate and the Medicare surcharge for high-income earners without private health insurance. Removing these measures will make that industry more efficient. Many private health insurance policies cover matters that have nothing to do with health and this causes health money to be wasted. Another source of waste is the Medicare surcharge, which makes some people take out useless policies just to dodge the punitive tax. Neither of these are efficient use of health money.

A rare moment in history. Crocodile agrees with Bam. I'll note the date in my diary.

crocodile wrote on Nov 3^rd, 2015 at 11:50am:

Kytro wrote on Nov 3rd, 2015 at 10:00am: crocodile wrote on Nov 3rd, 2015 at 8:20am: Are you suggesting that a surplus on the government side of the ledger does not show as a deficit on the private side. If so then I suggest your own real-life experiences are misunderstood. I'm assuming you mean if tax was lower the people would have kept more income. Clearly this is by definition. In a nutshell, yes. It's amazing how this rather simple accounting measure is not understood more widely. The effects on savings, private debt and investment is important. If you are really interested then google "sectoral balances". There you will find that long runs of government surpluses effectively decrease private sector savings and add to private debt. There is little point in looking only at the government debt levels without consideration to the level of private debt. This is a medicare thread so its probably the wrong thread to carry on. Suffice to say that the 10 years of surplus simply moved the debt from the public sector to the private sector. Great for electioneering but the nation is actually still carrying the debt but privately. The reality is that small deficits should be the ongoing default position.

There may be a clue there.

crocodile wrote on Nov 3^rd, 2015 at 8:20am:

mariacostel wrote on Nov 3rd, 2015 at 8:01am: crocodile wrote on Nov 2nd, 2015 at 9:34pm: mariacostel wrote on Nov 2nd, 2015 at 7:31pm: Dnarever wrote on Nov 2nd, 2015 at 6:03pm: Quote: NSW opposition health spokesman Walt Secord is calling for a doubling of the Medicare levy to help cover the multibillion dollar shortfall in health funding faced by NSW under cuts to Commonwealth payments in the federal government's 2014 budget. Both the increase to the GST and now this support to double the Medicare levy are only the result of the federal Liberal governments budget cuts. The better solution is to force the feds to give the money back and to stop them from forcing the states into asking for tax increases to cover up for federal government nastiness and incompetence. Deficit? Debt?  Heard of those?  Your leftly-losers gave us that and a sinking economy to make fixing it harder along with a senate that insists on being part of the problem. In reality it is all brinkmanship. They really don't matter as much as our dear leaders carry on about. Every surplus budget creates dollar for dollar deficits on the private side of the ledger anyway. Good old theory once again. Deficits don't matter, surpluses don't matter.  Your real-life experience appears to be deeply lacking. Are you suggesting that a surplus on the government side of the ledger does not show as a deficit on the private side. If so then I suggest your own real-life experiences are misunderstood.

It is beyond simplistic - which is why you don't hear other actual experienced economist saying this. You think in closed economies only. You ignore productivity growth and innovation - which government NEVer does and come up with this ludicrously simple concept. Where does the money come from to fund government deficits? LARGELY OVERSEAS. Crash goes your argument.

mariacostel wrote on Nov 3^rd, 2015 at 5:42pm:

crocodile wrote on Nov 3rd, 2015 at 8:20am: mariacostel wrote on Nov 3rd, 2015 at 8:01am: crocodile wrote on Nov 2nd, 2015 at 9:34pm: mariacostel wrote on Nov 2nd, 2015 at 7:31pm: Dnarever wrote on Nov 2nd, 2015 at 6:03pm: Quote: NSW opposition health spokesman Walt Secord is calling for a doubling of the Medicare levy to help cover the multibillion dollar shortfall in health funding faced by NSW under cuts to Commonwealth payments in the federal government's 2014 budget. Both the increase to the GST and now this support to double the Medicare levy are only the result of the federal Liberal governments budget cuts. The better solution is to force the feds to give the money back and to stop them from forcing the states into asking for tax increases to cover up for federal government nastiness and incompetence. Deficit? Debt?  Heard of those?  Your leftly-losers gave us that and a sinking economy to make fixing it harder along with a senate that insists on being part of the problem. In reality it is all brinkmanship. They really don't matter as much as our dear leaders carry on about. Every surplus budget creates dollar for dollar deficits on the private side of the ledger anyway. Good old theory once again. Deficits don't matter, surpluses don't matter.  Your real-life experience appears to be deeply lacking. Are you suggesting that a surplus on the government side of the ledger does not show as a deficit on the private side. If so then I suggest your own real-life experiences are misunderstood. It is beyond simplistic - which is why you don't hear other actual experienced economist saying this. You think in closed economies only. You ignore productivity growth and innovation - which government NEVer does and come up with this ludicrously simple concept. Where does the money come from to fund government deficits? LARGELY OVERSEAS. Crash goes your argument.

That is complete nonsense Maria. The total issue of Australian securities as of 30th June 2015 was $ 368,729.8 million of which a paltry $ 7.1 million are foreign denominated.

http://aofm.gov.au/files/2015/10/Table-H12.pdf

Deficits are funded by the issue of government bonds which are denominated in our sovereign currency. Foreigners may purchase them but they purchase them in $AUS and cop the arbitrage risks along with it.

The local economy, on average grows at a nominal rate of around 5% pa. The money supply must grow in nominal terms as as well. New money enters the economy as the interest on the bonds is paid. This is why a small deficit that never goes beyond the natural growth of the economy is entirely manageable. Surpluses are useful to claw back the times when it is exceeded but this is a historical rarity.

I take issue with your claim that reputable economists never mention the fact. I don't know of any economist that is even remotely suggesting a return to government surplus any time soon. The sectoral balance topic would be found in just about any decent macro textbook and most likely have an entire chapter devoted to the subject.

crocodile wrote on Nov 3^rd, 2015 at 7:25pm:

mariacostel wrote on Nov 3rd, 2015 at 5:42pm: crocodile wrote on Nov 3rd, 2015 at 8:20am: mariacostel wrote on Nov 3rd, 2015 at 8:01am: crocodile wrote on Nov 2nd, 2015 at 9:34pm: mariacostel wrote on Nov 2nd, 2015 at 7:31pm: Dnarever wrote on Nov 2nd, 2015 at 6:03pm: Quote: NSW opposition health spokesman Walt Secord is calling for a doubling of the Medicare levy to help cover the multibillion dollar shortfall in health funding faced by NSW under cuts to Commonwealth payments in the federal government's 2014 budget. Both the increase to the GST and now this support to double the Medicare levy are only the result of the federal Liberal governments budget cuts. The better solution is to force the feds to give the money back and to stop them from forcing the states into asking for tax increases to cover up for federal government nastiness and incompetence. Deficit? Debt?  Heard of those?  Your leftly-losers gave us that and a sinking economy to make fixing it harder along with a senate that insists on being part of the problem. In reality it is all brinkmanship. They really don't matter as much as our dear leaders carry on about. Every surplus budget creates dollar for dollar deficits on the private side of the ledger anyway. Good old theory once again. Deficits don't matter, surpluses don't matter.  Your real-life experience appears to be deeply lacking. Are you suggesting that a surplus on the government side of the ledger does not show as a deficit on the private side. If so then I suggest your own real-life experiences are misunderstood. It is beyond simplistic - which is why you don't hear other actual experienced economist saying this. You think in closed economies only. You ignore productivity growth and innovation - which government NEVer does and come up with this ludicrously simple concept. Where does the money come from to fund government deficits? LARGELY OVERSEAS. Crash goes your argument. That is complete nonsense Maria. The total issue of Australian securities as of 30th June 2015 was $ 368,729.8 million of which a paltry $ 7.1 million are foreign denominated. http://aofm.gov.au/files/2015/10/Table-H12.pdf Deficits are funded by the issue of government bonds which are denominated in our sovereign currency. Foreigners may purchase them but they purchase them in $AUS and cop the arbitrage risks along with it. The local economy, on average grows at a nominal rate of around 5% pa. The money supply must grow in nominal terms as as well. New money enters the economy as the interest on the bonds is paid. This is why a small deficit that never goes beyond the natural growth of the economy is entirely manageable. Surpluses are useful to claw back the times when it is exceeded but this is a historical rarity. I take issue with your claim that reputable economists never mention the fact. I don't know of any economist that is even remotely suggesting a return to government surplus any time soon. The sectoral balance topic would be found in just about any decent macro textbook and most likely have an entire chapter devoted to the subject.

As much as im thoroughly enjoying it , you should give it a rest bruce maria longy , getting your arse absolutely handed to you , perhaps you concentrate on winning an argument with facts as opposed to winning an argument based on debating .

Its time wrote on Nov 3^rd, 2015 at 8:36pm:

perhaps you concentrate on winning an argument with facts as opposed to winning an argument based on debating .

the only facts Maria knows are those she makes up ;D ;D

Its time wrote on Nov 3^rd, 2015 at 8:36pm:

crocodile wrote on Nov 3rd, 2015 at 7:25pm: mariacostel wrote on Nov 3rd, 2015 at 5:42pm: crocodile wrote on Nov 3rd, 2015 at 8:20am: mariacostel wrote on Nov 3rd, 2015 at 8:01am: crocodile wrote on Nov 2nd, 2015 at 9:34pm: mariacostel wrote on Nov 2nd, 2015 at 7:31pm: Dnarever wrote on Nov 2nd, 2015 at 6:03pm: Quote: NSW opposition health spokesman Walt Secord is calling for a doubling of the Medicare levy to help cover the multibillion dollar shortfall in health funding faced by NSW under cuts to Commonwealth payments in the federal government's 2014 budget. Both the increase to the GST and now this support to double the Medicare levy are only the result of the federal Liberal governments budget cuts. The better solution is to force the feds to give the money back and to stop them from forcing the states into asking for tax increases to cover up for federal government nastiness and incompetence. Deficit? Debt?  Heard of those?  Your leftly-losers gave us that and a sinking economy to make fixing it harder along with a senate that insists on being part of the problem. In reality it is all brinkmanship. They really don't matter as much as our dear leaders carry on about. Every surplus budget creates dollar for dollar deficits on the private side of the ledger anyway. Good old theory once again. Deficits don't matter, surpluses don't matter.  Your real-life experience appears to be deeply lacking. Are you suggesting that a surplus on the government side of the ledger does not show as a deficit on the private side. If so then I suggest your own real-life experiences are misunderstood. It is beyond simplistic - which is why you don't hear other actual experienced economist saying this. You think in closed economies only. You ignore productivity growth and innovation - which government NEVer does and come up with this ludicrously simple concept. Where does the money come from to fund government deficits? LARGELY OVERSEAS. Crash goes your argument. That is complete nonsense Maria. The total issue of Australian securities as of 30th June 2015 was $ 368,729.8 million of which a paltry $ 7.1 million are foreign denominated. http://aofm.gov.au/files/2015/10/Table-H12.pdf Deficits are funded by the issue of government bonds which are denominated in our sovereign currency. Foreigners may purchase them but they purchase them in $AUS and cop the arbitrage risks along with it. The local economy, on average grows at a nominal rate of around 5% pa. The money supply must grow in nominal terms as as well. New money enters the economy as the interest on the bonds is paid. This is why a small deficit that never goes beyond the natural growth of the economy is entirely manageable. Surpluses are useful to claw back the times when it is exceeded but this is a historical rarity. I take issue with your claim that reputable economists never mention the fact. I don't know of any economist that is even remotely suggesting a return to government surplus any time soon. The sectoral balance topic would be found in just about any decent macro textbook and most likely have an entire chapter devoted to the subject. As much as im thoroughly enjoying it , you should give it a rest bruce maria longy , getting your arse absolutely handed to you , perhaps you concentrate on winning an argument with facts as opposed to winning an argument based on debating .

OK fellas, there's nothing wrong with probing questions. Hopefully we all come here for information which we then use to make our own judgements. I've learned a lot here myself just reading the thoughts of others. I hope this is not viewed as a point scoring exercise. I'm actually quite serious about the economic and political landscape. Over the last 20 odd years we have been let down quite badly with opportunistic mistruths and negativity from both sides.

crocodile wrote on Nov 3^rd, 2015 at 11:50am:

Kytro wrote on Nov 3rd, 2015 at 10:00am: crocodile wrote on Nov 3rd, 2015 at 8:20am: Are you suggesting that a surplus on the government side of the ledger does not show as a deficit on the private side. If so then I suggest your own real-life experiences are misunderstood. I'm assuming you mean if tax was lower the people would have kept more income. Clearly this is by definition. In a nutshell, yes. It's amazing how this rather simple accounting measure is not understood more widely. The effects on savings, private debt and investment is important. If you are really interested then google "sectoral balances". There you will find that long runs of government surpluses effectively decrease private sector savings and add to private debt. There is little point in looking only at the government debt levels without consideration to the level of private debt. This is a medicare thread so its probably the wrong thread to carry on. Suffice to say that the 10 years of surplus simply moved the debt from the public sector to the private sector. Great for electioneering but the nation is actually still carrying the debt but privately. The reality is that small deficits should be the ongoing default position.

It can increase private debt, but it doesn't have to do so, nor is doing so always a bad thing. For instance if the government wants to enact certain policy, it might be useful.

crocodile wrote on Nov 3^rd, 2015 at 7:25pm:

mariacostel wrote on Nov 3rd, 2015 at 5:42pm: crocodile wrote on Nov 3rd, 2015 at 8:20am: mariacostel wrote on Nov 3rd, 2015 at 8:01am: crocodile wrote on Nov 2nd, 2015 at 9:34pm: mariacostel wrote on Nov 2nd, 2015 at 7:31pm: Dnarever wrote on Nov 2nd, 2015 at 6:03pm: Quote: NSW opposition health spokesman Walt Secord is calling for a doubling of the Medicare levy to help cover the multibillion dollar shortfall in health funding faced by NSW under cuts to Commonwealth payments in the federal government's 2014 budget. Both the increase to the GST and now this support to double the Medicare levy are only the result of the federal Liberal governments budget cuts. The better solution is to force the feds to give the money back and to stop them from forcing the states into asking for tax increases to cover up for federal government nastiness and incompetence. Deficit? Debt?  Heard of those?  Your leftly-losers gave us that and a sinking economy to make fixing it harder along with a senate that insists on being part of the problem. In reality it is all brinkmanship. They really don't matter as much as our dear leaders carry on about. Every surplus budget creates dollar for dollar deficits on the private side of the ledger anyway. Good old theory once again. Deficits don't matter, surpluses don't matter.  Your real-life experience appears to be deeply lacking. Are you suggesting that a surplus on the government side of the ledger does not show as a deficit on the private side. If so then I suggest your own real-life experiences are misunderstood. It is beyond simplistic - which is why you don't hear other actual experienced economist saying this. You think in closed economies only. You ignore productivity growth and innovation - which government NEVer does and come up with this ludicrously simple concept. Where does the money come from to fund government deficits? LARGELY OVERSEAS. Crash goes your argument. That is complete nonsense Maria. The total issue of Australian securities as of 30th June 2015 was $ 368,729.8 million of which a paltry $ 7.1 million are foreign denominated. http://aofm.gov.au/files/2015/10/Table-H12.pdf Deficits are funded by the issue of government bonds which are denominated in our sovereign currency. Foreigners may purchase them but they purchase them in $AUS and cop the arbitrage risks along with it. The local economy, on average grows at a nominal rate of around 5% pa. The money supply must grow in nominal terms as as well. New money enters the economy as the interest on the bonds is paid. This is why a small deficit that never goes beyond the natural growth of the economy is entirely manageable. Surpluses are useful to claw back the times when it is exceeded but this is a historical rarity. I take issue with your claim that reputable economists never mention the fact. I don't know of any economist that is even remotely suggesting a return to government surplus any time soon. The sectoral balance topic would be found in just about any decent macro textbook and most likely have an entire chapter devoted to the subject.

The point is not where they are denominated but where the money comes from and it largely comes from OVERSEAS which was my point. You are very theoretical. And you don't know of any economist suggesting a return to surplus being a good thing??  Maybe in a university perhaps where I think your experience is largely limited to.

mariacostel wrote on Nov 4^th, 2015 at 6:24am:

The point is not where they are denominated but where the money comes from and it largely comes from OVERSEAS which was my point. You are very theoretical. And you don't know of any economist suggesting a return to surplus being a good thing??  Maybe in a university perhaps where I think your experience is largely limited to.

The resident status of the bond holder is irrelevant. We've had substantial foreign investment in this nation ever since the first fleet arrived. If foreigners want to invest their hard earned on us they should be welcomed. I never said that a surplus was a bad thing only that right here and now nobody is advocating for one. Surpluses in general are not bad. It is the long run of year on year ones that are problematic. Eventually the private sector runs out of savings. I can't see why you think this is too theoretical. It seems rather obvious.

By the way, private local citizens and entities are also holders of other nations financial instruments. Balances out in the end.

Kytro wrote on Nov 4^th, 2015 at 6:13am:

crocodile wrote on Nov 3rd, 2015 at 11:50am: Kytro wrote on Nov 3rd, 2015 at 10:00am: crocodile wrote on Nov 3rd, 2015 at 8:20am: Are you suggesting that a surplus on the government side of the ledger does not show as a deficit on the private side. If so then I suggest your own real-life experiences are misunderstood. I'm assuming you mean if tax was lower the people would have kept more income. Clearly this is by definition. In a nutshell, yes. It's amazing how this rather simple accounting measure is not understood more widely. The effects on savings, private debt and investment is important. If you are really interested then google "sectoral balances". There you will find that long runs of government surpluses effectively decrease private sector savings and add to private debt. There is little point in looking only at the government debt levels without consideration to the level of private debt. This is a medicare thread so its probably the wrong thread to carry on. Suffice to say that the 10 years of surplus simply moved the debt from the public sector to the private sector. Great for electioneering but the nation is actually still carrying the debt but privately. The reality is that small deficits should be the ongoing default position. It can increase private debt, but it doesn't have to do so, nor is doing so always a bad thing. For instance if the government wants to enact certain policy, it might be useful.

If you include a decline in private sector saving within private debt then it is unfortunately the case. The only escape would be via a positive number on the foreign account but we don't generally have one of those as we are net importers. Therefore private debt rises on a dollar for dollar basis.

If you have a look at some sectoral balances from around the world and you will find that private sector balances are precisely equal to the government balance + CAD

Eurozone

http://multiplier-effect.org/files/2011/11/Euro-Sectoral-Balances.png

USA

http://www.macrobusiness.com.au/wp-content/uploads/2011/03/US-sectoral-balances.gif

Canada

http://1.bp.blogspot.com/-bGNDJj_621A/Tv9BZr1eNeI/AAAAAAAAALw/rhLkijkoUdk/s1600/Household+and+government+sectoral+balances+1961Q1+-+2011Q3.png

Japan

http://bilbo.economicoutlook.net/blog/wp-content/uploads/2011/03/Japan_sectoral_balances_1980_2010.jpg

Aussie

http://bilbo.economicoutlook.net/blog/wp-content/uploads/2013/03/Australia_BD_SI_1959_2012.jpg

UK

http://bilbo.economicoutlook.net/blog/wp-content/uploads/2013/03/UK_sectoral_balances_1980_2012.jpg

crocodile wrote on Nov 4^th, 2015 at 8:23am:

mariacostel wrote on Nov 4th, 2015 at 6:24am: The point is not where they are denominated but where the money comes from and it largely comes from OVERSEAS which was my point. You are very theoretical. And you don't know of any economist suggesting a return to surplus being a good thing??  Maybe in a university perhaps where I think your experience is largely limited to. The resident status of the bond holder is irrelevant. We've had substantial foreign investment in this nation ever since the first fleet arrived. If foreigners want to invest their hard earned on us they should be welcomed. I never said that a surplus was a bad thing only that right here and now nobody is advocating for one. Surpluses in general are not bad. It is the long run of year on year ones that are problematic. Eventually the private sector runs out of savings. I can't see why you think this is too theoretical. It seems rather obvious. By the way, private local citizens and entities are also holders of other nations financial instruments. Balances out in the end.

If you are talking about surpluses coming from private sector and vice versa, the origin of where borrowed money comes from to fund deficits is a CRUCIAL issue.

Not for nations with their own sovereign currency.

Surpluses, govt taxing more than it hands out, take money out the private sector. A surplus now is madness!

The biggest problem we face here in Australia is the Labor parties absolute refusal to introduce the Liberal party to the fairies at the bottom of the garden where all the free money comes from, we cannot move forward as a nation until this endless source of wealth is made available to whatever party is in power.   

mariacostel wrote on Nov 4^th, 2015 at 12:04pm:

crocodile wrote on Nov 4th, 2015 at 8:23am: mariacostel wrote on Nov 4th, 2015 at 6:24am: The point is not where they are denominated but where the money comes from and it largely comes from OVERSEAS which was my point. You are very theoretical. And you don't know of any economist suggesting a return to surplus being a good thing??  Maybe in a university perhaps where I think your experience is largely limited to. The resident status of the bond holder is irrelevant. We've had substantial foreign investment in this nation ever since the first fleet arrived. If foreigners want to invest their hard earned on us they should be welcomed. I never said that a surplus was a bad thing only that right here and now nobody is advocating for one. Surpluses in general are not bad. It is the long run of year on year ones that are problematic. Eventually the private sector runs out of savings. I can't see why you think this is too theoretical. It seems rather obvious. By the way, private local citizens and entities are also holders of other nations financial instruments. Balances out in the end. If you are talking about surpluses coming from private sector and vice versa, the origin of where borrowed money comes from to fund deficits is a CRUCIAL issue.

It's not crucial at all. It just adds to CAD. Australia's current account is almost never in surplus. If you look at the capital flows, both in and out, private and public I can't see why you are so bothered.

http://www.rba.gov.au/speeches/2011/images/sp-ag-080711-graph1.gif

innocentbystander. wrote on Nov 4^th, 2015 at 2:51pm:

The biggest problem we face here in Australia is the Labor parties absolute refusal to introduce the Liberal party to the fairies at the bottom of the garden where all the free money comes from, we cannot move forward as a nation until this endless source of wealth is made available to whatever party is in power.

Please do more research as to why a surplus every year is actually bad for the economy.  It sucks money out of the economy.  Think of it as water in a cycle.  When water is removed, the cycle breaks.  Sure deficits are bad, but sadly most libs and uninformed voters don't understand the purpose of budgetary surpluses/deficits in the economy as opposed to that in a household. 

Here's a link to read: http://greyenlightenment.com/economic-myths-part-1-budget-surpluses-are-good/

Balanced budgets over the long term are optimum. Sometimes it is in surplus, sometimes in deficit depending on need. If the economy is strong, a surplus is necessary to soak up excess demand; conversely, when the economy is weak a deficit is often necessary to stimulate demand.

The worst thing that one can do is impose austerity on an ailing economy. It only makes the economy worse.