19 January 2009

Unemployment to double?

| johnboy
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Idiot media are busy talking us all into a serious economic downturn. The local ABC is joining in warning that unemployment in the ACT is set to “Double” (Terrifying!).

Coming off a base so low that job creation has become a negative when developments are assessed this actually means a rise to a still very low 5.4% sometime next year.

But seeing has how Chris Richardson and Access Economics might as well be throwing darts at a board to make their predictions I wouldn’t worry too much about that either.

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neanderthalsis1:00 pm 20 Jan 09

johnboy said :

Hmm, I used to feel the same way neanderthalsis, until I did some work with the ACCI.

Those guys really do want to charge workers for the air they breathe.

When were you with ACCI?

Not just in the comms industry. In a former job, 24/7 on call was the norm for about the same money as an APS 3. Wonder why they lost 13 managers in 2 years. From what I hear, this company has not changed and this is a really big well known company that most people use 1 or 2 times a week. But that is retail.

Agreed neanderthalsis on the outcome. The comms industry is rife with this behaviour. It never seemed to change. No unions involved. So I guess I’ve become cynical about what goes on in the boardroom.

Hmm, I used to feel the same way neanderthalsis, until I did some work with the ACCI.

Those guys really do want to charge workers for the air they breathe.

neanderthalsis10:10 am 20 Jan 09

dexi said :

Wouldn’t the employers just work its staff longer and harder, then pocket the difference?

Oddly enough Dexi, despite what the Unions would have you believe, most employers don’t want to work their staff to death then give themselves a payrise from the unspent salaries of the dead. Employers generally aren’t sitting around the boardroom table discussing how best to screw over workers. This only really happens in the ACTU/Labor fantasy land.

Increased work hours or workload increases often lead to increases in lost time incidents: stress leave, sickness, injury etc. This costs an employer time and money either through lost productivity or replacing the missing staff.

harvyk1 said :

sexynotsmart, wasn’t the DVA contract owned by IBM?

it was, but it wasn’t an outsource. this it the gershon report in action. Why would a Government department remove an entire IT department? unless they are going to be outsourced?

dexi,

re the cut back on overtime, many industries don’t recognise overtime. it is a case of do the job, and work till it is done. In the IT industry, when responding to a tender, you might pull an all-nighter. but you get the job done. and if you win the tender, there are benefits… if you don’t, next tender please.

Say for instance person A gets paid $1000 per week with no tax on it and they go and my an item normally worth $100, but with 35% tax added it’s now $135. Other countries can still sell the item for $100, and thus the person buys it over the web for the $35 saving.

On the other hand if you have $1000, they then take out $350 leaving $650, and there is no GST the item is $100, be it brought locally or over the web.

All that making a big GST will do is drive local businesses out of business as everyone turns to the web for all purchases.

I agree, we need a flat and simple tax system. One that you earn a dollar you have 20c come out in tax but that’s it. No exceptions and no deductions.

harvyk1 said :

thetruth, I kinda think your onto something. The only problem is that if everything here in OZ had a GST of 35% added to it, most of the big ticket items (and quite a few of the smaller ones too) would be purchased over the internet to excape paying tax. It’d also make us a no-go destination as far as the world is concerned given we’d be an expensive place to visit.

The problem with taxes is that getting around them is easy for the rich (good accountants) and the poor (Centrelink). It’s the middle class that take the brunt.

Now if you could get the whole world to use a 35% GST, that’d be something, but it’s hardly going to happen any time soon, and by that stage anyways I doubt our alien overlords are really going to care about something as trivial as taxation.

Don’t forget – no income tax, sales tax wet tax, stamp duty – the prices would even out (the 35% was a number picked out of the sky , just need to do the sums

dexi said :

It good to see a discussion on unemployment revolves around tax cuts.

Maybe someone could explain how that will help employ people?

I found that one person can do the work of two or three people if he works long enough hours and takes short cuts. Contract labour can make further cuts for the need to employ people or produce quality work. We seem to have a large proportion of over worked employees doing cheap, quick work(only my experience). I suppose that’s the way to make a profit.

Isn’t it greed that brings us this recession?

Why couldn’t you drop wages and limit overtime to slow the unemployment rate?

Businesses invest employ people + jobs. Only hard for morons

sexynotsmart, wasn’t the DVA contract owned by IBM?

thetruth, I kinda think your onto something. The only problem is that if everything here in OZ had a GST of 35% added to it, most of the big ticket items (and quite a few of the smaller ones too) would be purchased over the internet to excape paying tax. It’d also make us a no-go destination as far as the world is concerned given we’d be an expensive place to visit.

The problem with taxes is that getting around them is easy for the rich (good accountants) and the poor (Centrelink). It’s the middle class that take the brunt.

Now if you could get the whole world to use a 35% GST, that’d be something, but it’s hardly going to happen any time soon, and by that stage anyways I doubt our alien overlords are really going to care about something as trivial as taxation.

sexynotsmart10:22 pm 19 Jan 09

I just got off the phone from a mate who was contracting at DVA. Apparently they sacked an entire IT division today – contractors and permanents. All their projects are cancelled. Management are calling it “paused”, but we don’t think anyone would cull APS staff if they’re ever looking to “unpause”.

Some of the contractors have been given two weeks to tidy things up. The permanents have been told there might be opportunities in other divisions or departments. The news was given by videoconference. There were people from HR present who asked if anyone had questions about VRs (apparently no departments are hiring right now so there’s nowhere for excess staff to re-deploy to).

So if anyone thought this was just going to involve some belt-tightening rhetoric, or highly-leveraged businesses trimming the sails, think again.

VYBerlinaV8_the_one_they_all_copy6:59 pm 19 Jan 09

This is where the free market comes in. When there’s lots of work to be done, and not enough humans (kinda like now), employers need to be competitive in what they offer staff, or the staff bail off to find a better deal.

That said, I don’t think it’s really relevant, since tax is between you and the govt, the employer is just the middle man. If they take the wrong amount, you get is later anyway (or pay back the extra).

Wouldn’t the employers just work its staff longer and harder, then pocket the difference?

VYBerlinaV8_the_one_they_all_copy6:47 pm 19 Jan 09

It good to see a discussion on unemployment revolves around tax cuts.

Maybe someone could explain how that will help employ people?

If tax is cut, people have more money in their pocket. People then spend more (on average). The money they spend goes to businesses and service providers who employ people. These people who are employed then spend their salary with other businesses and service providers. And so it goes on. People spending stimulates the economy, leading to more jobs.

Conversely, if you artificially drop wages and limit overtime people have less to spend, and businesses and service providers fire staff, cos their isn’t enough for them to do.

peterh said :

my idea of tax is:

flat rate as well
no GST on any food, manufactured or not, whatsoever.

actually, no GST!

Heres a better way – no other tax BUT GST say 35% (whatever it would take) – not tax returns (just BAS which is the same at 10% as 35%). You could give a GST rebate on the first $20k (whatever level) that you spend to assist the low income earners (increased by an amount for each dependent for families and carers.

keep the exemption on food – no deductions no receipts (past the first $20k +) no accountants, tax rulings, tax dodgers, no tax on exports, no tax on savings (only spendings), no tax on investment, no tax on jobs.

It good to see a discussion on unemployment revolves around tax cuts.

Maybe someone could explain how that will help employ people?

I found that one person can do the work of two or three people if he works long enough hours and takes short cuts. Contract labour can make further cuts for the need to employ people or produce quality work. We seem to have a large proportion of over worked employees doing cheap, quick work(only my experience). I suppose that’s the way to make a profit.

Isn’t it greed that brings us this recession?

Why couldn’t you drop wages and limit overtime to slow the unemployment rate?

On capital gains tax – I have alway been a bit perplexed.

Most assets only have a value if it has a future income stream (collectables is a bit different). so if the future income stream of the asset goes up then the value of the asset goes up. If I sell that income stream I get slugged for the tax based on the value of future income – THEN when the person that bought that asset gets the income – they also pay tax.

Has that particular asset been double taxed?????

I just caught Turnbull on the National Nine News advocating tax cuts to combat the economic downturn…or at least that’s what I assume he was doing as he got about 6 seconds of airtime.

This is why I get my news from the internerd.

neanderthalsis said :

I’m a big fan of tax simplification.
my dream world:
Tax free theshold: $15 000
2 bands, 15% & 30%
Apply the same for corporate tax.

Cut Capital Gains tax as it is a major constraint on investment

Because of dividend imputation corporate tax is just an advance on an individuals tax OR a tax on retained earnings. Retained earnings is what give capital adequacy and investment for more growth. SO corporate tax is merely a tax on investment and / or resilience. Only tax company income when it is distributed and then watch the balance sheets impove and investment in longer term occur

Actually just found the actual quote

“Economists have correctly predicted nine of the last five recessions.”

Whats that economist joke? Something like

“Economists have predicted 200 of the last ten recessions”

VYBerlinaV8_the_one_they_all_copy4:17 pm 19 Jan 09

Middle class welfare is ridiculous, and a waste of taxpayer dollars.

my idea of tax is:

flat rate as well
no GST on any food, manufactured or not, whatsoever.

actually, no GST!

We have many years of underfunded infrastructure to fix, and giving public money to people who DO NOT NEED IT is rather obscene.

Exactly. Surely if they were to spend all the money on building roads, bridges and hospitals, that would get the money straight into the economy too?

ant said :

I remain to be convinced that using tax money for middle class welfare is defensible or necessary. We have many years of underfunded infrastructure to fix, and giving public money to people who DO NOT NEED IT is rather obscene.

This stimulus money nonsense actually started in teh US. I got a stimulus payment from the US, but not from here. I jsut think it’s crazy, short-sighted and bad policy.

perhaps the government could release all the stalled projects, contracts and other purchases that they have put on hold as a result of the Gershon report. Although this would be of benefit to the ICT industry initially, the flow on effect would help prop up the rest of the economy, and help alleviate the impact that the downturn currently has had on the IT sector.

What we’re actually seeing is the success of capitalism creating wealth in developing nations. The NYSE collapses are a correction which is badly overdue because companies have not been as open as they should have been. The US govt is simply throwing its money away because the US economy will never again have the same clout as a proportion of the world’s economy.

The world is simply adjusting to this correction.

I remain to be convinced that using tax money for middle class welfare is defensible or necessary. We have many years of underfunded infrastructure to fix, and giving public money to people who DO NOT NEED IT is rather obscene.

This stimulus money nonsense actually started in teh US. I got a stimulus payment from the US, but not from here. I jsut think it’s crazy, short-sighted and bad policy.

Like the South Pacific Paso… errr.. NZD…

Madman said :

If all the economist say the rates will come down, job vacancies will fall, then I’ve got my top dollar on the opposite. After all, these are the same people who told us the dollar would rise to be in-line with the U.S. $$….

almost hit parity. then we slid back. but not as far as we could have. we are trading in the 60c range at the moment. really bad would be in the 30c range.

At this stage I’ll take precautions, but I’m not about to stock my house with food and guns and wait for the new world order to take over.

I am, but it has nothing to do with the financial crisis.

If all the economist say the rates will come down, job vacancies will fall, then I’ve got my top dollar on the opposite. After all, these are the same people who told us the dollar would rise to be in-line with the U.S. $$….

random said :

You don’t think the popping of a multi-trillion-dollar credit bubble has anything to do with it? The resulting collapse in trade finance?

I’m not saying that the credit bubble had nothing to do with it, infact when I first heard about the credit bubble bursting all I could think was “these are going to be interesting times ahead”, however consumers care more about what doomsday message has been written in a local newspaper, than someone on wall st losing money hand over foot.

I guess I don’t quite give in to the panic and hysteria which sometimes follows these things. If I start to see oppurtunities dry up, then I’ll worry. At this stage I’ll take precautions, but I’m not about to stock my house with food and guns and wait for the new world order to take over.

Because the numbers being thrown around are just so preposterously large and at so high a ‘helicopter view’ that they’re incomprehensible to most people.

“This recession is more driven by the media than anything else.”

You don’t think the popping of a multi-trillion-dollar credit bubble has anything to do with it? The resulting collapse in trade finance?

Seems to me that most of the frightening news and speculation isn’t getting to the mainstream media anyway.

That Access guy is as economically usefull as cow dung on the road flattened by some semi-trailers….

“I recall recently reading something that poker machine revenue in QLD had gone up some $15M over December.
Your tax dollars at work.”

Thumper, perhaps it could also be that the party season in December, (many christmas parties, functions, wedding groups) regular QLDers on break, and people on holidays in QLD could have added to that figure as well??
Not fair to suggest that people who have received this payment were automatically wholly responsible on their lonesome.

You watch, as unemployment rises all the politicians blame it on the global economic crisis, but when it falls again, it will all be due to their personal efforts.

VYBerlinaV8_the_one_they_all_copy1:22 pm 19 Jan 09

My idea of tax is:
1) Flat tax rate for all humans and legal entities (eg companies).
2) Humans get a tax free threshold, legal entities don’t. Adjust the tax free threshold to suit.
3) Adopt the US model of allowing capital gains taxes to be deferred if the proceeds of sale of an asset are used for further investment.

neanderthalsis1:06 pm 19 Jan 09

I’m a big fan of tax simplification.
my dream world:
Tax free theshold: $15 000
2 bands, 15% & 30%
Apply the same for corporate tax.

Cut Capital Gains tax as it is a major constraint on investment

5 Stages of Grief
Denial:
It’s different in Australia, we are isolated from the world because of [insert reason].
Anger:
Stop talking about a recession you bloody idiot. It’s all [insert polies name] fault.
Bargaining:
We should cut taxes and give handouts of wads of cash. That will fix everything.
Depression:
why bother with anything. The economy is stuffed.
Acceptance:
I can’t fight it, I may as well prepare for it.

Which stage are you in?

This recession is more driven by the media than anything else. The scary thing is that there are enough people who blindly follow what the media says that it can affect the markets.

Canberra is a pretty safe place to work. We only have one major industry, and short of the rest of Australia deciding to no longer pay taxes, that industry has a future.

I’d be a little more worried in Sydney or Melbourne, but not in Canberra.

I like your thoughts jakez.

I’d suggest slashing the corporate tax rate to have it equal to the top income tax bracket. I’d also remove tax deductability and abolish tax returns. Then I’d abolish the ATO and provide a scheme to re-train accountants as they adapt to a world with no tax returns. After that, I’d have a look at how we’re going financially and we’d take it from there.

My view is that the Howard Govt’s biggest mistake was the first home builder/owner scheme. It didn’t want a recession, no matter how technical, so it propped up the building industry which was going through a correction post Olympics-boom. The small recession didn’t occur, but home prices and rentals went up, fueling inflation and ensuring much of the big rises in a person’s economic worth was on paper only.

tylersmayhem12:58 pm 19 Jan 09

The answer:

Work harder, dress better, be consistent and deliver on what your job required. Be better than the guy next you you – ALL the time. When it comes to cuts, this will hopefully be to your benefit, and hey – you’re actually earning your dollars.

I know this is a off-the-cuff response and in many ways La La Land, but coming from a cut-throat contracting background, it’s this that had my contracts extended through the full timers redundancies and other contractors getting the boot.

Giving $1000 to the unemployed and pensioners economically achieved bugger all except maybe a boom in pokies revenue.

A boom for drug dealers as well if someone I know is anything to go by.

I wouldn’t even know HOW to spend $1600 on drugs.

Re tax cuts: I love tax cuts more than anyone here most likely. My pet issue is taxation (god knows how that happened). The problem as mentioned above is that its hard to get tax cuts out into the economy quickly. For the purposes of attempting to shock stimulate the economy in a very short term timeframe, they don’t trickle through fast enough.

I think the Federal Government’s choices were politically motivated rather than economically motivated however I can see the general idea.

If you wanted to use tax cuts as a short term boost you could try what the US tried a few months before it all fell apart. They had a stimulus plan where every worker was cut a cheque of some amount (I forget what it was), which was basically an advance on a tax refund. What most people in the US didn’t realise was that it was more of a loan than an actual tax cut, however you could easily modify it so that it was a tax cut. There are administrative issues and costs I’m sure though.

In the medium and long term, a strong decrease in tax revenue coupled with the Government not wasting money on dubious programs. Public choice theory and politics being what they are though, it’s extremely difficult to get rid of programs once they have been initiated (the Howard Government’s big failing was it’s post 2000 profligacy in this regard).

Families were the ones who got the cash! The pensioners got $2600 (which, given I know some people living on the single pension, went on things like chrissie presents and bills) and families got $1000 for having kids (though the rich parents didnt get anything as it was means tested).

So really, given the timing, most of the money would have gone into presents, plasmas or plastic (credit card payments) all of which either directly stimulate the economy or make future sitmulation possible (bigger gap between balance and credit card limit).

Tax cuts on the other hand only give you an extra $10 a week, so they take a fair bit longer to result in extra growth in the economy.

neanderthalsis12:25 pm 19 Jan 09

johnboy said :

Wayne Swan needs stringing up for the way he’s mis-managed the messages on this one.

He doesn’t do much for confidence.

Living in total denial does little for economic confidence. He can’t seem to fathom that in order to steer the ship past the iceberg you need to acknowledge that the iceberg is actually there.

Giving $1000 to the unemployed and pensioners economically achieved bugger all except maybe a boom in pokies revenue. Broad tax cuts for businesses and the working population (or “working families” if you’re that way inclined) would do far more to encourage spending and stimulate growth.

VYBerlinaV8_the_one_they_all_copy12:15 pm 19 Jan 09

Media makes more money by selling fear than news. Look at the tone of our headlines these days. Of course it’s the end of the world! I would suggest that the ACT has the most stable employers in the country, given that it’s a govt town. Work hard and be sensible and you should be fine.

Wayne Swan needs stringing up for the way he’s mis-managed the messages on this one.

He doesn’t do much for confidence.

I have never seen a recession flagged so early in the process. Looking back to previous recessions, we were well and truly in them before the pundits sounded the alarm.

This one has had such a big lead-in, and with the commentators talking up the end of teh world while the numbers stil aren’t showing any sign of it is a new one. Wayne Swan was making sombre comments over the weekend, reported in The Australian.

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