Imagine running an organisation where you decided what your expenses and revenues would be. Where all you had to do to raise another billion was vote on it or issue a decree. And your performance only mattered every three years.
Australia’s Treasurer, supposedly the world’s best, finds himself in just that situation. But you’ll never guess how he’s decided to keep his organisation profitable.
Actually, you’ll already know. It’s been all over the news. The government has cut the baby bonus from $5000 to $3000 for the second and subsequent children families have.
Wayne Swan is profiting off the back of babies. And unborn ones at that! Worst of all, he’s picking on the younger siblings.
It’s quite a clever ruse, really. Babies, especially unborn ones, don’t vote.
But it’s not just the government that can profit from this change. The editorial team here in the office was always one step ahead of the Treasurer. Knowing Australia’s fiscal position was about to become dire, several colleagues went off and multiplied.
The good news is that every newborn will make the cut-off for the $5000 baby bonus. Sadly, their parent doesn’t seem to come out for Friday afternoon drinks with their cash windfall.
If you don’t believe that this was a tactical move on the part of our clever editors, consider that three of the happy parents had, or are about to have, their second child within the cut-off date. That’s $6000 less in savings for Wayne Swan’s Budget.
We’re not sure if we’re licensed to give financial advice about making babies, but you’re certainly cutting it close if you want to outsmart Wayne Swan and his July 1st cut-off date. Good luck.
Governing at a Profit
You’re probably wondering why we’re not singing praises for the government’s commitment to responsible finances. Well, it’s not because we’re a one-sided two-faced political hack. We’re no-sided. Neither side would take us.
So we’re left with logic and reason to try and justify what we think, not just a political label which entitles us to support or ridicule. But given our support of sound money, surely we should cheer a budget surplus. So why isn’t the government’s budget surplus a good thing?
Perhaps because it’s too small? Nope, only in the minds of politicians and journalists is $1 billion too small. Imagine what you could do with your share — about $50.
Maybe the surplus is pathetic because it’s imaginary? As Wayne learned the hard way these past months, a budget surplus can disappear when it comes time to tally the numbers at the end of the year. But that’s true of any budget.
No, what’s wrong about governing at a profit is the underlying idea. There’s something wrong about telling people what they’re allowed to keep. And what they’re allowed to get. And then claiming to keep the difference on their behalf. It’s almost as bad as running up debts on their behalf.
In a world where government has these powers, do you really own anything? If the government can decree how much of your income you get to keep, do you really own that income in the first place? Or are you working and letting your ruler determine what cut you’re allowed to keep?
Do you want to live in a world where the ruler is allowed to decree policies like ‘thy second and subsequent child shalt be worth 3/5ths the value of the first to the state’? If they can decide that, what else can the government fiddle about with?
When it comes to seemingly good ideas like the baby bonus, keep in mind the government is only giving back to parents what it takes from them in the first place in the form of taxes. With a cut skimmed off the top for bureaucratic costs of course. Not to mention bribes for foreign government officials, which are probably quite expensive.
The Only Winners from the Government Gravy Train
You have to wonder how much the cost of government could be reduced if people just had one net payment rather than paying taxes, fines, fees, and then getting grants, subsidies, baby bonuses and the rest of it.
But that would destroy thousands of paper shuffling jobs. And one heck of a voting bloc…which works for the people it’s voting for. Conflict of interest anyone?
The main reason a ‘net payment system’ will never happen is that politicians form bonds with their voting blocs based on the cash they dish out.
Parents need help.
Farmers are too important to leave to themselves.
The car industry is a crucial component of our economy.
Pretty soon everyone gets their cut of the government gravy train, not realising they’re paying for everyone else’s cut at the same time. The only ones left benefiting from the confusion and complexity are politicians and their bureaucratic armies.
Thinking selfishly, why is it that childless newsletter writers never seem to get subsidies?
Anyway, as for the recent budget changes, it’s not just unborn younger siblings the government is making money off. Some changes to the government’s biggest ruse, Superannuation, are providing ‘savings’ too.
The Australian Tax Office will be allowed to confiscate ‘inactive’ super accounts with balances less than $2,000. Part of the definition of ‘inactive’ is an account to which there has been no contributions in the last 12 months.
The previous rule only allowed the ATO to raid the money if the ‘inactive’ accounts had less than $200 and there had been no contributions for the last five years. The rule change could net the government an extra $900 million. Suddenly a billion dollars isn’t so small, right?
A little super here…a little there…and pretty soon you’re talking real free money for the government. Kris Sayce has written about the government’s ‘super theft’ for years. He’s continuing to write about it in his new free e-letter, Pursuit of Happiness.
Two weeks ago Kris said ‘super theft’ would be one of the big stories of 2013. It looks as though the big story is taking place sooner than that.
And in tomorrow’s issue of Pursuit of Happiness, Kris will cover the subject in more detail. To subscribe to his new FREE eletter, click here now…
Whether you’re saving for retirement or extensions to your family, the government is tightening the noose it has on you. It doesn’t matter if that’s for your own good, the noose shouldn’t exist in the first place. But it does. And you have to invest and run the rest of your life with that in mind.
We’ve just completed three reports on three ways you can do just that. The first makes you money. The second keeps it safe and takes advantage of a government policy in the making. And the third is about a more dramatic way to cut free altogether.
The reports should be available next week.
Nick Hubble
Editor, Money Morning
From the Port Phillip Publishing Library
Special Report:
After the Bust
Daily Reckoning:
NAB and Australian Banking is Oversized and Under Pressure
Money Morning:
Stock Market ‘Barometer’ Speaks: The Bulls Won’t Like it…
Pursuit of Happiness:
Start Your ‘One Dollar’ Saving Plan Today
