The week that was – 5 May 2017

Ross Greenwood Newsletter 5 May 2017

 

“Wilmar has played everybody, every single federal politician as a complete and utter fool.

 They went and signed contracts with some of the cane-growers …conditional contracts.

In other words, even though they’ve signed contracts, as per the Code of Conduct, they (Wilmar) did not need to be obligated to those contracts.

And as a result now, many of those cane-growers, four weeks out, are still uncertain what price they are going to get for their cane.”

 

With only days to go until the Federal Budget, this is the busiest time of the year – I have even nicknamed it “grand final day”.

On Tuesday, I will be broadcasting live from Canberra and have quite the line-up planned including the Treasurer Scott Morrison, Shadow Treasurer Chris Bowen, The Business Council of Australia’s Chief Executive Jennifer Westacott and Deloitte’s Chief Economist Chris Richardson  – just to name a few.

Make sure to tune in!

But this week we have seen quite a number of pre-budget measures being taken; starting with cuts to University funding.

Do you want to know why young people, namely first home buyers, can’t afford to save for a deposit?

Of course there are a lot of reasons but one major reason is that they leave their education with tens of thousands of dollars in debt and the government has just made it harder by increasing the average course cost by 7.5 per cent, or $3,600.

This means that the maximum any student will pay for a four year course is now $50,000.

The most expensive course is a six year medical degree which will cost the student $75,000. But the tax payer, according to Education Minister Simon Birmingham, will pay $137,000 – so quite the difference.

But the sting in the tail is that students will need to start repaying their debt when they start work and their income exceeds $42,000.

The repayment threshold figure is currently at $55,000.

And considering there are not many professions with an average salary of less than $42,000, nearly all students will pay back their loans from the very first day they start work.

What is inevitably going to happen is these young adults are going to have to use their credit cards to pay back their student loans or to survive, only to wind up in more debt.

In other words, we have created a generation of young people who are in sizable debt before they even earn a dollar. And we wonder why they struggle to raise money for a housing deposit…

Senator Birmingham defended the change, arguing the existing student loan debt of $52 billion is unsustainable.

I do agree with the Senator there, $52 billion in unpaid student loans is ridiculous, and something does need to be done about it.

Now, these cuts are expected to save the government a near $2.8 billion, which is sorely needed but going about it this way, is probably not the best option.

Especially, considering the following day Prime Minister Malcolm Turnbull announced Gonski 2.0.

Gonski 2.0 is the Government’s plan to increases Commonwealth funding for schools over the next 10 years from $17.5 billion in 2017 to $30.6 billion in 2027 — a 75 per cent increase in recurrent spending.

Next week’s federal budget will even provide an extra $2.2 billion for schools over four years in addition to the $1.2 billion outlined in the 2016-17 budget.

But this overhaul will not benefit all schools. It will take away funding from a large amount of private schools which Turnbull dubbed as “overfunded” and give it to those that are “short-changed.”

Senator Birmingham agreed, saying the overhauled model would be “sector-blind” and include funding cuts for private schools.

Naturally, not all were happy.

Opposition Leader Bill Shorten said the overhaul would leave schools $22 billion worse off than they would have been under a Labor government.

Labor’s education spokeswoman, Tanya Plibersek, said the overhaul was “an act of political bastardry” and said Mr Turnbull was pretending he had saved needs-based school funding.

But my main question is – where is all the money coming from?

On Monday the Government committed to spending $6 billion on a new airport at Badgerys’s Creek after Sydney Airport walked away saying that “…the risks are considerable and endure for many decades…”

Now, the second airport is vital for Western Sydney.

By 2060, it will serve around four million people – that’s the same number that Sydney Airport serves now.

And in a rare show of bipartisanship – Labor has also supported the government funding the new airport.

But again I ask – where is the money coming from?

$6 billion is to be spent on a new airport and $13 billion to go to schools over the next decade…

Where is this money coming from?

Well, of course it’s going to be borrowed!

Latest’s stats show that the government already has $490 billion in gross debt and its rising fast.

Now, I suspect this is all in line with the Treasurer’s new idea for the budget of “good debt, bad debt.”

The government should use low interest rates to invest in infrastructure that can be sold off to the private sector – that explains Badgerys’s Creek.

But it doesn’t explain education.

Education is important, because it sets up future generations as taxpayers, but this overhaul is a massive punt.

Pouring more money into education which is supposed to deliver better outcomes and better students who will pay more tax …but I don’t buy it.

Education is something that you should pay for as you go because the outcomes are not guaranteed.

We’ll see how this all pans out come Budget Night on Tuesday.

In other breaking news this week, the Duke of Edinburgh, Prince Phillip, has announced that he will no longer be attending public royal engagements – effectively, he is going into retirement.

And at the ripe old age of 95 years, 96 next month, I have to say, it is well-deserved.

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