Jeff Kennett: Victoria’s economic Jaws eating our children’s future
As Victoria heads to a debt of $200bn, the government is attacking every generation, and the combination of political ideology and total mismanagement by Dan Andrews and Jacinta Allan has been nothing short of disgraceful.
Opinion
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The Jaws Ratio is an economic term, but one easily explained and understood.
It is a measure used in finance to demonstrate the extent to which a trading entity’s (or family or government) income growth or revenue growth rate exceeds its expenses growth rate, measured as a percentage.
In short, income exceeding expenses, or the reverse.
Every family understands how critical it is that they earn sufficient money to pay for the food they eat, energy costs, household expenses, and of course their mortgage repayments.
When the cost of living rises through no fault of their own, or when interest rates rise well above the rate they entered into their mortgage, but the income into the household does not keep pace or falls, economic stress mounts.
Sadly, for some they have to make difficult decisions of how they live, for some even having to sell their home, often at a loss to what they owe.
That of course represents a negative Jaws Ratio. Named Jaws after a shark. As we know sharks can bite ferociously.
For years I have been pointing out the Victorian government has been creating a very negative Jaws Ratio.
A combination of political ideology, total mismanagement and a lack of commercial experience.
In fact, I would go so far as to say the authoritarian leadership of Daniel Andrews and continued by Jacinta Allan has been nothing short of disgraceful, negligent even.
Every time the government announces new expenditures now the negative Jaws Ratio gets worse.
Of course, when they entered into these major infrastructure projects, all at the same time, which resulted in massive borrowings, and mounting interest repayments, together with the mismanagement of these projects, they were tightening the noose around the neck of every Victorian and business located in the state.
As a result, we see the cutback in the quality and availability of the services the government should be providing. You see it in hospitals and health services, childcare, and education, you see it in the deteriorating condition on our roads. Our ambulance and police services are a shadow of their former selves.
This is all the result of an increasing negative Jaws Ratio.
At the same time the government is attacking the middle-income Victorians with big increases in land taxes, payroll taxes for large employers, one-off charges for services such as mental health, workers compensation, and now recently higher charges for the exercising of probate for our wills. So even in death we are being pursued.
They are sucking the life out of families and businesses, there are no incentives to rebuild, for anyone.
The salary increases and bonuses to the public service, is another example of economic irresponsibility.
All things have been contributing to the negative Jaws Ratio and were occurring well before Covid, which the government uses as an excuse for its mismanagement.
Governments federal and state claim if it was not for government spending the country might have fallen into recession. Well, we are technically there already.
And quite the reverse, had we fallen into recession governments might have started reducing spending to reduce the negative Jaws Gap.
As Victoria heads to a debt of $200bn, and high interest payments, the government is attacking every generation of Victorians.
We now have the absurd situation where the federal Treasurer Jim Chalmers is blaming the Reserve Bank and their management of interest rates for the almost non-existent economic growth rate and declining productivity.
Rubbish, it is government spending at federal and state level that is keeping interest rates where they are.
There has been no national co-ordination of an economic agenda to work through this national period of change.
A bit like during the pandemic, every state eventually doing its own thing regardless of the intention of the formation of the national cabinet.
Right now, the federal government should identify the infrastructure projects they will not financially support.
For Victoria that means the feds saying unequivocally there will be no money for the Suburban Rail Loop or sadly for the moment the rail line to the airport.
The ratings agencies are equally at fault for failing in their duty to downgrade Victoria’s credit rating that properly reflects the condition of our Jaws Ratio.
Federal and state governments should reduce the number of public servants who provide backup services to those on the front line.
Finally, the continuing attack and demands on the private sector must stop, to encourage growth.
The extent of the increasing negative Jaws Ratio is adversely affecting us all. Reducing our standards of living and reducing our opportunities.
Please talk to you children about the Jaws Ratio, and what a negative Jaws Ratio means and how it is affecting their present and future.
That said, stay well.
Jeff Kennett is a former Premier of Victoria
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