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| Buy or Sell? | |
With the Liberal Party trying to flog off Telstra like expiring dairy goods, and
the the ALP trying to cling dearly to their proud (if outdated) socialist
policy of nationalizing the means of production, a new player has weighed in.
Maverick Democrat Meg (I'm-no-lightweight) Lees, recognizing that relevance is a good as real
policies has said that a Telstra sale was 'inevitable'. Interesting, she
also said that the worst thing to do with the money was to put it into the
'black hole' of retirement of public debt. Bearing in mind that the sale of the remaining 50% of Telstra is likely to
net about $30 Billion ($30B), there are three possibilities.
- ALP: Keep it (and also keep the public debt).
- Liberal: Sell it, and virtually retire our public debt.
- Lees: Sell it, and spend the money 'usefully'.
There is a huge misunderstanding in Australia about the money in the sale
itself. Many people are angry about having paid Telstra exorbitant fees for the
last 30 years, and then seen nothing from the sale of the first 50%, and don't
want to see this happen again. Unfortunately they fail to understand the
situation. People perceive personal debt as something to worry about, but seem
to regard public debt as 'the government's problem'. Ultimately it's your
problem too. Lets put it like this: The ALP, in their wild 13-year spending spree ran up
debt to about $5200 on behalf of every man, woman and child in this
country. ($96B total). The Liberal Government has, over the past 6 years paid
off most of that, and we now owe only about $AU2000 each. It would be nice to
think they did this through sound economic management, but in reality they did
this mostly through the sale of public assets. It's also fair to point out that
the ALP inherited about a quarter of this debt from the Malcolm
(we're-making-life-easier-for-ourselves) Fraser government. Anyway, the $2000 is money which has to be paid back (with interest) as taxes
or sales of public assets in the future. The sale of the last 50% of Telstra can
reduce that by about $1600. Would you rather owe $2000 or $400? Of course, the government could just hand out $1600 worth of Telstra shares to
each Australian citizen, but there isn't much point in having $1600 in Telstra
shares AND $1600 in debt. You may as well just sell the shares, and use the
$1600 to pay of your debt. If you prefer $1600 worth of Telstra shares, you can
use your own credit card, and buy that much on the float. (hint - borrowing
money on your credit card to spend on the stock exchange is generally not a smart thing
to do). Of course if they hadn't borrowed the money on our behalf in the first place we
could just get the Telstra shares and choose whether to sell them or not, and
we would all be better off, but we foolishly kept voting for a government in
love with our communal credit card. It might be annoying to see our $30B asset going into the hands of the rich
and powerful, but the government effectively already did this when they
borrowed money on our behalf. We simply have the choice about whether to give
them the rest of Telstra, or whether we want to pay the money as higher taxes,
or keep paying the interest indefinitely. One way, or another, every man, woman and child in this country is going to
pay the price of government debt. [please accept my apologies if the figures above are a little rubbery. Feel
free to correct them - it will not change the underlying arguments.]
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