Taxes and their Economic, Social and Political Issues in the light of the Coronavirus Epidemic

Introduction

The Australian Government uses its own currency, issued by the Reserve Bank of Australia (RBA). China, USA, Japan, the United Kingdom, New Zealand and many others do the same. A Sovereign currency Government creates money at the computer keyboard

The State and Local Governments cannot issue currency and rely on transfer payments from the Australian Federal Government, State and local taxes, stamp duties, rates, fines and fees, poker machine taxes etc.

Money enters the system when the government spends it into existence. The Australian Government requires that it’s taxes are paid only in $ Australian, ensuring acceptance of its currency.

I’m from the Tax Department!

Despite abandoning the Gold Standard and moving towards a modern economy in the 1940’s, there is a commonly held view that taxes are needed to fund government spending – “the Taxpayers Dollar” is a term widely used today.

Away back in the middle of the twentieth century, Ruml, Lerner and others demonstrated a clear understanding of how a modern economy really works. We have failed to use these insights. For a more complete discussion see We don’t need the taxes of the rich

In 1946, Beardsley Ruml published Taxes for Revenue Are Obsolete He was then Chairman of the Federal Reserve Bank of New York.He argued that “… given (1) control of a central banking system and (2) an inconvertible currency, a sovereign national government is finally free of money worries and need no longer levy taxes for the purpose of providing itself with revenue. All taxation, therefore should be regarded from the point of view of social and economic consequences.”

A taxation system that deters work effort and directs resources into {understandably) seeking ways to reduce a confiscatory tax system is ridiculous. So too is the superannuation system, bank taxes, GST, supporting (fudging?) GDP through unsustainable immigration and so much more.

Taxation supports demand for the currency.

The Australian Government requires that its taxes are paid only in $A, ensuring acceptance of the currency only it can issue. Taxation supports demand for the currency. The Australian Government’s capacity to spend is independent of taxation revenue.   It spends first and taxes afterwards. This ‘spending’ circulates until governments tax the money out of existence.

Taxes should be all about public purpose and should never be about raising revenue.

Tax is all about the social consequences – the total impact of each tax on the real economy and on people’s well-being. In a modern economy, spending and taxing are economically separate activities.

Taxes can be levied to curb inflation or to advance economic issues or address social issues, stimulate research and local manufacture and much more. All taxation should be regarded from the point of view of social and economic consequences.

A core principle of tax design is neutrality: ensuring that taxes depend on behaviour as little as possible. Keeping tax as low as is necessary mitigates tax dodging. When the cost to avoid a big tax bill involves mobs of records, tax accountants, lawyers and even off-shore havens, then it will often be a better choice is to pay it, not dodge it.

Keep it simple and as small as necessary to achieve its fundamental purposes, which have nothing to do with raising revenue to spend. All taxation should be regarded from the point of view of social and economic consequences.

Some examples of many socially destructive and ill-considered taxes

Excise on petrol is 41 cents per litre. GST adds 10%. This means we usually pay tax at around 54 cents a litre. Rationale seems to be to raise funds to support the transportation infrastructure. Excise and GST are regressive taxes affecting mostly those least able to afford a ‘hit’

State governments considering increasing excise taxes to back-fill revenue failures and pay for increased expenses due to the economic impact of the coronavirus shutdown is “bad tax policy,” according to an analysis by the Washington, D.C.-based Tax Foundation.

“The coronavirus-induced economic crisis has impacted “almost every meaningful source of state revenue,” Ulrik Boesen from the Tax Foundation says in a new report published on state deficits.”

The single most expensive ingredient in Australian beer is Australian Government tax. Tax accounts for almost half (42%) of the price of a typical carton of full-strength beer. Of the $52.00 retail price, a whopping $21.84 is tax. Beer excise Aust World’s worst

Fuel tax credits provide businesses with a credit for the fuel tax (excise or customs duty) that’s included in the price of fuel used in machinery, plant equipment,heavy vehicles and light vehicles travelling off public roads or on private roads.

Goods and Services Tax (GST) – We pay GST on power bills and phone/ NBN bills! Abolition of the GST would be sensible. The States should be funded by the Federal Government by Grants and not by using  the present  bizarre GST link.

GST and Fuel taxes see very substantial cost to businesses – Requires Business Activity Statement (BAS). Cost of record keeping for BAS estimates suggests businesses pay billions in time, tax accountants etc – MYOB has estimated that the time lost to GST compliance for the approximate two million small businesses in Australia equates to a productivity cost of $13.5 billion. (MYOB is a business software supplier and its estimate needs verification – high cost nevertheless.)

The systems can easily be fudged e.g. diesel in private cars from tractor stocks. GST is easily avoided. A anyone seeking repairs or maintenance to property or vehicles and other things is usually offered a cheaper price for cash, i.e. GST free.  GST also sees some dodgy companies collecting GST and later deliberately liquidated to avoid paying its debts, including taxes, creditors and employees. A new company is then created to continue the business of the company that has been placed in liquidation. See discussion Combating Illegal Pheonixing

Corporate Tax

Corporate tax is a particularly misunderstood and misused weapon. To again quote Beardsley Ruml:-Taxes for Revenue are Obsolete. “ Taxes on corporation profits have three principal consequences —- all of them bad. The bad effects of the corporation income tax are:-

  • “The money which is taken from the corporation in taxes must from the people, in the higher prices they pay;… from the corporation’s own employees in wages that are lower than they otherwise would be … from the corporation’s stockholders, in lower rate of return …harmful to production, purchasing power, and to investment.
  • The corporation income tax is the cause of double taxation. ….taxed once when his profit is earned by the corporation… again when he receives the profit as a dividend . …. stockholders with small incomes bear as heavy a burden under the corporation income tax as do stockholders with large incomes.”

Ruml also pointed out that:-

  • “A corporation is nothing but a method of doing business which is embodied in words inscribed on a piece of paper. The tax must be paid by one or more of the people who are parties at interest in the business…
  • …. the bad effect of tax consideration on business judgment is seen in the preferred position that debt financing has over equity financing. … interest and rents… are deductible as expense; whereas dividends paid are not . …. weighs the scales always in favor of debt financing, since no income tax is paid on the deductible costs of this form of capital. … in many cases, a high corporation income tax induces management to make expenditures which prudent judgment would avoid.
  • Corporation income tax results in either higher prices, lower wages, reduced return on investment, or all three in combination. The effects of the corporation income tax are bad effects.
  • Suppose the corporation income tax were removed, where would the money go that is now paid in taxes? … a large share would go in lower prices, and a smaller share would go in higher wages and in higher yield on savings invested in the industry.
  • A high corporation income tax induces management to make expenditures which prudent judgement would avoid. This is particularly true if a long-term benefit may result, a benefit which cannot or need not be capitalized.
  • The public purposes to be served by taxation are not thereby well served. The tax is uncertain in its effect with respect to the stabilisation of the dollar, and it is inequitable as part of a progressive levy on individual income. It tends to raise the prices of goods and services. It tends to keep wages lower than they otherwise might be. It reduces the yield on investment and obstructs the flow of savings into business enterprise.”

The foregoing supports a case for low or nil corporate tax and use instead other imposts and fees to address conduct or products that are at odds with the public good; eg fees for a licence at premises used to sell junk food or advertise gambling promoters, etc. Perhaps some fee or tax on certain advertising destined for viewing on the internet, payable by Google or Facebook of whatever.

Superannuation, Future Funds and Sovereign Funds

Superannuation, Future Funds and Sovereign Funds are effectively a tax on businesses and individuals with exorbitant management fees and offshore investment rife. Trillions in assets – billions a year in fees and wasted insurance premiums – value of the tax concessions far outweighs the reduction in Age Pension outlays. Judith Sloan  The Australian Contributing Economics Editor 18 August 2018 wrote-

… forces many people to forgo valuable current consumption — think buying a house, paying school fees and the like — in order to knock off their full entitlement to the Age Pension. In other words, it is essentially a tax — and an inefficient one at that. Second, the unmanaged basis of the super industry has created a bounty of wealth for those who run the funds and the associated entities. …..The bottom line is the industry is beset with problems that ultimately stem from the compulsory nature of contributions.’

 

The Australian Business Review 2 May 2020

“Super does not fulfil the requirement of a retirement income system; it’s better thought of as a growth-sapping, resource-wasting, tax-advantaged asset purchase scheme for high income earners, that may ultimately have little effect on reducing reliance on the age pension system.”

Aged pension more effective in retirement than ‘failed’ super

The Government should provide pensions and disability income at responsibly generous levels, with private superannuation available to those who chose it, at their own cost without tax concession, to augment their government pensions. Australia’s sovereign currency government can always repay its liabilities, which are repayable in $A,as they fall due.

The rationale for the Future Fund:-’We invest the assets of the Future Fund, the Medical Research Future Fund, the DisabilityCare Australia Fund, the Aboriginal and Torres Strait Islander Land and Sea Future Fund and two Nation-building Funds’.

Australia’s sovereign currency government can always fund medical research, care for the disabled and provide sensibly and adequately for Indigenous need. Australia’s sovereign currency government can always fund medical research, care for the disabled and provide sensibly and adequately for Indigenous needs right now and an on-going basis in $A, when and where they are needed, many urgently right now.

A future fund is costly to oversee and manage, as is any venture depending on return on investment. The fund is at the mercy of markets and trade wars e.g. USA/China tariff wars, which has seen falling stock markets, leaving returns in doubt.

The Coronavirus epidemic and Government’s responses  have  exacerbated the problems inherent in a Stock Market based, privatised program supposedly for the future ‘Public Good’.

The Australian Future Funds have substantial investment in Global Equities e.g. Future Fund as at 31 March 2019 has 17.4% in Developed markets and 9.00% in Emerging markets. This at the same time as Australia’s Public Good is grossly diminished by unemployment, underemployment, crappy Aged Care, contemptuous NewStart and disgraceful Indigenous disadvantage.

A Sovereign Currency Government – Australia’s – can always  pay for things as they fall due and to fund their superannuation liabilities when they became due, without any need to reduce any other necessary spending,

Those (few) governments with fixed exchange rate currencies have to fund future liabilities before they come due. Enough reserves must be held to make the guaranteed conversion features of the currency work. It also applies to non-government users of a currency.

A government with a Future Fund or Sovereign Fund spends an amount equal to that which drains it from the private sector with taxes to speculate in the financial and broader asset markets (domestic and abroad). It buys up assets including shares and real estate.It  competes in the private equity market to fuel speculation in financial assets and distort allocations of capital.

What the government does to generate the ‘funds” for its Future Fund adversely affects the economy and the public good. The Federal Government spends less than it taxes and this leads to ever decreasing levels of net private savings. The Private Sector has to borrow more to stay afloat. Private Sector debt is at an all-time high and worse in Australia than just about anywhere else.

The Future Fund’s investments are largely overseas with around 35% in USA, Europe 7 % Britain 3% Japan 8% Developed (other) 5% Emerging  Economies 21% – See https://www.futurefund.gov.au/about-us/annual-reports

The Future Funds Tribunals’ Determination 2017, taking effect from 1 July 2017, set the annual fee payable to the Chair at $206,330 and the fee for other members at $103,170. Some 7 Senior Managers share around $7,000.000 in salaries, entitlements and performance bonuses!

Is a Future Fund, as outlined above, a sensible use of public funds?

 

We must understand how modern financial systems really work to deal with emergencies like Coronavirus

Introduction

20200403_192411

I want a proper flight plan before I fly!

Politicians of all kinds, Media, many Academics and those of us who have neither the time, backgrounds or knowledge to challenge the prevailing superstitions are still trapped in a commodity money mindset and haven’t progressed conceptually from the days when money was backed by gold.

If the Community and Governments understood what a currency issuing country was able to really fund , there is prospect for an Australia with a vibrant economy, affordable tertiary and vocational education, research, equitable pensions, health care, jobs, respect for the natural environment and much more.

An on-going Job Guarantee program would permit quick and effective dealing with emergencies

Australia’s Sovereign Currency Government would be able to deal more effectively and quickly to deal with all kinds of emergencies from a pandemic such as  Coronavirus  as well as bushfires, floods and cyclones.

“Under the Job Guarantee policy, the government continuously absorbs workers displaced. from private sector employment. The Job Guarantee employees would be paid the minimum wage, which defines a wage floor for the economy. Government employment and spending automatically increases (decreases) as jobs are lost (gained) in the private sector. The approach generates full employment and price stability. The Job Guarantee wage provides a floor that prevents serious deflation from occurring and defines the private sector wage structure.”

Reference: W.F. Mitchell (1998). “The Buffer Stock Employment Model – Full Employment without a NAIRU”, Journal of Economic Issues, 32(2), pp.547-5. http://www.billmitchell.org/Job_Guarantee.php

How this Blog Post is structured

This post draws attention to how a modern economy really works. It seeks to make these points:-

  1. A Sovereign Currency Country’s government issues its own currency and can therefore purchase anything that is available for sale in that currency.
  2. Taxes should be levied to advance  public purpose and not about raising revenue.
  3. Because Australia issues its own currency, $A. It can run a deficit without borrowing.

A fairly broad outline of what is considered relevant follows, leaving detailed more detailed discussion about taxes and Job Guarantee to other blog posts.

Links to scholarly and other material are given frequently – About links. (Click and click again on the link shown.)  A general on-line search quoting material in bold-face type will provide further material.

Australia is a Sovereign Currency Nation

The Australian Government uses its own currency, issued by the Reserve Bank of Australia (RBA). China, USA, Japan, United Kingdom and New Zealand and many others do the same.

A Sovereign Currency Government creates money at the computer keyboard. See also RBA is creating money out of thin air

Money enters the system when the government spends it into existence. The Australian Government requires that its taxes are paid only in $ Australian, ensuring acceptance of the currency  only it can issue.

When the Australian Government spends, it does so by crediting the reserves of a commercial bank which are held at the RBA (Australia’s central bank), and having the commercial bank credit the bank account of whoever has been the beneficiary of that spending.

The State and Local Governments cannot issue currency and rely on transfer payments from the Australian Federal Government as well as State and local taxes, stamp duties, rates, fines and fees, poker machine taxes etc.

A Sovereign Currency country:-

  • does not borrow in foreign currencies or peg its currency to any other;
  • only spends and taxes in its own currency;
  • it sets policy interest rate. and
  • the currency floats against other currencies.

A Sovereign Currency country’s government can purchase anything that is available for sale in that currency. The Australian Government has an unlimited capacity to pay for things, to make contracted future payments and it has an unlimited ability to provide funds to the other sectors.

Growth in the money supply is critical for economic growth, and there are only two ways that the money supply can grow in a fiat currency system – Government spends more than it collects – runs a deficit or by private credit growth.

Government spending is not constrained by inflation. It is constrained by the capacity of the real economy. When spending (either by the private sector and/or the government sector) exceeds the capacity of the real economy, inflation increases. The real economy is the output of the underlying economy itself. Real wealth is assets, savings, goods and services

Taxation supports demand for the currency.

The Australian Government requires that its taxes are paid only in $A, ensuring acceptance of its currency. Taxation supports demand for the currency. The Australian Government’s capacity to spend is independent of taxation revenue. Sovereign Currency Governments spend first and tax afterwards. Tax is all about the social consequences – the total impact of each tax on the real economy and on people’s well-being. In a modern economy, spending and taxing are economically separate activities.

Taxes can be levied to curb inflation or to advance economic issues or address social issues, stimulate research and local manufacture and much more. All taxation should be regarded from the point of view of social and economic consequences.

All money comes from government spending and circulates until governments tax the money out of existence. If a government spends and taxes equally, there will be no money left in the economy to be used by the community.

As long as the 1940’s or earlier, society’s myths about money and taxes were beginning to be challenged. An excellent ‘wake up’ was given in a speech given to the American Bar Association in 1943 by The Federal Reserve Bank of New York chair, Beardsley Ruml:-Taxes for Revenue are Obsolete. Australia and much of the rest of the world needs to get up-to-date (or at least into the 21st century). http://www.constitution.org/tax/us-ic/cmt/ruml_obsolete.pdf

Taxes should be all about public purpose and should never be about raising revenue.

A core principle of tax design is neutrality —- ensuring that taxes depend on behaviour as little as possible. Keeping tax as low as is necessary mitigates tax dodging. When the cost to avoid a big tax bill involves mobs of records, tax accountants, lawyers and even off-shore havens, then it will often be a better choice is to pay it, not dodge it.

Keep it simple and as small as necessary to achieve its fundamental purposes, which have nothing to do with raising revenue to spend.

Taxes should  be levied to curb inflation or to advance economic issues or address social issues, stimulate research and local manufacture and similar public good issues.

Some examples of many socially destructive and ill-considered taxes

  1. Excise on petrol is 41 cents per litre. GST adds 10%. This means we pay tax at around 54 cents a litre. Rationale seems to be to raise funds to support the transportation infrastructure.
  2. Goods and Services Tax (GST) – We pay GST on power bills and phone/ NBN bills! Abolition of the GST, which wastes an enormous amount of resources in small businesses and fosters a black economy would be sensible. The States should receive funding from the Australian Government without the GST distortion. It is easily avoided – anyone seeking repairs or maintenance to property or vehicles and other things are usually offered a cheaper price for cash, i.e. GST free.
  3. Corporate tax is a particularly misunderstood and misused. To  quote Beardsley Ruml:-Taxes for Revenue are Obsolete. “ Taxes on corporation profits have three principal consequences —- all of them bad. …the money which is taken from the corporation in taxes must from the people, in the higher prices they pay;… from the corporation’s own employees in wages… from the corporation’s stockholders, in lower rate of return …
  4. Superannuation, Future Funds and Sovereign Funds are effectively a tax on businesses and individuals with exorbitant management fees and offshore investment rife. Trillions in assets – billions a year in fees and wasted insurance premiums – value of the tax concessions far outweighs the reduction in Age Pension outlays.

Australia’s sovereign currency government can always fund medical research, care for the disabled and provide sensibly and adequately for Indigenous needs right now and an on-going basis in $A, when and where they are needed, many urgently right now.

Inequitable, socially destructive and counterproductive taxes

The State and Local Governments cannot issue currency and rely on transfer payments from the Australian Federal Government.

State taxes are mostly inequitable and counter-productive – eg , stamp duties , rates, fees, poker machine taxes, payroll tax/ etc. Supposed benefits from gaming taxes are far outweighed by the cost of trying to repair the damage they cause. Those who can least afford it are most affected.

The States should receive funding from the Australian Government, not by blighting the poor and gullible.

Deficits and Budget Surpluses

Australia issues its own currency, $A. It can run a pure deficit, without borrowings. Instead, it has been decided (politically) that … fund any budget deficit by issues of securities .. A Budget Surplus is essentially meaningless – it is just the amount by which the proposed receipts – taxes, excise etc – will exceed proposed expenditure in a particular year or time scale.

Debt is the amount owed at any point in time—what has been borrowed and not paid back. Australia issues its own currency, $A. It can run a pure deficit, without borrowings – so there is no “debt’. Bonds issued in the past are repayable only in $A and this is done at the stroke of a computer key,

Governments should generally run deficits. The Australian Government has run deficits about 75% of the time. The Howard Government’s surpluses had much to do with selling off almost $72 billion of Government assets. Dept of Finance website – Past Sales. See also Sale of public assets

Most of these assets were natural monopolies – airports, National Transmission Network, ADI Ltd – etc.   A natural monopoly must be held only by a government charged with advancing the public good. Privatisation undermines the capacity of those activities to advance well-being and utilise productive resources effectively.

Thales Australia (formerly ADI Limited) is a defence contractor for the Australian Defence Force, based in Australia. Thales Group is a French multinational company.

Surely a critically important defence industry should be based and controlled by the Australian Government (which may subcontract, when useful) ? It may be cheaper to have India or China supply Australia’s infantry regiments, but would that be sensible?

Governments have in the past have far too often mismanaged public monopolies. Dealing with this mismanagement to ensure that best practice is the norm rather than the exception will ensure that public monopolies don’t waste resources and be unresponsive to the needs of their customers.

 

Aged care – Royal Commission into Aged Care Quality and Safety

Aged Care in Australia: A Shocking Tale of Neglect

The Royal Commission into Aged Care Quality and Safety’s Interim Report

… the aged care system fails to meet the needs of its older, vulnerable, citizens. It does not deliver uniformly safe and quality care, is unkind and uncaring towards older people and, in too many instances, it neglects them.

The Commissioners’ investigation into Australia’s aged care system led them to describe the aged care system as ‘a shocking tale of neglect… far from the best that can be done…a sad and shocking system that diminishes Australia ..a fundamental overhaul of the design, objectives, regulation and funding of aged care in Australia is required.https://agedcare.royalcommission.gov.au/

The Interim Report makes this very important point clearly:-

“A number of people will seek out aged care services either independently or at the urging of family, friends, doctors and hospitals. Unfortunately, it is at this point, when the aged care system should be welcoming and easy to navigate, that the first problems emerge.People are met with a telephone and internet-based national aged care entry system called My Aged Care that many people in their eighties and nineties find frightening, confronting and confusing. They are then referred for a face-to-face discussion to assess how much care they can receive and whether that will be in their own home or a residential care provider. This is the first of many assessments. Too often they must tell their story over and over again.Left to fend for themselves at this point…”

I have had the good fortune to have had tertiary education, many years with computers and websites and no obvious disability despite being in my 85th year. I wanted to see what I should do about aged care for my wife and I and encountered this –

“Request activation code for Aged Care Client Portal – Please enter the email address that was provided in your user access request form. An activation code will be sent to this email address with instructions on how to complete the account activation process. A user account has not been created for this email address within the Department of Social Services application. Please try again or contact the My Aged Care Service Desk on 1800 200 422 or email macservice@myagedcare.gov.au for assistance”.!!!!

Rock Fishing for Seniors and Paragliding for  the Aged and Infirm may be better options than seeking access to an Aged Care described by a Royal Commission as “… .a sad and shocking system that diminishes Australia”

Some comments and examples offered to Royal Commission

  • Under-staffing  … providers are accused of running understaffed homes to keep surpluses up. More than half of Australia’s residential aged care facilities have unacceptably low numbers of staff.- https://agedcare.royalcommission.gov.au/publications/Documents/research-paper-1.pdf
  •  About 80 per cent of the workforce are personal care workers who can be paid as little as $18 an hour — the same rate paid for packing supermarket shelves.
  • There is no standardised training … courses dished out by dozens of organisations varying in duration and quality from as little as six weeks’ online to 12 months at TAFE
  • The number of registered nurses has dropped from 25 per cent to 19 per cent over the past 12 years, while personal care workers, who previously made up 50 per cent of staff, now represent over 70 per cent.

Other relevant observations

 A  Report Commissioned by the Australian Nursing & Midwifery Federation –

“.. By number of beds, not-for-profit providers are the largest aged care provider group in Australia (52% in 2013-2014), however there has been a rapid growth in the size and spread of for-profit companies.. 6 for-profit companies operate over 20% of residential aged care beds … were given over $2.17 billion AUD via government subsidies http://anmf.org.au/documents/reports/ANMF_Tax_Avoidance_Full_Report.pdf 

Rural Doctors Association of Australia Submission to the Royal Commission into Aged Care Quality and Safety –

Aged care providers will not continue to operate where their business model is unviable. Where this is the case Commonwealth and State/Territory governments have a responsibility to make other arrangements for aged care provision that allows people to live in the places of their choosing for as long as possible. However, where market-based models of service delivery are not working to improve access to health and other aged care professionals and services, non-market-based models must be implemented to ensure aged care services are available for those who need them.”

 

A Fair Go –  Suitable Aged Care Versus Profits for Investors and others

The provision of … uniformly safe and quality care and profits for investors and others highlights fundamentally incompatible practices and cultures. The following are some of them –

  • To make a $, a business will hire as few staff as possible; pay them as little as possible. Paying low wages will see a business hiring less qualified staff, often less caring and empathetic.
  • Management level staff come and go frequently, as do  most others – often in disgust with a $ Versus  care and need culture.
  • A business will locate its facility only in densely populated areas and often where land is cheaper – on the outskirts or near a road/railway or industrial area.
  • A business that sees it business model or location as no longer viable (in terms of $$$) will close or move or “Phoenix” its structure to set aside its assets or coffers.
  • There are undoubtedly many business operators who are ethical, caring and totally above board. Unfortunately, those who have an eye only for $$$$ have major advantage in a competitive environment.  

Conclusions and suggestions aimed at delivering  ‘uniformly safe and quality care’

  1. Safe and Quality Aged Care, available to all Australians, should be provided and available to all by an Australian Government Agency at facilities, places and institutions manged and controlled by the Australian Government Agency.
  2. The responsible Australian Government Agency should urgently develop ‘best practice‘ to include evidence-based management process, staffing levels, work practices and such other matters found to be necessary to deliver ‘uniformly safe and quality care’
  3. Aged Care provided at all places, facilities, and institutions by any party – the  Australian Government Agency  itself or any  other Aged Care provider, either non-profit or for-profit, must be required to adopt and meticulously follow ‘best practice‘.
  4. An  Aged Care provider, either non-profit or for-profit, that can demonstrate by all relevant means including where necessary an on-site Government Auditor, that it uses and meticulously follows ‘best practice‘ may be deemed to be manged and controlled by the Australian Government Agency.
  5. A non-profit Aged Care provider that may consider that its business model is nonviable if it must follow mandatory ‘best practice‘  should be encouraged so seek to work with the Australian Government Agency to for example, permit the Agency to conduct the health and care requirements of residents at the premises, leaving the non-profit provider to manage premises, catering , outings, cultural practices and such other things as it may value.
  6. If a for-profit Aged Care provider does not wish to be subject to these contractual conditions then they must leave  the Industry leaving the Australian Government Agency free to negotiate a market based price for relevant assets or to  instead simply go into liquidation if that is its choice.
  7. Small and medium-sized business and privately owned firms have advantages that enable them to operate profitably and more effectively in satisfying the needs of a major enterprise that must focus on its prime function – in this case to deliver ‘uniformly safe and quality care’. A local business can provide and deliver meals (subject to mandatory quality and nutrition). Cleaning, lawns and gardens, data management, communications – so much more. Involve the local community!

How do we Balance the Budget and pay for all this?

 Australia issues its own currency, $A. It can  run a pure deficit, without borrowings. A budget surplus  drains savings from the private sector and that leads to loss of jobs and less work done. The Government has to spend money into existence. Without that there can be no tax. 

A Sovereign Currency Nation’s government like Australia’s primary purpose is to improve the well-being of its population. Balancing budgets is an irrelevant and destructive blind alley. The real economy is what is relevant to well-being, care for the environment, defence, research education, aged-care and employment (and so much more).

A Sovereign Currency Government issues the currency and it must first spend it by crediting private bank accounts before it can tax – by debiting bank accounts. The claim that governments must tax or borrow to ‘finance’ its spending is false under a fiat-currency system. See – https://www.investopedia.com › Economy › Economics

The restrictions on government spending are the quantity of real goods and services available for sale in its own currency, including all the unemployed labour. The only constraint that a currency-issuing government, such as the Australian government faces, are how many real goods and services are available for sale in $A.

Our wide-spread quasi-superstition about balanced budgets is a blight on public policy discussion. However this Blog is about Safe and Quality Aged Care and there is ample material on the Web about monetary theory and practice – see for example- http://bilbo.economicoutlook.net/blog/?p=41133#more-41133