News & Discussion: Adelaide Metro Trains

[rubberman]

State Labour only has itself to blame it should never have delayed electrification of any of the lines. The backbone of our network is the railway lines and they should be a priority to providing an efficient and more frequent service.
One thing that is very clear in this whole mess is that Infrastructure spending whether it be at a Federal or State level should be planned and managed by an independent body that is not effected by electoral pork baralleling and personal petty agendas.

Ozi, BOTH political parties, and BOTH Federal and State politicians are to blame. It is not possible to blame one party or another for the overall shemozzle that electrification of SA's suburban system has become.

The reasons: First of all, if you remember those funny middle carriages in the red hen sets, then you will know that they were bought for an electrification project in Adelaide that never went ahead...under the Liberals. Brisbane was electrified in 1976, and Perth in 1993. We have had both Liberal and Labor Governments in South Australia over that time. Neither party has covered itself in glory over this, and neither can point a finger of blame at the other.

However, it is also true that State Governments do not have enough money themselves for all the capital works they require. That requires Federal money, since the Feds gather about 70% of taxes, while having 35% of expenses. The rest of the money they dole out to the states. If they decide that some State project or another is unworthy, they can make it almost impossible to construct. It is called vertical fiscal imbalance, and Australia suffers badly from this in many ways.

However, one thing is perfectly clear. It is a Labor Government in Adelaide constructing NOW something that has been mooted since the nineteen twenties and which no previous government ever, of whatever political colour, ever managed to do. That is, almost 80 years of dithering by previous governments, but this one has managed to make a start. I think it would be pretty politically partisan not to give credit where it is due. Maybe the Wran/Weatherill governments could have done more, maybe they could have done it better, but still, they have managed to pull off something that no other government in the State's history has been able to do despite talk for the last 80 years.

[monotonehell]

...However, one thing is perfectly clear. It is a Labor Government in Adelaide constructing NOW something that has been mooted since the nineteen twenties and which no previous government ever, of whatever political colour, ever managed to do. That is, almost 80 years of dithering by previous governments, but this one has managed to make a start. I think it would be pretty politically partisan not to give credit where it is due. Maybe the Wran/Weatherill governments could have done more, maybe they could have done it better, but still, they have managed to pull off something that no other government in the State's history has been able to do despite talk for the last 80 years.

^ this. I see loads of comments about how the current govt messed this up, messed that up, and so on, with no regard for the history of both colours of politics over the past 50 years or so. Successive govts have allowed our rail network to wither on the vine to a point where the current lot have had to do a lot of expensive repair work. The only major piece of PT infrastructure in recent decades was the OBahn. Look at all the construction that has gone on since Rann.

Cue the people bleating about State Bank collapse etc... doesn't matter. This past mob has got things done, even if they didn't do it very competently.

[Mr Smith]

You guys seem to forget that thanks to the previous Federal labor Government and its huge debt,the new Federal Government cannot afford to keep on spending like we would all like them to.

If anything in the recent week is anything to go by, the Feds have just increased government debt by 66% to $500bn, and just threw away $8.8b to the Reserve Bank for no real reason whatsoever. So much for responsible fiscal management.

I agree with the sentiments of others, this is a flagrant act of bastardry by Abbott and his Coalition cronies. Fuck them. Bring on 2016.

Agree with Shuz.
What budget emergency? Hockey has been busily borrowing and increasing the debt limit to $500 billion. Meanwhile funding has been cut to many charities, programs and infrastructure projects, including rail and the Clean Energy Fund has been killed off and the NBN is being trashed. Medibank Private and Australia Post will be sold off and possibly students' HECS debt. The River Murray is also at risk from winding back solutions and funding.

Electrification of our rail system is great for the environment and an important part of the upgrade of public transport. I am outraged by this decision. It's just political, designed to whack the current state government. They released the news to the media first. And the Opposition's response?

Marshall has no ideas or vision that he cares to share with us, just negativity. Chapman just bleats and gloats.
Will the Opposition ever put SA first and stand up to Abbott and Hockey and fight for South Australia? This is critical infrastructure spending. It should have bipartisan support. Electrification of our rail network is well on the way. To have the Federal funding rug pulled away like this is a disgrace.

What next? Our state share of GST on the block?

What an absurdly emotional bleat!

Re GST share, SA gets a far greater per capita share of GST revenue that what we raise. SA and Tasmania are mendicant states that rely on Commonwealth grants and GST grants, in effect subsidised by taxpayers in other states, particularly WA.

The Labour priorities in this state are out of balance with the needs, for example SA has the highest amount of police per head of population in Australia - Why? What does this achieve beyond motorist going about there business being continually harrassed?

Going to war with the commonwealth govt is not the answer.

[rubberman]

What an absurdly emotional bleat!

Re GST share, SA gets a far greater per capita share of GST revenue that what we raise. SA and Tasmania are mendicant states that rely on Commonwealth grants and GST grants, in effect subsidised by taxpayers in other states, particularly WA.

The Labour priorities in this state are out of balance with the needs, for example SA has the highest amount of police per head of population in Australia - Why? What does this achieve beyond motorist going about there business being continually harrassed?

Going to war with the commonwealth govt is not the answer.

Actually because of our vertical fiscal imbalance, the only way to get many projects done is via Commonwealth money. Unfortunately that means it is the squeaky wheel that gets the grease. Sad that it must be so, but looking at outcomes over the past fifty years, that has proven time and time again to be the best way of getting funds. Playing nice and shutting up does not work. Reform of our tax system would help enormously, but the Feds aren't going to give up their financial power any time soon. Much easier to squeeze the states and make them suffer so that the Federal Government can announce a surplus, than to work for the good of the nation. Ignoring this, or playing nice has never worked in the past.

As far as mendicant states is concerned, that is correct in the very short term. However, taking a long term view shows that, for example, Western Australia was a 'mendicant State' for generations. Not any longer. Queensland at one point had a lower population and relative State Final Product compared to SA. Not any longer. In the longer term that a prudent Federal Government should be looking at, it may well be that this decade's mendicant is next decade's powerhouse.

As far as the police are concerned. If I don't drive too fast or run yellow lights, I guess I won't have to pay more voluntary tax. That is up to me, and I am prepared to take responsibility for my own actions there. However, if either political party wishes to bring up a reduction in police numbers as an election promise, I am sure the electors will give it due consideration.

[Waewick]

if you had $1B to invest as the federal government, where are you going to invest it if it comes down to SA v QLD or SA v NSW

We need to be professional in how we run this state because we aren't going to get a huge amount of support. To date, we haven't been run well at all - IMO of course.

[rubberman]

if you had $1B to invest as the federal government, where are you going to invest it if it comes down to SA v QLD or SA v NSW

We need to be professional in how we run this state because we aren't going to get a huge amount of support. To date, we haven't been run well at all - IMO of course.

Have you read the book "WA Webb" by Reece Jennings?

It details the monumental mismanagement of the South Australian Railways almost from the beginning until the end of the Webb Era, and would confirm your opinion of how well this State has been run from the late 1800s onward.

You are not alone in your opinions nor, would it be fair to say, is that opinion unjustified given the facts outlined in Dr Jennings' book.

The matter of where a Federal government should invest its $1Bn is an interesting one. I would put it to you, that it is not merely a matter of economics (important as that might be).

The States only agreed to become the Commonwealth of Australia on certain terms and conditions. One of those was that Federal money should be disbursed amongst States of different economic strength in such a way as to equalise the outcomes for people's living standards. That is, that richer States would subsidise poorer States was a pre-condition of those poorer States joining the Commonwealth. It was, for example, one of the reasons that the railway to Perth (via Kalgoorlie) was constructed, and why the Grants Commission hands out more money from some states to others. So, your question is not merely an economic one, rather a constitutional one going to the heart of the foundation of the Commonwealth.

There is also the valid point that had there been no agreement, say on the part of SA to join the Commonwealth, and we remained a separate country, like New Zealand, then today, our currency, let's call it a Dunstan or 'Dunny' would be at a great discount to the Aussie dollar - just as the NZ dollar is at a discount to the AUD. With a very cheap Dunny, we would still be exporting Holdens and goodness knows what overseas. Similarly, the AUD would be a little higher than it is today (since it would not be carrying mendicant SA) and would be having even more problems in places like Geelong. Put another way, Australia, by means of the Grants Commission and transfers to smaller states has been able to avoid the situation in Europe whereby there is monetary union, but not fiscal union.

[Maximus]

Ozi, BOTH political parties, and BOTH Federal and State politicians are to blame. It is not possible to blame one party or another for the overall shemozzle that electrification of SA's suburban system has become.

The reasons: ...

Thank you, Rubberman. This is pretty much exactly what I wanted to post this morning, but thinking about politics sometimes makes me feel so apathetic that it's difficult to type! All sides deserve blame for what is increasingly becoming a debacle. Unfortunately, they'd much prefer to sling mud at each other in public, rather than take responsibility for their own failings and work together in a civilised and professional way to generate solutions for the good of the people whom they presume to serve and represent. A pox on all of them!

[Aidan]

Which section of that act do you think limits our credit?

Ever since Hawke and Keating floated the Aussie dollar, Australia's credit has been unlimited. The RBA can create the money out of thin air, and one of its functions is to be the lender of last resort, so it will always need to lend to the government if the need arises. But plenty of others are clamouring to lend to the Australian government. In fact most of our recent economic problems are the result of too little money being borrowed from the RBA. Banks borrowing from overseas have pushed our dollar to unsustainable levels making our manufacturers uncompetitive, and the RBA is not making the huge profits that it should.

Banks have got SFA to do with the current $AUD position. You can thank the mining investment boom and RBA having a higher interest setting than its peers (Europe USA BOE etc) which has encouraged both speculators and investors (both currency and real property ).


The purpose of the RBA promote economic stability. If it was to do what America did would go against that.

My point was that the main reason our dollar was so high was because the RBA had set interest rates higher than its peers. If Australia's interest rates had been lower then less speculation would have occurred.

The blame lies squarely with the RBA but banks did have a substantial amount to do with it too. They were having to source their money from overseas because they couldn't source it from the RBA as easily.

I'm not sure what your point is about America since I never suggested we copy them. I think the RBA should be repurposed to promote economic growth as well as stability. But if stability's what you want, I hope you can see just how dismally the RBA's failed lately! Reacting to a little bit of economic success (which they saw as an unacceptable inflation risk and therefore bad) they raised interest rates, causing a flood of speculation to send the dollar to unsustainable levels.

[Waewick]

ok now i see where the confusion lies.

Banks don't borrow from the RBA. Banks source their money from depositors be them retail (people like us) or foreign and domestic wholesale market.

The RBA regulates the interest rates by changes to the supply of money in the economy (this includes things like Banks notes).The actual domestic interest rate is in reality a guide (one which banks follow). That is why you see term deposit rates drop when the interest rate does (domestic deposit) But Banks not always pass this on in their debt because only a portion of it funded by the domestic deposit.

Banks have had to go offshore for deposits because Australia isn't a net saving country. Like Say Japan has been in the past.

[Aidan]

ok now i see where the confusion lies.

Banks don't borrow from the RBA. Banks source their money from depositors be them retail (people like us) or foreign and domestic wholesale market.

The RBA is one of the sources on the domestic wholesale market. It controls interest rates not by regulation but by charging interest to those who've borrowed from it and paying interest to those banks which have deposits with it.

Too low a proportion of the banks' debts was sourced from the RBA, and the economy has suffered because of that.

[Waewick]

ok don't believe me.

http://learn.nab.com.au/how-bank-loan-r ... o-the-rba/

http://www.iifunds.com.au/bristlemouth/ ... rest-rates

I had this discussion every day for 4 years during the GFC.

[AG]

ok now i see where the confusion lies.

Banks don't borrow from the RBA. Banks source their money from depositors be them retail (people like us) or foreign and domestic wholesale market.

The RBA is one of the sources on the domestic wholesale market. It controls interest rates not by regulation but by charging interest to those who've borrowed from it and paying interest to those banks which have deposits with it.

Too low a proportion of the banks' debts was sourced from the RBA, and the economy has suffered because of that.

The RBA does not set interest rates - this is what the ADIs do. The RBA influences interest rates through altering the short term interest rate on overnight funds (a.k.a the "policy rate") which in turn influences longer term interest rates.

The banks have never sourced much of their funds from the RBA, but only short term funds and definitely not longer term funds. The RBA's primary role is to provide financial and currency stability. The RBA is not a bottomless pit, they operate on limited funds too and so their priority is stability before growth.

[Vee]

More on that $8.8billion injection to add to the conversation.
Read this in Business Spectator
The trouble with bolstering the RBA's reserves - by Stephen Koukoulas

Yesterday’s release of the Reserve Bank of Australia annual report shed some light on the controversial $8.8 billion cash injection to the Bank that Treasurer Joe Hockey announced earlier this week.

It was an odd decision to give the RBA such a large amount of money given the annual report expressed no concerns about the existing level of reserves nor have the financial markets viewed those reserves as anything other than a curious accounting issue. It was odd too because the $8.8 billion is being borrowed by the government and the interest paid on that debt will amount to an annual cost of around $350 million, based on the current 10 year government bond yield.

That cost aside, page 77 of the RBA Annual Report included a table that summarised the dividends paid by the Bank to the government since 1997-98.

That table shows that under the Howard Coalition government, the RBA paid a total of $20.2 billion in dividends. This was $1.83 billion a year. In today’s dollar terms, the total amount paid by the RBA was in excess of $30 billion or almost $3 billion per annum.

Under Labor, the RBA paid a total of $7.9 billion in dividends or around $1.3 billion a year, on average. In today’s dollar terms, this total approximately $9 billion or an average of around $1.5 billion per annum. In the last three Labor budgets, the average dividend was a tiny $410 million a year.

More:
http://www.businessspectator.com.au/art ... s-reserves

Tweet from @TheKouk ...
“Costs $1 million a day in interest to cover the $8.8 billion payment from Hockey to the RBA. And it's not necessary. http://t.co/dX24Muwvlm"

[Norman]

So, about electrification...

Anyone with any recent photos for those of us interstate?

[Aidan]

The RBA is one of the sources on the domestic wholesale market. It controls interest rates not by regulation but by charging interest to those who've borrowed from it and paying interest to those banks which have deposits with it.

Too low a proportion of the banks' debts was sourced from the RBA, and the economy has suffered because of that.

The RBA does not set interest rates - this is what the ADIs do. The RBA influences interest rates through altering the short term interest rate on overnight funds (a.k.a the "policy rate") which in turn influences longer term interest rates.

I, and I think most people, would regard that as setting interest rates.

The banks have never sourced much of their funds from the RBA, but only short term funds and definitely not longer term funds.

And that's a problem because it pushes the Aussie dollar up too high and hurts our exporters. We should aim to be nearer self sufficient in money creation.

The RBA's primary role is to provide financial and currency stability. The RBA is not a bottomless pit, they operate on limited funds too and so their priority is stability before growth.

The RBA are obsessive about interest rate stability at the expense of everything else. They've been wrecking the economy with unnecessarily high interest rates in an effort to keep the unemployment rate high because they think low unemployment is too inflationary (because the Rudd tax cuts resulted in low unemployment and a jump in inflation, and the RBA confused correlation with causation).

And looking at what's happened to our dollar in the last six years, I can only conclude they're not bothered about currency stability.