like father ….

David Cameron calls for permanent austerity …. dressed in a white tie & standing at a golden lectern …..

The squeeze on public spending should continue and result in a permanently slimmed-down public sector, David Cameron said on Monday night as he staked out economic battle-lines with Labour ahead of the election.

Delivering the annual Lord Mayor’s Banquet speech in the Guildhall, he signalled that austerity measures would continue after 2015 if the Conservatives won the next election.

Mr Cameron’s comments were a direct riposte to Labour’s repeated focus in recent months on continued falls in living standards as incomes lag behind inflation.

He ridiculed the suggestion that the way to put more cash in the pockets of the public was for “the state to spend more and more taxpayers’ money”.

The Prime Minister said the biggest threat to the cost of living was if Britain allowed its debts to get out of control, driving up interest and mortgage rates.

Cutting the deficit was not just about “difficult decisions on public spending”, he said as he outlined a vision of a heavily reduced public sector.

“It also means something more profound, it means building a leaner, more efficient state.  We need to do more with less. Not just now, but permanently,” the Prime Minister said.

He also took a gentle swipe at the Archbishop of Canterbury, the Most Rev Justin Welby, who was sitting alongside him. Dr Welby has raised fears over the social impact of cuts to benefit payments.

But Mr Cameron said: “At a time when family budgets are tight, it is really worth remembering that this spending comes out of the pockets of the same taxpayers whose living standards we want to see improve.

“I hope the Archbishop of Canterbury will forgive me for saying - it’s not robbing Peter to pay Paul, but rather robbing Peter to pay Peter.”

Mr Cameron, who announced plans to lead a trade delegation to China next month, argued Britain had to undergo a “fundamental culture change” if it was to compete in the “global race”.

He described it as a “culture that’s on the side of those who work hard, which values that typically British, entrepreneurial, buccaneering spirit, and which rewards people with the ambition to make things, sell things and create jobs for others”.

Arguing that Britain could not “try and rebuild the same type of economy we had before the crash”, he said the country could not afford to allow thousands of children to leave school without any qualifications.

Nor could it succeed in the long-term if “capable people are paid to stay idle and out of work”. Mr Cameron insisted: “We are putting an end to the poverty and wealth traps that have plagued our welfare system for too long”.

And he argued that major infrastructure projects, such as the planned High Speed 2 rail line between London, the Midlands and the North of England, proved the Government had a “plan for the long-term”.

In a speech a Tuesday Ed Miliband, the Labour leader, will accuse Mr Cameron of failing to equip young people with crucial hi-tech skills.

“IT apprenticeships have fallen from 18,520 to 13,750 in the last year alone, leaving businesses having to recruit workers from abroad.

“Businesses need to be able to recruit talent and plug the skill gaps by hiring from overseas. But both they and government have a responsibility to ensure that in the future we have the skills needed for Britain to succeed in the future. “

Mr Miliband will announce that the former television presenter, Maggie Philbin, will head a digital skills taskforce to draw up recommendations for tackling skills shortages.

David Cameron Insists That Squeeze On Public Sector Spending Is Permanent

like son ….

Treasurer Joe Hockey wants to cut tax concessions for 3.6 million workers on lower incomes, but not those for around 16,000 of Australia's highest earners, writes Leith van Onselen.

If anyone wants an example of why politics is mostly form over substance, look no further than Joe Hockey's actions on entitlement spending.

Last year, Joe Hockey gave a speech entitled "The End of the Age of Entitlement", which lamented the blow-out of entitlement spending by governments: "As the electoral pendulum has swung between socialist and conservative sides of politics, the socialist governments - often winning electoral success thanks to the funding from unions - have created a huge array of entitlements for selected classes of individuals..."

Hockey then went on to detail how governments will need to wind-back entitlement spending in order to return their budgets to a more sustainable footing.

In many ways, it was a great speech by Hockey, and one that I broadly agreed with.

In Australia's case, entitlement spending blew out under both the Howard and Rudd Gillard Governments, where we witnessed a ballooning of payments to a wide range of constituents, including middle-class families, the aged, and wealthy retirees. Among other things, we saw baby bonuses handed out, increases in family tax benefits, aged pensions, and generous tax breaks for superannuation, which have now placed the budget in structural deficit.

The situation is particularly acute when it comes to aged pensions and superannuation tax breaks, where Australia now finds itself in the unsustainable situation where benefits to households aged over 65 years of age have ballooned just as their incomes and wealth have grown, which will place undue pressure on the federal budget as the baby boomer generation retires and the share of workers in the economy shrinks.

Given Hockey's strong words on entitlement spending, and the demographic tsunami facing Australia, one would have thought the superannuation system would have been high on his list for reform. Not so, with Entitlement Joe this morning announcing that the new Coalition Government will jettison the former Labor Government's planned changes to superannuation, maintaining generous tax breaks for around 16,000 wealthier Australians while cutting tax concessions for 3.6 million workers on lower incomes.

Treasurer Joe Hockey and Assistant Treasurer Arthur Sinodinos announced the changes following an audit of 96 unresolved tax and superannuation reforms dating back to 2001. The Treasurer described the reforms as "undeliverable" and committed the Coalition to stability in the superannuation system.

Whether the Coalition can maintain the superannuation system in its current form, given pressures on the budget, is debatable. But if successful, it would certainly worsen outcomes for everyone else.

The continuation of the existing superannuation rules by Hockey would significantly exacerbate inequities in the superannuation system, since under the flat (15 per cent) tax an even greater share of tax concessions - a direct hit on the budget - will flow to those on higher income earners, whilst lower income earners will receive next to no tax benefit.

The sustainability of the superannuation system would also be reduced under the Coalition's policy. It is the lower end of the tax scale that are most likely to be reliant on the pension in old age, yet they will have less incentive and opportunity to build-up a retirement nest egg following the announced changes.

In the end, the policy change announced by the Coalition would result in a superannuation system that costs the budget even more money - mostly via the huge concessions granted to higher income earners - while doing little to relieve the strain on the aged pension, since those most likely to require the pension in old age will receive an even smaller share of the superannuation concessions.

It's enough to make a cynic like me suspect that Hockey's bluster over entitlement spending is just hollow rhetoric designed to mask an assault on government support for the poor, while maintaining benefits to his rich constituents.

Leith van Onselen writes as the Unconventional Economist. He writes daily at MacroBusiness. View his full profile here.

The End Of Entitlements Doesn't Apply To The Rich