Frequently Asked Questions

How much does membership of the New Democracy Party cost?

How long is membership for?

What does membership mean?

What will you spend my donation on?

How are you different to the LNP, ALP or Greens?

How do you differ from the growing number of minor parties?

How will you approach the “post-truth” world?

What do you think you can achieve politically?

Are you a religious party?

Are you a socialist party?

I have always voted for the LNP but I am not happy with them now - why should I vote for you?

Will increased government spending drive up inflation?

Will increased government spending result in the Australia Dollar collapsing on the foreign exchange markets?

Will higher budget deficits increase interest rates?

If the Government doesn't need to borrow to fund the deficit, why does it issue debt?

If tax doesn't fund government expenditure, why do we need tax at all?

If what you say about the Government's capacity to spend is true, why isn't anyone else talking about it?

What's to stop the Government going crazy with its spending?


  • Nothing. If you would like to contribute financially you can donate via the main website (this website)

  • Membership is for life unless you voluntarily terminate your membership or if you are required to leave because you contravened the NDP code of conduct. Our code of conduct is not onerous, however, we do expect that our members behave respectfully towards others and after the democratic process has finished on any issue the final decision is honoured.

  • Membership of the New Democracy Party opens a whole world of possibilities. You can choose to be completely passive, highly active or somewhere in between. If you choose to be active, there are several aspects of the party you can contribute to, including:

    • Policy development
    • Campaigns
    • Party administration and operation

    Additionally, you can stand for pre-selection as a candidate in a suitable electorate or as a Senator, subject to meeting the statutory requirements and pre-selection criteria for representative roles for the New Democracy Party. NDP is from and for all Australians so we are as interested in having representatives in local, state and territory governments as we are in having representatives in our common wealth government.

  • Firstly, we do not require than any member makes a contribution. We understand that people can only contribute what they have. Some of our members can afford to donate some money to support NDP, others donate their valuable time and energy. All of these things are valued equally.

    For those who decide they want to donate some money, rest assured we will use donation revenue wisely as we expect to have access to fewer funds than the major parties with whom we will compete directly. This is because we have high standards and complete transparency towards all donations we receive.

    Of course, there are unavoidable costs in running a political party. Currently these are mainly technology related costs but will soon include other costs such advertising, banking, printing, rent and minor travel expenses (we will keep helicopter costs to a minimum). The New Democracy Party is rapidly growing into a sizeable organisation and as we get closer to the next federal election we will need to take on some full-time and part-time staff too. Of course, like many political parties the clear majority of human effort in NDP will come from volunteers who have other commitments but are sick of the current politicians and are prepared to put in their valuable time and effort to drive the change we urgently need in our nation.

    Regardless of what or how our members and friends donate we really appreciate them helping us to make the positive change our nation and communities deserve.

  • We differ in many ways from the existing political parties but there are a number of fundamental differences that mean the NDP is offering a powerful positive departure from politics as usual.

    New Democracy means a New and Inclusive Political Philosophy:

    The New Democracy Party was formed out of a concern that we need to enhance and revitalise open and democratic society if it is able to effectively address:

    • the social and economic challenges, and conundrums we face as we transition to a more sustainable society
    • the very real existential threat to all of our world from climate change
    • the very real environmental challenges we face in our big but fragile country
    • the dramatic explosion in inequality, casualisation of the Australian workforce and injustice brought about by lousy leadership from our representatives in Canberra
    • the ongoing attacks from illiberal totalitarian regimes

    New Democracy is from and for the People:

    All existing parties are operating under the belief or assumption that the government is largely powerless to actively protect the well-being of its citizens now that we have a globalised business environment where large multinational corporations can quickly move their businesses to different countries, where large financial institutions can choose whether to fund government spending and credit ratings agencies that stand in judgement as to whether the government is managing its finances effectively. We know that to be complete nonsense that is based on big lies and/or ignorance about how the monetary system works in a sovereign country like Australia. Our principles, important facts and policy positions are built on the knowledge that not only does our Common Wealth Government have the power to act in the best interests of all its citizens, it has the responsibility to do so. Multinational corporations, banks and credit ratings agencies do not have control. The current political parties are choosing to act as if they do and the results are for everyone to see.

    As important as these policy and economic facts are, the way we function as an organisation is also informed by genuine and real grassroots democratic structures and processes. We don’t work from the assumption that we need to constrain the powers of our members. Rather, we work from the operating assumption that wherever we can empower our members we will do so. The New Democracy Party is committed to honouring civil liberties and human rights and we don’t just ‘talk the walk’ we do actually ‘walk the talk’ in the way our organisation functions.

    Distributed leadership means better Leadership and Decisions:

    Another fundamental difference between the New Democracy Party and the existing political parties is the way our party is organised internally. We are a truly grass roots democratic organisation in which policies and other decisions are voted on by the membership. We have a distributed leadership model so there will be no single person who runs the show. There will not be the “captain’s calls” that happen in all the other parties. We also know, and we all have witnessed, the inherently corrosive influence that centralising power in one person or a small group of people can have on them. We believe that we need a new type of leadership to grapple with the big policy challenges we face in our communities and our nation. We believe that this new type of leadership is more suitable for a new century because it is clear that the old style of disingenuous leadership has simply not worked.

    Informed, but Responsible and Democratic Policy Development:

    If you are a member of the New Democracy Party, you can choose to influence the party’s internal policies and our policy platform. Or not. You can choose how active you want to be in what areas of the party. One thing is guaranteed though – decisions will not be imposed from above in an undemocratic and autocratic manner.

    New Democracy is an Inclusive Political Philosophy:

    We are an inclusive party. As long as people believe in our principles and accept the important facts they are welcome to become members and contribute to policy development regardless of their belief or ideological background and biases. This means we will see a wide range of views and political leanings expressed within the party.

    Currently, in NDP we have people who self-identify as positive conservatives, liberal democrats, democratic socialists and independent thinkers, religious, non-religious and agnostics. We support a diverse and inclusive (but non–extremist) broad view of what is important to enhance and empower new democracy in our party and our society. Because of the nature of the people who are our members, the New Democracy Party is a microcosm of all of Australia and open and democratic society more generally. That cannot be said for any of the existing parties. This inclusive, tolerant and democracy focused but forward looking vision for our party, communities and society is what separates the New Democracy Party from other political parties.

  • We will not be a minor party looking for a few seats in the upper or lower house. We are aiming to win government in the next federal election. We intend to change the political scene fundamentally.

    It is time Australia had a new force in politics. We cannot leave the well-being of Australians in the hands of the two major parties or the Greens. They have all proven their inability to provide the political courage, integrity, vision and policy framework we need as a nation to move forward united in implementing a shared vision.

    The major political narrative in political parties in Australia these days is more concerned with vilification, hate speech and division rather than building a positive and forward looking vision based on unity and community. The New Democracy Party will not be cowered by the shameful treatment of us by our representatives who are more concerned with swindling our common wealth through all sorts of scams rather than being prudent stewards who wisely invest our common wealth - to the benefit of all Australians.

  • We have been in a post-truth world for several decades. The only difference now is that the lies and “fake news” are working against the establishment whereas up until now they have worked in favour of the establishment. For example, the mainstream explanation of how government finances work is a lie that has worked well for the privileged few.

    Some of these more common lies include: government spending is constrained by the need to balance the budget; reducing government spending will lead to growth; reducing wages and conditions will increase employment; privatising government owned monopolies will lead to better service at lower costs; welfare payments are disincentives to work; and unemployment is caused by the lack of effort by the unemployed. What makes these lies worse is that the mainstream press has not been complaining about these lies. But now the new lies are working against the establishment. The truth is the mainstream Neoliberal voodoo ideology is simply a myth to support greater inequality and injustice.

    The New Democracy Party will not be telling lies to gain power. We are doing something different. We are telling the truth because we believe that we can tell the truth, be authentic and still obtain the support of most Australians.

  • We believe we can form government at the next federal election in 2019.

  • No. We are an inclusive political party that welcomes all people as long as they believe in our principles, accept the important facts and do not represent extremist attitudes, agendas or behaviours.

  • No. Some people believe socialism is indicated by the extent of government involvement in the economy. We may be labelled as socialists because we will significantly increase the role of government in the economy but that is not socialism. Socialism is about eliminating the private ownership of the means of production (factories, offices, equipment, etc.) and having workers own the businesses. We are not eliminating the private ownership of the means of production although we do believe that the power balance between workers and business owners has tilted too far in the direction of the owners, which has created problems for workers’ well-being and the sustainability of the economy as workers take on more debt. We also believe corporations need to be more accountable for their impact on society. Our policies will generally be good for business, but when profits and society’s well-being conflict, we will unashamedly represent the interests of the majority. That is called democracy not socialism.

  • If you voted for the LNP because you believed they are the better managers of the economy, well… what can we say? We understand your disappointment.

    The LNP (nor any of the other parties) cannot possibly get the economy and its people thriving again because all their economic policies are based on lies about how the monetary system works. Their understanding of how we arrived at the current situation of weak growth, high unemployment, high household debt, reducing business investment, etc. is also flawed as result. It is impossible for them to generate “jobs and growth” while also achieving a budget surplus by 2020-21 as they have promised. Watch as they squirm and blame all sorts of things for why they cannot achieve what they said they would. Of course, their explanations will also be lies – they must be. The alternative is admitting their understanding of how the economy works was horribly flawed.

    If you want the economy humming again then vote for the New Democracy Party. We are not bound by an ideological hatred (or economic ignorance) of government spending.

    Only the New Democracy Party is committed to:

    • creating full employment
    • free high quality health and dental care
    • free high quality education
    • secure housing
    • lower household debt
    • a healthy private sector
    • a thriving society while drastically reducing the environmental impact.

    It is all possible.

    It is a choice that you can make. So, accept the challenge, join us or vote for the New Democracy Party. We are the only party that promotes positive change with a real vision for the future for all Australians.

  • Will increased government spending drive up inflation?

    It may or may not, depending upon the situation. Any spending has the potential to drive inflation. Whether it does or not depends upon what is being purchased and whether the additional demand from the new spending will result in an increase in the quantity sold or an increase in the price. This in turn depends upon whether there is excess capacity in the economy.  The Australian economy currently has plenty of excess capacity both in terms of labour (witness the high unemployment) and capital, e.g. production equipment, as shown in the graphs below from the RBA.

    The difference between the current output of the economy and the maximum output is called the output gap or spending gap. The current large spending gap in Australia means that in general when faced with increased demand (resulting from increased government or non-government spending), firms will increase the quantity of goods or services sold rather than increase prices, otherwise they would lose market share. Of course, if the economy was at full capacity (no spending gap) it would be foolhardy for the government to increase spending further and we are not proposing to do that.

    For those tempted to quote the hyperinflation episodes of Zimbabwe and the Weimer Republic should understand that in both cases there were extreme collapses in the respective productive capacities. These are not relevant for Australia.

    Some people may remember the quantity theory of money from school or university and automatically think that issuing new money will automatically result in inflation. That is only true if the economy is at full capacity and the velocity of money is constant. Both of these assumptions do not apply in the situation facing Australia.

  • Will increased government spending result in the Australia Dollar collapsing on the foreign exchange markets?

    No the Australian dollar will not collapse. If the Job Guarantee workers or others with new jobs in the private sector spend some of their higher incomes on imports then yes, the currency may depreciate a little but no more than would happen if growth came completely from the private sector, which most people think would be a good thing. Spending on imports does tend to go up when economies grow. Of course if the currency does depreciate (as it has recently from 1.04 to 0.70 vs the US dollar in 2.5 years or so without the sky falling) then our exports become more competitive.

    To implement our policies we will spend money into existence at a greater amount than the current government is doing, initially creating larger budget deficits and increasing the money supply. This will not itself result in a depreciation of the Australian dollar even though there will be more dollars in circulation. The exchange rate is heavily influenced by the supply and demand for the Australian dollar but the "supply" of the Australian dollar in this context is just those Australian dollars that are being offered for exchange into a foreign currency, which is mainly those dollars used to buy imports.

    Our policies will generate higher spending (aggregate demand) thus allowing the private sector to sell more, increase profits and employ more people (drawing from the Job Guarantee pool and increasing aggregate demand again). Investments in education, infrastructure and research will drive productivity and profits in the private sector making Australia a very attractive place for capital thus increasing demand for the Australian dollar and putting upward pressure on its value in the foreign exchange market.

  • Will higher budget deficits increase interest rates?

    No. You'll often hear mainstream economists and politicians talking about government deficits increasing interest rates and "crowding out" private investment. This is based on a misunderstanding of the modern monetary system and the mechanisms by which government spends. Their belief is that there is a limited pool of funds in the private sector that is available for investment and government debt absorbs a share of this, reducing the funds available for productive investment and therefore driving up interest rates. There are so many things wrong with this belief it is difficult to know where to start.

    When the government spends it credits bank accounts of the recipients and credits the banks' reserve accounts (also called Exchange Settlement Accounts) that are held at the Reserve Bank of Australia (RBA).  For example, the government might spend $100,000 to have a gym built at a school by a construction company, ABC Constructions, that banks with Westpac. The government credits ABC Constructions' account at Westpac with $100,000 and credits Westpac's reserve account at the RBA with $100,000.

    The government now has a new asset, the gym, and a new liability, the increased reserve balance at the RBA. Westpac has a new asset, the increased reserve balance at the RBA, and a new liability, the extra $100,000 in ABC Constructions' account that the company can withdraw at any time. So Westpac has not gained or lost anything, it’s just acting as the middle man. ABC Constructions has a new asset, the increased cash in its account at Westpac but does not have a new liability as a result of the Government spending. Nor does anyone else in the non-government sector have an offsetting liability for the amount paid to ABC Constructions. Its net worth has increased. The new cash can be used wholly or partially for investment and/or it can be used to increase saving. These options can be taken by ABC Constructions or by the firms or individuals that receive payments subsequently from ABC Constructions.

    Compare this situation to one where a private school paid for a gym rather than the government (on behalf of a public school). Then there would be an offsetting liability (or asset reduction) in the non-government sector (the private schools' bank account would go down). Only the government can increase or decrease the net financial wealth of the aggregate non-government sector.

    Note that when ABC Constructions pays tax, its account at Westpac is debited (goes down) and Westpac’s reserve account at the RBA also goes down. So, in a deficit situation, there is a net increase in reserve balances held at the RBA as the government spends more than it receives in taxes. As the banks must have positive reserve balances, those with negative balances after settling the day’s transfer will seek to borrow reserves from banks that have excess reserves and these banks will be keen to lend as they will earn more interest than they would if they just left the excess reserves. But in a deficit situation it is impossible for the banks as a group to eliminate the excess reserves in the system simply by lending to each other so the competition to lend in the overnight interbank market is fierce driving interest rates down. As the interest rate tumbles, the RBA intervenes to make sure that the interest rate doesn't go below its target rate. It does this by draining excess reserves by selling government debt to the banks, who are happy to buy them with their reserve funds as they offer better interest returns than reserve balances. In this way, the Government debt being issued is not to fund government spending but to manage interest rates.

    With respect to the crowding out theory of budget deficits, the newly issued government debt is supposed to reduce the funds available for private investment. You can see from the above that this cannot be the case. The money used to purchase the government debt is the excess reserve balances that are generated from the deficit spending. These reserve balances didn't exist before the deficit spending and, in any case, they cannot be used to invest in factory equipment for example. The money that went to ABC Constructions in the above example is not impacted by the new government debt. It is still there after the government debt has been issued, to be used for consumption, investment or saving by the private sector. So, government spending increases private investment.

    As for the idea that budget deficits increase interest rates, you can see from the above that budget deficits actually drive interest rates down via the downward pressure on the interbank loan rate, which would go lower than the RBA's target rate if it didn't intervene by issuing government debt.

    Below is a graph plotting the Australian Government budget balance against the cash rate from 1990 to 2015. Clearly there is no suggestion that budget deficits create higher interest rates.

    Yet another reason the crowding out theory is nonsense is that most investment is made with funds borrowed from a bank. It is not from savings and it is not a limited pool.

  • If the government doesn't need to borrow to fund the deficit, why does it issue debt?

    We can answer the question quickly by saying that we will not be issuing any government debt even when running deficits. The explanation, however, is long and it gets a bit technical, which probably explains why so few politicians and economists understand it. It is worth repeating that. Few highly trained economists understand why government debt is issued. Hard to believe but it is true. Unfortunately for us, these guys run the place.

    It all resolves around reserve accounting and the mechanisms by which government spends money. All commercial banks have what is called reserve accounts (also called Exchange Settlement Accounts) at the Reserve Bank of Australia (RBA). So, the big four banks, Westpac, ANZ, CBA and NAB, as well as some smaller institutions, all have reserve accounts at the RBA. A key purpose of the reserve accounts is to facilitate clearing payments between the banks every day. So if someone who banks with Westpac pays someone who banks with the ANZ, Westpac must transfer the amount from its reserve account to ANZ's reserve account. All banks must settle or clear these transactions between each other every day and after all the transfers, it is possible that some banks have negative balances in their reserve accounts. The RBA requires all reserve accounts to have positive balances so the banks with negative balances need to sell government debt they acquired earlier, borrow from other banks or borrow from the RBA to get positive balances. The RBA pays relatively low interest on balances in reserve accounts so while banks must have positive balances they don't want to have very high balances. So the banks with excess reserve balances at the end of the clearing process will be motivated to lend to the banks with negative rates in the interbank loan market at an interest rate higher than the rate the RBA pays on reserve balances. The banks with negative balances are motivated to borrow from other banks because the rate will be lower than if they borrow directly from the RBA, which charges a penalty rate.

    When the Government spends it credits bank accounts of the recipients and credits the banks' reserve accounts that are held at the RBA.  For example, the government might spend $100,000 to have a gym built at a school by a construction company, ABC Constructions, that banks with Westpac. The government credits ABC Constructions' account at Westpac with $100,000 and credits Westpac's reserve account at the RBA with $100,000.  When taxes are paid, the reverse happens. For example, if ABC Constructions pays tax of $10,000, its account at Westpac will be debited (reduced) by $10,000 and Westpac's reserve account is also debited (reduced) by the same amount.

    If the government runs a budget deficit, it means the value of its total spending is more than the value of the total taxes recived. Which also means that in total, reserve accounts are credited (from spending) more than they are debited (from taxes). In such a deficit situation it is impossible for the banks as a group to eliminate the excess reserves from the system simply by lending to each other. That is, one or more banks will be left with large balances in their reserve accounts so the competition to lend in the overnight interbank market is fierce, driving interest rates down. As the interest rate tumbles, the RBA intervenes to make sure that the interest rate doesn't go below its target rate (the RBA has a target interbank loan rate that impacts on other interest rates applied throughout the economy - this is the interest rate often reported in the news when the RBA decides to change it in the expectation that the banks will change the rates at which they lend money). The RBA drains excess reserves by selling government debt to the banks, who are happy to buy them with their reserve funds as they offer better interest returns than the RBA pays on reserve balances. In this way,  the Government debt being issued is not to fund government spending but to manage interest rates. Issuing government debt is part of monetary policy, not fiscal policy.

  • If tax doesn't fund government expenditure, why do we need tax at all?

    Taxes are necessary to control spending in various areas so the government can pursue its social objectives with its own spending. That is, taxing can be used to create "space" for the government to spend without creating inflation. Similarly, it can be used to take the heat out of the economy if it is nearing or at full capacity to prevent inflation. Taxes can also be used for distributional purposed (fairness) and to pursue social objectives by influencing behaviour, e.g. taxing cigarettes.

    So, while taxes are not necessary for funding government expenditure they are necessary for other reasons. The right amount of tax will be determined after working out the levels of spending required to maintain full employment, price stability, well-being, sustainability, etc. What is not taken into account is the budget balance. It is irrelevant.

  • If what you say about the government's capacity to spend is true, why isn't anyone else talking about it?

    The following groups of people are telling us the government cannot afford to make sure all Australians have a decent standard of living

    1. Economists

    2. Politicians

    3. Representatives of big business

    4. Mainstream media

    Economists

    Academic economists are the most disappointing of all the groups. They have turned their profession into a joke. So many people's lives rely on their expertise but a little bit of digging uncovers the fact that the social science of economics is massively influenced by the ideological persuasions of the individuals. That is, the vast majority of them are not objective. They have a set of beliefs and they belong to factions. They derive theories and interpret data through the lens of their beliefs to confirm them. They suffer from confirmation bias and groupthink. They peddle theories and "laws" that are nonsense and do not stand up to empirical data. The global financial crisis (GFC) and the anaemic growth since has defied their predictions. Their insistence on austerity measures have not generated the growth their models predicted and growth predictions are continually revised downwards but they don't question the fundamentals of their thinking.

    Economics is a contested discipline. The different factions are based on different paradigms. Before the great depression, classical economics, that was very similar to the current thinking, was the dominant paradigm but it was discredited during the great depression. Policies based on Keynesian economics, that calls for the government to actively stimulate aggregate demand, rescued the world from the great depression when classical economics could not. It remained the dominant paradigm until the 1970s when a new form of classical economics resurfaced and has remained in place since with its slower growth, higher unemployment, decaying infrastructure, extreme and worsening inequality, declining mental health and continued environmental damage. The proponents of this paradigm were economists who had an ideological hatred of government involvement in the economy and an undying faith in market forces. They convinced many, especially those who it served well (see below). The past failures of this thinking was forgotten and it now needs to be discredited all over again.

    There are exceptions to this herd of uncritical economists - a select minority of heterodox economists who do understand how an economy with a modern monetary system works, for example the proponents of Modern Monetary Theory (MMT). They have written extensively in peer reviewed journals and have authored books and maintain blogs to educate the rest of us. They systematically destroy the fantasy world of mainstream economists with sheer force of logic and undeniable empirical evidence but their voice is lost.

    There must be some mainstream economists who do now know the truth but they are never going to admit their contorted models that have supported diabolical policy for the last 40 years are fundamentally flawed.

    Politicians

    We think that most politicians are like you and me and assume the mainstream economists must be right - it sounds intuitively correct that the government needs to earn or borrow money before it can spend. Plus we were all taught the orthodox approach using textbooks that continue to perpetuate models that even central banks say are now wrong in some critical respects. It is beyond them to conceive that the mainstream is wrong.

    There is evidence that some politicians do understand how a modern monetary economy really works but we assume that they think it is political suicide to say deficits are not an issue because: a) voters in general would think they are mad because everyone has been conditioned to thinking they are bad; b) it would mean an embarrassing back flip requiring them to admit they have been wrong for so long and destroyed millions of people's lives and threatened future generations out of their own ignorance. They must pray like mad that this never really takes hold as their legacies will be destroyed. Think about John Howard and Peter Costello. If people sooner or later figure out that Howard and Costello's budget surpluses were funded by private debt build up that they are still recovering from, their legacies will be ruined. They are not going to let that happen if they can help it.

    Representatives of big business

    Big business has certainly benefited from the current economic paradigm over the last 40 years. Big businesses are very keen to keep the government out of the economy so they will perpetuate the current paradigm whether they believe it to be true or not. We suspect that the individuals involved are always surrounded by like-minded people, all benefiting from current policies and all assuming that critics are just people who have failed to achieve what they have. Ironically, they are going to have to be saved from themselves as the current policies that depend on private debt build up for growth has real limits.

    Mainstream Media

    Mainstream media is big business so what we have said above applies here. It is not in their interest to change the paradigm. Additionally, there is a real lack of investigative journalism and so the rare moments that MMT gets some airtime it is not pursued in any depth. Again, most commentators are in a position where they would have to admit they have been egregiously mistaken for a long time.

    Conclusion

    All proponents of the current flawed economic paradigm are trapped. They are not motivated to change their view or even entertain alternatives. Even if confronted with clear evidence of the fundamental flaws in the current paradigm it would be career suicide to publicly change their position. Generally, they can achieve their objectives without shaking up the status quo by arguing for a fundamental rethink.

    That is why it has to be a new political force that doesn't have a legacy to protect.

  • What's to stop the government going crazy with its spending?

    The answer to this question is closely related to the answer to the question whether spending currency into existing will drive up inflation but we would like to add a few more points here. Please review the answer to the inflation question before continuing to read the answer to this question.

    The answer to the inflation question is around the concept of the economy's capacity utilisation. This can also be thought of as an output gap or a spending gap, which is the difference between what the economy could be producing (in terms of goods and services) if it was operating at full capacity and what it is actually producing. In general, while there is an output gap, increased government spending will not drive up inflation. But what happens if the economy does reach full capacity? What will the government do with respect to spending?

    If the economy is at full capacity (no spending gap) any increase in spending, whether by the government or non-government sector, would drive up inflation. It is the government's job to close the spending gap when the non-government sector won’t but equally, it needs to make sure that total spending does not increase beyond this. It has three main tools at its disposal to manage this: its own spending; interest rates; and taxation.