Costello: Wayne’s World A Parallel Reality

28 Apr

Peter Costello has stepped up with some hard facts and figures to debunk the Goose’s latest myth-making efforts.

From the Sydney Morning Herald:

Five years ago the prices of Australia’s exports began rising sharply. The price of iron ore hit about $US30 a tonne and thermal coal about $US50. Australia had not seen export prices like that in a very long time.

The federal government was running budget surpluses. It had paid off its debt so it established a sovereign wealth fund – the Future Fund – to save for the future. This was to prepare for a time when things were more normal and to cover the costs of the ageing population. About $60 billion was deposited into it.

This year the iron ore price is nudging $US170 a tonne (about five times what it was when the Coalition was ”wasting” the boom) and the coal price is about $US130 (nearly three times the price of five years ago). If you look at a graph of historical prices, we are at the peak of Mount Everest. The rise of 2006 looks like Monticello – a small rise visible only because conditions were quite depressed before it.
The Reserve Bank’s index of commodity prices shows an all-time high in March 2011. The index is nearly double where it was in 2006 and triple the levels of the late 1990s. Adjusting back into Australian dollars it rose 32 per cent in the past year.

And mining profits are super strong. In 2006, BHP’s profit after abnormals was a massive $10 billion. This year it reported that profit for just the first half-year.

Since it was apparently wasteful to run budget surpluses, build a savings fund and cut tax in 2006, Swan could show us how things should be done now we are in a real boom. He could, but apparently he will not, because last week he gave a pre-budget speech lamenting how hard everything had become and saying that we should not expect too much, not even a balanced budget in May, let alone a substantial contribution to the Future Fund. And although he has found a way of sharing the pain of the Queensland floods with a flood levy, we should not expect to share the prosperity of the mining boom through any tax cuts.

There is reality. And then there is Wayne’s world.

In Wayne’s world a boom is something that happens to others, not to him. In his world, others find rivers of gold, but for him the river never rises.

In Wayne’s world, Labor is a superior economic manager which runs into bad luck all the time, while Liberals are poor financial managers who waste opportunities and somehow get good outcomes when the dice fall their way. It’s a weird place inside Wayne’s world.

Costello’s depiction of Wayne Swan as living in a “Wayne’s World” parallel universe has some rather interesting and ironic … parallels.

In the movie Wayne’s World, our hero Wayne falls in love with Cassandra Wong, a Chinese-American lead singer for a heavy metal band.

In our real-life version of Wayne’s World, our hero Wayne has fallen in love with “Cassandra Wong”, the Chinese-American buyer/s of 73% of our 189+ Billion sovereign debt.  This “Cassandra” has sung a tune about an endless China boom, promising decades of heavy metal-fuelled prosperity for Australia as a result.

And Wayne has fallen for her siren song.

One Response to “Costello: Wayne’s World A Parallel Reality”

  1. Daryl April 28, 2011 at 5:41 am #

    I guess I should expect a fair amount of ‘spin’ from a politicians blog but if you take the spin of this article there is a far scarier consequence.

    The vast amount of debt that was retired by the Coalition was done so through sale of Commonwealth assets aka privitisation.

    What have we got left to sell these days to pay down foreign debt?? There just isn’t too much left in the coffers.

    Here’s an idea, we could float a company called the Private Public Service.

    One of the main rationales behind privatisation is the increased efficiency the reduction in bureaucracy will bring. By this logic, wouldn’t our public service be far more cost effective if it were privatised?

    I am being sarcastic but given we have sold strategically critical parts of our infrastructure is it really that much of a stretch to think that the Public Service might be privatised?

    The real problem is that we are progressively ceding soveriegnty of our nation through debt and under a debt based monetary system it is simply impossible for a government to remain in surplus.

    I find it amazing that the ALP don’t make a lot more of the fact that in post WWII Australia, the coalition have served during times of global economic growth and the ALP have served during times of global economic contraction…so all comparisons can never be apples for apples…of course to suggest the economic situation in Australia is primarily caused by the global economic situation would be to imply the government have no control.

    And in reality, what power does our government have when an independent organisation with absolutely no public oversignt can dictate the interest rates in Australia??

    Whatever side of the political divide, our politicians are forced to work within the playground that is the global reserve banking system.

    As long as we are in ‘their’ playground, we will be forced to play by their rules.

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