One RBA Chart Debunks Wayne’s Entire Budget

14 May

I am so glad that Wayne Swan is such an imbecile.

It means that, despite being sick, I can debunk his entire budget with about as much ease as taking candy from a baby.

Or a Baby Bonus from a “working family”.

All of the “estimates” and “projections” in Wayne’s 2013-14 budget are based on a critical assumption – 5% annual growth in GDP in the next two years:

Screen shot 2013-05-14 at 8.21.19 PM

Budget 2013-14 Overview, Appendix H

Really Wayne?

5% a year?

Let’s see what the RBA’s Chart Pack has to say about actual, not “forecast” GDP –

4tl-gdpgrwth

Er…

Anyone else get a sense of deja vu about this?

With good reason. In last year’s budget, Wayne forecast 5% GDP growth for the current year…

Screen shot 2013-05-14 at 8.33.33 PM

Budget 2012-13 Overview, Appendix H

… and since then, has been forced by that little thing called “REALITY” to revise it down, to 3.25% (see 1st chart).

Remember, this 35% downward revision for “GDP” growth in the current year has come during a period when, according to none other than Wayne himself, we have been enjoying the benefits of a “strong economy, low unemployment, low interest rates, and a huge (mining) investment pipeline.”

Not to mention record-high Terms of Trade.

That “huge” mining investment pipeline is rapidly closing down.

And the record-high Terms of Trade are collapsing too:

Source: macrobusiness.com.au

Source: macrobusiness.com.au

5% GDP growth next year, and the year after?

Sorry.

I don’t buy it.

Neither should you.

And since all of Wayne’s latest revenue estimates, and spending estimates, and budget deficit/surplus estimates, are based on that critical GDP growth ass-umption, I think it only fair to say that we can write off this entire budget as a(nother) very, very bad joke.

Problem is, the joke’s on all of us.

UPDATE:

A number of my Twitter followers have kindly informed me that I have made an error. Apparently, the RBA chart for GDP that I’ve referred to above is “Real” (ie, inflation adjusted) GDP, and the budget forecast I’ve referred to is “nominal” GDP.

No matter.

Given the falling Terms of Trade, the closing of that “huge” mining investment pipeline, and a likely incoming Coalition government purportedly looking to slash spending and public service jobs, I reckon even a forecast 2.75 (2013-14) and 3% (2014-15) “Real” GDP is highly unlikely:

Screen shot 2013-05-14 at 9.26.32 PM

4tl-gdpgrwth

UPDATE 2:

Thanks to Twitter follower @gregfranksimmo (EDIT: who got it from Greg Jericho, aka @GrogsGamut), the following chart of both “nominal” and “real” GDP clearly shows that nominal GDP has been declining since December 2010, and has actually been below “real” GDP for the past two quarters, while “real” GDP growth is presently barely managing 3% … despite all those wonderful (and temporary) economic “strengths” Wayne has been boasting about –

BKOYpNmCcAI780O

UPDATE 3:

Business Spectator and unabashed ALP apologist Stephen Koukoulas – he of the recent 8 – 12% house price rise prediction – tells us why the nominal GDP forecast is so important for the budget figures:

The forecasts that matter more for revenue, nominal GDP growth, are similarly understated at 3.25 per cent and 5 per cent growth respectively.

Er…

“Nominal” GDP in the Sep ’12 and Dec ’12 quarters was running below “Real” GDP, at less than 2% per annum.

5% “nominal” GDP in each of the next two years?

Chances of that are, I reckon, somewhere roughly between Buckley’s and none.

Meaning, the government’s revenue forecasts have roughly the same chances of coming to pass.

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5 Responses to “One RBA Chart Debunks Wayne’s Entire Budget”

  1. mick May 14, 2013 at 9:12 pm #

    How can you tell are politician is lying? Answer: his lips are moving.

    So we are left with rosy forward estimates from the treasury. Does this mean we sack the treasury or Swan or both?

    And then we have the liberal side of politics itching to get into government. Deceit, gutter tactics, lies…all tools of trade. And lets not forget the agenda which comes from Tony Abbott’s own lips: 1. “give back the mining tax”…to the wealthiest of all Australians. One needs to ask why if the mining tax is not delivering much of anything into government coffers anyway. 2. “repeal the carbon tax”…again for the benefit of wealthy miners. 3. “reduce company tax rates”….so that the rich can pay less tax. This is the section of society which does not consume all that it earns to survive, has a miriad of tax deductions including generous tax benefits for money squirreled into superannuation.

    Yes folks, the alternative to Labor is a Liberal government which has already stated that it intends to make the rich even richer whilst increasing taxes on the poor to pay for the above unconscionable conduct.

    So who do we all trust? THINK INDEPENDENT OR MINOR PARTY, the only way of taming the bastards. This is not a paid political advertisement. It is a statement of facts which those with clouded vision or self interest refuse to acknowledge. As Malcolm Fraser (from the liberal side of politics) once stated “life wasn’t meant to be easy”. Yeah right!!

  2. Tomorrow's Serf May 14, 2013 at 9:45 pm #

    It’s time to call a spade a spade!!

    Australia has been taken over by a Criminal Cabal of Fabian Socialist nutcases intent on destroying the fabric of society as we know it.,(let’s call them our own little New World Order cabal)

    Explain to me $270 billion in debt in just 5 years.(it’ll take over 200 yrs to pay it off-if ever)

    Explain to me 30,000 boat people in 5 years. (thanks Serco!!)

    Explain to me anything this Criminal Govt has done in the last 5 years that makes any sense whatsoever….

    Explain to me a BS Carbon Tax/Derivative Trading Scheme….

    Explain to me Pink Batts, School Halls, shutdown of the live cattle trade, the Water Buy Back Scheme, NBN ,privatisation of Electricity grids.et al.

    They have run up unproductive debts to the banksters..

    Wake Up Sheeple. We are neck deep in the process of being screwed….

  3. Tel May 14, 2013 at 10:54 pm #

    http://www.abs.gov.au/ausstats/abs@.nsf/mf/5206.0/

    There’s a graph of GDP growth which is somehow adjusted for inflation (I certainly won’t call it “real” growth, but anyhow, an adjustment is in play). The typical value is around 0.8% per quarter or 3.2% per year.

    I might mention the so called “core-core inflation” index (which excludes food, energy, consumables, luxuries, and everything else except wages, and even then excludes government wages because government does not produce anything). While wages stay roughly constant and labour participation rate also stay roughly constant, it just ain’t possible that the economy is growing.

  4. Kevin Moore May 15, 2013 at 9:15 am #

    Whatever a revenue writedown is this sure sounds like one –

    “7 BILLION AUSTRALIAN DOLLARS DOWN THE DRAIN AS WAYNE SWAN BANKROLLS THE EU”

    http://badrickunadulterated.com/?p=11056

  5. Richo May 16, 2013 at 12:05 pm #

    They expect nominal GDP to jump 1.75 per cent next year. This is despite a predicted increase in unemployment amongst several other expected negative indicators. The term magic pudding comes to mind.

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