5 Years After The GFC, ALP Admits Economy Has Not “Recovered”, And 3 More Won’t Help

3 Aug

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The Global Financial Crisis peaked in 2008-09.

Since then, the ALP has relentlessly talked up the “strength” of our economy — by comparing to basket-case northern hemisphere countries — and by extension, the brilliance of their economic management.

Many hundreds of times, they promised a “return to surplus”. And fair enough too.

After all, our economy was — so they said — the “strongest advanced economy” in the world.

We had a “huge pipeline of investment”.

“Low unemployment”.

“Low inflation”.

“Low interest rates”.

And record-high Terms of Trade (ToT), from a Chinese stimulus-fuelled mining boom.

A mining boom that — so they said — would give us a period of “unprecedented prosperity”, “stretching to 2050”.

They should know.

After all, their leader is fluent in Mandarin.

And yet, despite all this … no surplus.

Only more, and deeper deficits.

Yesterday, they admitted that their latest budget — released less than 3 months ago — has already developed a $33 billion black hole.

Word is, they are now going to call an election, for September 7.

So we should, perhaps, pause for a moment to reconsider the strength of our supposedly “strong economy”, according to the ALP’s own words, and their own yardstick.

In the August Economic Statement released yesterday, in one little paragraph, the ALP has conceded that 5 years after the GFC, the economy has not “recovered”:

August Economic Statement, page 29 (click to enlarge)

August Economic Statement, page 29 (click to enlarge)

And their newest revised forecasts, showing deficits to 2016/17, tells us that 3 more years of their brilliant economic management won’t help.

The simple truth is this.

By their own measure — a budget surplus — the economy has not “recovered”.

And with their revised “forecasts” now predicting rising unemployment, and no surplus till 2016/17, there is no hope in sight for an economic recovery.

Under their management, at least.

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12 Responses to “5 Years After The GFC, ALP Admits Economy Has Not “Recovered”, And 3 More Won’t Help”

  1. mick August 3, 2013 at 11:54 am #

    A “huge pipeline of investment”:

    What this means is that Australia has flogged off everything (predominantly mining projects) of value to overseas investors and that these investors are employing Australian labour to get these investments ready for the repatriation of trillions of dollars. This is what huge pipeline of investment is achieving.

    The prime example is the Gorgon LNG deposit which has gone over budget to the tune of $50 billion. But once it begins to crank out the exports of gas into Asia the rivers of gold will begin. Then Australia gets the crumbs (royalties) the same as all other third world nations with wealth whilst other countries do nicely thank you very much.

    As much as this blog highlights the failure of Labor to do what is in the best interests of the nation it would have been no different had the coalition been in power. The only difference is that it would not have squandered so much money and would have directed this into the bank accounts of the rich. Working Australians would not have been any better off. And a parting comment: the above example of the Gorgon LNG deposit was let go offshore by the Howard government. So much for the national interest test.

    • The Blissful Ignoramus August 3, 2013 at 5:28 pm #

      “Australia has flogged off everything (predominantly mining projects) of value to overseas investors”

      Exactly. Under both “sides” of Australian politics.

      “this blog highlights the failure of Labor to do what is in the best interests of the nation”

      Because it is in power.

      “it would have been no different had the coalition been in power”

      Very little.

  2. bushbunny August 3, 2013 at 1:54 pm #

    I am getting terribly skeptical regarding our Nations future. With the fear of unemployment people are suffering. Particularly in regional areas. Two examples. A 45 year old woman was forced into redundancy and a package. The redundancy package allowed her to pay off her mortgage and car finance with the fear another job would not be available for a long time. She sought out Centrelink. She was not allowed to draw unemployment benefits as they deemed she was still employed to a certain date as her ex employer had paid her in advance. The gross amount was taken, but not the tax that was immense that reduced her payout by thousands. She was faced reducing her finances by paying out her mortgage and car, or living on the amount until she could draw benefits in 8 months time. Another person was terminated after 13 years, and the same thing happened no unemployment benefits until all the gross amount of long service and termination pay had according to Centrelink expired. The employer had paid them in advance, so they were strictly still employed by them? Again thousands were taken out from the gross amount for tax that they would not take into account. From $900 per week gross pay, the eventual NewStart was only $505. per fortnight. Yes. No rent allowance was available either, they lived at home with their pensioner parent, and if they claimed another 41.00 per week rent allowance her pension would be docked. So she is now subsidising her son from her pension. With taxing savings to force banks to take out insurance up to $250,000 that this government said they would support if banks became insolvent. That doesn’t worry me particularly but putting another 158% on cigarettes does. A rotten trick aimed at smokers. It will be insurance hikes next no doubt to save the government from paying out disaster funds.

  3. Shawnster August 3, 2013 at 3:42 pm #

    That’s some effort to put us in the poor house to so much debt. Just to run a small surplus in 2016 means by then our debt will be possibly $600B by that stage. I just guessed that number btw.
    What worries me is we have to pay this off and the interest on it, well lets not let them confuse us with Surplus (Flows) and Debt (An Absolute value). Also how come Krudd is giving us so much bad news all at once if the election is only 5 weeks (possibly) away. If he was as sneaky as moi then I would not be raising fags and grog and bank levies til after I was re-elected. Maybe the answer is that the the people who are reliant on welfare see all this as a sign of security for them in this recycled leader.

    • The Blissful Ignoramus August 3, 2013 at 5:29 pm #

      They “forecast” $370 billion of debt by then. We know what their forecasts are worth.

      EDIT: By the way, could not agree more wholeheartedly with you on this point …

      lets not let them confuse us with Surplus (Flows) and Debt (An Absolute value).”

      Otherwise known as “Flows” and “Stocks”. You are spot on. They have to manage a real (not imaginary) $16 billion surplus, just to pay the interest bill. And even then, the principal (stock) remains.

  4. Kevin Moore August 3, 2013 at 4:08 pm #

    https://www.wsws.org/en/articles/2012/03/swan-m30.html
    Australian government pledges to slash billions from budget
    By Patrick O’Connor
    30 March 2012

    Australian Treasurer Wayne Swan yesterday warned that massive spending cuts and savings will be necessary to deliver the Labor government’s promised budget surplus on May 8.
    The budget will involve the most severe cutbacks in decades, drastically lowering spending on social services and infrastructure, public sector jobs and wages, and welfare entitlements. These measures are in line with the sweeping austerity cuts that have devastated the working class in Europe, the US and internationally.
    The preparations for the May budget further expose the government’s claim that Australia avoided the global economic crisis. They also underscore the fraud of Swan’s recent demagogic criticisms of the “self interested 0.01 percent” and the “mining billionaires.”

    • The Blissful Ignoramus August 3, 2013 at 5:33 pm #

      Yes Kevin. As regular readers know, the thing that perhaps most infuriated me about the whole mining tax farce, was Swan’s smokescreen of deceit in trying to distract the public’s attention with his class warfare rhetoric, scapegoating the billionaire local Aussie miners (Forrest, Rinehart, Palmer). When the truth of it all was that he and Gillard did a secret backroom deal with the foreign-owned multinational giants (BHP, RIO, Xstrata), for a mining tax design that favoured them, and penalised their locally-owned, smaller competitors. The locals were locked out of that so-called “negotiation”. If I had my way, Gillard and Swan would be tried for treason on this issue alone.

      • Ross Johnson August 3, 2013 at 6:30 pm #

        Scumbag Labor have reached the lowest ebb in their history and still they have yet to reach the bottom of their cesspool of corruption and nepotism. They stand for nothing but their hedonistic self interest.

        Paul Keating was instrumental in selling off the our last token gesture of monetary sovereignty called the Commonwealth Bank.

        We desperately need a new party that represents the people of this country since time is running out.

  5. Kevin Moore August 4, 2013 at 7:29 am #

    The Australian Constitution says in Chapter 5, 115. “A State shall not coin money, nor make anything but gold and silver coin a legal tender in payment of debts”.
    .
    What is there to stop the Australian States [ besides the Banks armies ] from minting a coin equivalent to the States total debt? It would certainly put an end to Socialists Kevin Rudd and the ALP’s Babylonian dream of centralised government.
    .
    http://www.commondreams.org/view/2013/01/18-1
    The Trillion Dollar Coin: A Debt Solution for the People
    Far from being a gimmick, having the U.S. Treasury mint high-denomination coins is a solution that cuts to the root of America’s financial problems. And Benjamin Franklin would have liked it, too.
    by Ellen Brown

    “……….In 1872, New York bankers sent a letter to every bank in the United States. The letter, as quoted by Lynn Wheeler in Triumphant Plutocracy: The Story of American Public Life from 1870 to 1920, read in part:
    Dear Sir: It is advisable to do all in your power to sustain such prominent daily and weekly newspapers…as will oppose the issuing of greenback paper money, and that you also withhold patronage or favors from all applicants who are not willing to oppose the Government issue of money. Let the Government issue the coin and the banks issue the paper money of the country. [T]o restore to circulation the Government issue of money, will be to provide the people with money, and will therefore seriously affect your individual profit as bankers and lenders .
    Bank-created money, including paper bills and now electronic money, could be rented to the people at a profit. The people’s debt-free money was limited to coins, which today compose less than one ten-thousandth of M3, the broadest measure of the money supply…..”

    • The Blissful Ignoramus August 4, 2013 at 9:29 am #

      My understanding is that there is nothing to stop such an action happening … except the ignorance, lack of courage, and complicity of our politicians. As I understand it, many of them would never have been preselected, and/or acquired sufficient support (financial and otherwise) to get into parliament, without the “help” of the usual suspects.

  6. Kevin Moore August 4, 2013 at 9:20 am #

    But “rising unemployment” will be good for Therese Reins business [Kevin Rudds wife].

    http://kangaroocourtofaustralia.com/2013/08/04/kevin-rudd-therese-rein-and-their-company-ingeus-ltd-the-obeids-of-the-federal-government/#comment-18043

    • bushbunny August 5, 2013 at 1:51 pm #

      Absolutely agree Kevin M, also David Gonski is a chairman on her board, what a corruption of ideology as has been mentioned in UK where her company is under investigation. The Australian ran an article or articles about it, but the rest have left it alone. Maybe they will run more now the election is in sight?

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