Tag Archives: bill shorten

“On Tuesday I Will Blow The Bloody Show Up!”

14 Jun

From The Daily Telegraph’s Simon Benson:

Bill Shorten, who is doing the dance of the seven veils, says publicly he still supports Julia Gillard.

But he will only support her until he doesn’t. And that could be very soon.

Shorten’s choice of words this week was telling.

When asked if he thought Gillard would still be leader by the time of the election, he said: “I believe so.”

These are not the words of a powerbroker confident in the survival of his leader.

As The Daily Telegraph revealed, Shorten is now counting numbers. And those numbers are falling Rudd’s way.

The mood even among many of Gillard’s supporters is bleak. And, after this week’s performance, their support is said to now be soft at best.

One senior Labor MP said that, unless something happens, he was prepared to walk into caucus on Tuesday next week and challenge the PM himself.

“I’ll blow the bloody show up,” they said.

Do it.

Do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it do it.

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Shorten Studies Israel Option For Aussies’ Super

23 Apr

One of the themes we have long followed here at barnabyisright.com is this blogger’s conviction that Australians will inevitably be caught up in the wave of government theft of citizens’ superannuation that has been slowly but surely sweeping the Western world since the GFC.

Indeed, as we have documented many times, the tide has already gone out in preparation for the big wave’s arrival on our shores, with Labor having quietly implemented a sneaky Liberal party policy aiming to direct your employer to send your future super payments to a special new department at the ATO, not directly to your super fund.

We have previously seen that PM-in-waiting Bill Shorten, Minister for Superannuation, has described Australians’ $1.3 Trillion in individual superannuation savings as “our sovereign wealth fund”, a “significant national asset”.

In today’s Australian newspaper, we learn that Shorten is off to Israel to meet and greet, and investigate the Israeli superannuation fund industry.

Your humble blogger’s sceptical eyebrow was raised sharply on noting that, while the emphasis of the story is that, purportedly, Bill is visiting Israel “to examine ways for the retirement savings system to help kick-start the Australian venture capital business” – a disturbing development in its own right – Bill’s spokeswoman let a very different kind of cat out of the bag:

SOME of the leading figures in the multi-trillion-dollar superannuation sector will join federal Financial Services Minister Bill Shorten on a visit to Israel later this week as the government examines ways for the retirement savings system to help kick-start the Australian venture capital business.

Joining Mr Shorten on the visit will be Australian Prudential Regulation Authority deputy chairman Ross Jones, MLC chief executive Steve Tucker and Challenger Group retirement income chairman Jeremy Cooper, author of the contentious Cooper Report on the superannuation sector.

During the visit, co-ordinated by the Australia-Israel Chamber of Commerce and the Israeli embassy, the group will meet executives of leading Israeli financial services companies, including its largest insurance group, Migdal, and fellow insurer Clal Insurance Enterprise Holdings.

It will also meet officials of the Capital Market, Insurance, and Savings Department, which supervises insurance and the long-term savings market.

Mr Shorten is also planning one-on-one meetings with Bank of Israel governor Professor Stanley Fischer, chief scientist Avi Hasson and Israeli and Palestinian leaders.

“The chamber is very excited about the Shorten-led trade mission,” said AICC chairman Paul Israel, who is based in Tel Aviv. “For the first time Australian pension funds will be exposed to the vibrant and innovative Israeli venture capital and hi-tech scene.”

Mr Israel said the week-long trade mission would investigate how Israel — with 7.2 million people, a third of the size of Tasmania, 60 per cent desert, only 63 years old with limited natural resources — had produced more start-ups than large, peaceful and stable nations such as Japan, India, Korea, Canada, Britain and Australia.

It would look at Israel’s superannuation, tax reform, venture capital and seed fund models, as well as its innovation and entrepreneurship culture, he said.

A spokeswoman for Mr Shorten said it was important that super funds looked beyond traditional assets classes and the government was keen to remove investment barriers to them.

She said the trip was designed to improve Australian super funds’ understanding of Israel as an investment destination, particularly in light of the strong venture capital sector there.

Hold on. Wasn’t the purpose of the trip to examine “ways for the retirement savings system to help kick-start the Australian venture capital business”?

Mr Shorten also hopes Australian super funds can get an understanding of how Israel’s pension funds go about investing in innovative and early stage companies.

“Innovative” and “early stage”.

That is bankster and speculator code for “high risk”.

Given the volatility on global share markets, and the parlous state of the global economy, one wonders why any responsible politician would be interested in finding ways to direct their citizens’ retirement savings into high risk start-up ventures.

In Australia … or Israel.

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Big Banks Call For Government To Raid Your Super To Give To Them To “Save The Mining Boom”

31 Mar

Well, no. That’s not exactly what they said.

But if you have the ability to look beyond the end of your nose; if you have seen that governments across the “developed” world have been stealing their citizens’ super to prop up their own and their banks’ finances; if you have seen the dire state of the Federal budget; and if you have seen the sneaky policy quietly introduced by the Liberal Party, and now implemented by the Labor Party, then the unstated implication is clear.

Some day soon, a tapped out Australian Government – whether Labor or Liberal – will “borrow” your super to give to the banks.

In our “national economic interest”.

In the opinion of your humble blogger, this is as clear and as inevitable as the rising of the sun on a crisp cloudless morning.

The rays illuminating this truth have been faintly flickering over the horizon, ever more brightly, for well over a year.

Now, it is dawning.

The only question is this – Who is awake early to see it?

From the Australian (emphasis added):

Funding shortfall threatens resources projects

THE economy’s ability to reap the full benefits of the once in a generation resources boom is in jeopardy, with major projects facing a funding gap as more foreign banks leave the Australian market and local lenders struggle with ongoing turmoil in financial markets.

The big four banks all warn that a record pipeline of hundreds of billions of dollars worth of resources-related projects cannot be met by the banking sector alone while it is being crunched by current economic instability and is being forced to raise its capital levels to comply with new global banking rules.

A range of submissions from the major banks to a Productivity Commission inquiry into the future of the Export Finance and Insurance Corporation (EFIC) show the banks are worried the funding shortfall is set to worsen.

There are fears that a funding gap will exacerbate the “hollow nation” notion that Australia is not capitalising on the boom.

Oh dear! Where to begin?

On the one hand, there are many (including your humble blogger) who have cogently argued that both the Treasury Secretary’s and RBA Governor’s economic policy settings are deliberately geared to hollowing out the rest of the economy to “make room” for the mining boom. Both Treasury and the RBA have openly admitted this. Their deliberate high AUD policy is the most disastrous example. But now, the new claim is that the Big Banks need an extra source of funding, or else the nation will be hollowed out by not maximising a mining boom?! Orwell would be proud.

The biggest bank, the Commonwealth, predicts that the number of banks lending in the Australian market will shrink further.

Translation: We know that Wayne has made “increased bank competition” a mantra, hoping to placate voters’ anger; what better way to pitch for government “help” than to warn (threaten) of a future with reduced competition.

National Australia Bank’s group executive of wholesale banking, Rick Sawers, said there was a risk that funding to the resources sector could become constrained, which would ultimately hold back the sector’s growth.

“As project capital costs have increased, particularly in the infrastructure and natural resources sectors, maximum individual bank exposure amounts are being tested,” Mr Sawers said.

He said “additional sources of capital” were required.

Mr Sawers said Australia needed to ensure that international sovereign wealth funds were encouraged to invest in the local market.

The banks argued that there was a role for EFIC to provide funding to ensure export-oriented projects could be developed.

So if it is true that the big banks are going to have difficulty accessing enough money from overseas to finance Wayne’s oft-touted “massive investment pipeline” in mining, where do you think the extra money is going to come from?

If investment by international sovereign wealth funds in Australia’s mining boom was such an obvious winner for them, there would be no problem, and no need to “encourage” them, now would there?

There is another “sovereign wealth fund”, that could more easily be “encouraged” by government to “invest” in the Big Banks.

Consider: What is by far the biggest pool of “savings” that could be quickly and easily tapped, by a tapped out Federal Government?

Why, the fourth largest retirement savings pool in the world, of course! The $1.3 Trillion in Aussies’ combined superannuation savings. The pool of funds described by Minister for Superannuation and PM-in-waiting, Bill Shorten, as “our” “sovereign wealth fund”, a “significant national asset” that “strengthens our financial sector“:

Superannuation is our sovereign wealth fund

This week marks 12 months exactly since the government announced plans to take compulsory superannuation from 9 per cent to 12 per cent.

… our superannuation savings place Australia fourth in the world. Its $1.3 trillion in funds under management through superannuation significantly boosts national savings and provides greater retirement security for millions of Australians. Superannuation is also a significant national asset because it strengthens our financial sector.

It is the same pool of funds that Gillard has already tried “encouraging” to invest in government “infrastructure projects”, like the NBN –

The Gillard government’s 2011-12 budget has proposed a raft of initiatives aimed at encouraging superannuation fund and private investment in infrastructure projects.

Drip.

Drip.

Drip.

Back to the Big Banks’ veiled threat:

Westpac warned that the major Australian banks were already facing “considerable pressure” because of large resource-related projects and the ongoing squeeze in global financial markets, while other funding sources “cannot meet the demand for funding created by the historically strong project pipeline in Australia at present”.

…

ANZ said an estimated $109bn in debt would be needed to finance projects this year and Germany’s Deutsche Bank said the impact of the global financial crisis was still being felt four years on as banks were forced to restrict their lending.

…

The banks’ warnings are contained in new submissions to Julia Gillard’s chief micro-economic adviser in a bid to convince it to reverse a recommendation that EFIC be cut back.

The Productivity Commission has accused EFIC, the government’s export credit agency, of handing out damaging subsidies to big exporters.

Now do you understand why the ALP government has passed legislation to increase the compulsory superannuation levy on employers by 33.3% – from 9% to 12% – and is using the blatant lie that the mining tax will pay for the increase to smear over the truth, that it is small business who will wear the extra cost, even though the Treasury and RBA’s policy settings are already sending small businesses bankrupt in record numbers?

Now do you understand why Tony Abbott claims that he does not support the superannuation increase, but has refused to repeal it on becoming PM?

Make no mistake, dear reader.

That is the new dawn coming over the horizon.

What has already happened in countries like the USA, UK, France, Ireland, Portugal, Poland, Hungary, Argentina, and many more, will happen here too.

It is just a matter of time.

For more, here is a selection of previous articles, in reverse chronological order:

Grand Theft Super – A Very Subtle Form Of Theft

Another Government Raid On Citizens’ Super

It Has Begun – Labor Steals Liberal’s Idea To Steal Your Super

“And Now They’re Coming For Your F***ing Retirement Money”

Stealing Our Super – I DARE You To Ignore This Now

Money Morning Agrees – Your Retirement Savings Under Threat

Now The UK Government Is Stealing Super Too

US Treasury “Borrowing” Of Federal Pensions Brings Theft Of Private Pensions One Step Closer

Liberal Party’s Sneaky Plan To Steal Your Super To Pay Labor’s Debt

No Super For You!!

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Shorten Truth

16 Feb

Professor Sinclair Davidson at Catallaxy Files spots a tiny inconsistency:

The newspapers are full of the problems facing the aluminium industry. The basic problem as I see it is that the government has adopted a policy – the carbon tax – that should see the industry closing down (or at least massively reduced in size) but doesn’t want to admit to it. The AFR reports Bill Shorten explaining why the Treasury modelling doesn’t really show the industry collapsing (emphasis added).

Employment Minister Bill Shorten also rebuffed concerns based on the carbon tax modelling.

“It’s how you use that modelling – and that modelling depends upon the rest of the world doing nothing,” Mr Shorten said. “And the reality is the rest of the world is moving to lower emissions, greater carbon efficiency.”

Does Treasury know?

An equilibrium global permit price emerges to clear the global permit market.
…
The modelling assumes an eventual shift to a lower cost coordinated international policy framework, recognising that this is ultimately in all countries’ best interests. By 2016, a more coordinated international policy regime allows countries to trade either bilaterally or through a common central market. As a result, a harmonised world carbon price emerges in 2016.

That must be the exact opposite to what Shorten is saying.

Indeed. But then again, as regular readers of this blog know, Treasury modelling is a farce anyway. So maybe that is why it does not bother Bill Shorten to blatantly lie about the critical base assumptions used by Treasury in their CO2 derivatives scam modelling … since the predicted outcomes (just like global warmists’ “models”) won’t be anywhere near reality anyway.

This propensity to lie seems to be endemic amongst Labor’s leading politicians.

Perhaps I should have titled today’s earlier post, “Labor’s Deficit Of Moral Hygiene”.

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Grand Theft Super – A Very Subtle Form Of Theft

7 Dec

1930's Depression-era cartoon

The Sovereign Man, Simon Black, explains how our very system of modern government public sector financing is … just like private sector financing … nothing more than a Ponzi scheme.

Don’t miss his comment at the end, about how the UK government is effectively stealing citizens’ super. It’s just one of the several ways that our own government has already set in train the policies to do the same (emphasis added):

Say what you want about him, but Bernie Madoff was a guy who knew how to keep the party going. For years, he ran one of the largest private-sector Ponzi schemes in history and always heeded the golden rule of financial scams: make sure your inflows are greater than your outflows.

He was finally done in when redemptions exceeded new investments. He didn’t have enough cash to pay out investors, and he wasn’t able to scam more people into paying in to the scheme. As a result, Madoff finally had to admit that the whole thing was a total fraud.

Governments around the world are in similar situations right now with their own public sector Ponzi schemes. Faced with failed auctions, declining demand, and rising yields, politicians are having to resort to desperate measures.

Like any good scam artist, they’re appealing to the masses first; all over Europe, governments are sponsoring new marketing campaigns suggesting that it’s people’s patriotic duty to buy government debt.

In Spain, they’re actually issuing instruments called ‘Bonos Patrioticos,’ or ‘patriotic bonds.’ Ad campaigns say that the bonds are “good for you, good for the future.”

In Ireland, they’ve issued “Prize Bonds” which carry a 0% interest rate; instead of receiving interest, bondholders are entered into a weekly lottery contest.  Naturally, lottery winnings are only possible as long as people keep buying the bonds… pretty much the definition of a Ponzi scheme!

In Italy, they’re rolling out the country’s sports celebrities to encourage everyone to buy Italian sovereign debt.

What’s ironic is that Italy’s dismal balance sheet is almost universally acknowledged. It’s as if everyone knows the country has almost no chance of making good on its obligations, but they still feel the need to willingly throw away their hard earned savings for the greater good of political incompetence.

Thing is, it’s not the millionaire sports stars, wealthy business leaders, or political elite who are buying these bonds… at least, not in anything beyond a token, symbolic amount. It’s the average guy on the street who really stands to get hurt when the government finally capitulates.

This is a truly despicable act and amounts to theft, plain and simple.

The United Kingdom, which is rapidly reaching this banana republic sovereign debt status itself, has unveiled a plan to issue roughly $50 billion in infrastructure bonds. This would be the equivalent of issuing $300 billion in the US– not exactly chump change.

Given Britain’s already colossal debt level, private investors aren’t exact diving in head first to loan the government even more money.

Undeterred, British Chancellor George Osborne plans to ‘highly encourage’ UK pension funds to mop up about 60% of the total amount. “We have got to make sure that British savings in things like pension funds are employed here and British taxpayers’ money is well used,” he said.

In other words, ‘we are going to make sure that British people buy our junk, one way or another.’

The last year has seen numerous pension funds around the world, from the United States to Argentina to Hungary, be raided for the sake of keeping these Ponzi scheme going.  The UK is already lining up to be the next.

It’s one of the last acts of a truly desperate government to begin directing public and private savings into their Ponzi schemes.

Fast-forward a few downgrades and you can plan on seeing the exact same thing in the United States– appealing to people’s patriotism to loan their hard-earned savings (if they even have any) to the Federal government at a rate of interest that fails to keep up with inflation.

It’s nothing more than a very clever (and subtle) form of theft.

Those UK plans ring any bells?

They should … alarm bells.

Your humble blogger has been ringing that same alarm bell ever since the May budget, when our government quietly announced exactly the same plan:

… Barnaby is warning that it could happen here too.

The first steps in that direction have already begun.

From Global Custodian (Australia edition), 11 May 2011:

The Gillard government’s 2011-12 budget has proposed a raft of initiatives aimed at encouraging superannuation fund and private investment in infrastructure projects.

In light of the botched “school halls” program, and the stalled white elephant NBN – which so far has only achieved a 12% takeup rate, versus their predicted 58% – would you really trust this government to wisely and prudently invest your super in Government infrastructure?

Others have their doubts.

From The Australian, 12 May 2011:

The government’s plan to use tax incentives to encourage superannuation funds to invest in new infrastructure could be thwarted by inadequate returns on projects and a reluctance by the states to take on project risk, experts say.

First, a little “encouragement” for super funds to invest in government spending programs.

Then, when the costs blow out, or when the government debt becomes unmanageable?

“No super for you!”

We also said this:

Labor’s PM-in-waiting, the Minister for Financial Services and Superannuation, Bill Shorten, already thinks of your super as a “significant national asset” … a kind of “sovereign wealth fund”.

From The Australian, 4 May 2011:

Superannuation is our sovereign wealth fund

This week marks 12 months exactly since the government announced plans to take compulsory superannuation from 9 per cent to 12 per cent.

… our superannuation savings place Australia fourth in the world. Its $1.3 trillion in funds under management through superannuation significantly boosts national savings and provides greater retirement security for millions of Australians. Superannuation is also a significant national asset because it strengthens our financial sector.

Have no illusions, dear reader.

Green-Labor already have their eyes firmly fixed on stealing your super, using exactly the same “infrastructure bonds” scam as the Pommy government.

After all, why not?

In their twisted rationale, your super is a “significant national asset”.

“Nation building” infrastructure is a “national asset” too, right?

You know … electrified ceiling insulation, overpriced school halls, “green scheme” rorts, the no cost/benefit analysis Nation Bankrupting Network.

So of course it makes perfect sense to “encourage” your super fund (mis)manager to “invest” your super the “significant national asset” in … significant national infrastructure assets.

Then, when the economy nosedives, the banks collapse, our government hocks the taxpayer (and their children and grandchildren) to the moon to bail them out, and ultimately (like the rest of the West) goes cap-in-hand to the IMF for loans, your super that’s been invested in that “national infrastructure” … will get handed over to the IMF as collateral on unpayable sovereign loans.

Just like in every other country where the IMF is asked for “help”.

If you’ve not yet woken up to the reality that neither “side” of our political spectrum can be trusted (at all, much less) to keep their hands off your retirement savings, then consider this.

Labor has already begun the subtle, insidious process of “encouraging” your employer to funnel your future super payments directly to the ATO.

A policy stolen from the Liberal Party.

I know.

I got their letter:

(Click to enlarge)

Wake up Australia!

It’s time to take the red pill.

The Matrix: "You take the blue pill – the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill – you stay in Wonderland and I show you how deep the rabbit-hole goes." - Morpheus

UPDATE:

(h/t reader JMD) Another example of a desperately over-indebted government trying to bribe/coerce/con the citizenry into keeping the Ponzi scheme going:

‘Gold For Bonds’ in Japan as Bond Buyers Get Gold Coins

Japan will reward investors who buy reconstruction bonds with half an ounce of gold, an added incentive that could boost the return by nearly six times according to Japanese Finance Minister Jun Azumi.

Individual investors who purchase more than 10 million yen ($129,000) in the debt with a 0.05 percent return and keep it for three years will receive a gold commemorative coin weighing 15.6 grams (0.55 ounces), the Finance Ministry said in Tokyo today, worth about $948 based on current prices for the precious metal.

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Who To Believe On Super?

16 Aug

From ABC Insiders:

BILL SHORTEN: Well in the last two years, and whilst the final figures haven’t come out from last year, Chant West who are one of the organisations who monitor [superannuation fund] returns show that the year before last the returns on average for a balanced fund was 8.9 per cent. The year just passed – 9.2 per cent.

From ABC TV’s Alan Kohler in Business Spectator:

For the past five years the market has given nothing. After the 20 per cent correction between April 11 and August 8, the ASX 200 accumulation index (capital return plus dividends) has now produced a zero five-year return.

From ABC Insiders:

BILL SHORTEN: As an actual investment product super’s done reasonably well over the last 20 years.

From Alan Kohler:

The first fifteen years since the superannuation guarantee legislation was first introduced in 1992 went extremely well. The compound annual rate of return provided by the sharemarket – like manna from heaven – was 15.5 per cent…

Of course, not all that return dribbled into the members’ accounts: the superannuation industry, consisting of advisers, platforms, fund managers and the super funds, were furiously skimming the accounts and getting gloriously rich.

Still, anyone retiring in 2007 was a big winner and didn’t begrudge the skimmers their little portion. Everyone was a winner!

But now life has changed completely. The five-year total return from the sharemarket is zero; the 20-year total return is now below 10 per cent; the ten-year return is just 6.6 per cent. The fees skimmed off by the industry – which of course continue even though the balances have gone backwards – now represent a much larger percentage of the long-term return.

Suddenly accumulation super lacks the vital ingredient of accumulation. And there is a clear risk that the bear market will continue for some time yet, with both Europe and the United States mired in debt.

From ABC Insiders:

BARRIE CASSIDY: So what do you say then to people who got a bit of a fright this week, that they’ve just got to hang in there?

BILL SHORTEN: Well certainly if you’re right at making a decision to retire in the very near future, if you’re a self-funded retiree and you’ve got a portfolio of shares, this has been incredibly tough; just as was the first global financial crisis in 2008.

But I would say that now is not the time to make snap decisions. I would say that in the long run superannuation in the last 10 years, say if you’ve been in an industry fund, it’s been 4 per cent each year. I would say that the shares market generally has performed well in Australia. I do believe that things will improve.

Hmmmmmm.

Question.

Why is it that anyone other than politicians who gives financial advice, has to be licenced to do so, or risk facing the full force of the law?

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Shorten Stupid, Swanning Around On Debt

15 Aug

Not only is our Treasurer unquestionably The World’s Stupidest Treasurer (“Wayne: OOPS! I Did It Again”).

The Assistant Treasurer wants his title.

From ABC Insiders (note carefully the emphasis added):

BARRIE CASSIDY: Now what’s happened to the budget bottom line? This promise to reach a surplus by 2012-13, will that now happen?

BILL SHORTEN: Well as our Prime Minister said, getting to a budget surplus is our objective.

And just referring to your earlier questions about the stock market and Australia and how we’re going, when you look at our public sector finance position in Australia compared to the Americans, the Europeans, we are doing very well.

Our net public sector debt at the moment is 7.2 per cent. Or to put it in plain English, if you as the Australian economy were bringing in $100,000 our net public sector debt is $7,000. Our interest payments are 0.4 per cent or $400 off a base of $100,000.

Oh dear.

This is not only the Assistant Treasurer.

This is also the Minister for Financial Services and Superannuation ( “Stealing Our Super – I DARE You To Ignore This Now” ).

As we saw with the RBA Governor, Shorten is either a liar, or a blithering idiot.

Or more likely both.

His “plain english” analogy is manifestly false and stupid.

And whether by accident or intent, it is inexcusably deceptive.

He is of course, obliquely referring to the preferred “standard” measure of government debt – “as a percentage of GDP”.

Regular readers (and Twitter followers in particular) will know my strongly-held views on the politically-convenient falsity of this measure.  I maintain that it is a completely invalid (and deliberately deceptive) measure by which to assess government debt levels.

“GDP” stands for “Gross Domestic Product“, and is supposed to be a measure of the market value of all real “production” of the economy.

The reality is far different.

Rather than actually measuring the actual market value of what is actually produced and actually sold (that is, real products/services that are of real value), the methodologies used for measuring GDP are, to be blunt, fudges. Invented by ivory-towered #JAFA‘s, disconnected from reality, in high-minded belief that they are “approximating” the real world. In the end, what we find is that the “GDP” (and thus, the economic “growth”) figures that we are given, are really nothing more than the grand sum total value of transactions (ie, buying and selling) in the economy.

So, to use a simplistic example – Person A pays Person B $5 for something, and Person B uses that $5 to pay Person C for something; the “GDP” measure considers that to be $10 worth of “GDP”. Note well: nothing new has necessarily been “produced” here. The same $5 has simply churned from one person, to another, to another, in exchange for goods or services. But for the purposes of the false GDP measuring stick, that series of transactions is considered $10 worth of “GDP”.

[Importantly, if the bankstering system creates 5% more new money (credit, ie, debt) out of thin air this year, thus devaluing the buying power of the money already in the system, and as a result, next year the same transaction costs $5.25 from Person A to Person B, and $5.25 from Person B to Person C, then the total ($10.50, versus $10 last year) would be deemed notional “economic growth” of 5%. When in reality, there may still be no new real wealth “produced” in that example … just a churn of more (devalued) money.]

Now most of us would think it quite stupid for a household or a business to measure its debt against the grand sum total of all its buying + selling (or spending + earning).  Instead, for budget purposes we measure our debt versus our income (or for Household Balance Sheet purposes, against our liquid, convertible-to-cash assets)

Likewise, when it comes to the national Budget, the Government should not be permitted to blur over and hide the truth of the issue by talking about the debts it accrues (for the taxpayer to pay back) as a percentage of all the buying and selling in the economy. Instead, it should be required to discuss the debts it accrues, as a measure of government debt versus government income.

Let’s consider a real world example.

In the 2009-10 Final Budget Outcome, we see the following:

2009-10 Final Budget Outcome, Part 1, Table 1

As you can see, the government’s income (Revenue) was $292.8 Billion.

It claims this was 22.5% of GDP. Meaning that the GDP calculation for 2009-10 must have been 292.8 / 0.225 = $1.3 Trillion.

Now, to use Shorten’s false, misleading and deceptive analogy, he would have us all think that the government was “bringing in” $1.3 Trillion.

And so, he would have you focus on the totally irrelevant fact that the government’s net public debt was “only” 7.2% of that $1.3 Trillion churned in the economy (or approx. $94 Billion @ June 2010).

Convenient bit of perception management.

Because it doesn’t sound like very much, when stated that way.

But … what if you instead compare the actual public debt number, not to the $1.3 Trillion in transactions churned in the economy, but to actual government income?

Using the same 2009-10 example, $94 billion in net debt, versus $292.8 billion in total income (ie, 32%) sounds a lot worse, doesn’t it.

And most importantly of all, it is an honest way of expressing debt that is far easier for average voters to understand.

When you look at it this way, what you see is a very different picture of government debt.

Presented in these terms, it is like a householder who earns only $29,280 in income, with a net* debt of $9,400.

Once you pay for all your costs of living out of your $29,280 in income, that $9,400 debt is not such a “low” figure after all. Servicing the interest and paying off the debt principal is not so easy, as the deceitful politician would have you imagine.

Finally, did you notice the last sentence that Shorten uttered?

Our interest payments are 0.4 per cent or $400 off a base of $100,000.

By now I hope that you can see how false, misleading and deceptive that statement is.

You now know that his analogy is completely false – that the government is not “bringing in” $100,000 with which to pay interest on the debt.  And neither is the economy – because that “$100,000” is simply the grand sum total of all the buying and selling in the economy.  It is NOT a measure of income, or of available cash!

If Mr Shorten were honest – or, had a clue what he was talking about – then what he should have said is this –

“Our interest payments are 3.74 per cent or $13,095 off a base of (an estimated) $349,961 in Income for 2011-12 alone”.

Source: 2011-12 Budget, Paper No. 1, Statement 9, Table 1

Swanning around with false, misleading, and deceptive statements about our economy typifies the gross dishonesty of our political “class”.

It’s not good enough.

I suggest that it is high time for fundamental changes to our system of governance.

A good starting point would be for us all to fully wake up to the reality of the kind of self-serving, short-sighted, dishonest and immature scumbags who populate our Parliament, and demand a change to the rules concerning eligibility for running for public office.

I vote for a Parliament of amateurs – regular people – with no one under retirement age allowed to stand for election –

No More Mañana Or Bananas In A Parliament Of Nanna’s

* “Net” debt” is another misleading and deceptive way in which all our politicians (except Barnaby Joyce) prefer to describe debt.

Referring to public debt in “net” terms (rather than “gross”) is another example of politicians wilfully ignoring reality, in order to gild the lily and make their own piss-poor performance seem better than it is.

“Net” debt is (simply stated) the total of debt actually owed by the government (ie, Gross debt), minus the value of “financial assets” held by the government. Australia uses the OECD definition (emphasis added):

Government net debt comprise all financial liabilities minus all financial assets of general government. Financial assets of the general government sector have a corresponding liability existing outside that sector. The exceptions are monetary gold and Special Drawing Rights, financial assets for which there is no counterpart liability.

Monetary gold and Special Drawing Rights may be included as assets of the general government sector or they may be classified as assets of the central bank, at the discretion of the government.

Source Publication:
The OECD Economic Outlook: Sources and Methods.

It’s important to note the bolded phrase in that definition.

Because in choosing to use “Net” debt as the preferred figure to talk about in public, the government (no matter the Party) is wilfully deceiving themselves, and the community.

Gross debt is what the government owes.

Net debt is gross debt, minus the government’s financial assets. And with the exception of gold and SDR’s, those “assets” are someone else’s liability.

To use the politically-convenient “net” debt figure (because it is lower thus sounds better than Gross debt), a politician must count their chickens before they’ve hatched. That is, by implication they are assuming that the counterparty who is liable for the “assets” they are counting on, can and will actually make good on their liability.

The GFC which never went away is a perfect example of why you can never bank on counterparties.

The only honest way to look at debt, is the simplest way.

What you owe to others, is what you owe. You cannot bank on what others owe to you before you get it, as a false justification for claiming that your own debt burden is less than it actually is.

End of story.

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