Tag Archives: budget

Hello?! McFly?!! A Simple Question For Swan & Hockey

30 Apr

The Federal government budget has now been in deficit for 5 years straight.

Some analysts are predicting a further decade of budget deficits.

The Federal government presently owes $269.4 billion (77% of tax revenue) to creditors, over 70% of whom are “Non-resident” –

Source: Australian Office of Financial Management

Source: Australian Office of Financial Management

The cost to taxpayers – the extra burden on the economy – of paying just the Interest on the debt accrued so far, is $12 – $13 billion every year

Budget 2012-13, MYEFO, Appendix B, Note 10

Budget 2012-13, MYEFO, Appendix B, Note 10

It is almost universally agreed – the RBA included – that the Australian Dollar is significantly over-valued compared to the currencies of other key trading nations.

It is also near-universally agreed that this over-valuation of the AUD is damaging the Australian economy (ie, reducing business profits, and tax receipts).


Why are you continuing to increase the debt and interest burden on taxpayers (and the economy) by selling government bonds that owe interest to the bond holder, when you could simply order the Australian Treasury to (electronically) print Australian Dollars, use those new dollars to pay down the existing debts to foreigners, and, weaken the foreign-exchange value of the too-high Aussie Dollar all at the same time?


Are you galactically stupid? …

… or, is it that you are all just bought and paid for, gutless, traitorous, overpaid, 100% self-interested puppets of the international bankster sector?

P.S. I Just Had To Do This

4 May

* Apologies – it seems the Youtube video is not available in Australia. Although strangely, I can watch it with no problem. Oh well … a couple hours of video editing to entertain myself only. As you were.

UPDATE: Try this instead –

Our Media In $140 Billion Lie For Wayne

4 Apr

What hope is there, dear reader?

If it is not Wayne Swan himself telling lie after lie about the economy, and the government’s financial record, then it is the mainstream media telling lies for him.

Here’s a classic example:

Last Thursday Wayne Swan said tax revenue had fallen $140 billion since the GFC, $90 billion of which has been due to lower company tax.

That was Alan Kohler in Business Spectator. Who we already picked up for inaccurate parroting of Wayne’s lies yesterday.

Here’s Sky News whistling the same false tune:

… having come through such tremendous global turbulence, one of the after-effects has been the revenue impact, with some $140 billion lost over five years.

Thanks to news wire service AAP, this lie was repeated across the mainstream media over recent days.

And the truth?

The truth is that Wayne did not actually say this in his speech last Thursday. What he did say, was that there was a write-down of $140 billion in revenue:

The bulk of the tax receipts write-down post GFC can be explained by write-downs in company tax. Out of a total write-down of $140 billion, company taxes contributed around $90 billion over the five years to 2012-13.

And what that really means, in simple truth, is that the Treasury “experts” over-estimated likely revenues by $140 billion in their original budget estimates. And then, they later had to “write-down” the amount they did not actually get. Which the media then lazily reported in the form of a tacit excuse for this government’s massive budget deficits. As though money you only hoped to get, and then didn’t, is somehow a “loss”.

But can we really blame the media entirely?

After all, here’s Wayne today – after the media had been dutifully reporting the $140 billion writedown as a “loss” for days now – himself repeating their $140 billion lie in a formal statement:

…the global financial crisis and the revenue challenges it brought to state and federal budgets meant it was unrealistic for any treasurer to pretend a drop in revenue was unique to their state.

‘Nor is it realistic to suggest state revenue losses are anywhere near the $140 billion the federal government has lost due to the global crisis,’ Mr Swan told AAP in a statement.

As we saw yesterday (“Wayne’s ‘Per Cent Of GDP’ Lies Debunked”),  the real truth, hidden behind a smokescreen of half-truths, cleverly worded misleading and deceptive statements, accounting tricks, and outright lies, is that the government is not making a “loss” on tax revenues at all. Indeed, they are pulling in tens of billions more Total Revenue now, than they were in the 2007-08 year, pre-GFC.

The real reason why the budget is in such a parlous state, and why our sovereign AAA rating is now in jeopardy, is because the ALP’s rarely-mentioned spending is still totally out-of-control. As I reported yesterday:

According to Wayne’s Treasury’s most recent published figures, in 2011-12 this government will rake in $37.41 billion more revenue than in 2007-08, pre-GFC.

But they will spend $91.64 billion more than in 2007-08, pre-GFC.

I have not seen a single journalist or economic commentator in the land actually report the simple, plain truth about this government’s actual budget position.

Instead, they lazily report repeat the Government’s lies. Or, lazily report lies all by themselves.

It is inexcusable.

It does not matter what the government says, in speeches or press releases. Indeed, this government is so adept at twisting words, glossing over facts, and using misleading and deceptive statements, the smartest thing to do is to assume that everything they say is a half-truth, misdirection, or blatant lie, and go check the data for yourself.

Every time.

Anyone can go to the government’s Budget website, look up the Past Budgets information, compare the basic Revenue and Expenditure figures, and see the simple truth. In mere minutes.

The low calibre of our supposed “experts” and intellectual “betters”, whether they be in politics, or the commentariat, truly causes me to despair for our country.

About The May ‘Surplus’ Budget – “It Won’t Actually Be Achieved, Of Course”

4 Apr

Alan Kohler points to the Emperor’s Clothes:

If Treasurer Wayne Swan and Treasury Secretary Martin Parkinson really do pull off a surplus in the 2012-13 budget it will be an incredible achievement.

It won’t actually be achieved, of course, when we come to look back on 2012-13 in hindsight, because it is bound to contain over-optimistic projections…


Just like last year’s ridiculous budget.

But just watch, dear reader.

Watch Wayne and friends – that is, the mainstream media – crow and pontificate and hail the magnificent “return to surplus”, “as promised”, under “extremely difficult” economic circumstances, come May the 8th, 2012.

An “on paper” forecast surplus, that has not a snowflake’s chance in hell of actually being delivered, come June 30 2013.

Wayne’s “Per Cent Of GDP” Lies Debunked

3 Apr

“As a percentage of GDP”.

Possibly the most common phrase of deception in the average Treasurer’s armoury.

In the case of the average economist, the most common phrase of self-deception.

Let us take a look at how The World’s Greatest Treasurer Wayne Swan the Treasury department’s economists have used the “as a percentage of GDP” lie as the foundation of steaming bovine faeces for an entire speech delivered to the Australian Business Economists’ Breakfast on 29 March 2012 by the Treasury’s muppet.

Here’s Wayne:

The GFC hit all our revenue heads, as production, consumption, profits and employment all tumbled. The tax-to-GDP ratio fell 4.2 percentage points to 20.0 per cent. Compare this with the Howard Government’s peak of 24.2 per cent, and we’re looking at a massive write-down in tax receipts across the board.

Wayne Treasury had prepared some charts showing GDP and Tax Receipt estimates for the period 2007-08, through 2011-12 (MYEFO). Expressed “as a percentage of GDP”.

But let us set aside the “per cent of GDP” measure, and dig deeper.

What about the raw figures?

2007-08 Final Budget Outcome Taxation Revenue (actual) – $286.22 billion

2010-11 Final Budget Outcome Taxation Revenue (actual) – $309.89 billion

2011-12 Mid-Year Economic and Fiscal Outlook Taxation Revenue (estimate) – $323.63 billion

An increase in Taxation Revenue from 2007-08 (actual) to 2011-12 (estimated) of $37.41 billion.

Back to Wayne:

Collections, particularly relating to company profits, have been lower than expected. In part, our lower tax take reflects reduced tax receipts following the GFC…

We have already seen that the second part of this statement is a lie. Actual tax receipts are higher now, than they were in the 2007-08 (pre-GFC) Final Budget Outcome.

It is only when one uses the misleading and deceptive “as a percentage of GDP” measure, that black can become white. Or in the case of a government budget, black can become red. Or red can become black, depending on the political lie of the moment.

For the sake of thoroughness, let us break down “Tax Receipts” to just look at “Company Tax”. Perhaps Wayne Treasury is right, and Company Tax receipts have fallen since the GFC?

2007-08 Final Budget Outcome Company Tax revenue (actual) – $66.48 billion

2010-11 Final Budget Outcome Company Tax revenue (actual) – $57.31 billion

2011-12 Mid-Year Economic and Fiscal Outlook Company Tax revenue (estimate) – $71.80 billion

Yes, there was a decrease of $9.17 billion in actual Company Tax revenue between 2007-08 and 2010-11.

But as at MYEFO Nov 2011, there is an “estimated” increase in Company Tax revenue (versus 2007-08) of $5.32 billion.

So, what is the problem, dear reader?

Quite clearly, the government IS pulling in more actual Total Revenue now, than they were in 2007-08.

Last year (2010-11) the government raked in $23.67 billion more in Total Revenue, than in 2007-08.

Their November MYEFO estimated that the government would rake in $37.41 billion more than in 2007-08.

With all that extra income, why is it that this government cannot seem to achieve a balanced (much less a surplus) budget for a year?

Indeed, their annual budget deficits just keep getting bigger.

Could this government’s spending have anything to do with it?

Wayne Treasury barely even mentioned the government’s actual record of expenditure in the speech to the Australian Business Economists’ Breakfast. A long, tiresome rant, complaining about lower revenue “than expected” … “as a percentage of GDP”. And a mere handful of paragraphs about “Savings” at the end of the speech. Saying absolutely nothing.

Well, except for this doozy:

The savings we find in this Budget will be consistent with the discipline that has been the hallmark of the Budgets we’ve delivered. Remember that in the four Budgets since 2008-09, we have identified over $100 billion of savings.


2007-08 Final Budget Outcome Total Expenses (actual) – $280.1 billion

2010-11 Final Budget Outcome Total Expenses (actual) – $356.1 billion

2011-12 Mid-Year Economic and Fiscal Outlook Total Expenses (estimate) – $371.74 billion

An actual increase in Total Expenses of $76 billion in 2010-11, versus 2007-08.

An “estimated” increase in Total Expenses of $91.64 billion in 2011-12, versus 2007-08

But that’s ok.

All is forgiven … because they “identified over $100 billion in savings” over those four years too.

And all is forgiven with respect to our economic commentariat, who faithfully repeat Wayne’s Treasury’s misleading and deceptive statements without scrutiny. As illustrated by Alan Kohler in Business Spectator:

In fact, as Wayne Swan pointed on Thursday, Labor has already cut $100 billion from spending and this year’s budget will cut even more…

No, Alan. That is not “in fact” at all. It is what he wanted you to hear, and report. But it is not what he actually said. “We have identified over $100 billion in savings” is not the same thing as “we have already cut $100 billion from spending”.

Let us recap.

According to Wayne’s Treasury’s most recent published figures, in 2011-12 this government will rake in $37.41 billion more revenue than in 2007-08, pre-GFC.

But they will spend $91.64 billion more than in 2007-08, pre-GFC.

All the “as a percentage of GDP” nonsense, is a smokescreen.

The simple reality is, this government is getting tens of billions more annual revenue than the Howard Government did in its last year.

But they are spending a SHIPLOAD of borrowed-from-foreigners money more every year, than they are receiving in increased annual revenues.

Back to Wayne one last time:

It was Stephen Koukoulas who reminded us that … we never exceeded the tax-to-GDP ratio that we inherited…


How is that possible?

We have already seen clearly, that this government is getting more total tax revenues than in 2007-08.

So given that their tax take is up, then the only way this claim is possible is if there has also been a truly remarkable increase in the GDP figure.

Oh look!

There has!

How very, very convenient that the new System of National Accounts introduced in the GFC year of 2008-09, just happened to result in a “substantial increase” in the GDP figure. One that you would not be aware of unless you had carefully read all the fine print in the 2009-10 MYEFO. Or if you’d carefully read the Treasurer’s press release sent out on … the opening day of the Copenhagen Climate Change Conference. One month after the MYEFO.

Now that’s creative accounting (see “Hide The Recession: Labor’s Grand Deceit On GDP Figures Exposed” )

Faked GDP, Faked Budgets, Faked Legal Advice – Nothing To See Here

28 Mar

Media Release – Senator Barnaby Joyce, 28 March 2012 (my emphasis added):

Government response keeps Murray-Darling in the dark on the Water Act

The Labor government has once again refused to release legal advice on the Water Act in defiance of the recommendations of a Senate inquiry.

Last year, the Senate Legal and Constitutional Affairs Committee found that the provisions of the Water Act create a legal framework where “environmental considerations can be, and are, given substantially more ‘weight’ than social and economic considerations.”

Even the Greens, in their dissenting report, admitted the same stating that “the MDBA and the Minister are required to give environmental considerations precedence in developing the Basin Plan.”

The difference is that the Greens agree with this unbalanced outcome, the Committee recommended the Act be changed to fix it and that all of the government’s legal advice be released.

The Committee’s recommendations were based on legal advice from many sources including an ‘in camera’ briefing from former MDBA chair, Mike Taylor, submissions from Professor George Williams, Professor of Law at the University of New South Wales, and Professor John Briscoe of Harvard University.

The government’s response to the Senate Legal and Constitutional Affairs Committee’s Water Act inquiry has also called into question the validity of the summary legal advice the government has previously released.

So far the government has released just 10 pages of the more than 1000 pages of legal advice they have received on the Water Act.

In its response today, the government claims that the summary legal advice it has made public is “distinguished” from other legal advice because it was prepared on the understanding that it would be made public.

This calls into question whether the summary advice is a full and accurate reflection of the other advice the government has received.

The Murray-Darling is too important for the government to keep it in the dark. It must release all of the legal advice before the basin plan is finalised.

The Murray-Darling is home to 2.1 million Australians, provides water for 1 million others and produces 40 per cent of Australia’s agricultural output, including 9 of every 10 Australian oranges.

Over the past two years, we have seen that the Rudd-Gillard-Swan ALP government has faked GDP, and faked budgets, by becoming adept in the “dark arts” and “using some of what are now  the standard tricks in order to (in the words of former Finance Minister Lindsay Tanner) “maximise political appearances”.

Now, thanks to Senator Joyce, we see that they will happily fake legal advice as well.

Funnily enough, the ALP and the Greens have recently expressed “confidence” that their carbon tax CO2 derivatives scam legislation is legally sound, and does not breach the Constitution.


Wouldn’t it be interesting to see their actual legal advice.

You know.

The advice they have not released to the public.

What would be even more interesting is to see their legislation challenged in the High Court.

For that, it seems our fate is in the hands of big-promising-non-delivering Coalition State Governments.

And National Living Treasure, Clive Palmer.

Say ‘Bye Bye Surplus’, Swanny

14 Mar

What happens when your business is massively reliant on one customer … and that customer stops needing as much of your product?

Ask Wayne Swan:

RBA Chart Pack - March 2012

Steel production not looking good. And total production growth gently sliding.

Why might that be?

RBA Chart Pack - March 2012

House prices topped out and rolling over. Floor space sold falling.

And fixed asset investments ground to a halt:

RBA Chart Pack - March 2012

Why is all this happening?

RBA Chart Pack - March 2012

The same old story, as seen throughout the Western world, now in China too.

When the “credit” (ie, debt) needed to keep blowing up a bubble slows and falls, the end is nigh.

And without all that debt-fuelled building activity to drive “GDP growth”?

RBA Chart Pack - March 2012

Say “bye bye” to that surplus fantasy, Swanny.

Oh yes, no doubt you will loudly trumpet a forecast surplus in the May budget.

But I for one am willing to bet you that, come end June 2013, there is not a snowflake’s chance in hell of your delivering one.

Labor’s Budget Made Simple

31 Jan

Twitter follower @cr0atz recently brought to my attention an interesting picture of the US budget made simple. He asked me to make an Aussie version.


Click to enlarge

Now don’t let anyone tell you that debt and deficits don’t matter.

Or, that government and household budgets are “different”.

Just remember, dear reader.

Those spruiking such claims – their ideological Articles of Faith – are the same “experts” who didn’t see the GFC coming.

And now, can’t fix it either.

#JAFA’s, in other words.

Barnaby is right:

“If you do not manage debt, debt manages you” ~ Feb 2010

Barnaby’s Budget Reply

1 Dec

I’ve been eagerly awaiting this.

Senator Joyce’s response to Wayne’s budget update.

Yes, he’s been busy with the Murray-Darling Basin Plan. But we just knew it wouldn’t take long for Australia’s prophet on debt risk to speak outside his portfolio again … as pledged.

From the Canberra Times (emphasis added):

Swan drowns in a sea of debt

In GK Chesterton’s Father Brown novels the world renowned criminal Flambeau makes a name for himself by forming a successful London dairy company even though he owns no cows, no carts and no milk. Instead, he served his customers by moving the milk bottles outside people’s homes to the homes of his customers.

All very similar to Wayne Swan’s crisis budget. Moving money from his year of surplus to his years of non-surplus years before and after. No cows, no milk, no focus on increased production just a bunch of very tricky, very sneaky accounting tricks. Remember their surplus does not pay off the extra $15 billion they will now borrow this year.

A crisis budget from a crisis government who reflect the sobriety of the situation with the appointment of a new Speaker for the House of Representatives. Greeting the Queen or President at the next official soiree will be; Peter Neil Slipper. Yes all is under control on the Good Green Ship Labor.

There is no better recent portrayal of their exemplary management skills than the announcement of “regional experts” to help the 2.1 million people of the Murray-Darling “adapt” to the challenges of the precision hydrology skills so evidently amorphous in the draft Murray-Darling Basin Plan. I have always thought floor 30, Martin Place, Sydney is precisely the place to be to help those at the south-west NSW town of Griffith who have failed to better appreciate the Green-Labor-Independent government’s empathy and earnest desire to maintain our major food producing asset.

I love the way Labor rise to the challenge. If they are not cooling houses before setting fire to 194 of them, they are cooling the whole planet with a carbon tax and now they are redesigning how we feed ourselves with the glossy wonder of the latest draft Plan for the Murray-Darling Basin.

Canberra you are the canary in the coal mine on Australian Government debt. With debt rising by $2.1 billion, again, last week to $219 billion gross, the crossword puzzle at the bottom of this enclosure is moving into depressing focus as we hold on by our talons to the inverse view of this mad bird cage.

Surprise, surprise then the government has announced further cuts to the public service. Does the $2.5 billion spent on ceiling insulation look smart now? What about $16 billion on school halls? Now’s the perfect time to spend $50 billion on a second telephone network.

Now Wayne Swan predicts that the gross debt will race over our current debt ceiling of $250 billion by the end of this financial year* and over $270 billion by the end of the forward estimates. It looks like that unless we extend the overdraft again next year our nation will get the notice at the checkout “transaction declined, see bank for details.”

Why is it that after years of warning about a lack of cost management we now have to believe that those that are so witless as not to see it coming are competent enough to manage us through it. I publicly offered a bet in 2009 for a thousand dollars, which Mr Swan never took, that Labor would never deliver their predicted surplus. An organisation that delivers week in, week out rolling deficits covered with accelerated borrowing is not going to deliver an annualised surplus. No change in behaviour, no change in outcome.

They told us to throw the scales out the window, it is your net weight that matters and your gross weight is only going up because each week you are wearing an additional two kilograms of clothes, apparently. Oh, it is all so clear now, depressingly so.

The bleeding obvious from years ago has now mugged our inept government and Canberra, the cuts I predicted have now crystallised in their initial stage in Wong and Swan’s announcement. It will get worse.

Yes I have a palpable sense of frustration that not only did the government not react earlier when the remedy would be a less bitter pill, but others, the economic commentariat of the fourth estate, did not forensically question the Government’s rhetoric that we had no issues.

Does the crisis budget deal with the crisis? Nope. Carbon Taxes, NBNs and now shutting down sections of the Murray-Darling, there is no stomach in this management for the hard decisions. The golden rule is invest where you make money and cut where it costs you, prioritise and know your threats and be pragmatic not romantic in your long term plan.

Barnaby is right.

* And so was I … see Nov 2 post “Australia On Target To Hit Debt Ceiling By Mid-2012”

Wayne’s Budget Is Already Shot To Hell

5 Nov

Fairfax journalist Peter Martin crunches the numbers and glimpses the reality, but still can’t quite admit what barnabyisright.com readers have long known.

That no sane person should believe Treasury’s budget forecasting:

It’s just as well the banks are cutting rates. The budget is getting hammered. In May the budget forecast an massive jump in company tax revenue of 28.9 per cent.

That’s right — around 30 per cent. The company tax take was to jump from $57.9 billion to $74.6 billion in the space of a financial year, an increase of $16.7 billion.

The reasonable-sounding argument was that profits had been bludgeoned by the global financial crisis, the high dollar and the January natural disasters and that these effects would “unwind gradually” during 2011-12.


No Peter. It was only “reasonable-sounding” if one were blithely ignorant of what was happening in the USA, Europe, and China.

To wit, the fact that the GFC never went away; rather, that governments worldwide had merely kicked the can down the road, by borrowing and/or printing trillions (a la Zimbabwe) to spend on “stimulus”. Thus achieving nothing, other than temporarily papering over the root problem (too much private debt) with an even bigger problem (even more debt, now sheeted home to government balance sheets).

But I digress …

But 28.9 per cent was more than an unwinding – it would have driven company tax to a new record high, even after adjustment for inflation.

And it wasn’t gradual. The budget papers partly explain the forecast acceleration by saying very low company tax instalment payments in 2010-11 meant that more than usual of any boost to tax would turn up in 2011-12 rather than 2010-11.

Also several tax breaks would end in 2011-12 and the budget would book “gains associated with increased Australian Tax Office compliance activities”, which would be helpful if it happened.

Superannuation tax revenue would jump as well, roaring back 29.3 per cent or $2.1 billion as the share market recovered.

Combined, these two revenue forecasts – each largely dependent on an improved economy – promised $18.8 billion in extra revenue… enough to pave the way for the paper-thin $3.5 billion surplus forecast for 2012-13.

In addition income tax revenue was expected climb 10 per cent, reflecting “anticipated growth in employment and wages”, contributing another $14.6 billion.

Only a brave or foolish person would call the Treasury over-optimistic. Its tax analysis division has 50 staff. The Finance Department’s budget group has 250 staff. They know far more about the budget position than any of their critics.

Well, I guess that means your humble blogger is “brave”. As must be the folks at Macquarie Economic Research, who called the budget forecasts “truly extraordinary”.

After all, how could we be “foolish” Peter? By your own tacit admission here in your own article, I was right:

But on this occasion the economy was crumbling underneath them as the budget was published. Released in May at a time when all but three of the employment outcomes for 2010-11 were already known the budget went for jobs growth that year of 2.75 per cent. It got 2.2 per cent. For 2011-12 it went for jobs growth of 1.75 per cent. Three months in to that year jobs growth is running at an annualised 0.2 per cent.

Without an economic boost we will have 177,000 fewer Australians working and paying tax by mid next year than the budget was counting on.

Funny that.

Your humble blogger pointed out several times, before and after the Budget was released, that Swan was already lying about past jobs creation. Why?  To distract attention from the upcoming record budget deficit announcement. Thus it stood to reason that his (ie, Treasury’s) “promise” of future jobs “creation” was also a lie.

Company tax has been going the same way. At budget time the government expected to collect $57.1 billion in 2010-11. It collected $56.3 billion, almost a billion less; hardly an encouraging beginning to an upward trend that was going boost company takings 28.9 per cent.

Superannuation tax earnings missed the mark by 8 per cent, also an unimpressive start to an upward trend that was going boost takings 29.3 per cent.

Since the budget the Australian share market has collapsed a further 12 per cent. The forecast upturn may be underway. The market has been improving since the start of October, but it’s too early to have much confidence.

We urgently need a financial update. The May budget was out of date within days of its release. We’ll get that update with the release of the Mid-Year Economic and Fiscal Outlook (MYEFO), an event often scheduled for Melbourne Cup Day. This year it will be later. Treasury and Finance need more time to put the forecasts together.

Well of course they need more time.

Cooking the books to show that Green-Labor’s financial management is wonderful … without it being dog’s-balls obvious … is becoming ever more difficult. Especially when the facts to the contrary out here in the real world are so clear to every normal person slaving away beneath the politicians’ and Canberra press gallery’s ivory towers.

The only “financial update” we will get from this government, will be as completely fiddled and wholly untrustworthy as the previous ones.

Not only has Labor’s cooking the books been proven time and time again here on barnabyisright.com.

Former Finance Minister Lindsay Tanner openly admitted it in his book “Sideshow – Dumbing Down Democracy”, to the applause of “senior” political editors:

As the budget approaches, his insights into the conjuring that goes on are valuable. He became adept at “the dark arts”, he confesses, “using some of what are now the standard tricks employed to maximise political appearances”.

These included switching between different forms of accounting, choosing different indicators of spending “according to which . . . suited the argument better”, classifying annual spending as capital, and making commitments beyond the years of the budget period.

Treasury “forecasts” are nonsense.

The economists who concoct “forecasts” are practicing pseudo-science. Tea-leaf reading at best. Gross intellectual (self) deception at worst.

As we saw earlier this week, Australia’s all-time record high terms of trade are set to cop a battering, with the 33% collapse in the price of our biggest export (iron ore) since early September:

Steel China Iron Ore Fines cfr main China port USD/dry metric tonne (MBFOFO01:IND)

Not only that, the price of our second biggest export (coal) is down around 24%.

And the reason why, is because China’s manufacturing and construction industries are continuing to slow:

Just as predicted by many for months now.

Even Wayne knows it’s true.

Which is why the loudly shouted “promise” that Green-Labor would spend $3.5 billion less than they expected to earn in 2012-13 … is no longer on the table.

Brace yourself.

Not for a “return to surplus” (ie, a balanced budget, in one year only).

But for new record deficits.

In just 5 months, the Green-Labor 2011-12 budget is already shot to hell.

Quelle surprise.

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