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Swan Raises Govt Borrowing Limit By Another $50bn – And Don’t Ask Questions

But but but … we’ll have a surplus budget in 2013. Honest we will:

The Government has blamed Australia’s summer of disasters for its move to raise the cap on government debt by $50 billion.

As Treasurer Wayne Swan was congratulated by colleagues after Tuesday’s budget speech, Assistant Treasurer Bill Shorten introduced draft laws allowing the government to increase the amount it can borrow from $200 billion to $250 billion.

And what’s more:

The proposed legislation would also remove a requirement that the Treasurer explain why the extra money is needed.

Barnaby is right.

Tags: $50 billion, barnaby joyce, budget, debt and deficit, debt limit, government bonds, sovereign debt, sovereign default, wayne swan

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“Half A Million Jobs” – Wayne’s Big Lie (Reprise)

11 May

In the classic British political satire Yes Minister, master of obfuscation and manipulation Sir Humphrey Appleby said that it is always best to “dispose of the difficult bit in the title; it does less harm there than in the text.”

Sadly for Labor, they’ve not disposed of it in the title. They’ve left the evidence in the text.

Wayne Swan’s latest mantra is that Budget 2011-12 is all about “jobs, jobs, jobs“. Last week, Wayne was claiming that Labor has “created 750,000 jobs” since coming to office. In “Behold, Wayne’s Große Lüge“, we showed evidence that this is a Big Lie.

In the (fine print) text of last night’s Budget 2011, we find evidence that Wayne’s big claim of “half a million more” jobs “in the next two years” is also a Big Lie:

Economic parameter variations are forecast to reduce expenses in 2011‑12 and over the forward estimates … Partly offsetting these reductions … an upwards revision in the estimated number of unemployment benefit recipients is expected to increase expenses in 2011‑12 compared to MYEFO, although this is partly unwound by a reduction in the forecast of the number of unemployment benefit recipients in 2012‑13.

The government’s own Budget “estimates” an increase of more than half a BILLION dollars ($530 million) in unemployment benefit expenses for this year and next:

Budget 2011-12 | Budget Paper No. 1, Statement 6, Table 2

So, since the MYEFO just 6 months ago, Labor has revised its “estimates” and is now budgeting for a $530 million increase in unemployment benefit expenses – $479 million of that in the next 12 months. This equals approximately 43,000 more unemployed people next year (at current full single rate unemployment benefit).

Yet, we are expected to believe that they will “create half a million more” jobs “in the next two years”?!?

Lindsay Tanner was right:

“The lesson is simple: whenever a politician cites spending figures to show what a fine job he or she is doing, examine the fine print very carefully.”

Tags: 750000 jobs, barnaby joyce, budget, half a million jobs, job creation, wayne swan

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Barnaby: Labor’s “Free Beer Tomorrow” Budget

11 May

Media Release – Senator Barnaby Joyce and The Hon. Bob Baldwin, 11 May 2011:

A letdown for regional Australia

For regional Australia this budget amounts to beautiful promises but a meagre reality.

“This Budget is a cunning and shrewd way to promise lots, do less now and saying trust me I’ll do the rest of what I was going to do later. In other words “I really, really love you but I just don’t want to get married yet, but by gosh it will be a big engagement ring when I say I do” said Senator Barnaby Joyce today.

“As long as you say the numbers but don’t tell the time, this trick always works. It is the typical “free beer tomorrow” promise,” Senator Joyce said.

“The only thing this Budget delivers for regional Australia is a serving of mirage economics,” Mr Baldwin said.

“This Budget proves the Gillard Government’s commitments to regional Australia are nothing but unfunded spin.

“The Coalition was investing more in regional Australia than the Gillard Government is, and we didn’t need a massive mining tax to pay for it.

“Labor are so caught up in spin they think that just by whacking the word ‘regional’ into a program name they’ve done their bit for regional Australia.

“Not a single one of Labor’s regional funds actually quarantines funding for regional Australia – the terms of the Regional Development Australia Fund permit the entire fund to be spent in capital cities.

“Just two months ago Simon Crean promised $1 billion for the Regional Development Australia Fund but the Government’s own Budget shows Labor will deliver just $150 million of this funding before the next election,” Mr Baldwin said.

This Budget shows that $500 million has been cut from regional programs.

1. $350 million from the Priority Regional Infrastructure Program. 1

2. $100 million from the Building Better Regional Cities program. 2

3. $50 million redirected from the Regional Development Australia fund for projects in Lyne. 3

Senator Joyce added that “On top of that it is the triumph of rhetoric over substance when you can announce a $1 billion road without one inch of asphalt. 4

“The Magnus opus of Simon Crean’s regional policy has to be seen to be disbelieved. I can not wait to tell the people of Tenterfield that part of their regional policy goes to assist the Australian Antarctic division. I know it is getting cold there but I didn’t know it was that freezing.

“More substantially, the people of Southern Cross will be ecstatic about the regional development appropriation for Perth Airport roads amounting to $480 million. That folks is the biggest allocation from “regional” infrastructure spending,” Senator Joyce said.

1. Budget paper no. 2, p. 293

2. Budget paper no. 2, p. 290

3. Budget paper no. 2, p. 290

4. From Minister Albanese’s media release ‘More Funding for the Pacific Highway’, “The extra funding will complete all the necessary detailed planning along those remaining sections of highway where this has not already occurred. If matched by the NSW Government, further construction could also begin in the short term including on the Frederickton to Eungai section.” (emphasis added), http://www.minister.infrastructure.gov.au/aa/releases/2011/May/budget-infra_05-2011.htm

More Information – Matthew Canavan 0458 709433 Senator Joyce’s office
Alistair Mitchell – 0411 157707 Mr Baldwin’s office

Tags: anthony albanese, barnaby joyce, bob baldwin, budget, regional and local community infrastructure program

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Leading Australian Stock-Picker: Barnaby Was Right

11 May

Southern Cross Equities’ Charlie Aitken tells his clients to get out of the stockmarket and into cash:

Aitken says anyone looking closely at the markets at the moment has to entertain the possibility of something they have not seen before. “[Nationals senator] Barnaby Joyce was ridiculed last year for saying this, but I’m prepared to say that some sort of US debt default is now on the table as a risk for investors. I never thought I would say that. You would have to say that is the biggest black swan of them all.”

The term black swan refers to a completely unexpected, utterly improbable event. In the investment market sense, a black swan is a scary prospect, with its connotations of a sudden market fall. The origin of the term is in the astonishment of the Dutch explorers who arrived at the Swan River in the 17th century and discovered that swans could be black, when to all European experience they were only white.

Aitken joins ANZ chief Mike Smith, Toscafund’s global currency expert Savvas Savouri, ABC’s Inside Business and Business Spectator‘s Alan Kohler, credit rating agency Standard and Poors, CNBC TV “First in business worldwide”, Deutsche Bank, and Barack Obama, in conceding that Barnaby Was Right about the risk of US debt default.

Barnaby forewarned of the dangers to the global economy – and Australia – back in late 2009 through early 2010.

The “experts” are slowly, and finally catching up with the only politician in the country who is always on the ball.

More from Charlie Aitken – and independent derivatives expert Satyajit Das – in this must-read article.

Tags: barnaby joyce, budget, charlie aitken, debt and deficit, GFC, government bonds, southern cross equities, sovereign default, stock market crash, us debt default

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Budget Blowout: Interest-On-Debt $1.59m Per Hour

11 May

Six months.

That’s all it has taken for Labor’s November 2010 MYEFO budget “estimate” for Interest-on-debt to blow out.

By $5.69 Billion to 2013-14.

The November MYEFO 2010-11 “estimate”:

MYEFO 2010-11, Appendix B, Note 10: Interest Expense

The new Budget 2011-12 “estimate”:

Budget 2011-12 | Budget Paper No. 1, Statement 9, Note 10

In March last year (“Rudd’s Interest Bill – $48.49bn to 2013“), we saw that Labor expected to lump taxpayers with $48.49 billion in Interest-on-debt through 2013.

A year later, that’s blown out yet again.

Including this year’s (2010-11) $10.845 Billion, we’re talking an “estimated” and “projected” grand total of $66.466 Billion through 2015.

That’s $1,587,357 ($1.59 million) per hour*, over the next 4 years.

Interest-only.

* The calculation = Total (66.466bn) – 2010-2011 (10.845bn) / 4 years / 365 days / 24 hours.

Tags: budget, debt and deficit, interest expense, sovereign debt, wayne swan

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Barnaby: Budget Duds Regional Australia … Again

10 May

Media Release – Senator Barnaby Joyce, 10 May 2011:

Budget set to dud regional Australia… again

Labor’s first three budgets have not been good for regional Australia.

Its first budget slashed $1 billion in regional funding and axed the OPEL contract to deliver fast broadband to regional communities. Its second budget introduced a carbon emissions tax and slashed $900 million from the agriculture budget.

And its third heralded a mining tax and ramped up water buy-backs from farmers. Tonight’s is not shaping up as any better.

“Labor’s record has never lived up to its rhetoric – tonight will be no exception. The Government has already made overblown assurances that don’t stack up – like re-announcing road projects, short-term skilled migrants in the regions and a boost to apprenticeship schemes that specifically exclude agriculture and horticulture,” Leader of The Nationals Warren Truss said.

“A few things you can count on Labor to deliver tonight… less money for the regions and two big new taxes on the way.

“But we are being asked to take on trust that the Treasurer, who plunged us into record debt and the budget into a $50 billion deficit in just four years, will return the nation’s books to surplus over the next two.

“Labor is, again, taking us for mugs. But we’ve been down this path before. People in the regions do not trust a government that has already robbed them blind, habitually broken promises, overseen dramatic cost of living increases on households and mired us in massive debt.

“Once the budget hype subsides, regional Australia will be counting the costs… again.”

Senator Barnaby Joyce added: “Half of Mr Swan’s life is a promise, the other is an excuse. Tonight we are due to get both.”

“As an example, the biggest promise Labor has made in regional Australia is the Perth airport roads upgrade. I keep trying to explain this to the people of Collarenebri about how well they are getting looked after, by this regional package, but I just can’t convince them.

“They need not worry. Wayne is going to whack them between the eyes again as he ramps up their fringe benefit tax every time they jump in the car.

“Meanwhile one of the largest items, the carbon tax, doesn’t even “crack a feature” – as my old boss in accountancy called it. Interesting, the carbon tax used to be the greatest moral challenge of our time, now it doesn’t get its own line on the nation’s P&L.”

“Instead of new taxes, the Nationals want to create more opportunity for regional Australia. We have led efforts to reinstate Youth Allowance for students from regional areas. We have established a dams task group to open up new areas of economic opportunity in our nation. We want to unlock the $1.4 trillion invested in superannuation, attracting investment in nation building infrastructure through targeted tax concessions.”

Mr Truss and Senator Joyce declared The Nationals have a plan for regional Australia. Labor doesn’t even know where regional Australia is.

——————————

The facts on regional Australia

Just as it has done every year, Labor will make a lot of big claims tonight. But once again, Labor’s budget is set to dud regional Australia with less money for the regions and two great big new taxes on the way.

Labor has not delivered for regional Australia

PROMISE: Labor announced a $10 billion regional Australia agreement with the independents which apparently swayed them to support Labor.

REALITY: Less than one-tenth of this was new money, $800 million for a regional development fund (which has since been cut by $350 million) and $140 million for increased ethanol assistance. The rest was an already announced $6 billion Regional Infrastructure Fund (funded from the mining tax) and the allocation of existing health and education funds to regional Australia.

Less than one year in Labor has cut money from regional Australia

PROMISE: In their agreement with the independents, the Government promised $1.4 billion in funding for economic, social and community infrastructure in regional Australia.

REALITY: On 3 March, 2011 Labor announced a $1 billion Regional Australia Fund, $400 million less than what was originally promised.

Labor is spending even less on regional Australia than in its first term

PROMISE: Labor promised to increase investment in regional Australia and Julia Gillard promised “to deliver for regional Australia”.

REALITY: The $1 billion Regional Australia Fund is less than the regional development funding it replaces, the $1.2 billion Regional and Local Community Infrastructure Program. On an annual basis, it’s $170 million less per year. The new fund amounts to $200 million per year (five-year program). The old fund amounted to $370 million per year (over three years).

The mining tax is a dud deal for the regions

PROMISE: Labor says that it will use the proceeds of the mining tax to invest in regional Australia.

REALITY: The mining tax will rip out at least $40 billion from regional Australia in the next decade. Only $6 billion has been earmarked for regional Australia.

Labor can’t even define where regional Australia is

PROMISE: Labor promised a new deal for “regional” Australia.

REALITY: Labor’s announcements so far from regional funds spend more in capital cities than the regions. The biggest “regional” promise Labor has made is the $480 million investment in the Perth Airports road upgrade.

[ENDS]

Media Contacts: Mr Truss: Brett Heffernan on (02) 6277 4482 or 0467 650 020 or brett.heffernan@aph.gov.au

Senator Joyce: Matt Canavan on 6277 3244 or 0458 709 433 or matthew.canavan@aph.gov.au

Tags: barnaby joyce, budget, media release, regional australia, wayne swan

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I Was Right: Labor Hid The Increase

9 May

On 3rd March 2010 I published “Labor: Hide The Increase“, showing proof of exactly how Labor had changed accounting methods in order to fudge the 2009-10 Mid Year Economic and Fiscal Outlook (MYEFO) budget report.

Now, former Finance Minister Lindsay Tanner has openly admitted that this is precisely the kind of “dark art” that Labor practices. To lie to the public, and cover up their financial mismanagement:

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.

Why did Labor hide the increase in spending in 2009-10?

They had made a promise not to increase real spending growth by more than 2%. They had broken that promise. Hence, a little “dark art” with the accounting method. To present figures that would instead show that they had not broken their promise at all.

Read “Labor: Hide The Increase” for full background on how they fiddled the books.

For now though, take a look at how Labor’s own MYEFO numbers have again changed. Proving once again that “estimates” are a bad joke. And that Labor just can’t help but spend far more than even their own estimates.

In the 2009-10 MYEFO, their “Estimate” for real spending growth as a % of GDP for this year (2010-11), using their new accounting method of “CPI” instead of “NFGDP”, was -1.3% (click to enlarge):

MYEFO 2009-10 | Appendix D, Table D1

Ok. Sounds good right? In November 2009, they “expected” to reduce government spending growth in 2010-11 by 1.3%.

Now, what is their most recent “Estimate” for real spending growth in 2010-11, as updated in the November 2010 MYEFO?

+1.5%

MYEFO 2010-11 | Appendix D, Table D1

So, even using their new accounting method, Labor’s spending still blew out anyway. Rather than cutting by 1.3%, their own budget mid-year updates show a spending increase of 1.5%.

What’s that in actual dollars? Look at their tables under “Payments” and “$m”. In 2009-10 they estimated government spending for 2010-11 of $340,995 million ($340 billion). A year later, that estimate was revised up to $351,660 million ($351 billion). A blowout in spending of $10.66 billion, over their own estimates.

What’s more, this comes on the back of an increase in government revenue. Not a decrease, as Labor are complaining loudly now, as an excuse for their massive budget deficit black hole.

Look at their own tables again. In MYEFO 2009-10, their “estimate” for “Receipts” in 2010-11 was $297,131 million.

But in MYEFO 2010-11 – released just 6 months ago – their new “estimate” was $313,205 million. An increase in revenue. Not a decrease. An increase of $16,000 million ($16 billion) over their own estimate a year earlier.

Labor’s promise not to increase spending by more than 2% came with eerily similar “tough talk” rhetoric before last year’s budget:

Tanner Warns of Austerity Budget

Finance Minister Lindsay Tanner has flagged that the 2010-11 budget will contain tough savings measures…

The collapse of revenue caused by the global economic downturn would be compounded by the early effects of the ageing of the population, Mr Tanner told the Ten Network yesterday.

“There’s going to have to be tough decisions and ministers are aware of that,” he said.

Deja vu.

Again this year, we hear lots of tough talk about the coming budget. Again we hear all the (same) excuses about why it has to be tough.

I have no doubt that tomorrow night, once again we will receive a Labor budget contrived by the “dark arts”.

What “standard tricks” will they use this time?

Tags: barnaby joyce, budget, debt and deficit, hide the increase, lindsay tanner, stimulus spending, wayne swan

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US$ To Hit A$0.58 – Currency Experts Agree, Barnaby Was Right

9 May

More experts line up with Alan Kohler, Standard & Poors, CNBC, Deutsche Bank, and Barack Obama, in agreeing that Barnaby was right.

First, the head of ANZ:

ANZ chief Mike Smith said yesterday that the currency was likely to resume its climb above $US1.10, and one of the world’s leading foreign exchange experts predicted the dollar would continue to rise and could hit $US1.30 in 2013 and $US1.70 by 2014.

This spells bad news for non-resource sectors such as manufacturing and tourism…

“I can’t see that there is anything to knock it off its perch because it’s not only the strong Australian dollar, it’s also the weak US dollar,” Mr Smith said yesterday.

“And when you think about what is happening in the US, I can’t see them increasing rates for at least 18 months and that will have an impact.”

Next, a global currency expert:

Global currency expert Savvas Savouri, of the British-based Toscafund hedge fund, went a step further, predicting the greenback would be relegated to a “museum” …

Dr Savouri, in Sydney for a conference, predicts the dollar will reach $US1.30 by 2013 – and $US1.70 by 2014, as the greenback relinquishes its “exorbitant privilege” as the world’s default currency.

What the ‘experts’ aren’t telling you, is that the reason for the Aussie dollar’s rise is directly due to the slow-motion collapse of the US economy, and the unintended consequences caused by those trying to prop it up.

How’s that, you ask?

For several years, the US Federal Reserve has been creating literally trillions of US dollars out of thin air (“Quantitative Easing” 1 and 2). By doing this, it believes it will achieve two things – (1) Keep interest rates in America extremely low (near zero), preventing further collapse in the housing market and broader economy; (2) pump up the stock market, creating public “confidence”. And it has achieved both those aims.

But what about the unintended consequences?

First, the immediate effect of printing money is to weaken the American currency. That is the main reason why the Aussie dollar has risen against the USD.

It is not because our currency has strengthened. It’s because the USD has been (deliberately) weakened.

Much of those trillions in near interest-free US money has been poured into speculation by international banks and hedge funds. What are they speculating on?

Mostly on commodities – which our economy sells.

Hundreds of billions in “hot money” has been flowing from the Zero-Interest-Rate-Policy (ZIRP) United States into our currency, through speculation on our commodities. Driving up our currency’s apparent strength.

But “hot money” can flow out again just as fast. As we saw in the GFC. And again just last week, when the Aussie dollar hit US$1.10, and plummeted to US$1.05 in three days … due to a single bad economic news data release in the US:

Yahoo Finance - AUD/USD 1.10 to 1.05

During the peak of GFC panic in Sep-Oct 2008, the Aussie dollar collapsed from US$0.98 to just US$0.60 in barely two months:

Yahoo Finance - AUD/USD

When you compare the Aussie dollar to the Euro, for example, it’s easy to see that our dollar only “appears” to be super strong when it is being compared – as usual – only to the ever-weakening USD.

Our dollar has risen against the Euro too. But by far less. And again, only after first falling significantly in the GFC. Then rising only after the US Federal Reserve began seriously printing money, which has been poured into commodities and commodity currencies: