Tag Archives: Commonwealth securities

Our Government *Officially* Does Not Know Who Owns More Than 60% Of Australia’s Debt

16 Jun

Who owns our nearly $200 billion public debt?

It’s a question we’ve asked before.

Back on the 14th of March last year (“Who Owns Our Debt?“), we discovered that “expert” SMH economic commentator Ross Gittins was wrong. He had claimed –

You thought the pollies had done little else but spar about deficits and debt? Sorry, different debt. They’ve been arguing about the public debt – the amount the federal government owes (mainly to Australians).

A search through the RBA’s Statistics tables easily proved Gittins wrong.  We found that at September 2009, an estimated 63.3% of public debt was held by non-residents of Australia.

On April 24th this year (Who Owns 73% Of Our Debt?), we checked again. At December 2010, 72.6% of public debt was estimated to be owed to non-residents of Australia.

The RBA’s data has been updated again. According to them, we owed an estimated 73.13% of our $183.794 billion in public debt (at March 2011) to non-residents.

So, just who are these “non-residents”?

Noone knows.

Not even the Australian Office of Financial Management.  That’s the government department that “manages Australian Government debt, cash and financial assets”.

Apparently, they do not know who owns over 60% of our total public debt.  Even though, according to the AOFM’s website:

The [Guarantee of State and Territory Borrowing Appropriation Act 2009] Act requires the AOFM to establish, and publish on its website each quarter, a register recording the beneficial ownership, by country, of all securities issued by the Commonwealth and any securities guaranteed by the Commonwealth that are issued by Australian States or Territories.

What’s the problem then?

In yet another example of incompetent Labor government bungling (or is it?), the Act mentioned …

contains no provisions to compel the provision of information to the AOFM by the beneficial owners of securities or by persons holding securities on their behalf.  This has limited the information available to the AOFM to form an opinion on the beneficial ownership of the securities.

Still, they don’t mind having a guess (emphasis added):

The figures in the tables represent opinions formed by the AOFM based on limited information.  The AOFM does not believe that they provide any indication of the likely distribution by country of the beneficial ownership of securities held by custodian and nominee companies, or are representative of the distribution of the beneficial ownership of the total securities on issue.

To ascertain the country of beneficial ownership of the securities covered by the legislation, the AOFM has reviewed where possible the ownership records of the registry or depository systems in which they are held.  The AOFM has reviewed the name of the accounts which are registered as holding these securities and from this information and knowledge of the business identified sought to form opinions on the country of domicile of the beneficial owners.  However this information is insufficient to ascertain beneficial ownership where securities are listed as held by custodians or nominees.

So, the Guarantee of State and Territory Borrowing Appropriation Act 2009, and the Public Register set up in accordance with it … is utterly useless.

But let us take a look at the Public Register’s most recently updated “information” anyway (click to enlarge):

Source: AOFM Public Register

Source: AOFM Public Register

As you can see, according to the AOFM’s “opinion”, 2.5% of our public debt is held “overseas not identified by country of beneficial ownership”.

And according to their “opinion”, a whopping 58.8 per cent of our public debt is held by “domestic custodian and nominee companies”.

In other words, by locally-registered ‘shelf’ companies with a PO Box address. Companies that exist in name only, and are officially owned by ‘nominees’ on behalf of unnamed, anonymous beneficiaries.

What a joke.

It’s official.

Labor has hocked our nation up to the eyeballs to … God only knows who.

Mind you, it is rather curious that the almighty RBA has somehow managed to “estimate” that 73% of our debt is held by “non-residents”.

How could they know that?

Especially when the AOFM’s official “opinion” (with a big disclaimer) is that they can only identify the country of beneficial ownership of just 38.7% of our debt.

I say that this Labor government, the AOFM, and especially the “independent” RBA, have an awful lot of explaining to do.

An ancient proverb says, “The borrower is the servant to the lender”.

I for one think that the citizens of Australia have the right to know exactly who our government is rendering us as servants to obey.

How Much More Debt Next Week, Wayne?

4 Jun

$2.5 Billion.

Great, isn’t it.

Over the past 6 weeks since I began tracking the AOFM’s government debt auctions, Wayne’s pack of lunatics have borrowed no less than $2 Billion, and as much as $2.75 Billion.

Every single week.

And we can see here, that ever since JuLIAR Gillard knifed KRudd, she has been on a borrow-and-spendathon that puts even the jet-setting Mr Stimulus to shame.

The following chart shows only the value of Treasury Notes auctioned by Labor. These are “short term” debt “instruments”, that typically must be repaid within 30-90 days.  They are supposed to be issued only when necessary to “smooth” cashflow requirements of the government.

Most of the government’s primary funding comes, instead, from the auction of Treasury Bonds, which are longer term debt “instruments”, that must be repaid over durations of anything up to 20+ years.

We take particular interest in the blowout in borrowing using Treasury Notes, because it indicates a government that has completely lost the plot.  An utterly incompetent government, that has no idea what it is doing.  Has no planning.  Cannot even manage to balance the weekly cashflow needs of government.  And so is constantly going back to the international debt markets, to borrow $2+ billion per week on the “short term” national credit card (click to enlarge):

Source: Australian Office of Financial Management (AOFM) - to end April 2011

Note carefully that this chart only goes up to end of April this year. During May, the government borrowed another $5.8 Billion using Treasury Notes. To picture this – since I’m too lazy to update the chart right now – just imagine another blue line on the end of that chart, one that is double the height of the tallest blue line.

So far in June – a mere 3 days in – they have already borrowed another $500 million using T-Notes.

And next Thursday 9th June, they will borrow another $1 Billion using T-Notes.

What’s Another $2 Billion Anyway, I’ll be Retired On A Taxpayer-Funded Pension

28 May

How’s that borrow-our-country-into-endless-servitude-to-foreign-lenders caper going, Wayne?

Four weeks ago – $2.2bn more debt.

Three weeks ago – $2.4bn more debt.

Last week – $2.75bn more debt.

This week – $2.5bn more debt.

Next week – $2bn more debt.

Wayne’s well on track to shatter the glass of Labor’s newly revised $250 Billion debt ceiling by around the 3rd week of August.

That’s just after Aug 2nd, when the US Treasury reckons the US could default on its debts.

Says It All Really

6 May

h/t Twitter users _AshleyPriest, Prronto, and LyndsayFarlow (click to enlarge):

How Gillard’s Use Of The Credit Card Makes Rudd’s GFC Spending Spree Look A Model Of Financial Prudence

5 May

A few days ago I wrote an article titled “The Real Reason Why Gillard’s A Spinster“.  It ruffled feathers.  Not for the intended reason, unfortunately.

Humourless critics were so rankled by my [insert self-righteous PC perjorative] that they did not see the point.

So here’s a follow up.  Without the creative literary device/s for decoration.

The following chart is an updated and extended version of the one used in the previous article.  This shows Treasury Note auctions from 2000 through to end April 2011 (the previous chart began at March 2009).

The other difference, is that the previous chart listed each individual auction separately.  It escaped my notice that there has been as many as 3 auctions p.w. in recent times.  So this new chart sums the total of all auctions of Treasury Notes in a given week into a single bar on the chart (click to enlarge):

Source: Australian Office of Financial Management (AOFM)

Some key points to note.

Firstly, there’s clearly quite a difference between how much the Howard Government relied on short-term debt (Treasury Notes), compared with the subsequent Labor Government.  The period when the largest block of Howard-era short term debt auctions occurred was through the year 2002 – coinciding with the 2002-03 global recession, which Australia largely avoided.

Secondly, for four (4) full years between October 2003 and the Rudd election win in November 2007, the Howard Government raised no short-term debt. Not one cent.

Neither did Kevin07.  For 16 months.  Until the GFC.

Thirdly, you can see clearly the period from March 2009 through around September 2009, during which the Rudd Government was regularly raising around $800m to $1,500m a week from short-term debt auctions. I assume that this reflects (at least in part) the government’s urgent need for cash to fund their “stimulus” response to the GFC.  Stimulus 1 – $10.4 billion in cash handouts in late 2008 (goodbye 50% of Howard surplus).  Stimulus 2 – another $42 billion in cash handouts and “nation-building”, beginning in … February/March 2009.

You remember. “Swift and decisive”. Rushed and bungled. $900 cheques to dead people. Electrifying foil insulation. Blazing pink batts. Rorted “green” schemes. Overpriced school halls. Literally billions more, to investigate and repair these Rudd-made disasters.

Finally, note the significant jump in both the frequency and the totals of short-term debt auctions, coinciding exactly with Ms Gillard’s rise to power. The fact is, she has presided over a $10.1bn (31.5%) increase in issuances of short-term debt in just 10 months, compared to the previous 12 months of the Rudd Government.

The big unanswered question that I have is this: WHY would a Gillard-led government suddenly need to bash the nation’s short-term credit card 31.5% harder than even the profligate Kevin Rudd did? After all, he had a GFC “stimulus” package or two to finance.

What is Ms Gillard’s excuse?

According to the government’s own budget records, we-the-taxpayers are already wearing an Interest-on-debt bill of more than $10 Billion per year:

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

According to the AOFM, short-term Treasury debt is supposed to be used for financing “within-year”, daily cashflow requirements of the Government. And then there’s this official prediction:

Treasury Notes are not expected to make a major contribution to overall funding for the 2010-11 financial year as a whole.

Why has the Gillard-led government apparently been so incapable of planning their week-to-week expenses, that since that statement was published they have resorted to bashing the national credit card more than 31.5% harder than Kevin Rudd “needed” to?

The data supports the increasingly widespread view that the Gillard minority government is a shambles.  They have no financial plan – even over the short-term.  And so, from Day 1, have had to pull out the national credit card 31.5% more than Kevin Rudd, just to manage the week-to-week cashflow requirements of government.

One can only wonder just how much Interest-on-debt we will end up paying in total over the coming years.

While Gillard and Co comfortably retire.  On mega-buck, index-linked, taxpayer-funded pensions.

Friday On My Mind – Another $700m In Debt

27 Apr

While most everyone else is obsessing about this Friday’s royal wedding, I’m thinking about another kind of “marriage” contract.

Til Debt Do Us Part.

You see, $189.84 Billion in debt is not a big enough ball-and-chain for the Goose.  Come this Friday, he’s signing us up to another $700 Million in the red contract.

Noone with two brain cells to rub together could still believe this government’s line that they will produce a surplus budget for the year (just 1 year, mind) in 2012-13.  Their ongoing dalliance with debt is all the evidence needed.  They are addicts, who will never go a single year without borrowing-and-spending far more than they take from us in taxes.

The simple fact is, we’ll all be paying for Goose’s indiscretions.  For decades to come.  Our creditors must be paid.

So tell us Wayne … who’s buying now?  Who Really Owns 73% Of Our Debt?

Who Owns 73% Of Our Debt?

24 Apr

Back on the 14th of March last year (“Who Owns Our Debt?“), we discovered that noted SMH economic commentator Ross Gittins was wrong. He had claimed –

You thought the pollies had done little else but spar about deficits and debt? Sorry, different debt. They’ve been arguing about the public debt – the amount the federal government owes (mainly to Australians).

At the time, a search through the RBA’s Statistics tables (“E3.xls”, Commonwealth Government Securities Classified By Holder) proved Gittins wrong.  We found that at September 2009, $65.972bn in Commonwealth debt was estimated to be held by non-residents. From a total of $104.228bn.  In percentage terms, an estimated 63.3% of public debt was actually held by non-residents of Australia.

Naturally we posed the question – Who exactly, are these ‘non-residents’ who hold 63.3% (or more?) of our public debt?

A little over a year later, we’ve had another look at those numbers (click to enlarge) –

Magenta - Total Public Debt. | Blue - Non-resident holders.

According to the updated RBA spreadsheet (“E3.xls”), at December 2010, $127.027bn in Commonwealth debt was estimated to be held by non-residents.  From a total of $174.794bn.

In other words, at December last year we owed $174.794bn.  And of that, $127bn – that is, 72.6% – was estimated to be owed to non-residents of Australia.

We ask again – Who exactly are the ‘non-residents’ who now own 72.6% (or more?) of our public debt?

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