Tag Archives: debt and deficit

“As A Nation We Are Owning Less But Owing More”

12 Jul

A superb, insightful op-ed from Barnaby Joyce in the Canberra Times:

GrainCorp may be purchased by Archer Daniel Midland. Photo: Natalie Behring

GrainCorp may be purchased by Archer Daniel Midland. Photo: Natalie Behring

To be a strong nation, we must focus on core beliefs

What do you believe in? What would you give your political career up over, rather than compromise?

If politics is the jousting of social clubs, then a politician can be anything on any day, which is a little dangerous. Have we now such a greater fascination with form over substance that it has really become a quasi thespian frolic devoid of Lincoln, Churchill and Julius Caesar.

Are we just minnows usurping the space that would be better returned to the page three babe in a bikini? Is that who we are, a people who as a nation are owning less but owing more?

There has got to be a political spine that the nation stands on, a set of principles that hurt because you stand by them: family as traditionally proposed, even if it’s not your personal reality; small business, the farmers and the shops, despite the lubricious entrapment of economic policy, a policy that has a tendency to favour the large over the small and in many instances the external over the domestic.

The mining boom is waning, prices are falling, our debt is rising and our economy cannot put its hand to an international champion that is domestically owned. BHP is majority foreign-owned, Rio is not even based here anymore. There is no international agricultural champion that is Australian-owned.

If Graincorp is purchased by Archer Daniel Midland, we will have yet another impediment to becoming the agricultural powerhouse of South East Asia. Under the current conditions our debt both public and private is higher than it ever has been and getting worse so our economic bible has taken us to a peculiar religious experience.

Our belief in a global rule book is going to be challenged by a new Asian reality that gives scant regard to wishes but exploits our weaknesses. Our terms and conditions will be just ours, as seen this week when Yancoal stepped away from their Foreign Investment Review Board conditions.

After a mining boom we should be flush with funds, instead we are $258 billion in gross debt and conducting an increasingly desperate search for what will take the place of mining. Maybe live exports because we have excelled there!

China is creating a deeper pool of offshore liquidity as it moves to replacing the US dollar as the global reserve currency. That is a global game-changer and, if we are not fully versed in all the ramifications of that massive power shift we will be in a long term strategic disadvantage.

All this is happening but what is the political debate about? Kevin Rudd managing the process of how Rudd got rid of Gillard, a slew of new ministers from treasury to agriculture with little or no expertise in their new portfolios, a tawdry attempt to politicise indigenous recognition when nothing but bipartisan goodwill has been shown on this issue thus far.

What we can take out of the indigenous recognition issue is, in the history of humankind and economics benevolence takes a backseat to greed. This is the reality of human nature which we ignore at our peril.

Europeans basically dispossessed and exploited the resources that had belonged to indigenous Australians. In a more complicated form that process is still at foot but it is just being conducted by different parties in a more clandestine form. It is naïve to think a policy desire that relies on international relations can be delivered to the detriment of that specific external nation.

Here is my point: when you look at the deeper issues, the more relevant issues that are vital to our nation’s future today, they are not the ephemeral issues that Mr Rudd appears to be engaged with.

Mr Rudd has not changed. He is a man of media, earnestly delivered with sometimes flawed and brash statements.

Whether he has the competency to guide our nation over the longer term is unlikely on previous form.

Barnaby is right.

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“$35 Million A Day” Usury-On-Debt: Sloppy Joe Hockey Finally Gets It Right

22 May

Congratulations Joe Hockey!

At long last, in his budget reply speech at the Press Club today, “Sloppy Joe” finally got around to correctly stating the cost to taxpayers of Usury (interest) on the Federal Government debt:

Screen shot 2013-05-14 at 7.50.25 PM

Though he still chose to use the lowest of those budget forecast numbers – the $12.759 billion for the current financial year, ending June 30.

All the forecast numbers for the years “going forward” .. are higher.

Try about $36.7 million a day Joe.

Or, be even more accurate, by taking the “Total interest expense” figure, which includes (projected) “other financing costs”.

The total usury expense is forecast (!!) to be more like $39 million a day.

Clairvoyants Revelling In A Financial Kama Sutra

17 May

Barnaby Joyce writes for the Canberra Times (my emphasis added):

Budget bottom line? Theatricality trumps actuality

The Budget is defining for politicians. They preen and pose and the building fills up with tribal acolytes. But it is after all, theatre. It is not actual it is a budget.

Everyone has an opinion, and you can as well, as it is an amorphous interpretation that you can get as wildly wrong as you like without any ramifications to you personally.

Actuals, as opposed to budgets, they are real. CEOs, accountants, shareholders live and die on actuals. If you “fudge” as an accountant and the partner finds out, you are out. If you cannot get the account to reconcile, say so, stay back and get help, but do not fudge it as it is the cardinal sin of accounting.

Budgets are more wishful thinking, sometimes pure romance. So accountants – dour, colourless characters that we are – get joy out of actuals, but budgets are more the indolent afterthought.

Anyone can play budgets and many positions are possible with clairvoyants revelling in a financial Karma Sutra, but in actuals only one position is right.

Well by the time you read this, which I am writing on Tuesday night, the Budget will basically be an item of ridicule and all will be waiting for the election this time with a fear to match the frustration.

The forward face value of our debt is in excess of $370 billion and that is from a Government Treasury whose claim to fame in the past is that they are consistently and miserably wrong, underestimating the problem, leaving the Treasurer with the time to gloat over an undeliverable promise. The unethical issue of getting the forecast wrong is that the alleviating action is put off and massive debt hurts those who never caused the problem. How on earth do we pay this money back, what is for sale, whose job is safe?

On the big picture, the Baby Bonus is gone and we have no real idea what the National Disability Insurance Scheme is going to cost, nor what Gonski really means in detail as far as cost is concerned.

On things you probably may not hear, big business will be forced to go monthly on PAYG. This will move the cost down to suppliers who will be under the pump to pay sooner. If you want to get someone on a 457 visa, the application charge will now be more than double, at $900. Why? No real reason for this apart from the fact they are running out of money.

There is confusion as to what on earth the message is, saving while spending in unnecessary areas and getting further into debt. What is the big plan that can stand in the here and now without relying on heroic projections? The levy for NDIS is projected near $3 billion for a cost which some have estimated at near $20 billion a year. Our terms of trade will have to be on the optimistic side to say the least as commodity prices are currently weakening.

I have to admit New England got a few promises more than most electorates, making my job harder there, but the question is how does one deliver a promise in either opposition or more pertinently when we have no money. Promises should not be confused with delivery. This is a question that I do not believe sections of the media will delve into with much intent, preferring the colour of the announcement over the complexity of the delivery.

Complexity is hard to distil down to a line but a very good indicator always is the debt. For Canberra, as I have stated so many times, debt is the canary in the coal mine and Canberra should be more observant of this issue than any other city in Australia. Departments know the problems for them are directly correlated to the size of the debt for the incoming government. When the Greens, Labor and independents decided that prudence should be put aside, then with it goes stability and security for the city of Canberra.

The final analogy I would say about this budget is the overwhelming feeling in the building of irrelevance in the Government’s papers and following discussions. It was an anticlimax that happened in the corner without any of the gravitas or attention of previous budgets. Australia does finally get to the TV to switch off the politics; they have done that.

Hear hear!

“In A Few Years Time We Will Be Like Ireland”

15 May

“Gillard’s An Imbecile” – Barnaby

7 May

I do love that rare, near-extinct breed … the Straight-Talkin’ politician:

2GB Chris Smith Afternoon Show Transcript
7 May 2013

Topics: Beef industry crisis, Budget deficit.

Chris Smith: Barnaby, good afternoon.

Barnaby Joyce: Good afternoon Chris. How are you today mate?

Chris Smith: I’m very well. I’ve heard from your team to say that you are in Richmond at a beef industry meeting, but this is not the Richmond near Windsor in Sydney right? You’re in the middle of Queensland.

Barnaby Joyce: This is Richmond in the Gulf. We’re up here because we have a Beef Crisis Meeting. What that means Chris is that last week we had cattle selling for merely $20 a head at Longreach. That’s disastrous. When you think that you’d need 25 head of cattle to pay for the fortnightly groceries. You can’t do that, you’re not going to survive.

What is it caused by? Well, three things. One thing is the drought. There’s not much you can do about that except pray for rain. There are two you can do something about. One is the live cattle trade. When you shut it down; it completely decimated our markets so that people don’t have a market to sell into. Now all those cattle are going south and they’re forcing down the price in other areas.

The Indonesians are happily sitting back saying: “Well you made our life a misery and now we’re making your life a misery”. That’s why we need to be so careful that we never overreact. Sometimes we see these terrible things on television. They’re terrible but we have to fix the problem not stuff the industry.
We have a parliamentary secretary who doesn’t believe in the live cattle trade. This just shows you how incompetent the Labor Government is.

Chris Smith:
It’s so out of whack. Maybe it’s because of all those farming-oriented cabinet members Barnaby?

Barnaby Joyce: They just don’t seem to get it. Why isn’t the Trade Minister Mr Emerson, instead of doing his funny little dances and his OP Ed pieces about et al and sundry, why isn’t he, the actual Trade Minister, over there trying to fix up our trade? Why isn’t he over in Indonesia trying to fix it up?

The other thing is the dollar’s high. The dollar, if you actually want to, you can actually affect it. It’s not written on tablets of stone and presented from Mount Sinai. You can influence the price of the dollar down if there is real motivation and desire to do so. One of the reasons they don’t do it is because they want to be economically pure. The way we’re going at the moment we’re going to be pure in debt, economically dead, so let’s make sure we keep our industry going.

Chris Smith: Let’s give people an idea. You’re saying $20 a head, right? Two years ago, one head of cattle sold for $500. That’s how far the industry has plummeted.

Barnaby Joyce: Yes, obviously they didn’t all sell for $20 a head but that was the bottom of sale. It gives you a sense that what happens then, so your listeners would understand, people won’t sell them at the saleyards; they’ll just shoot them in the paddock because the cost of transport is more than what you’re going to get. More to the point, these people are under the pump. The bank manager’s screaming at them, the values of their place is going down. If you think about it in another way, imagine if you got your pay packet and it was only a fifth of the money or an eighth of the money you usually got in it. You’d be a little bit shocked wouldn’t you?

Chris Smith: Now, the deficit, it seems to get worse by the day. We’ve had Penny Wong this morning on the ABC today confirming the blow out will hit $17 billion.

Penny Wong: What I can confirm is that we are facing a very significant revenue shortfall from what was anticipated. Certainly in the current financial year if you look at what was expected at Budget until now, we’re going to be receiving as a government, about $17 billion less and we do anticipate that we will see revenues hit across the Forward Estimates. So, in that context, given the challenges the Budget faces and the nation faces, the Government has to take responsible decisions, so we have indicated today that we won’t be proceeding with the boost, the additional boost to the Family Tax Benefits that was planned for later this year. That’s a regrettable decision, but one that’s responsible in the economic circumstance.

Chris Smith: Okay, so the Family Tax Benefit is out of the picture because there will be no added bonus associated with that. Another broken promise out the window – but they have to do that. While Penny Wong tells it how it is Barnaby, we have the Prime Minister yesterday with school children, she seems to have school children with her almost every week now, she didn’t think the deficit was such a problem.

Julia Gillard: Now, we’ve got to work our way back to a surplus and obviously pay off the debt, but the scale of the debt is around 10 per cent of GDP. What does that mean? It’s the same as someone who earns $100,000 a year, having a mortgage of $10,000. I think most of you would know, you’re probably living in homes mum and dad are buying, that they have mortgages well in excess of $10,000 and they would happily change places with someone whose mortgage was just 10 per cent of their income. That’s not something that you have to worry about.

Chris Smith: So Barnaby, relax, it’s only a $10,000 mortgage.

Barnaby Joyce: She’s an imbecile. This is incredible, the debt as we speak right now is $271.1 billion gross. If you don’t believe me, check it out for yourself, AOFM, Australian Office of Financial Management website. On top of that you’re going to have your state debt. Of course if things fall over you’ll be picking up the state debt as well. Between the State and Federal Government debt we would be well in excess of half a trillion dollars. Our GDP of this nation is 1.3 to 1.4 trillion dollars. So if my mathematics are correct, even if you just take the Federal Government debt, it’s getting close to 15 to 20 per cent of our GDP.

Dear reader, this really, REALLY angers me.

The “GDP” fallacy.

GDP is not … NOT … government income!!!!!!!!!!!

The government’s income (ie, from taxing us) for this financial year, was projected in the October MYEFO to be $373 billion.  Finance Minister Penny Wong has now declared that the actual budget outcome will likely be $17 billion less than predicted. So that’s about $356 billion in annual income for the Federal government this year.

The Federal debt is (so far) $271 billion. Meaning that the Federal Government debt-to-income ratio is 76%.

So Ms Gillard … and Barnaby … the correct, honest analogy would be as follows:

“It’s the same as someone who receives $35,600 a year on public welfare, having a personal line-of-credit of $27,100.”

Please, please … get this right!  GDP is not … NOT … government income!!

Chris Smith: She’s fiddling with the numbers mate.

Barnaby Joyce: You see what they do, it’s so annoying, they say, “Oh the net debt, the net debt…” So where are we going to get this magic money Ms Gillard to pay off your gross debt? Where they’re going to get it is the cash reserves in the Future Fund. The Future Fund’s there to pay the public servants’ superannuation because they never put the money aside for. So all you’re doing to taking money from one credit card to pay off the other credit card and both credit cards are overdrawn.

Chris Smith: So there was no real surprise about the Newspoll results today. Labor’s primary vote has fallen to 31. That’s normally shock horror stuff. I just get the feeling that we’ve become desensitised to these numbers now.

Barnaby Joyce: The Australian people have given up on them. The Greens and the independents go with this crowd. They’re also ducking for cover now, pretending they weren’t there. Mr Windsor gave us this government. Mr Oakeshott gave us this government. The reason they’ve done this to our country is because they let them. To this day they are supporting them. They’re all in there together. They all wanted their time in the sun where they ran the show. Well they ran the show and what an absolute and categorical disaster it is, from Richmond in the north where they’re dealing with a cattle industry in crisis to down in the south where we’re running out of money. Left, right and centre and all over the joint, we’ve gone out the back door.

Chris Smith:
I want to put this to listeners this afternoon, Julia Gillard also last night spoke about her desire to see more female Prime Ministers and hoped there would be less focus on makeup, hairstyles and choice of fashion. Now as I remember, a lot of the cartoonists and commentators had a great deal of fun with his glasses and his eyebrows. What about Bob Carr’s glasses, etcetera, etcetera? I don’t think that we’ve been overly critical of Julia Gillard’s state of dress or what she wore or how she looked any more than we mentioned the same with other Prime Ministers. It’s just how good you do the job.

Barnaby Joyce:
We all get caricatures. They’ve had me tangled up in barbed wire fences and hayseeds hanging out of my mouth. It comes with the territory. If you don’t like the heat get out of the kitchen. They probably will have more female Prime Ministers and I hope they do, but by gosh I hope they’re vastly more competent than the current one we’ve got.

Barnaby: Learned Oracles Coming To A Belated Epiphany

11 Apr

Senator Joyce writes for the Canberra Times:

A nightmare for us all, as random spirits haunt Labor

When Labor is basically all out of the country, they work a great deal better: they should get away more often from their independent and Green partners.

I must say they are two Australian assets that I would be quite happy to get a price for if anyone in China is interested.

Back home, the white ants continue their merry way through the finances in Treasury, where the debt is now just short of $270 billion gross. No doubt they are now drafting up the next extension on your credit card rather than working out that eventually the structure will collapse if they do not fix their spending problem.

I now see the learned oracles that pilloried my warnings about the debt trajectory years ago coming to a rather belated epiphany.

Labor has desperately been looking around trying to work out what silverware can be whisked out of the house to meet the payments at the hock shop.

What they have come across is your savings in superannuation. They say it is only for the “fabulously rich”, but if that “rich” does not collect enough money then they will just get the Macquarie Dictionary to change the definition of “rich” to something more appropriate for Treasury’s dire requirements.

The mining tax collected $126 million in its first six months and none of the major miners expect to pay much in the near future. That one was a complete fizzer.

The problem is you cannot tax business into prosperity; they actually have to get the overheads down and the product moving if we are going to level this debt trajectory out. You also cannot get business moving if you sell off too much of the capital base. This is not necessarily the case at present, but saying that any deal from any entity is a good deal is slightly naive, to say the least, when it comes to foreign ownership in Australia.

The independents, and now quite a few of Labor’s own members, are trying the great political illusionist trick of: “It was not me, I was not there. I did not really agree, please still vote for me.”

On the Northern Rivers the Labor members for Page and Richmond are fighting against coal seam gas. This is a neat trick since it was under the governance of the Australian Labor Party, at a state level, that most of the exploration licences were sold.

Tony Windsor, the independent member for New England, did one better, selling his whole property, at a very good price indeed, to a coal mining company before becoming a champion for the farmers down the road in their struggle with coal mining.

The Greens did the famous “marriage is over” news conference, but the relationship seems to be going along strong without any discernible change in allegiance in any crucial vote. It is the new art form in the politics of the sham divorce.

If Janelle Saffin, Member for Page and Justine Elliot, Member for Richmond, really oppose coal seam gas then they should resign from the Labor Party, or at least have the gumption to cross the floor. None of these participants ever do, so every day of government, and every action of the government, is one they supported, or at the very least refused to stop.

The Next Budget Nightmare, NBN, has now become the Ninety Billion Nightmare with this debacle set to cost the Australian taxpayer $94 billion, $45 billion over budget and four years over schedule. This is telling of this government’s incompetence and flippant disregard for managing the government’s coffers.

This train wreck is not a Labor government; it would be wrong to suggest that a Labor government would be this bad. This train wreck is a Green-Labor-independent alliance and they are all jointly liable for every fiasco that stands in proxy for responsible government.

The wiser heads, and they do exist, in the Labor Party will be making sure that after this comes to an end, and it will, that they never ever get themselves into this position again.

A position where they are held to ransom by random spirits who had neither the ethos nor the capacity to govern but instead foisted their peculiar desires into what should have been responsible, nation-based, strategic plans.

 

See also Only NOW Experts Agree: Barnaby Is Right On Debt

 

David Murray Shows The Greens And MSM Are Clueless. Again.

18 Apr

Former chairman of the Future Fund, David Murray, ruffled lots of establishment feathers during his tenure, particularly for his scathing criticism of the Warmageddonist movement.

Now, he has shown up the Greens – and, the entire lamestream economics and political media contingent – with his astute comments about the real reason why the government must balance the nation’s books.

From the Australian (emphasis added):

FORMER Future Fund chairman David Murray has accused the Greens of making “ill-advised” demands on the federal budget, declaring the priority should be to protect the government’s credit rating as the global financial system remains under strain

Mr Murray, former chairman of the nation’s $73 billion sovereign wealth fund and a former Commonwealth Bank chief executive, said he was concerned about the Greens’ suggestions that curbing government spending was not important, given the woes in the global economy and the size of the blow-out in the budget at the peak of the global financial crisis.

“What’s at risk here is that with very significant offshore borrowings and a shaky world for raising capital, if the commonwealth in particular can’t hold its ratings, that will affect the ratings of the banks, that will affect the cost of debt, and it also means that the commonwealth is not there in the same measure as a backstop if things go wrong again and the banking system can’t fund itself offshore,” Mr Murray told The Australian.

That’s the higher risk that has to be managed at the moment. We don’t control what happens in the rest of the world. You need the commonwealth rating as a backstop because of what’s going on elsewhere in the world. You can’t put that at risk. To do that you have to achieve a budget that is cash-neutral at least, so that the debt stabilises and within that cash neutral position you can pay interest.”

Exactly right.

As we have seen here at barnabyisright.com for many months now, the government (and the economy) are now trapped by the errors and abject stupidity of the past.

The credit ratings agencies have put our government on notice that the credit rating of the government – and more importantly, of the banking system – is contingent on the government showing a credible path back to balanced budgets. Why? Because in the GFC, the government explicitly and implicitly guaranteed our hugely overleveraged, foreign-debt dependent, housing market exposed banking system, using the sovereign balance sheet.  If the government can not promptly curb its ever-rising debt and deficits, then the government guarantee propping up the banks will lose credibility.

On the other hand, if the government does attempt to achieve an actual surplus in 2012-13, and not just a forecast for one on May 8th, that spells disaster for the economy too.

How so?

See for yourself – Labor’s Inbred, Debt-Fed Chickens Coming Home To Roost.

We are Ireland Mk 2.

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