Tag Archives: debt and deficit

Joyce: The Labor Government Is Dodgy

15 Jul

Media Release – Senator Barnaby Joyce, 15 July 2010:

In trying to think of a metaphor to describe the Labor government in one word, it is this – dodgy! Their figures are dodgy when they talk about a $7.5 billion reduction in revenue but apparently only causing a $1.5 billion reduction in income. Their approach is dodgy when they talk about net debt as if the people who lent us the money don’t want the money back in gross terms and just for the record, we currently owe $150 billion and are currently borrowing an extra $150 million a day.

They are completely dodgy with how they change Prime Ministers in the middle of the night without telling the Australian people. They are even dodgy amongst themselves with the deals they make, such as the one between Kevin Rudd and Julia Gillard on the process of leadership transition which Julia obviously didn’t honour because the backroom boys told her not to. They are dodgy in how they talk about future surpluses, yet their past prescriptions about current surpluses have been so totally wrong and actually end up as deficits.

They are dodgy in how they describe solutions for the processing of boat people in East Timor when they haven’t actually done the homework to get the deal through East Timor. They are dodgy in how they employ mates such as Mr Kaiser for $450,000 a year without even putting an advertisement in the paper so that other Australian’s can apply for the job. They are dodgy in how they go forward with a $43 billion capital infrastructure program such as the NBN without doing a cost benefit analysis as to whether it will actually work.

They were dodgy in the way that they allowed the importation of beef from countries with Mad Cow Disease until we found out about the deal and then they changed the decision around again. They were dodgy in how they told people that the ETS was the greatest moral challenge of our time, but the person who was crucial in changing that moral paradigm is now enjoying the benefits of the Prime Minsters office. They were dodgy when they inferred that an ETS would change the climate when quite obviously it was never going to.

They were dodgy with how they told the Australian people that they would fix the hospital system by July 2009 or they would take it over and in the end, they did neither. They were dodgy when they decided to build school halls across our nation for $16.2 billion whether you wanted them or not and at three times the price. They were dodgy when they decided to put ceiling insulation into roofs and burnt down over 180 houses causing tragically the deaths of 4 people that we know of.

However, where they are really dodgy is this – they told people that they would assist with the cost of living. They had the dodgy fuel watch scheme and the dodgy grocery watch scheme which were announced with fan fare but achieved zip.

The cost of living in Australia is going through the roof because this crowd in government is dodgy and has absolutely no idea how to get the basics right. You cannot keep borrowing money at the rate they are, putting upward pressure on interest rates, and squeezing the last drop of blood out of working families and then claim to know something about the cost of living.

You cannot talk about reducing coal fired power replacing it with renewables at many times the cost and not expect that this is going to make working families poorer. You can’t fail to develop the inland and not expect the result to be far greater pressure on the social and economic infrastructure of urban Australia. If you don’t develop water infrastructure then you have to expect the price of a limited resource, water, to go through the roof. If you keep on making it difficult for farmers to farm, with continual new laws on vegetation, and everything they do from sunrise to sundown and in between, while at the same time failing to oversee that farmers are getting a fair price at the farm gate, then the farmers will disappear and the price of food will go through the roof. You can’t borrow hundreds of billions of dollars from overseas and not expect that it has to be repaid by people who have to pay taxes, working families, who could have otherwise put that money in their pockets.

In summary, many people at the supermarkets and at the pubs and clubs and at the church on the weekend and at the sport with their kids understand one thing – that they seem to be poorer under this crowd then they were before, they have less money than they did before. They seem to be watching a political soap opera that has more episodes than Blue Hills standing in proxy for decent government.

My statement to the Australian people on behalf of the National Party in the Senate will be this – Do you honestly believe that you can carry on with this crowd for another three years? What do you think will be left of the show if you do?

More Information – Jenny Swan 0746 251500

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Gottliebsen: In The Eye Of GFC Storm

30 Jun

Highly respected business commentator Robert Gottliebsen appears to agree today with what Barnaby Joyce has been saying since October last year – that the GFC is far from over.

From Business Spectator:

Despite a late US Dow index rally, last night was among the more serious sharemarket falls we have experienced since global financial crisis plunged markets in 2009.

We are well above the dismally low levels witnessed on equities markets during the crisis, but last night you could see fear in almost every corner of the world. The forces that are behind each of the fears are probably manageable, but when they occur together, as what happened last night, they triggered waves of selling, including a savaging of the Australian dollar.

And of course Gillard’s mining tax dithering is rekindling global doubts about the sovereign risk of this country which threatens to put Australia and our high house prices in the eye of the storm.

And for most Australians, the global wave of selling will be reflected in our share prices levels at June 30, which means that the value of superannuation funds will be hit on balance day. Many retirees will have their income reduced for the year ahead…

Clearly China is slowing much more rapidly than expected, and as a result the bad property loans that are in its banking portfolios will weigh down future growth.

In the past China has always managed these issues and I think it will do it again, but the markets fear there will be much more pain than had been anticipated.

Meanwhile, in Europe the big banks have been playing the stupid game of borrowing from depositors and then investing in the sovereign debts of European countries that can’t pay.

Tomorrow the banks are supposed to repay €442 billion in emergency loans but they almost certainly will have to be bailed out again. Fears of bank collapses are rife. On top of this dire outlook, Europe’s austerity measures will bring on recessions in countries ranging from Greece to the UK which will make it even harder for the banks. And the strikes in Greece will be repeated in many countries, which could make the spending cuts impossible to deliver.

In the US they are helped because in a crisis money flows to the world currency, so the US dollar rises. Nevertheless, there are still chronic housing problems so consumer confidence is depressed and the US economy is still living on the old stimulus packages. Accordingly Wall Street’s earnings estimates look too optimistic.

Barnaby is right.

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Complete And Definitive Guide To The Sovereign Debt Crisis

30 Jun

Professor Niall Ferguson, of the acclaimed book and ABC documentary series “The Ascent of Money“, has recently published a brilliant guide to the global sovereign debt crisis.  Click here to read it.

Back in February, Professor Ferguson had this to say in the Financial Times:

… it would be a grave mistake to assume that the sovereign debt crisis that is unfolding will remain confined to the weaker eurozone economies. For this is more than just a Mediterranean problem with a farmyard acronym. It is a fiscal crisis of the western world. Its ramifications are far more profound than most investors currently appreciate…

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BIS: Global Economy “Vastly Worse” Than In GFC

29 Jun

The latest report from the Bank of International Settlements (BIS) – the central bank to the central banks – warns that the global financial system is in a “vastly worse” position than 3 years ago.

From the Associated Press:

An organization bringing together the world’s major central banks warned Monday that the global economy risks a replay of the 2008-2009 financial crisis, with massive public debt in Europe and the United States replacing the private debt that fueled the credit crunch two years ago.

“A shock of virtually any size risks a replay of the events we saw in late 2008 and early 2009,” the Basel, Switzerland-based organization said in its 206-page annual report.

In a stark warning to governments to clean up their finances, the central bankers noted that “macroeconomic policy is in a vastly worse position than it was three years ago, with little capacity to combat a new crisis.”

The report recommended winding down stimulus packages, raising interest rates in the long term and forcing through reforms of the financial system to prevent sudden shocks from causing market-wide collapse as they did two years ago.

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46 US States In Debt Crisis

29 Jun

46 out of 50 US state governments are now technically bankrupt.  To understand how bad that is for the global economy – including Australia – consider the fact that California alone has an economy that is larger than that of Russia.

From Bloomberg:

California, tied with Illinois for the lowest credit rating of any state, is diverting a rising portion of tax revenue to service debt, Bloomberg Markets magazine reports in its August issue.

Far from rebounding, the Golden State, with a $1.8 trillion economy that’s larger than Russia’s, is sinking deeper into its financial funk. And it’s not alone.

Even as the U.S. appears to be on the mend — gross domestic product has climbed three straight quarters — finances in Arizona, Illinois, New Jersey, New York and other states show few signs of improvement. Forty-six states face budget shortfalls that add up to $112 billion for the fiscal year ending next June, according to the Center on Budget and Policy Priorities, a Washington research institution.

State budget woes are a worsening drag on growth as the federal government tries to wean the economy from two years of extraordinary support. By Jan. 1, funds from the $787 billion federal stimulus bill will dry up. That money from Washington has helped cushion state budgets as tax revenue has plunged.

State leaders won’t be able to ride out this cycle the way they have in the past. The budget holes are too large.

What will the US do when nearly every state government is facing Greek-style deficits?

According to an RBS note to its clients, prepare for unprecedented money printing.

From the UK’s Telegraph:

As recovery starts to stall in the US and Europe with echoes of mid-1931, bond experts are once again dusting off a speech by Ben Bernanke given eight years ago as a freshman governor at the Federal Reserve.

Andrew Roberts, credit chief at RBS, is advising clients to read the Bernanke text very closely because the Fed is soon going to have to the pull the lever on “monster” quantitative easing (QE)”.

“We cannot stress enough how strongly we believe that a cliff-edge may be around the corner, for the global banking system (particularly in Europe) and for the global economy. Think the unthinkable,” he said in a note to investors.

Societe Generale’s uber-bear Albert Edwards said the Fed and other central banks will be forced to print more money whatever they now say, given the “stinking fiscal mess” across the developed world. “The response to the coming deflationary maelstrom will be additional money printing that will make the recent QE seem insignificant,” he said.

Barnaby Joyce began warning about a bigger GFC in October last year. No one wanted to listen.

He was roundly ridiculed by the “experts” – such as the genius academic who designed the controversial RSPT, Treasury secretary Ken Henry – for suggesting the possibility that the USA could default on its massive debts.

The simple fact is this.  The USA is defaulting on its debts.

Printing money (euphemistically called “Quantitative Easing”) is technically a form of sovereign default.  When you cannot pay your debts, printing money devalues your currency, and makes it easier to pay back your debts.

It also means high inflation.  Possibly hyperinflation.  Think Weimar Germany in the 1920’s.  Or Zimbabwe today.

Barnaby is right.

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Labor’s Debt: $3,500 Per Person

25 Jun

From the Federal Liberal Party’s Friday Facts –

Despite inheriting a $20 billion surplus, zero net debt and $60 billion in the Future Fund, Labor is delivering:

  • $78.5 billion of net debt in 2010-11 – $3,500 per person
  • $4.6 billion of interest paid on net debt in 2010-11 – $205 for every Australian (and as the graph below shows, it will get worse)
  • A Budget deficit of $40.8 billion in 2010-11 (the biggest deficit since World War II)
  • To fund its reckless and wasteful spending, Labor needs to borrow more than $100 million every day.

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Joyce: Gillard Set To Outspend Rudd

25 Jun

Media Release – Senator Barnaby Joyce, 25 June, 2010:

Rudd borrows $95 million a day, Julia set to break record

Senator Barnaby Joyce today said that the new Labor Government has a lot of work to do to get this country back on track.

“The new appointee of the faceless factional bosses, Prime Minster Gillard, has already stated that she wants to get the Government “back on track”, and it certainly is a long way off-track at the moment” said Senator Barnaby Joyce, Shadow Minister for Regional Development, Infrastructure and Water today.

When this Government came to power Australia’s gross debt was $59 billion. It is now $147 billion. This Government has spent $88 billion in 935 days. This is a new record for Australian Prime Ministers.

“This Government has been an unmitigated disaster for our country, and even the Labor party now agrees. They have been racking up debt on the national credit card at $95 million a day.

“Every day of the Rudd Government, that money could have built almost 500 km of sealed country roads or repaired and refurbished over 100 bridges in regional Australia. Instead, thanks to Julia Gillard and her team we have overpriced trinkets at the back of school yards. .

“If the new PM really wants to get this great country back on track, she needs to stop this reckless and wasteful spending. The budget that the Deputy Prime Minister handed down less than two months ago forecast borrowing of $150 million a day for the next financial year. Gillard is already on track to smash Rudd’s record and things look like getting worse before they get better.”

“Australia can’t afford another term of pandemonium from the Labor party.”

More Information – Matthew Canavan 0458 709 433

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McKibbin For PM 2010

23 Jun

Long something of an outsider – the lone outspoken voice of reason and commonsense on the otherwise “reserved” board of the Reserve Bank – Warwick McKibbin has again spoken out.  He has accused Rudd of panicking, and wasting huge sums of taxpayer money.

Who’d have thought!

From the Sydney Morning Herald:

A prominent university economist and member of the Reserve Bank board has delivered a scathing critique of Kevin Rudd’s response to the global financial crisis, saying his government ”panicked” and ”rammed through” decisions fraught with risk.

Warwick McKibbin, of the Australian National University, accused the government of overspending on its stimulus package, and then coming up with ”a really badly designed resource tax” to try to compensate.

And he described the government’s planned $43 billion national broadband network as ”a gigantic white elephant waiting to happen”.

It gets better.

McKibbin also attacks Treasury secretary Ken Henry.

Readers of this blog will know our scathing views of Henry’s “performance” before, during, and after the GFC.  We have been calling for him to be sacked… a call that is only now just beginning to resonate in the Opposition ranks.  And in the economic commentariat too. Highly esteemed business leader and commentator Robert Gottliebsen recently said this:

The position of Ken Henry as the head of Treasury is not sustainable.

Here’s what Professor McKibbin had to say about Henry:

Professor McKibbin also took aim at fellow Reserve Bank board member and Treasury secretary Ken Henry, accusing him of not only failing to consult experts on economic issues, but of trying to silence them…

(Professor McKibbin)… has told The Age he was stunned by Dr Henry’s call this week for academics to ”put down their weapons” and stop nitpicking over government proposals such at the emissions trading scheme.

”The ETS was a flawed scheme. Had the government got it through it would be dead by now because of the financial crisis,” Professor McKibbin said. ”I have enormous respect for Ken Henry, but he can’t believe that you should have consensus because it is better to have bad policy that everyone agrees with than eventually get good policy that will work.”

Enough of Henry. Really … enough!

Back to Rudd / Henry’s rushed and bungled “economic stimulus”:

And in a damning assessment of the government’s stimulus package, he (McKibbin) said: ”It wasn’t evidence-based policy, they panicked. They put the money into school buildings, they put it in insulation, they put it in stuff they could never reverse.

”The government rammed those decisions through the economy even though they were fraught with risk,” Professor McKibbin said. ”No one was consulted about an alternative view, and if you did say anything you were attacked by the Treasurer and the Prime Minister in public.”

He also accused the government of overspending on the stimulus package and then deciding that ”because of politics they had to get their spending back so they could claim they had fiscal surplus – for which there is no economic basis, by the way.

”So they come up with a really badly designed resource tax to try and get the position to look good three years from now and, in the middle of a sovereign risk crisis, exposed the economy to a reassessment of sovereign risk.”

Warwick, we need you in politics.  You have my vote.

McKibbin For PM 2010!

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Barnaby Bets Henry

26 May

From AAP:

Queensland Senator Barnaby Joyce wants to bet federal Treasury boss Ken Henry $1000 that the government fails to deliver its $1 billion 2012 budget surplus.

The forecast surplus depends largely on the government’s proposed 40 per cent resource rent tax.

Senator Joyce said achieving the 2012 surplus will be miraculous.

“Does Dr Henry truly believe that?,” the Nationals leader told ABC television on Tuesday.

“If he does, I’m willing to take a $1000 bet with Dr Henry, and if he is … a billion dollars or better I will pay him $1000.

“If we have a deficit, is he prepared to match my money?”

Senator Joyce has clashed with Treasury secretary Ken Henry previously.  When Barnaby was the Opposition’s Shadow Finance Minister, the insufferably arrogant Ken Henry appeared to relish taking every opportunity during Senate Estimates hearings… and in public speeches… to make thinly-veiled criticisms about his economic views.  Criticisms that the feral media pack wlecomed gleefully in their constant baying for Barnaby’s sacking.

Ironically, the increasingly dire global economic events are demonstrating ever more clearly, that when it comes to economics, Ken Henry is usually wrong.

And Barnaby Is Right.

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Joyce: Rudd Expects Miners To Pay Off The Debt

20 May

Media Release – Senator Barnaby Joyce, 19 May 2010:

Senator Barnaby Joyce, whilst on his “Straight Talking Tour” in Deniliquin said, “It was interesting to read the answer given yesterday to a question I asked on notice at the Senate Standing Committee on Economics in February as to what our debt position is.”

In 2008, there were six countries in the OECD that had higher net foreign debt as a proportion of GDP than Australia. These countries are Iceland (355 per cent of GDP), Portugal (72 per cent of GDP), Hungary (72 per cent of GDP), Greece (68 per cent of GDP), Spain (66 per cent of GDP) and New Zealand (60 per cent of GDP). In the same year, Australia’s net foreign debt amounted to 56 per cent of GDP. Around 10 per cent of Australia’s net foreign debt is held by the public sector. In the US, around 64 per cent of its net foreign debt is held by the public sector while in Greece, the public sector holds more than 100 per cent of the stock of net foreign debt.

“I also note that our Commonwealth gross public debt has gone from $139.182 billion to $141.282 billion in the last week. In addition to this is the fact that the aggregate borrowing of the states’ non-financial public sectors is expected to be $164 billion in 2009-10. There is also the money owed by entities such as utility companies that have borrowed money to pay state so-called ‘dividends’. As these debts do not come under the government sector financial reporting, who knows how much they owe.

Are we to believe that this government with their current track record has the capacity to fix things up over the next three years?

The Labor government solution is to go to the only section of the community that is making good money and to impede them on the capacity to pay off the debt. Australia has to maintain the vibrant integrity of its mining sector especially if the global economy starts to peel off through the ructions that are currently being seen in Europe. A resource tax would have to be the most foolish decision that a government could make at this point of time in global economics.

The Labor Party members have to ask themselves one question. If the mining sector is not bringing in money to our nation, and the agricultural sector, which they have managed to tie up with green and red tape, is not bringing in the money, then where exactly are our export dollars going to come from? Export dollars underpin the service industry where the vast majority of Australians work. You may not work in an export industry, but your pay depends on them.

In simple terms, if no money turns up on the table from export dollars, there is no money to pass around the table to reflect our GDP and ultimately to pay the debt on what is one on the most indebted nations on earth.”

More Information- Jenny Swan 0746 251500 / 0438 578 402

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