Tag Archives: kevin rudd

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.

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

Ode To KRudd

24 Jun

'nuff said.


Henry “Dumb”, “Completely Mad”, “Naïve Greenie”

24 Jun

In the wake – literally – of former PM Kevin Rudd, Mike Mangan at Business Spectator predicts the death knell for the RSPT:

The Labor leadership spill ensures the resources super profits tax is dead. While the RSPT started as an investment theme, it’s now just politics…

This (the RSPT) would have to rate as one of the dumbest political moves since Chifley tried to nationalise the banks 60 odd years ago. Labor nick-named Mark Latham “crazy brave”. But I doubt even Latham would have tried this one on…

Happily, Mangan goes on to join the rumblings (that were started right here on this blog back in February) calling for the sacking of Treasury secretary Ken Henry:

Former Labor senator Graham Richardson said earlier this week the miners are now spending a million a week advertising the stupidity of this “super tax on profits”. And he concludes “their ads are 50 times more effective than the government’s ads”. What was Rudd thinking? Who was advising him?

Enter stage left: Ken Henry.

Although Rudd has since rejected the idea, on Monday Rudd’s Treasury Secretary helpfully suggested the RSPT should be extended to all industries, especially banks and retailers. I think there are three possibilities here. Ken Henry is either politically dumb, gone completely mad or he is a secret admirer of Tony Abbott. Surely Kevin Rudd had enough enemies without adding two of Australia’s largest industries to that ever growing list. There is another possibility. Henry is just a naïve greenie. Reportedly he partly drafted his tax review while caring for northern hairy-nosed wombats in central Queensland. Too bad wombats don’t vote.

The spill result is great news for investors, because the mayhem Rudd unleashed over the last six or so months will cease and the RSPT in particular will be consigned to the history books with him. And I strongly suspect Secretary Henry won’t be too far behind.

Barnaby: The Economic Illuminati

9 Jun

Opinion piece for The Punch – Senator Barnaby Joyce, 7 June 2010:

The Mining Tax:  Treasury’s Own Love Formula

Every now and then, a select group from the economic illuminati retire to their monastic study and devise a splendid idea to try and pay off their previous splendid idea.

Splendid idea number one was to borrow so much money that we put ourselves in more strife than the early settlers in our desire to adorn the nation with an eclectic mix of rubbish that apparently was going to save us from Asia ceasing to purchase our minerals. The relationship between our stimulus and mineral exports was as clear as mud, but there was an emphatic defence of this fantastic proposition by Labor.

The Treasury corruption of the graphs depicting the relationship between our and other nations’ fiscal stimulus packages and the effect on their respective economies shows that when the graphs were corrected the relationship was hardly apparent. We really were sold a lemon on Labor’s “go hard, go early, go household strategy” in response to the North American and European financial crisis and are currently lumbered with in excess of $144 billion gross federal debt while on our merry way to in excess of $220 billion gross federal debt.

The next chapter in the Labor Party Magnus Opus was called “massive debt” and the next problem for Treasury was “how do we pay it off?” The Labor Party thought to increase their revenue stream in the most politically parochial way. They explained to Australia that the big miners are morally lacking, are exploiting the workers, and they as a government, Robin Hood – like, would restore the balance of fiscal morality. It would mean the partial nationalisation of our whole mining sector, however. They had it on good advice from the Secretary of the Treasury, that he had studied a theorem at high school that no matter how you flog this mining sector, it’s going to hang around and continue to support you.

The sobering reality is this, despite the Secretary of the Treasury stating that you can put taxes up in the mining sector and not affect the investment profile, he is wrong on this occasion. If taxes go up at an exponential rate to where they formerly were, people will make the logical decision to go where the taxes are less. If the Secretary of the Treasury tells you that a new tax will assist in cooling the planet, you really have to ask yourself if this is necessarily so. If you surround yourself with hedges of economic theorems and carpets of policy papers and spend your nights fanatically trying to turn human emotion into predictable mathematical models, and don’t recognise what is yelled to you as common sense by the peak industry groups, you will come unstuck when you find that your models don’t match their experience.

During Estimates one can get quite frustrated with well meaning pontificating by well paid bureaucrats about a perfect world they have created and what happens in it. This world has created a Newtonian expectation of preciseness to economics as required to match government policy desires. It supposes that gravity and economics are the same and that people’s actions are as predictable as other items of physics- like a mathematical model for love. Commonsense expectations on actions and reactions are put aside for superb anodyne reflections on economic issues. The basic premise that must be first applied when analysing the RSPT is this – if a miner can make more money in another venue, then to that other venue they will go. Unfortunately it appears that this statement of the bleeding obvious, that one cannot predict the economic speed of sound, has meant that a realistic gut instinct of what happens when you put a 40% tax on mining has not been followed.

The reality of the RSPT, which was blatantly obvious to virtually everyone, has now of course come to be in the actions of such companies as Xstrata in the reduction of their investment decisions in Australia. How can we believe the Labor Party’s lauding of their so-called management of the GFC and take for granted their endorsement that it was their school halls program that saved us from a recession, when it is the same Labor Government inspired brains trust that is creating this stuff up?

Dr Henry, in answer to my question at the Economics References Committee Inquiry earlier this week, stated that it didn’t matter whether the RSPT tax was at 40, 60 or 70 percent, as to how it would affect investment in Australia. I was left no choice but to believe that he was correct in his description of a theory but had completely departed from reality as to what was actually going to happen.

This new tax will not only be a bombshell to such mining areas as Gladstone, Townsville, Wollongong Newcastle and Mackay and the whole of WA, but ultimately it will affect those other big coastal towns such as Brisbane, Melbourne and Sydney as they come to the startling reality that these Labor Party splendid ideas are going to have dire consequences to the investment and export structure of our nation.

In the town of Wandoan, there are some farmers who are happy today due to the fact that a major mine is not going ahead and yes we should not be mining prime agricultural land because this is the ultimate non renewable resource. This Labor Party package was not to protect prime agricultural land but to prop up Treasury with a new tax. In fact the Labor Party hoped the mining would go ahead in Wandoan. However, there are some other families who were hoping that the income from the mine will increase their standard of living, and they are very unhappy, because Labor Party hopes are not their reality.

There were people who were going to build a $1 billion railway line from Wandoan to Banana and they are unhappy today as they are not going to build it anymore. There was supposed to be the development of a massive income stream to support lots of shops, chemists, school teachers, nurses, contractors, metal fabricators, diesel fitters and they are all going to miss out. They are all very unhappy. They are all unhappy because some group of individuals in Canberra decided that they were beyond questioning and resolute in a desire to inflict on the Australian economy what would have to be the most incongruous economic policy since the 1949 desire by the Labor government to nationalise the banking industry.

Joyce: ‘More Modelling Than Naomi Campbell’

3 Jun

Barnaby Joyce accuses Labor of using dodgy statistics in its propaganda for its Orwellian-named “Resource Super-Profits Tax” (RSPT).

From The Australian:

The Federal Government has more modelling “than Naomi Campbell” on its proposed mining tax, but none of it makes any sense, Nationals Senate leader Barnaby Joyce says.

He has accused the Government of hiding behind questionable statistics in its push to implement a 40 per cent tax on the super profits of mining companies.

They’ve got more modelling than Naomi Campbell, but it’s all wrong,” Senator Joyce said today.

Indeed, the modelling is all wrong.

Professor Steve Keen, winner of the Revere Award for being the international economist who first and most cogently forewarned of the coming GFC, has demonstrated that Treasury’s modelling is based on economic fallacies and “a gaping hole in logic“, in a series of articles for Business Spectator.  They can also be found on Professor Keen’s DebtWatch blog.

Returning to Barnaby:

He took special aim at Treasury over pie charts Treasurer Wayne Swan used to back the Government’s argument miners have been paying half the tax they were paying a decade ago.

Respected business commentator and ABC TV’s Finance presenter, Alan Kohler, today checked the numbers for himself in a column for Business Spectator titled, “The Government’s RSPT Spin Is A Disgrace”:

Another big accounting firm, Deloittes, has gone through ATO data and demonstrated that the effective tax rate for Australian mining companies (company tax plus royalties) is 41.3 per cent, compared with the average across all sectors of 27.18 per cent. I went into the ATO website and did the same calculation: it’s true.

In one of its taxpayer-funded advertisements, the government says: “Before the last boom Australia got 1 in every 3 dollars of mining profits in royalties and resource charges, we now receive just 1 in every 7 dollars.”

This statement is a disgrace, even leaving aside the fact that we are paying for it.

Back to Barnaby:

Senator Joyce wants to see the figures Treasury used to formulate the charts, but Departmental officials have opted to stall at a series of Senate estimates hearings this week.

“The pie charts don’t make any sense,” he said.

“They’ve had four days to explain two pie charts and they can’t do it.”

Indeed, according to mining magnate Andrew ‘Twiggy’ Forrest today, the head of the Treasury department Ken Henry – the architect of the now infamous Henry Tax Review – can’t even explain it himself:

Mr Forrest said Dr Henry had effectively conceded at a lunch with leading economists late last month that he was uncertain how financiers would view the rebate.

“When asked … he (Dr Henry) said, `I’m sure some clever banker is going to find out how to make it work’,” Mr Forrest said.

What he’s saying to the Australian people is that he doesn’t know.

“Ken Henry doesn’t have the answers and what I know with absolute certainty is that he didn’t consult with the banking industry, like he didn’t consult with the mining industry.

As this blog has highlighted many times, Treasury secretary Ken Henry is not fit to hold his position, and should be sacked.  The huge controversy over the RSPT only serves to confirm this view.

Yesterday Andrew Forrest revealed details of his own private conversations with Ken Henry over the RSPT, during which Henry admitted that the “logic” of his RSPT all rests on one critical assumption.  The fact that this assumption is dead wrong, further proves Henry’s ivory-towered, disconnected-from-economic-reality incompetence:

“Ken has described to me how the tax works and it relies on a critical assumption, that the so-called guarantee of 40 per cent of losses in bankruptcy actually has a value to financiers,” Mr Forrest told ABC Radio.

“If it doesn’t, then in Ken Henry’s own words, the logic of the entire tax collapses and this is just a 40 per cent take, which of course will then damage the industry.”

Mr Forrest said he had told Mr Henry that the 40 per cent tax credit guarantee on losses would be worthless to the mining industry as it would not be worth anything to financiers when they decided on loans.

“It theoretically works for economists in textbooks, it doesn’t work in the real world.”

Which is exactly what contrarian economist Steve Keen says is true about almost all mainstream economic thought, in his brilliant book Debunking Economics.

UPDATE:

From The Australian:

One of Australia’s most respected economic forecasters, Chris Richardson, has demolished the intellectual and economic modelling behind the government’s resource super-profits tax, effectively telling Treasury it got it badly wrong..

The assault on the fundamental logic of the tax will seriously embarrass the government and the architect of the tax, Treasury secretary Ken Henry, given their repeated claims that their model will not deter investment and the mining industry is merely running a fear campaign.

Rudd’s Smoke And Mirrors Accounting

26 May

Media Release – Senator Barnaby Joyce, 26 May 2010:

Questioning in Senate Estimates today showed that the Labor Party has been cooking the books to make their spending plans look better.

In the budget the Labor Party brought forward about $1.5 billion, which was earmarked for spending in future years for State and Local Governments, to this financial year.

“Much of this will be paid on June 7. It is not clear what State and Local governments will do with the money for the 23 days that will be left in this financial year. Perhaps the interest will help their bottom line at the expense of the Commonwealth’s”, Senator Barnaby Joyce said.

“The Government could not provide a cogent reason for bringing forward this spending. They could not produce one letter from a local government requesting an early transfer of spending.”

“Labor has produced an accounting trick to increase the base of their funding in 2009-10 and therefore make the amount they can spend higher under the 2% expenditure cap in forward years.”

“The Government’s financial acumen is demonstrated by them losing $11 million on the Sydney West Metro project. In last year’s budget the Government gave NSW $91 million for this project. Not much more than six months later the NSW government scrapped the project, with $11 million of the Commonwealth’s contribution going west on helpful things like ‘consultant fees’.”

“This is another clear example that the Australian people simply cannot trust this Labor Government to deliver economic responsibility.”

More Information- Jenny Swan 0746 251500

This government is constantly ‘cooking the books’.

Please take the time to review the following exposés of other accounting ‘tricks’, in previous Rudd government budgets –

Labor: Hide The Increase

Labor Fakes GDP By 4.5%

Tanner Lies About Budget, GFC

Labor’s $50bn Budget Fraud

Smashed $A – Rudd’s Super Tax Blamed

21 May

Goldman Sachs’ Australian subsidiary, JBWere, has issued a note to clients highlighting the reasons for the ongoing rout in the Australian Dollar, which has nose-dived from USD93c to just USD81c (at time of writing) in just three weeks since April 30.

via ZeroHedge:

Despite our belief that relative growth and relative interest rates suggest some support for the A$ over coming months, it is hard to see a swift resolution to the major sources of risk aversion impacting Australia and its hard to build a compelling case for offshore investors to bid the A$ higher. In that environment it will be difficult for our long-standing 95c target for the A$ around mid-year to be met; however, we still think our 12 month 90c target is still feasible, albeit with the path to 90 now likely to be via near-term weakness. Whether an ongoing decline in the A$ is in prospect will partly hinge on whether the Treasury Secretary’s suggestions that the WACC for the resource sector will be lower are viewed by the market as valid arguments or not. In sum, it is not just risk aversion that is driving the A% lower at present, fundamental factors have also been very important (relative growth, shifting rate expectations, lower commodity prices and capital exit) and the path to lower risk aversion is less dependant on the typical ebb and flow of market sentiment and highly dependant upon the actions of policy makers in Australia and Europe. Our A$ forecasts are now under review.

(emphasis added)

So there you have it, from one of the world’s most powerful investment banks, in their advice to clients. “Fundamental factors” have been “very important” in the rapid sell-off of the Australian Dollar.  And a key factor blamed, is the Rudd government’s “Resource Super-Profits Tax” (RSPT), inspired by Treasury Secretary Ken Henry.

(This is the same Ken Henry who utterly failed to foresee the GFC coming in 2007-08.  The same Ken Henry who, in February this year, publicly announced that the GFC is ‘over’, and predicted that Australia is set for a period of “unprecedented prosperity” lasting to 2050)

The financial markets are now considering the AUD to be a high risk currency. And according to JBWere, the “path to lower risk aversion” is “highly dependant on the actions of policy makers in Australia…”.

Rudd’s proposed “super tax” on the mining industry is not just wiping tens of billions off the value of Australian mining company shares – and the value of your Superannuation account.  It has also pulled the floor out from under the Aussie Dollar.

Insulation program. School halls. Border protection. Computers in schools. Renewable energy. FuelWatch. GroceryWatch. “The greatest moral challenge of our time”.

Does everything this government does turn to $***?

Labor’s $50bn Budget Fraud

13 May

Economist Terry McCrann exposes yet more of the same blatant fiddling the books in this year’s Budget from Labor.  $50 Billion worth of “fiddling”.

From the Herald Sun:

Wayne Swan’s budget is built on two great fiddles. Appropriately, the fiddles relate to the Rudd Government’s two great stupidities – the National Broadband Network and the Emissions Trading Scheme.

The fiddles enable the government to hide up to a massive $50 billion of new spending. So much for the claim they’ve pulled the pursestrings tight.

They also enable the government to ‘keep’ the growth in spending in the 2013-14 year to just 1.9 per cent. Without the fiddles, spending would actually have grown by at least 3.5 per cent in that year – shattering the government’s 2 per cent ceiling.

Now yes, the government’s second great stupidity, the ETS, has been ‘deferred’, while the first marches on…

Ditching the ETS enables the government to take up to $30 billion of proposed spending on it out of the budget and replace it – or most of it – by new spending. With, in an exercise of fiscal magic, no increase in the total spending number!

While separately the $26 billion-going-on-$43 billion to be spent on the NBN is just ‘disappeared’ almost completely from the budget! …

So, put the two together – the ditching of the ETS and the “no formal response” to the NBN – and the government has quite probably hidden as much as $50 billion of very real new spending out to 2013-14.

And blown its 2 per cent growth target right out of the very dirty fiscal water.

Rudd Ruins Businesses

7 May

Media Release – Senator Barnaby Joyce, 7 May 2010:

“I still have a distinct vision of Mr Rudd earnestly going to the front of Parliament House with a brand new note book and pen as props for the media grab at the one-on-one with the ceiling insulation industry representatives and the press gallery. He said something about fixing it all up himself, before zipping off. The news our office is getting is that this mess is far from being fixed,” says Senator Barnaby Joyce.

“Not happy with upsetting the resources sector in Australia and slashing millions of dollars off the share market, the Rudd Labor government has not just upset, but sent to the wall, hundreds of legitimate insulation companies. Yes, there needs to be recourse against shonky companies, who, let’s face it, took advantage of a sloppy government scheme, but where is the compassion for the “working Families” Mr Rudd likes to be seen to champion?”

“We have been contacted by many of these honest people who are beginning to have telephones disconnected, locked out of businesses premises, losing motor vehicles to finance companies and some have had mortgagee possession notices on their family homes, because the government will not pay them what is legitimately owed. Minister Combet’s media release on the 20th of April 2010 stated GST deferral was to be made available to insulation companies, yet the Australian Taxation office has sent debt collectors after these same debts. According to industry sources, you Mr Rudd, Mr Combet and Mr Garrett, have ruined a whole industry. So much for the stimulus package sent to save us.”

“Come on Mr Rudd. Where is the fair play you claim to have for “working families”? Why is this insulation program continuing to be such a debacle? Fix it now!”

More Information- Jenny Swan 0746 251500

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