Tag Archives: kevin rudd

Labor Less ‘Creative’ Than Greece

19 Mar

From the Korea Times:

The Greek crisis is a textbook example of the interconnectedness of the global economy and the foreign policy environment.

For most of the last decade, the Greek economy grew faster than others in the euro area. Yet, the country’s balance sheets worsened.

(Sound familiar?)

So, when the global recession hit, and the Greek economy contracted by 2 percent in 2009, international bond markets panicked, fearing that Athens was going to have trouble meeting its obligations. By mid-February the Greek government was paying three percentage points more to borrow money than the interest rate charged Germany, worsening the mismatch between Greek revenues and expenditures.

Wall Street bears some of the blame for this mess. Goldman Sachs and possibly other American financial institutions reportedly helped Athens understate its true indebtedness through the creation of innovative financial instruments.

The Rudd Government has used a more traditional way to understate our true indebtedness. ‘Creative accounting’. Or ‘cooking the books’.

First, Rudd Labor has made changes to the ‘methodology’ used for reporting Gross Domestic Product (GDP).  And they have applied those changes to all the previously reported Budget numbers too.  The result?  A “substantial increase” in Australia’s GDP.  As much as (eg) 4.5% per annum added to the real, inflation-adjusted GDP that was originally reported in the Howard Government’s 2006-07 Final Budget Outcome.

The benefit to Rudd Labor in making this “substantial increase” to GDP in the historical data, is that their spending (as a percentage of that GDP) looks lower.  Their annual spending growth (as a percentage of GDP) looks lower. Their debt (as a percentage of GDP) looks lower. And, their Interest-on-debt (as a percentage of GDP) looks lower too. This explains why Rudd Labor politicians always love to quote everything in percentages. “As a percentage of GDP”.

Second, Rudd Labor has also changed the ‘methodology’ used to calculate the inflation-adjusted value of ‘real’ spending growth.  This was a sudden decision, for the November 2009 MYEFO budget update. The result? The Rudd Government’s reported ‘real spending growth’ is a whopping 30.1% lower under their new calculation method.

Finally, Rudd Labor lies about the GFC whenever it needs to defend its massive spending spree. They have repeatedly told the public that “the GFC punched a huge hole in our projected revenues”.  But the official Budget documents show that this is a lie.  In the May 2009 Budget, the estimated government “Receipts” were only 2.7% lower than for the previous year.  And by the November MYEFO update, government revenues were expected to be slightly higher than for the previous year.

Please follow those links. View for yourself the actual Budget documents that show how Rudd Labor have ‘cooked the books’.

You will see that, unlike Greece, our Labor Government does not need to hide our true state of indebtness through the use of creative financial instruments.

They use good old-fashioned ‘creative accounting’ instead.

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Labor Fakes GDP By 4.5%

17 Mar

*This post follows on from my recent article, “Labor: Hide The Increase”.  There, I showed that the Rudd Government has fiddled the books to hide their massive increase in borrowing and spending. Please read the article for background to this new article.

In the fine print on the Rudd Government’s Budget 2009-10 MYEFO website, we learned that Rudd Labor made a change in the accounting method that was previously used to calculate Gross Domestic Product (GDP).  This change resulted in a “substantial increase” to the official GDP figures:

* The 2008-09 Annual National Accounts show a substantial increase in the level of GDP over history due to the ABS adopting the new System of National Accounts 2008. Given the degree of increase in the level of nominal GDP, the Government has released updated tables of fiscal aggregates contained within Appendix D of the 2009-10 MYEFO.

So just how much is that “substantial increase”?

4.5%. Or $47bn. In just one year.

Here’s a chart I’ve put together from the official Australian Government Budget data. It shows my reverse calculation* of the value (in $millions) of Rudd Labor’s “revisions” to historic GDP.

That is, it shows just how much the Rudd government has simply tacked on to the previously-reported official GDP figures (click to enlarge):

Rudd Labor "revisions" to past GDP figures

This chart only goes up to 2006-07.  The last year of a Coalition government Budget report.

That is because the Rudd government has gone back and “revised” the figures in the Rudd Labor 2007-08 and 2008-09 Final Budget Outcome documents too.  So I could not find the original reported figures for those years in order to calculate the GDP, and compare to their newly “revised” figures.

Even so, you can easily see that Rudd Labor’s “revisions” to past GDP are indeed, a “substantial increase”.  For the 2006-07 year – the last year that I am able to compare original vs “revised” figures – it appears that they have adjusted GDP upwards by $47 billion (4.49%) over the original figures reported by the Howard Government.

Of course, we can easily perceive just why Rudd Labor would wish to do this….

Continue reading ‘Labor Fakes GDP By 4.5%’

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ECB: Stark Warning of Eurozone Debt Crisis

17 Mar

From BusinessWeek:

European Central Bank Executive Board member Juergen Stark said the euro region may face a sovereign debt crisis unless governments reduce budget deficits.

There is “a clear risk that we will enter a third wave,” which is “a sovereign debt crisis in most advanced economies,” Stark told lawmakers in the European Parliament in Brussels today.

In Australia, our government is continuing to increase our budget deficit, by refusing to withdraw its woefully incompetent and wasteful “stimulus” spending.

Even though we had no recession, and RBA Governor Glenn Stevens recently referred to 2008-09 as “the mildest downturn” we have had since WW2.

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China Warns of Double-Dip Recession

15 Mar

From The Australian today:

China’s Premier, Wen Jiabao, has warned that the world risks sliding back into recession and says his country faces a difficult year trying to maintain economic growth and spur development.

“The unemployment rate of the world’s main economy is still high, some countries’ debt crises are still deepening, and the world’s commodity prices and exchange rates are not stable, which are most likely to become the cause of any setback in the economic recovery,” Mr Wen said yesterday in Beijing’s Great Hall of the People.

China’s and Australia’s economies have become more intertwined in recent years: the country is now our largest trading partner with two-way trade surging to $83 billion in the year ending last June 30, and in December it passed Japan as our largest export market.

Any trouble in China’s economy would quickly resonate in Australia.

Perhaps Treasury Secretary Ken Henry might care to revise his recent declaration that the GFC is ‘over’?

Perhaps Henry, along with RBA Governor Glenn Stevens, and all their many mindless cheerleaders in the media, might pause to reconsider their claims that ‘the risk of serious contraction‘ has passed, and that Australia is now set to enjoy a multi-decade China-fueled mining boom?  One that will fix the massive Rudd hole in the Budget, and provide a “period of unprecedented prosperity” for Australia?

Please… inform yourself.  Understand what is really going on in the financial world. Unlike the lazy, short-sighted economic illiterates who are running this country.

Please browse through the posts on this blog, and follow the links that catch your eye.

You will find references and links to literally dozens of articles from around the world.  You will see that international economists, investors, financiers, world leaders, and many others, have been increasingly warning of the many threats to the global economy. And thus, to Australia’s economy too.

Our Australian economic “authorities” are living in La la land.

Only Barnaby is on the ball.

Rudd Labor, Ken Henry, RBA and friends

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Labor’s Debt Legacy

12 Mar

Media Release – Senator Barnaby Joyce, 12 March 2010

Senator Barnaby Joyce says that reports in The Australian today confirm what the Coalition has been saying for months on debt and interest rates. Simply put, the Rudd Government’s excessive and profligate spending is putting upward pressure on interest rates.

It is clear that the RBA have resorted to the fastest increases in interest rates among advanced economies in response to the effects of this spending. So while other countries enjoy modest rises, hard working Australians will be paying the price for Labor’s bad management.

There is still a major portion of the $42 billion Nation Building and Jobs Plan to spend and while the Government has almost $128 billion of debt on issue (almost $16,000 per household), this is less than half its projected peak of $270 billion in 2014-15.

Gross debt has risen from $126.183 billion two weeks ago to $127.982 billion today. In two weeks the debt has risen by $1.8 billion. Easy to throw these figures about, but remember, just this increase is enough to seal 9000 kilometres of 6 metre wide road in country Queensland. This would take us from Sydney to Perth and back again and still have money left over.

It is highly unlikely there will be many left of the current Labor members by the time this debt is repaid. In fact quite a few will have passed away, but the debt will still be with us.

More Information- Jenny Swan 0746 251500

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The Net Debt Picture

12 Mar

Here’s a picture that speaks volumes.

From the government’s 2009-10 Mid-Year Fiscal and Economic Outlook, Appendix D, Table D4, I’ve made the following chart tracking official ‘net debt’ since 1982 (click on chart to enlarge) –

Australian Government - Net Debt

I’ve marked the first full budget year for each successive government, from Labor’s Bob Hawke through to Labor’s Kevin Rudd.

See that steep fall in government net debt on the chart?  The one that took the nation from $96.2bn in net debt, down down down to negative $44.82bn in net debt?

Yes. That was a Coalition government.

See the rocket-like launch back UP to unprecedented levels of net debt?  Yes, that’s the Rudd Government’s panicked, totally unnecessary spending binge for you. The one they’ve been lying about.

With much more debt still to come.

After all, they borrowed another $1.6bn just this week. See the AOFM website, and click on the links under ‘Recent Tender Results”.

And next week, they’re planning to borrow another $2.1bn.

The massive, multi-billion dollar cockups in every single “stimulus” spending program, will only add to their… OUR… huge and unpayable debts.

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Rudd’s Interest Bill – $48.49bn to 2013

6 Mar

How much will Rudd’s spending spree cost Australian taxpayers… just in Interest-only?

$48.488 Billion to 2013. With more to come.

That’s enough to buy a No-business-plan-No-cost/benefit-analysis National Broadband Network.  With $5.5 Billion left over in loose change for, let’s say, a disastrous home insulation scheme plus the costs of fixing it afterwards.

Need proof?

I made the chart below using the data from the Government’s Mid-Year Economic and Fiscal Outlook (MYEFO) 2009-10 Budget statements. It shows the government’s projections of Interest on debt for this financial year, and the following three years. These are the Total Interest* (not principal) repayments that Kevin Rudd has incurred, and we-the-taxpayers must pay back –

Interest on debt - Total $48.488 Billion

Interest Expense - MYEFO 2009-10, Appendix B, Note 10

Note:  This is only the “Estimates” (2009-10, 2010-11) and “Projections” (2011-12, 2012-13) for Interest-on-debt, as at November 2009 when the MYEFO was published. With the Rudd Government still borrowing well over $1 billion a week, who knows just how big the Interest-only bill is now.

One thing we do know.  We cannot pay it back.

* Total Interest includes $5.49 Billion in ‘Other financing costs’ – What exactly is that, and who gets it?

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Trust Rudd on Health?

3 Mar

Media Release – Senator Barnaby Joyce, 3 March 2010:

Barnaby Joyce, whilst campaigning with Andrew Lamming, Member for Bowman, said that he was astounded to hear a headline speech on the reconfiguration of health policy by the Prime Minister. It is obviously one of the major issues that Mr Rudd wishes to take to an election. On Sunday he was apologising that he didn’t understand health and that it was more complicated than he expected.

On Sunday he wanted “whacking”.  On the same issue, today, Wednesday he wants backing and has left all of us scratching as to which Kevin Rudd to believe today.  No doubt it is this ad- hoc and erratic approach to policy that led to the mad hatter insulation policy and one would have to presume that the same management criterion that was taken to the ceiling insulation program will be taken to health.

One has to ask the question how he managed to get a huge turnaround in his grasp of the subject matter in three days.

More Information- Jenny Swan 0746 251500

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Labor: Hide The Increase

3 Mar

Australia’s much-heralded “low” debt-to-GDP ratio statistic appears to be a fraud. Deliberately “adjusted” by the Rudd Government, in order to make their massive debt-funded spending binge appear less than it is.

In the 2009-10 Mid-Year Economic and Fiscal Outlook (MYEFO), the government refers to a change in the methodology used to calculate GDP  for the previous 2008-09 year, and for the historical data series.  This change results in a “substantial increase” in the published level of GDP.

The flow-on result from this change is obvious. The government’s spending, as a percentage of that artificially increased GDP figure, will appear lower than if the change had not been made.

And because all of its spending is being done using borrowed money, the debt-to-GDP figure will also appear lower too. Perfect cover for a government that needs to defend itself from Opposition attacks, and smooth over public fears, about rising government debt.

But there’s more.

In the 2009-10 MYEFO, the Rudd Government changed the methodology used to “adjust” government spending for inflation. The result is that the government’s “real” spending growth % figure is artificially reduced… by a whopping 30.1% for 2009-10.

How can we know this?

In the fine print – isn’t it always? – on the Rudd Government’s Budget 2009-10 MYEFO website, we read:

…

Continue reading ‘Labor: Hide The Increase’

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Joyce: Rudd On Risk

1 Mar

Media Release – Senator Barnaby Joyce, 1 March 2010

On the weekend I was flattered by Mr Rudd making a statement about myself and risk.  I heard the statement whilst driving from a major protest in Armidale about the decision to bring in beef from countries with mad cow disease, which I think is very risky and so do most Australian consumers.

Whilst driving there was blanket coverage on the radio about Mr Rudd’s insulation program, a program responsible for the deaths of four young men, a program which has burnt down approximately one hundred houses and created deaths traps in about another 1000. According to James Tinsley from the National Electrical and Communications Association  it could cost tax payers almost half a billion dollars to fix.

Yesterday I heard Mr Rudd asked about fixing the health system and he said, “We didn’t anticipate how hard it was going to be to deliver things.” Now he wants us to give him more time to do a proper job on it. Let us not forget that Mr Rudd continues to pursue the Emissions Trading Scheme. This is where he reconfigures the whole of the nation’s economy based on a colourless, odourless gas while taxing every Australian household at the power points in their rooms. This is on the belief that Minister Wong can single handedly change the temperature of the globe from her room in Canberra.

Surely Mr Rudd can see the paradox of his statements on risk and national management. I’ll have to inform Mr Rudd, that as I drive around the country I am told constantly about the parody that his government is becoming. I think the best summation of the Labor Government was given by two people, a worker in a mine talking about discussions with his union colleagues and a service station operator. The first one said we just do not understand anything Mr Rudd says and we are very concerned about our jobs and his position on the ETS. The service station operator said people just start laughing when they see Mr Rudd now.

That, Mr Rudd is the fair dinkum reality. It is like the mechanic who, asked to service your car has done nothing to it except mount up a huge bill. After a couple of years bits and pieces of the vehicle are strewn around the shed and now Mr Rudd rushes out the front to talk to you with his little note book and says, I know I’ve stuffed up but I just want you to give me a couple more years to do a proper job on this.

More Information- Jenny Swan 0746 251500

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