Tag Archives: surplus

5 Years After The GFC, ALP Admits Economy Has Not “Recovered”, And 3 More Won’t Help

3 Aug

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The Global Financial Crisis peaked in 2008-09.

Since then, the ALP has relentlessly talked up the “strength” of our economy — by comparing to basket-case northern hemisphere countries — and by extension, the brilliance of their economic management.

Many hundreds of times, they promised a “return to surplus”. And fair enough too.

After all, our economy was — so they said — the “strongest advanced economy” in the world.

We had a “huge pipeline of investment”.

“Low unemployment”.

“Low inflation”.

“Low interest rates”.

And record-high Terms of Trade (ToT), from a Chinese stimulus-fuelled mining boom.

A mining boom that — so they said — would give us a period of “unprecedented prosperity”, “stretching to 2050”.

They should know.

After all, their leader is fluent in Mandarin.

And yet, despite all this … no surplus.

Only more, and deeper deficits.

Yesterday, they admitted that their latest budget — released less than 3 months ago — has already developed a $33 billion black hole.

Word is, they are now going to call an election, for September 7.

So we should, perhaps, pause for a moment to reconsider the strength of our supposedly “strong economy”, according to the ALP’s own words, and their own yardstick.

In the August Economic Statement released yesterday, in one little paragraph, the ALP has conceded that 5 years after the GFC, the economy has not “recovered”:

August Economic Statement, page 29 (click to enlarge)

August Economic Statement, page 29 (click to enlarge)

And their newest revised forecasts, showing deficits to 2016/17, tells us that 3 more years of their brilliant economic management won’t help.

The simple truth is this.

By their own measure — a budget surplus — the economy has not “recovered”.

And with their revised “forecasts” now predicting rising unemployment, and no surplus till 2016/17, there is no hope in sight for an economic recovery.

Under their management, at least.

I Was Right – Mining Tax The Greens’ Pit Of Despair

30 Mar

Back in December, a mining industry executive walked your humble blogger through the details of the GilSwan mining tax. He helped us all to see that Julia and Wayne have done it again. The mining tax is a high farce. One that will produce the opposite result of what the Government – and especially the Greens – have proclaimed.

Far from “spreading the wealth” of the mining boom, we saw that the MRRT will help the Big 3 foreign miners to increase their oligopoly, at the expense of local miners. And, it will smash another yawning chasm in the government’s budget. Making us all poorer (see GilSwan Conned – Mining Tax The Greens’ Pit Of Despair).

Now … 3 months later … after the legislation has passed into law … “expert” analysts have come to a very similar conclusion.

From The Australian (emphasis added):

BHP, Rio tax take forecasts ‘too high’

THE Gillard government’s forecast of $10.6 billion in revenue from the mining tax over the next three years is looking increasingly shaky, after expert modelling by three investment banks found the nation’s biggest miners would pay much less than expected from July 1.

Analysts at Goldman Sachs estimate that the world’s biggest mining company, BHP Billiton, would pay just $443 million under the minerals resource rent tax in the next financial year.

Modelling by UBS suggests rival miner Rio Tinto would pay a minimum of $US472m ($454m) on its dominant Hamersley iron ore unit in Western Australia, which would fall to zero after three years.

Meanwhile, analysts at investment bank Credit Suisse said their modelling had shown that Fortescue Metals Group, the nation’s other big iron ore producer, would have a maximum potential MRRT liability of $US200m in 2014 but this would fall away in later years.

The Gillard government has said previously that the three big miners who helped design the MRRT – BHP, Rio and Xstrata – were expected to account for 90 per cent of the revenue.

It is counting on raising $3.7bn from the MRRT next year but analysts doubt whether this is possible given the massive deductions available to the big miners that recognise the tens of billions of dollars they have spent on their operations over decades.

Revenue is also likely to be affected by falling commodity prices, a higher Australian dollar and rising costs since Treasury released its latest MRRT projections in May last year.

Any shortfall in MRRT revenue poses a significant risk to the government’s budget position because Wayne Swan has committed the $10.6bn over three years to superannuation reforms, company tax cuts, small business instant asset writeoffs and regional infrastructure funding.

*shakes head sorrowfully*

[ Insert perjorative of reader’s choice here ]

Say ‘Bye Bye Surplus’, Swanny

14 Mar

What happens when your business is massively reliant on one customer … and that customer stops needing as much of your product?

Ask Wayne Swan:

RBA Chart Pack - March 2012

Steel production not looking good. And total production growth gently sliding.

Why might that be?

RBA Chart Pack - March 2012

House prices topped out and rolling over. Floor space sold falling.

And fixed asset investments ground to a halt:

RBA Chart Pack - March 2012

Why is all this happening?

RBA Chart Pack - March 2012

The same old story, as seen throughout the Western world, now in China too.

When the “credit” (ie, debt) needed to keep blowing up a bubble slows and falls, the end is nigh.

And without all that debt-fuelled building activity to drive “GDP growth”?

RBA Chart Pack - March 2012

Say “bye bye” to that surplus fantasy, Swanny.

Oh yes, no doubt you will loudly trumpet a forecast surplus in the May budget.

But I for one am willing to bet you that, come end June 2013, there is not a snowflake’s chance in hell of your delivering one.

Barnaby’s Reminder Of The Obvious

13 May

From AAP:

Nationals Senate Leader Barnaby Joyce said he would leave it to Mr Abbott to outline the coalition’s response to the budget.

But he did take a swipe at the government’s debt position, which he said was in the range of $141 billion.

“I know this is obvious, but you have to tell the Australian people this, just because you get a surplus, doesn’t mean you’ve paid off your debt,” Senator Joyce told reporters.

Barnaby is right, of course.

You need to achieve budget surpluses – lots of them – in order to pay down your debt.

I wonder how many mainstream reporters actually know that this is obvious?  And I wonder how many reporters will heed Barnaby’s advice, that you have to tell the Australian people this?

Few if any, I’ll wager.  I would happily bet that a poll taken now would show that most Aussies have been thoroughly hoodwinked by the Rudd Labor and media ‘spin’ lies campaign… and think that a (claimed) return to surplus in 2012-13 means that the debt wil be all paid off.

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