Tag Archives: wayne swan

Bracing For Another $50 Billion Deficit

12 Mar

No surprises here:

Company tax slump threatens surplus plan

If company tax receipts perform as poorly in the June half year as they did in the December half, the government will face a deficit this year approaching $50 billion.

It would be beyond the reach of the creative accounting evident in last November’s budget update to turn this into a 2012-13 surplus.

Treasury secretary Martin Parkinson yesterday underlined the serious weakening in the structural budget positions of both commonwealth and state governments.

Tax has fallen as a share of GDP by four percentage points since the global financial crisis, equivalent to a shortfall of about $60bn a year.

It “is not expected to recover to its pre-crisis level for many years to come”, he said.

Nearly two weeks ago, Barnaby Is Right readers saw that the government’s management of the budget for this financial year was tracking almost identically to 2010-11, when Labor delivered a record $51.5 billion deficit:

According to the RBA, Labor has racked up a $30.26 billion loss for the first half of 2011-12:

That’s just $3 billion less than the record deficit they racked up for the first half of 2010-11:

Now, it is worth recalling that in the November MYEFO budget update, Wayne had to revise his original May budget “estimate” for a $22.6 billion deficit this year. He told us it would blow out to $37.1 billion.

Don’t you just love economic forecasting?

$22.6 billion deficit, forecast in May.

$37.1 billion, forecast in November.

$5? billion deficit actually achieved, at the end of June.

But never mind all that.

We are all going to believe the headlines, and the TV sound bites, and the rants in Question Time, when Wayne and Co. loudly proclaim that much-promised “return to surplus” in the May budget.

Even though it will be nothing more than a forecast.

With even less credibility than all four of their previous #epicFAIL budget forecasts.

There are only two chances of Labor achieving anything like a surplus in 2012-13.

Buckley’s. And none.

Wake me up on June 30, 2013, dear reader.

Then we shall see just how large a budget deficit for 2012-13 Labor actually delivers.

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Better Late Than Never: Hartcher’s Conscience Jarred

11 Mar

At last, a journalist from the lamestream media spots the galactic hypocrisy in Wayne Swan’s rants against 3 local miners.

Without actually calling it that, of course (emphasis added):

Swan’s pronouncements strike a jarring note, for three reasons. First, the contemporary playbook for “vested interest” campaigning was written not by the miners but by the unions.

It was the ACTU’s campaign against Howard’s Work Choices that established the power of an aggressive third-party thrust into politics. The union movement’s $30 million Your Rights at Work campaign discredited Work Choices, forced the Howard government into retreat and, finally, helped destroy the Coalition government. In the final humiliation, it even contributed to Howard’s loss of his seat of Bennelong. Swan was a beneficiary of this campaign.

Second, the miners that Swan demonised are not the miners that successfully emasculated his original mining tax. It was BHP Billiton, Rio and Xstrata that aggressively campaigned against the tax and funded its $22 million worth of lobbying and advertising, and it was Twiggy Forrest who went into private negotiations with Kevin Rudd to try to reach a compromise on the tax.

It was the three multinationals that helped discredit the Rudd government, accelerated Rudd’s downfall and forced the Gillard government to come to terms. Yet Swan does not mention these three multinationals in his critique of vested interests. Swan does not criticise the “vested interests” to whom he capitulated but the ones who were shut out of the negotiations. He is, in effect, punishing them for continuing to complain about a special deal to which he would not admit them.

The rest of Fairfax political editor Peter Hartcher’s article is well worth reading too. Even if it does continue to refrain from calling a spade a spade.

A little tip, Peter. That “jarring note” you feel, is called your Conscience.

The polar opposition between Wayne’s words, and his actions, pricks the inner sense of right and wrong once known as “morality” that we all possess, but few (especially politicians, and journalists) ever seem to recognise. Much less heed. And even less … act upon.

For the full story on Wayne Swan’s hypocrisy … and treason … not just on the mining tax, but on the carbon dioxide derivatives scam too, see this blog’s writeup of almost a week earlier – The Galactic Hypocrisy Of Wayne Swan.

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Hide The Recession: Labor’s Grand Deceit On GDP Figures Exposed

7 Mar

Picture this.

You are a new government, following nearly 12 long years in opposition.

You campaigned with the catchcry, “This reckless spending must stop”.

A global financial crisis has struck within 12 months of your taking office.

Your party’s last term in office presided over a “recession we had to have”, so your economic credentials are poor.

You desperately wish to avoid being seen to preside over a “technical recession”, especially in your first term.

You have embarked on a massive “stimulus” spending spree, drawing criticism from many.

You have blown the $20-odd billion surplus left to you by the previous government, and plunged the nation’s finances deep into the red.

Your government’s financial numbers are terrible.

You are obsessed with “managing” the media cycle, public perceptions, and the popularity polls.

What do you do?

In his post-career book Sideshow: Dumbing Down Democracy, key member of the “kitchen cabinet” or “Gang of Four”, former Finance Minister Lindsay Tanner, informed us that what he did was to become adept in the “dark arts”.  He employed the “standard tricks” – such as “switching between different methods of accounting“ – in order to “maximise political appearances”.

But how do you cook the books to disguise your massive spendathon – and bury the truth of a technical recession – without the media catching you out?

And how do you cover your tracks, so that noone can ever say you lied?

Easy.

What you do is tell everyone about your change in accounting methods.

But you do it in such a way that no one hears you.

What you do is bury the notice of your change in accounting methods in the fine print of the Mid-Year Economic and Fiscal Outlook (MYEFO) budget update, released 2 November 2009. You do not mention any numbers that might reveal the actual impact of the change. And you include a reference to an obscure Appendix of “revised” historical data*, that you know journalists don’t ever bother to read, much less take the time to cross-reference against previously published budget figures.

In your Treasurer’s press release announcing the MYEFO, you do not mention the changed accounting method at all. Nor do you mention it in Parliament, or in interviews with the media.

Instead, you issue another Treasurer’s press release that, while still opaque and misleading, does admit (in one sentence) to just how much your changed accounting method has impacted on the critical budget number – the GDP figure.

But … you delay issuing that press release until 8 December 2009. Over a month after the MYEFO. Two weeks after Parliament has closed for the year. And, the same day (UTC) as the opening of the 2009 UN Climate Change Conference in Copenhagen, where the eyes of the world are focussed, where your party’s Prime Minister is playing a headline role … and where you have brought a massive Australian media delegation.

Voila!

You did not lie.

No one heard you publicly admit that you cooked the books to hide a recession. And you spend the rest of your days in office loudly and incessantly referring to your brilliant economic management … using figures always expressed in terms of “per cent of GDP”.

A GDP number that you made a “substantial increase” to, just by changing the method of accounting.

Hard to believe that our government is that crooked?

It is true.

They have admitted it.

You just have to follow the carefully hidden trail of evidence, to discover that admission. And the deceit used to hide it.

Two years ago on 3 March 2010, your humble blogger revealed that Labor’s much-heralded low debt-to-GDP ratio figure was a fraud (emphasis in original):

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.

Two weeks later, I calculated the actual amount by which Labor had artificially increased the reported level of GDP (see Labor Fakes GDP By 4.5%):

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.

…

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

By making “revisions” to the historical data – revisions that all very conveniently result in a “substantial increase” in reported GDP – their spending (as a percentage of 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.

Fast forward another two years, to this week.

In response to my mentioning the fudged GDP figure, fellow Macro Business reader Steven Shaw kindly drew my attention to Treasurer Wayne Swan’s press release No. 122.

While it is gratifying to see confirmation that my March 2010 reverse calculation of the “substantial increase” to the GDP figures was accurate, it is far more interesting to observe the date of the press release – 8 December 2009.

A press release date (in Australia) that happily coincided with the opening day of the Copenhagen Climate Change Conference:

The Annual National Accounts also show a substantial increase in the level of GDP over history due to the ABS adopting the new System of National Accounts 2008 standards.

The ABS has taken the decision to adopt these new standards to better capture new economic developments and to reflect revised international standards issued by the UN Statistical Commission.

The level of nominal GDP is now 4.4 per cent higher in 2007‑08 than published in the 2007-08 Annual National Accounts, bringing the size of the Australian economy to $1.25 trillion in 2008-09.

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. These tables include receipts, revenue, net debt, payments and expenses as a proportion of nominal GDP and are available at: www.budget.gov.au. The adoption of the new standards only affects those Budget aggregates which are expressed as proportion of GDP.

Quelle surprise!

Have you ever noticed, dear reader, that this government always … always … boasts of its economic record by quoting figures expressed as a proportion of GDP?

How very, very convenient that “substantial increase” in nominal GDP has turned out to be.

No need to worry about two consecutive quarters of negative GDP (a “technical recession”) making your new government look like it has blown tens of billions of borrowed dollars on “rushed and bungled” “stimulus” for nothing.

Simply change accounting methods. Tack on an extra 4.4% of GDP “growth” out of thin air to the year’s “official” figures. And revise all the historical data as well.

And make sure you tell everyone … in such a way that no one hears you.

Mind you, dear reader, the reason for the change in accounting method was solely to “improve the accuracy and comparability of the data through time” (MYEFO excuse). And/or “to better capture new economic developments and to reflect revised international standards” (Treasurer’s belated-and-buried press release excuse).

Of course it was.

Nothing to see here. Move along now.

If a corporate executive engaged in these kinds of “dark arts”, these “standard tricks”, they would be prosecuted and jailed for fraud.

Our government is a pack of crooks.

If you accept any claimed government statistic at face value, you are a fool.

It is that simple.

* On Labor’s revising of historical budget data, reader “vk” summed it up best two years ago: “Any similarity with the book 1984 – where the Ministry of Truth kept revising old encyclopedias and newspapers in the libraries – is purely coincidental.”

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The Galactic Hypocrisy Of Wayne Swan

6 Mar

The red mist has descended.

Your humble blogger is angry.

Very angry.

Wayne Swan has publicly attacked three local, homegrown Aussie miners.

Ms Gina Rinehart. Mr Clive Palmer. And Mr Andrew Forrest.

Wayne claims that he is fighting for a “fair go”, for “equality”, against “rich” “vested interests” that are “threatening our democracy”.

Oh really?

Wayne Swan did a secret, exclusive deal on the design of the mining tax with the Big Three foreign-owned multinational mining companies, BHP Billiton, Rio Tinto, and Xstrata, just before the 2010 election.

Wayne’s secret deal is widely claimed to favour the Big Three foreigners, at the expense of the much smaller local Aussie mining companies.

Wayne’s secret deal is alleged to have come about after the Big Three foreign-owned mining companies “gave the nod” for Julia Gillard to knife democratically-elected PM Kevin Rudd, and promised to pull their anti-mining tax ad campaign.

Tell us again, who is a “threat to democracy”?

Wayne Swan accuses three local Aussie miners – two of whom are self-made, from humble beginnings – of being “champions of privilege”.

Oh really?

Wayne is a career political hack, with an Arts degree, and zero business experience.

Wayne receives $346,000 per annum, $6,653 per week, paid for by the taxpayer.

Wayne voted himself an $84,000 pay rise late last year.

Wayne blew $75,440 of taxpayers’ money on empty RAAF VIP “ghost flights” to collect and ferry him around, in just 6 months last year.

Tell us again, who is a “champion of privilege”?

Wayne Swan is a vile, disgusting, public trough-swilling, grossly overpaid, thoroughly under qualified, pathologically dishonest, monumentally repugnant, morally destitute, vomitous, self-serving, bottom-dwelling, anti-Australian, treasonous, galactic hypocrite.

* I have chosen to keep this piece focussed on Swan and his attack on locals in the mining industry. I could write an entire new piece on other “vested interests” that Wayne oh so conveniently neglects to mention, much less publicly attack. For example, the unions who finance (and rule) the ALP, and the clubs industry whose “power” and political activism prompted the Labor government to brazenly renege on a written contract with Andrew Wilkie for poker machine reform. And that’s just for starters.

** The media in this country are deserving of very similar epithets to those attributed to Wayne Swan above. I am not aware that a single journalist has challenged Wayne Swan on any of the above facts.

*** Note well: this blogger is no fawning acolyte of miners, big business, or “free markets”. On the contrary, if it were within my power I would nationalise all mineral, petroleum, and natural gas resources – see “Why I Hang Farther To The Left Than Bob Brown”.

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Swan’s Anti-Australian Rant A Smokescreen For Treason

2 Mar

Treasurer Wayne Swan has written an essay in The Monthly. Doubtless you will hear about it elsewhere.

What you are highly unlikely to hear, is Wayne’s essay being called out for what it really is.

An anti-Australian rant. And a smokescreen for treason.

How so?

Consider Wayne’s definitive paragraph:

But Australia’s fair go is today under threat from a new source. To be blunt, the rising power of vested interests is undermining our equality and threatening our democracy. We see this most obviously in the ferocious and highly misleading campaigns waged in recent years against resource taxation reforms and the pricing of carbon pollution. The infamous billionaires’ protest against the mining tax would have been laughed out of town in the Australia I grew up in, and yet it received a wide and favourable reception two years ago. A handful of vested interests that have pocketed a disproportionate share of the nation’s economic success now feel they have a right to shape Australia’s future to satisfy their own self-interest.

Note well.

Wayne uses his essay to single out and publicly attack three (3) Australian citizens.

All wealthy miners.

All … how shall I put this delicately … of ordinary physical appearance.

Or less delicately … fat and ugly.

Here is the photo used for the piece:

Billionaire activists: Clive Palmer, Andrew Forrest and Gina Rinehart. © Philip Norrish/Newspix; Greg Wood/AAP; Tony McDonough/AAP

Wayne has singled out this Terrible Three as somehow exemplifying the dangers of “vested interests”, a threat to “democracy” and “equality”.

Conveniently, Wayne neglects to mention a few relevant facts.

A lot of relevant facts, actually.

He neglects to mention that he and Gillard locked these 3 Aussies-made-good out of the behind-closed-doors negotiation of his “mining tax”, and that instead, he negotiated the design of the MRRT exclusively and confidentially with BHP Billiton, Rio Tinto, and Xstrata – the Big Three multinational mining companies.

He neglects to mention that the final design of the MRRT favours the foreign-owned multinationals – quelle surprise! – and that it will in reality act as a tax minimisation mechanism that will not “spread the wealth of the mining boom”, but will instead help the multinationals to increase their oligopoly, at the expense of much smaller Aussie locals like Palmer, Forrest, and Rinehart.

(Do you think that just might have something to do with their choosing to become “activists” against this government’s policy agenda?)

And the carbon tax “vested interests”?

Again, Wayne very conveniently neglects to mention a few highly relevant facts.

He neglects to mention that the Green-Labor government’s anointed chief “designer” of the Clean Energy Future legislation, Ross Garnaut, is a career Big Banker and a member of the Trilateral Commission.

He neglects to mention that the choirmaster for the “eminent economists” who publicly sang in favour of the legislation, Saul Eslake, was at the time the director of the BHP Billiton-founded and funded Grattan Institute; the former chief economist for ANZ Bank; and is now employed by Bank of America Merrill Lynch – a major player in the international CO2 derivatives trade.

He neglects to mention that Mr Eslake conceded (right here on this blog) that 7 of the 13 “eminent economists” who co-signed the Open Letter in support of the government’s plan to “price carbon” were current employees of banks; that 3 more were former employees of banks; and that only 3 of the 13 had no past or present associations with banks “as far as I know”.

He neglects to mention that Mr Eslake conceded (right here on this blog) that “..it is true that banks might make money from an emissions trading scheme..”.

He neglects to mention that just 3 days after the announcement of the draft legislation, leading banks were already announcing plans to cash in via a new carbon derivatives market, one specifically allowed by two tiny clauses buried in the 1,000 pages of legislation; a new market whose value (to banks) would, in their words, “dwarf” the value of the underlying market for basic carbon permits.

He neglects to mention other “vested interests” in our society too – like the unions who finance and rule his own party, and the banks who our major political parties rely on for loans to finance their election campaigns. Conflict-of-(vested)-interest, much?

Wayne has cynically picked out three easy targets to attack, in his class warfare-inciting rant.

Three fat, unattractive, wealthy, Australian Tall Poppies*.

Wayne has conveniently neglected to mention his own appalling hypocrisy.

And his treason.

Because when it comes to Green-Labor’s two big “economic reforms”, loudly touted as being in the “interests of all Australians”, the truth is that Wayne is personally culpable for selling out the financial best interests of the Australian people to multinational miners, and Big Finance.

Foreign-owned “vested interests”, whose wealth and power make our homegrown Ms Rinehart, Mr Palmer, and Mr Forrest appear mere paupers by comparison.

Treasurer Wayne Swan is a cynical, dishonest, anti-Australian, treasonous hypocrite of the lowest order. A disgrace to morally sentient beings.

He revolts me.

UPDATE:

It is alleged that the Big Three multinationals approved the plot to remove elected PM Kevin Rudd (and with him, the original RSPT):

JULIA Gillard was “given the nod” by the big three mining companies — Xstrata, Rio Tinto and BHP Billiton—to challenge Kevin Rudd’s prime ministership, knowing the advertising campaign against the mining tax “would be pulled”.

… The revelations come from an article written by Mr Rudd’s friend and actor Rhys Muldoon, published in the latest issue of The Monthly magazine.

Immediately after the coup, Wayne and new PM Julia went behind closed doors with the Big 3 – and only the Big 3 – and quickly locked in a new deal before the election. One that the Big 3 foreigners are “happy with”.

And yet, Wayne Swan has the unmitigated gall to author a rant singling out and publicly vilifying 3 of our homegrown Aussie miners as the “dangerous” “vested interests” threatening our democracy?!

To paraphrase Thomas Beckett:

Will no one rid me of this turdulent Treasurer?

* My sincere apologies for the use of wholly unfair and brutal artistic licence to Ms Rinehart, Mr Palmer, and Mr Forrest, whom I’ve never met and have no reason to doubt are hard working, decent Australians.

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Wayne’s Half-Year Earnings Report: $30 Billion Loss

1 Mar

Remember the Labor Government’s record $51.5 billion deficit in 2010-11?

They are on track to do it again this year too.

According to the RBA, Labor has racked up a $30.26 billion loss for the first half of 2011-12:

Source: RBA Statistics - E1 Australian Government Budget - Monthly | Click to enlarge

That’s just $3 billion less than the record deficit they racked up for the first half of 2010-11:

Budget Surplus/Deficit Compared - First half 2010-11 vs 2011-12 | Click to enlarge

Now, it is worth recalling that in the November MYEFO budget update, Wayne had to revise his original May budget “estimate” for a $22.6 billion deficit this year. He told us it would blow out to $37.1 billion.

Just four weeks after that new claim from the World’s Greatest Treasurer, RBA records show that he had already managed to achieve a $30 billion headline loss for the first half of this financial year.

But he is going to deliver a $1.5 billion surplus next financial year.

Honest he is.

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Swanomics – Big Words For A Small Mind

29 Feb

Today in Question Time, our esteemed World’s Greatest Treasurer loudly let us know that he’s learnt a new phrase from his Treasury puppeteers.

“Horizontal Fiscal Equalisation”.

Now that he’s finally mastered the ability to repeat one 4 syllable and one 5 syllable word in the same sentence, Wayne wants you to know that he is a “strong supporter” of it.

Quelle surprise.

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I Wonder How Much These “Experts” Pull?

16 Feb

Back in December, your humble blogger published a comprehensive critique of the Green-Labor-Independents’ disaster-in-waiting dubbed the “Minerals Resource Rent Tax”.

Or “mining tax” for short.

Today, Professors’ Carey and Fargher of Deakin Uni and the ANU respectively, have combined their scintillating intellects to do the same.

This will all sound very familiar to regular readers.

From the Age (emphasis added):

Illustration: John Spooner | Source: The Age

Flaws in the mineral tax mean Australia may profit little from its resource wealth.

Could Australia end up with little to show for its mining boom – as an echo of what happened to Nauru once its considerable phosphate wealth was exhausted?

Close examination of the proposed minerals resource rent tax reveals serious flaws that could leave the federal government well short of the forecast revenue. It is conceivable that some large and highly profitable mining companies could reorganise their affairs to pay little or none of the tax.

The first and most obvious shortcoming of the MRRT, in terms of its revenue potential, is that it applies only to coal and iron ore. All other minerals are exempt. But it is the design of the tax as it applies to coal and iron ore miners that could leave the government facing an unanticipated multibillion-dollar shortfall.

The main problem is that the tax is based not on an objective measure such as tonnes of material mined, but on ”super profit” (mining profit less allowances). Profit at the best of times is a highly flexible concept that can allow accountants to apply creative techniques to minimise a company’s tax obligations. With the MRRT, the incentives and opportunities for creative avoidance appear even greater than those applying to company tax.

…

The minerals tax is not based on audited company profits from statutory accounts, but on a narrow portion of profits from particular mining activities. It requires the taxpayers (that is, the mining companies) to determine the amount of proceeds and costs that relate to these activities.

Ruh roh!

Does that sound familiar?

According to Carey and Fargher, the companies who are supposed to be “taxed” are the ones who will do the measuring (accounting) that determines how much tax they will pay!

That’s exactly like the Clean Energy Future “carbon tax” (see “An OSCAR For The Clean Energy Future”), where the entire scheme relies on “encouraging” the “biggest polluters” to “self-assess” their emissions … and the “audit” procedure by the government is quietly but openly admitted to be nothing more than an exercise in managing the public’s “perceptions” of compliance by the “polluters”.

This reliance on the miners themselves to determine the appropriate proceeds and costs creates a significant incentive to estimate profit from taxable activities in the most tax-efficient manner. For example, the MRRT requires the miners to split revenue between the taxable value earned to the point of producing a stock of coal or iron ore and revenue earned after that point. Transfers within the company also need to be valued. Losses can be offset between operations.

This point yielded a key insight in my detailed critique of the mining tax (see “GilSwan Conned – Mining Tax The Greens’ Pit Of Despair”).

The design of the MRRT actually creates an incentive for the Big 3 multi-nationals to buy out their smaller competitors – including loss-making junior miners and explorers. Why?

Because they can claim numerous deductions against their MRRT liabilities from existing mines, by gobbling up smaller, locally-owned competitors.

In other words, far from “spreading the wealth” of the mining boom, the design of the mining tax will actually help the Big 3 to increase their monopoly, thus sending even more profits offshore.

At numerous points, opportunities exist to reduce revenue estimates and increase costs so as to minimise the taxable profit reported. Volatility in commodity prices could also allow strategic timing of the recognition of revenue and expenses. All these factors, combined with any decline in the underlying commodity price from the record levels seen when the tax was first envisaged, could greatly reduce the expected proceeds to government coffers.

So, too, could the generous and sometimes unconventional allowances built into the tax. There are more than 50 pages of allowances that can be used to reduce a firm’s tax liability. While most allowances have their foundation in generally accepted accounting principles (e.g. royalties paid to state governments or pre-mining exploration expenditure), other are less conventional.

For example, under division 75, miners can choose between the ”book value” or ”market value” of an asset, which will be allocated against revenue over the productive life of a mine in order to calculate MRRT liability. Depreciating assets based on market valuation is not generally accepted accounting practice, yet it is allowed in the legislation. In simple terms, a mining asset that cost $100 million to bring to production might today be worth $350 million if sold on the open market. A miner could use this higher valuation to calculate depreciation, which would reduce the profit subject to the tax.

Business transactions can be complex, and legislation must therefore contain a range of provisions that require subjective interpretation. The mining tax legislation adds a further layer of complexity, which at times defies conventional accounting and can be used to aggressively minimise the amount of tax payable.

…

Even at this late stage in the process, key improvements might be made if there were full transparency in the revised revenue estimates, the underlying assumptions and, in particular, the ability of the tax office to monitor and collect the minerals tax. It is not surprising that critics have begun to question Treasury’s revenue estimates, which are based on private information supplied by the mining companies that is not on the public record.

Mining companies are entitled to make a profit, but if the nation decides it is also entitled to a return on the exploitation of national resources, then it is important to design a tax that is effective. Once the resources are gone, they are gone for good…

Well done Professors.

Better late than never.

I wonder what a “professor of accounting at Deakin University’s faculty of business and law” pulls?

Indeed, what does a “professor of accounting at the Australian National University’s College of Business and Economics” pull?

One thing’s for sure. The Big 3 multi-national mining companies pulled the wool over Swan’s eyes in their backroom, closed door deal.

Unsurprising really.

Since Wayne Swan’s intellectual power wouldn’t pull the skin off a custard.

(h/t @CaroChristie )

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Economy Begins A Swan Dive

3 Feb

Unemployment data for January 2012 from Roy Morgan Research is out.

For those brave enough to peek between their fingers clasped over the eyes, here’s a chart to give you nightmares:

Click to enlarge

In Roy Morgan Research’s own words (emphasis added):

  • Unemployment was 10.3% (up 1.7% since December 2011) — an estimated 1,278,000 Australians were unemployed and looking for work. This is Australia’s highest ever number of unemployed as reported by Roy Morgan and is also Australia’s highest unemployment rate for a decade — since January 2002 (10.9% — 1,075,000).
  • A further 7.5% of the workforce* were working part-time looking for more work (underemployed) — 934,000 Australians.
  • In total a record 17.8% of the workforce, or 2.21 million Australians, were unemployed or underemployed.
  • The Australian workforce* in January was at a record high 12,429,000, up 383,000 since January 2011 — comprising 7,681,000 full-time workers (up 106,000); 3,470,000 part-time workers (down 53,000) and 1,278,000 looking for work (up 330,000).
  • The latest Roy Morgan unemployment estimate of 10.3% is now almost double the 5.2% currently quoted by the ABS for December 2011.

Now, you may be wondering why Roy Morgan stats are so much higher than the Australian Bureau of Statistics (ABS) data.

You know. The “official” statistics agency that is quoted exclusively by government politicians, and parroted by their PR agencies … ummmm, the media.

A few hints:

1. The ABS is a government agency.

2. See 1.

3. You have to run up and down the street naked, waving your hands wildly and shrieking “I don’t have a job!!” for weeks to be counted as unemployed by the ABS.

More seriously, academic economist Bill Mitchell has written a very lengthy, detailed article about the differences between ABS and Roy Morgan methodology here.

In a nutshell:

“...the real difference is that [Roy Morgan] do not apply an activity test as strictly as the ABS and thus include a number of workers which we might consider to be “hidden unemployed” as per the previous discussion.

The Roy Morgan method asks whether the person who is “not employed if they are actually looking for a paid job (regardless of whether they’ve looked in the last four weeks)” and so they include the ABS official unemployed plus some estimate of the hidden unemployed…“

In other words, Roy Morgan Research data is a broader measure of employment (or lack thereof).

So which one to believe?

Here’s Bill Mitchell again (emphasis added):

“The broad rule of thumb that economists such as me use to provide an estimate of the state of the labour market is to double the official unemployment rate and then add some for hidden unemployment.”

Now you know why “word on the street” amongst we average folk has been that unemployment is on the rise, while the government continues to downplay ever increasing job losses.

About that budget surplus Wayne … Wayne?

*crickets*

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An Average Aussie Unloads On The Average Labor Pollie

30 Dec

Reader “Tomorrow’s Serf” has a thoughtful word or many for modern Labor:

And so this is Christmas, and what have we done? Another year over……

We been forced to watch as our fantastic country has been poured down the toilet towards economic disaster by a bunch of, at best, incompetent, and at worst, treasonous fools and morons.

We have housing going down, retailing going down, mining slowing down, shares and stocks going down, (and up a bit and then down some more) economic activity everywhere going down, employment going down, happiness going down.

And interest rates, they’re going down……but not for long. And when they too start going up, that’s when the S will really H the F!!

Well something’s got to be going up! That’s right, government debt levels (last check, it was $228 billion??), unemployment, mortgage stress, senior executive salaries, politicians salaries (did Craig Thompson get a 40 percent pay rise too for his contributions to the sex industry?). Food prices, fuel prices, electricity prices. Then there’s the increasing number of useless bureaucrats, increasing taxes and surchages, fees and tariffs. Fines and penalties too. Yep, there’s lots of things going up.

I sit here in chilly old Bremen, Northern Germany, suffering from catastrophic global warming (BRRRRR!! NOT), enjoying my front-row seat watching first hand the implosion of that brilliant piece of social and economic engineering, the european union, implode in real time. Who designed this mess? Probably a politician, a bureaucrat or a banker. Probably a mix of all three!! And to think that the silly old Greeks jiggled their books, with the help of our old friends from Goldman Sachs (Hi Mal, we’re watching you) to be allowed in. I wonder if, now that the european credit card has been thoroughly maxed out, and the bill is now due, whether they think, with the benefit of hindsight, that it was such a good idea to join. Anyone for an Austerity Riot??

Which makes me wonder about the wisdom of we Aussies allowing ourselves to be dragged into the next great social and economic experiment, APEC. The Asia Pacific Economic Council. But Julia seems to think it makes good sense. She was recently running around the Pacific somewhere, minding someone else’s business, as she does, bleating about Free Trade, and closer ties. You know, all the usual stuff.

But this is the same woman/politician who thinks other things are good ideas too. Things like NBN’s, Pink Batts, BER’s, MRRT’s (just as the mining boom busts), MDBA’s (because you can’t let farmers have water to irrigate – hell, they might grow some food), Carbon Taxes (sorry, make that a Bankster generated, Carbon Dioxide Derivative Trading Platform), shutting down the live cattle trade in the NT, shutting down the coal mining industry, stopping logging activities in Tassy, flip-flopping on flogging uranium to India, blowing out the Federal Budget to around $230 billion in 4 years, giving cash handouts to support Asian electronics industries, encouraging people smuggling, and appointing a global corporation like Serco (who the hell is Serco, anyway??) to run our Gulags for us, again at considerable cost to the long-suffering taxpayer.

If you wanted to destroy the economic structure and fabric of a nation, you couldn’t make a better choice than appointing the current Labor government.

Not that I think this is really a “Labor” government. Labor was the party of the working man. The guy who rolled his sleeves up and worked hard, played hard, drank hard. You know who I mean. The bloke you couldn’t help but admire. So he voted for his political team, like my tradie mates still do. Fair enough. But they mis-spelt “Labor”. They are being conned by the modern Labor politician. Today’s Labor pollie has never handled a shovel, can’t wire up a house, couldn’t fix an engine, can’t change a washer or a light bulb, and has certainly never milked a cow or driven a tractor.

What he/she can do is think up smarmy one-liners to insult his constituents, he can stare straight into a TV camera and lie with conviction about giving a rats arse about the average punter. Today’s Labor politician is adept at explaining unusual official Credit Card activity at brothels and restaurants (Craig), is not above threatening staff members at hospitality venues with the loss of their jobs if a table isn’t immediately made available for them (eh Belinda), is a master of the “late night meeting” with “business associates” hoping to secure “NO BID” mining leases all over the country side. He is a whizz at lining his own pocket at the expense of the citizen. He/she are charlatans.

This mob is not the Real McCoy. It’s a wolf in sheeps’ clothing. It’s a cobbled-together mish mash of self interested “Save the Worlders” with a bunch of political opportunists with economics and law degrees and stints at the UN (like Craig Emerson our Trade Minister) Anthony Albanese (remember him with his smarmy side swipe at “the Convoy of NO Confidence” calling it instead “the Convoy of No Consequence”.)

It’s a mob trading on the fond memory of probably well meaning and patriotic Labor politicians of days gone by. Chifley, Curtin. Those guys. They’d roll over in their graves if they could see this current lot.

No, I’m afraid this lot aren’t there for us. Nobody could be THIS bad by accident. And if it’s not accidental, then it’s deliberate. And if it’s deliberate, then it’s treason.

And that’s a hanging offense (or should be).

We’ve asked for an election. We’ve demanded an election, and they laughed at us and gave us a Carbon Tax. They’ve lied, cheated, given themselves a 40 percent pay rise whilst battlers who voted for them (and those of us who didn’t) struggle.

Maybe we just have to occupy Federal Parliament and have them arrested!!

It’s time to call a spade a Bloody Shovel. Yes indeed, it’s long past time.

I feel better having gotten that off my chest…

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