Tag Archives: wayne swan

Barnaby: Let’s Take A Closer Look At Our Spiralling National Debt

13 May

Barnaby writes for The Punch (emphasis added):

Let us first consider what Wayne Maxwell Swan said on the 10th of March 2009. He stated that “the emerging economies of China and India are now expected to slow markedly”. Because of this, Wayne Maxwell Swan stated “it will be necessary to increase Government borrowing”.

The result was Wayne Maxwell Swan increased by $125 billion the amount able to be borrowed by reason of the Commonwealth Inscribed Stock Act 1911 and the Loans and Securities Act 1919. This resulted in the nation’s credit card having a $200 billion limit.

Now as we know, China did not go into recession so neither did we, in fact China hardly missed a beat but Australia has now gained the ignominy clearly spelt out by Dr Ken Rogoff of Harvard when he noted the countries with the greatest cumulative increase in real public debt since 2007.

The order of infamy is as follows: Iceland is first, Ireland is second and Australia is third. Spain, Greece, Portugal and the US all experienced lower increases in their debt. I know that these other countries are already in crisis, so we start from a lower base but at this rate that will be a fleeting grace.

On Tuesday night’s budget, Labor sneaked in an Amendment of the Commonwealth Inscribed Stock Act 1911. Here is the most telling statement for where our nation is going under this Green-Labor-Independent Alliance. Under Part 5 Section 18 subsection 1 “omitting ‘$75’ and substituting ‘250’ ”.

Now that is in billons ladies and gentlemen and it is real money that really has to be paid back. If we have all this money stashed away under the lower net debt figure that is always quoted by Labor, then why not use some of this mystery money to pay off what we owe to the Chinese and others who we are hocked up to the eyeballs to.

The reason why we can’t is at least $70 billion that makes up ‘net’ debt is tied up in the Future Fund and student loans.

Of course, the public servants will not be happy when we use their retirement savings, put aside in the Future Fund, to pay off some of Labor’s massive debt. But that is what you must agree to if you believe in net debt. Likewise, you have to believe that you can track down all the students to pay all their HECS back immediately if you believe in net debt. Good luck patrolling the creeks and streams of Northern NSW looking for them.

So we are on the road and racing to serious problems. It is there in the figures. Debt ceiling issues in the US have now started visiting us in their primal form in Australia. I have been banging on about this, trying my best to warn about this, and generally vilified because of it and believe me, vindication is not what I was seeking.

We must realise what is happening or our nation will be like a bad accountancy client oblivious to the mechanism of their financial demise and the associated immense humiliation and hurt that comes because of it.

People generally do not understand the deficit and surplus concept, often believing that a surplus means all the debt has been paid. The surplus or deficit is broadly the profit or loss of the operation or the business of government.

Like a shop on the skids, the last three years profit and loss statements from 2010 have shown a $54 billion loss then a $49 billion loss which will be followed by another $22 billion loss. This was achieved while receiving record prices for our main sale items of coal and iron ore. How long will a shop like that be around for, and if you doubt the figures check their overdraft.

Where did the money go? What on earth have they done with it? How on earth will they pay it back? The answer to the last question is they will not, you the taxpayer will.

You will just have to spend more of your life working not for you but for the government. Instead of working Monday and half of Tuesday stacking bricks, shearing sheep, working behind a desk or on a checkout to pay your tax, you will have to spend more time through late Tuesday and Wednesday glancing at the clock saying more of my life is slavery for their incompetence.

Barnaby is right.

He has been warning of this since 2009. He quickly lost his job as Shadow Finance Spokesman, because he dared to say what most do not want to hear.

Now, more and more “experts” are slowly emerging from the woodwork to agree that Barnaby Was Right.

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Swan Raises Govt Borrowing Limit By Another $50bn – And Don’t Ask Questions

12 May

But but but … we’ll have a surplus budget in 2013. Honest we will:

The Government has blamed Australia’s summer of disasters for its move to raise the cap on government debt by $50 billion.

As Treasurer Wayne Swan was congratulated by colleagues after Tuesday’s budget speech, Assistant Treasurer Bill Shorten introduced draft laws allowing the government to increase the amount it can borrow from $200 billion to $250 billion.

And what’s more:

The proposed legislation would also remove a requirement that the Treasurer explain why the extra money is needed.

Barnaby is right.

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“Half A Million Jobs” – Wayne’s Big Lie (Reprise)

11 May

In the classic British political satire Yes Minister, master of obfuscation and manipulation Sir Humphrey Appleby said that it is always best to “dispose of the difficult bit in the title; it does less harm there than in the text.”

Sadly for Labor, they’ve not disposed of it in the title. They’ve left the evidence in the text.

Wayne Swan’s latest mantra is that Budget 2011-12 is all about “jobs, jobs, jobs“. Last week, Wayne was claiming that Labor has “created 750,000 jobs” since coming to office.  In “Behold, Wayne’s Große Lüge“, we showed evidence that this is a Big Lie.

In the (fine print) text of last night’s Budget 2011, we find evidence that Wayne’s big claim of “half a million more” jobs “in the next two years” is also a Big Lie:

Economic parameter variations are forecast to reduce expenses in 2011‑12 and over the forward estimates … Partly offsetting these reductions … an upwards revision in the estimated number of unemployment benefit recipients is expected to increase expenses in 2011‑12 compared to MYEFO, although this is partly unwound by a reduction in the forecast of the number of unemployment benefit recipients in 2012‑13.

The government’s own Budget “estimates” an increase of more than half a BILLION dollars ($530 million) in unemployment benefit expenses for this year and next:

Budget 2011-12 | Budget Paper No. 1, Statement 6, Table 2

So, since the MYEFO just 6 months ago, Labor has revised its “estimates” and is now budgeting for a $530 million increase in unemployment benefit expenses – $479 million of that in the next 12 months.  This equals approximately 43,000 more unemployed people next year (at current full single rate unemployment benefit).

Yet, we are expected to believe that they will “create half a million more” jobs “in the next two years”?!?

Lindsay Tanner was right:

“The lesson is simple: whenever a politician cites spending figures to show what a fine job he or she is doing, examine the fine print very carefully.”

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Budget Blowout: Interest-On-Debt $1.59m Per Hour

11 May

Six months.

That’s all it has taken for Labor’s November 2010 MYEFO budget “estimate” for Interest-on-debt to blow out.

By $5.69 Billion to 2013-14.

The November MYEFO 2010-11 “estimate”:

MYEFO 2010-11, Appendix B, Note 10: Interest Expense

The new Budget 2011-12 “estimate”:

Budget 2011-12 | Budget Paper No. 1, Statement 9, Note 10

In March last year (“Rudd’s Interest Bill – $48.49bn to 2013“), we saw that Labor expected to lump taxpayers with $48.49 billion in Interest-on-debt through 2013.

A year later, that’s blown out yet again.

Including this year’s (2010-11) $10.845 Billion, we’re talking an “estimated” and “projected” grand total of $66.466 Billion through 2015.

That’s $1,587,357 ($1.59 million) per hour*, over the next 4 years.

Interest-only.

* The calculation = Total (66.466bn) – 2010-2011 (10.845bn) / 4 years / 365 days / 24 hours.

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Barnaby: Budget Duds Regional Australia … Again

10 May

Media Release – Senator Barnaby Joyce, 10 May 2011:

Budget set to dud regional Australia… again

Labor’s first three budgets have not been good for regional Australia.

Its first budget slashed $1 billion in regional funding and axed the OPEL contract to deliver fast broadband to regional communities. Its second budget introduced a carbon emissions tax and slashed $900 million from the agriculture budget.

And its third heralded a mining tax and ramped up water buy-backs from farmers. Tonight’s is not shaping up as any better.

“Labor’s record has never lived up to its rhetoric – tonight will be no exception. The Government has already made overblown assurances that don’t stack up – like re-announcing road projects, short-term skilled migrants in the regions and a boost to apprenticeship schemes that specifically exclude agriculture and horticulture,” Leader of The Nationals Warren Truss said.

“A few things you can count on Labor to deliver tonight… less money for the regions and two big new taxes on the way.

“But we are being asked to take on trust that the Treasurer, who plunged us into record debt and the budget into a $50 billion deficit in just four years, will return the nation’s books to surplus over the next two.

“Labor is, again, taking us for mugs. But we’ve been down this path before. People in the regions do not trust a government that has already robbed them blind, habitually broken promises, overseen dramatic cost of living increases on households and mired us in massive debt.

“Once the budget hype subsides, regional Australia will be counting the costs… again.”

Senator Barnaby Joyce added: “Half of Mr Swan’s life is a promise, the other is an excuse. Tonight we are due to get both.”

“As an example, the biggest promise Labor has made in regional Australia is the Perth airport roads upgrade. I keep trying to explain this to the people of Collarenebri about how well they are getting looked after, by this regional package, but I just can’t convince them.

“They need not worry. Wayne is going to whack them between the eyes again as he ramps up their fringe benefit tax every time they jump in the car.

“Meanwhile one of the largest items, the carbon tax, doesn’t even “crack a feature” – as my old boss in accountancy called it. Interesting, the carbon tax used to be the greatest moral challenge of our time, now it doesn’t get its own line on the nation’s P&L.”

“Instead of new taxes, the Nationals want to create more opportunity for regional Australia. We have led efforts to reinstate Youth Allowance for students from regional areas. We have established a dams task group to open up new areas of economic opportunity in our nation. We want to unlock the $1.4 trillion invested in superannuation, attracting investment in nation building infrastructure through targeted tax concessions.”

Mr Truss and Senator Joyce declared The Nationals have a plan for regional Australia. Labor doesn’t even know where regional Australia is.

——————————

The facts on regional Australia

Just as it has done every year, Labor will make a lot of big claims tonight. But once again, Labor’s budget is set to dud regional Australia with less money for the regions and two great big new taxes on the way.

Labor has not delivered for regional Australia

PROMISE: Labor announced a $10 billion regional Australia agreement with the independents which apparently swayed them to support Labor.

REALITY: Less than one-tenth of this was new money, $800 million for a regional development fund (which has since been cut by $350 million) and $140 million for increased ethanol assistance. The rest was an already announced $6 billion Regional Infrastructure Fund (funded from the mining tax) and the allocation of existing health and education funds to regional Australia.

Less than one year in Labor has cut money from regional Australia

PROMISE: In their agreement with the independents, the Government promised $1.4 billion in funding for economic, social and community infrastructure in regional Australia.

REALITY: On 3 March, 2011 Labor announced a $1 billion Regional Australia Fund, $400 million less than what was originally promised.

Labor is spending even less on regional Australia than in its first term

PROMISE: Labor promised to increase investment in regional Australia and Julia Gillard promised “to deliver for regional Australia”.

REALITY: The $1 billion Regional Australia Fund is less than the regional development funding it replaces, the $1.2 billion Regional and Local Community Infrastructure Program. On an annual basis, it’s $170 million less per year. The new fund amounts to $200 million per year (five-year program). The old fund amounted to $370 million per year (over three years).

The mining tax is a dud deal for the regions

PROMISE: Labor says that it will use the proceeds of the mining tax to invest in regional Australia.

REALITY: The mining tax will rip out at least $40 billion from regional Australia in the next decade. Only $6 billion has been earmarked for regional Australia.

Labor can’t even define where regional Australia is

PROMISE: Labor promised a new deal for “regional” Australia.

REALITY: Labor’s announcements so far from regional funds spend more in capital cities than the regions. The biggest “regional” promise Labor has made is the $480 million investment in the Perth Airports road upgrade.

[ENDS]

Media Contacts: Mr Truss: Brett Heffernan on (02) 6277 4482 or 0467 650 020 or brett.heffernan@aph.gov.au

Senator Joyce: Matt Canavan on 6277 3244 or 0458 709 433 or matthew.canavan@aph.gov.au

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I Was Right: Labor Hid The Increase

9 May

On 3rd March 2010 I published “Labor: Hide The Increase“, showing proof of exactly how Labor had changed accounting methods in order to fudge the 2009-10 Mid Year Economic and Fiscal Outlook (MYEFO) budget report.

Now, former Finance Minister Lindsay Tanner has openly admitted that this is precisely the kind of “dark art” that Labor practices.  To lie to the public, and cover up their financial mismanagement:

He became adept at “the dark arts”, he confesses, “using some of what are now the standard tricks employed to maximise political appearances”.

These included switching between different forms of accounting, choosing different indicators of spending “according to which . . . suited the argument better”, classifying annual spending as capital, and making commitments beyond the years of the budget period.

Why did Labor hide the increase in spending in 2009-10?

They had made a promise not to increase real spending growth by more than 2%.  They had broken that promise. Hence, a little “dark art” with the accounting method.  To present figures that would instead show that they had not broken their promise at all.

Read “Labor: Hide The Increase” for full background on how they fiddled the books.

For now though, take a look at how Labor’s own MYEFO numbers have again changed. Proving once again that “estimates” are a bad joke. And that Labor just can’t help but spend far more than even their own estimates.

In the 2009-10 MYEFO, their “Estimate” for real spending growth as a % of GDP for this year (2010-11), using their new accounting method of “CPI” instead of “NFGDP”, was -1.3% (click to enlarge):

MYEFO 2009-10 | Appendix D, Table D1

Ok.  Sounds good right?  In November 2009, they “expected” to reduce government spending growth in 2010-11 by 1.3%.

Now, what is their most recent “Estimate” for real spending growth in 2010-11, as updated in the November 2010 MYEFO?

+1.5%

MYEFO 2010-11 | Appendix D, Table D1

So, even using their new accounting method, Labor’s spending still blew out anyway.  Rather than cutting by 1.3%, their own budget mid-year updates show a spending increase of 1.5%.

What’s that in actual dollars?  Look at their tables under “Payments” and “$m”.  In 2009-10 they estimated government spending for 2010-11 of $340,995 million ($340 billion).  A year later, that estimate was revised up to $351,660 million ($351 billion).  A blowout in spending of $10.66 billion, over their own estimates.

What’s more, this comes on the back of an increase in government revenue. Not a decrease, as Labor are complaining loudly now, as an excuse for their massive budget deficit black hole.

Look at their own tables again.  In MYEFO 2009-10, their “estimate” for “Receipts” in 2010-11 was $297,131 million.

But in MYEFO 2010-11 – released just 6 months ago – their new “estimate” was $313,205 million.  An increase in revenue.  Not a decrease.  An increase of $16,000 million ($16 billion) over their own estimate a year earlier.

Labor’s promise not to increase spending by more than 2% came with eerily similar “tough talk” rhetoric before last year’s budget:

Tanner Warns of Austerity Budget

Finance Minister Lindsay Tanner has flagged that the 2010-11 budget will contain tough savings measures…

The collapse of revenue caused by the global economic downturn would be compounded by the early effects of the ageing of the population, Mr Tanner told the Ten Network yesterday.

“There’s going to have to be tough decisions and ministers are aware of that,” he said.

Deja vu.

Again this year, we hear lots of tough talk about the coming budget.  Again we hear all the (same) excuses about why it has to be tough.

I have no doubt that tomorrow night, once again we will receive a Labor budget contrived by the “dark arts”.

What “standard tricks” will they use this time?

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Labor’s $2.4 Billion Budget Spray

6 May

Thought $2.2 billion more debt this week was impressive?

The Labor party’s just getting started.

The AOFM has just announced next week’s Australian sovereign debt auctions.

A $600 million T-bond auction on Wednesday – to celebrate the myth-making record-deficit Budget Speech the night before, no doubt.

$1.2 billion (2 x $600 million) in T-note auctions on Thursday.

And another $600 million T-bond auction on Friday.

Labor’s $2.4 Billion Budget Spray.

How much more Interest-on-debt must we pay?

And how much will the “Estimates” and “Projections” for Interest-on-debt made in last year’s Budget be .. revised .. in this year’s Budget?

MYEFO 2010-11, Appendix B, Note 10: Interest Expense

According to their own “Estimate” just for this year 2010-11, we’re paying $1,201,712 ($1.2 million) per hour in Interest-on-debt.

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Barnaby: You Can Count On Swan’s Debt Pile

5 May

Barnaby Joyce in the Canberra Times today:

Next week’s budget is shaping up as another rollicking frolic on the road to pandemonium.

Almost a year ago, Wayne Swan delivered a budget for 2010-11 with what he predicted would be a $40.8 billion deficit which is a massive loss on the nation’s books. Next week he will reveal that the financial morass is more than $50 billion out the back door.

We are getting used to this unfortunately, the 25% Swan-error factor, incompetence, massive deficits and now massive debt.

If Labor can not manage the nation’s business, balance income to expenditure, in the middle of a resources boom, how on earth will it do it when the boom comes to an end?

When the Government announced the $90 billion spree in response to the North Atlantic financial crisis, Treasury officials told me that our debt would reach its $200 billion ceiling in 2013-2014. We are already at $190 billion in debt and rising.

Australia never went into a recession because China never went into a recession. School halls did not put any coal on a boat, ceiling insulation did not sell one tonne of iron ore and $900 cheques did not plant one acre of wheat.

In the parallel universe of Wayne Swan hocking the Australian credit card up with rubbish increases demand for soft and hard commodities in south-east Asia. The same way, I imagine that buying a new Playstation helps you get a wage rise at work.

Half of Mr Swan’s life is a promise; the other half is an excuse. Next week we will get both.

The promise will be a surplus, not now, but later. Labor will start paying the debt back not now but later. The excuses will be the GFC, the Tsunami, Yasi, Swanny and trust me.

He will tell you about new jobs and you might need one as his profligate spending will start to put the screws on the capacity for expenditure on government services.

The Treasurer will promise to cool the planet from a room in Parliament House by reducing carbon dioxide usage domestically, while selling record amounts of coal overseas. He will take you on a guilt trip about the price of power in Australia. He will try to convince you that it is morally just that the fundamentals of life become prohibitive for the average Australian consumer and that the trade advantage of our industry, cheap power, is an evil that should be removed and sent overseas. This is the Green-Labor-Independent economic miracle, future alternate “green” jobs in their future alternate green universe.

Earlier this week, Wayne Swan had the temerity to accuse the previous Coalition government of wasting the mining boom. Remember that terrible time? It was when we had tens of billions of money in the bank. Wayne just has massive debts.

He will say that it is not the gross debt that matters but the net debt. Yet he has never explained the difference between the two. He has never explained it because I don’t think he knows the difference.

Now maybe he might not know but his department does. In response to a question I put in Senate estimates, Treasury revealed that $64 billion of the difference between our gross debt and our net debt is made up of the cash and non-equity investments of the Future Fund. The Future Fund is there to cover the otherwise unfunded costs of public servants’ superannuation.

That is a little fact that the people of Canberra might be interested in. When Wayne mentions net debt translate that to, I am going to pay his debt off with my retirement savings.

If you want to test the competency of Mr Swan then it is similar to how you test the competency of anyone in any field. Pay a little bit of attention to their promises but pay immense attention to their delivery.

The last Coalition government delivered 10 surpluses in 12 years. A Labor treasurer has not delivered a budget with a surplus in it since 1989.

In the 21 years since, Labor delivered 9 budgets and racked up a cumulative debt of $200 billion.

The Coalition delivered 12 budgets producing cumulative savings of $97 billion.

Labor borrows at double the rate that Coalition governments can save.

The Coalition left Labor with a $60 billion Future Fund and a $20 billion surplus. We are now racing towards $200 billion in gross debt.

Next week’s budget is shaping up as another rollicking frolic on the road to pandemonium.

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Another $2.2bn In Debt This Week

5 May

Yesterday, the AOFM auctioned another $600 million in Treasury Bonds. Lumping the taxpayer with a (weighted-average) interest-burden of 5.35%.

Today, the AOFM will auction another $1 Billion in Treasury Notes.

Tomorrow, the AOFM will auction another $600 million in Treasury Bonds.

How much will this week’s national credit card binge add to last year’s “Estimates” and “Projections” of Interest-on-debt?

MYEFO 2010-11, Appendix B, Note 10: Interest Expense

According to their own “Estimate” just for this year 2010-11, we’re paying $1,201,712 per hour in Interest-on-debt.

UPDATE:

Today’s $1 Billion Treasury Notes auction completed.

Slug to taxpayers? 4.73% interest rate (weighted average yield).

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How Gillard’s Use Of The Credit Card Makes Rudd’s GFC Spending Spree Look A Model Of Financial Prudence

5 May

A few days ago I wrote an article titled “The Real Reason Why Gillard’s A Spinster“.  It ruffled feathers.  Not for the intended reason, unfortunately.

Humourless critics were so rankled by my [insert self-righteous PC perjorative] that they did not see the point.

So here’s a follow up.  Without the creative literary device/s for decoration.

The following chart is an updated and extended version of the one used in the previous article.  This shows Treasury Note auctions from 2000 through to end April 2011 (the previous chart began at March 2009).

The other difference, is that the previous chart listed each individual auction separately.  It escaped my notice that there has been as many as 3 auctions p.w. in recent times.  So this new chart sums the total of all auctions of Treasury Notes in a given week into a single bar on the chart (click to enlarge):

Source: Australian Office of Financial Management (AOFM)

Some key points to note.

Firstly, there’s clearly quite a difference between how much the Howard Government relied on short-term debt (Treasury Notes), compared with the subsequent Labor Government.  The period when the largest block of Howard-era short term debt auctions occurred was through the year 2002 – coinciding with the 2002-03 global recession, which Australia largely avoided.

Secondly, for four (4) full years between October 2003 and the Rudd election win in November 2007, the Howard Government raised no short-term debt. Not one cent.

Neither did Kevin07.  For 16 months.  Until the GFC.

Thirdly, you can see clearly the period from March 2009 through around September 2009, during which the Rudd Government was regularly raising around $800m to $1,500m a week from short-term debt auctions. I assume that this reflects (at least in part) the government’s urgent need for cash to fund their “stimulus” response to the GFC.  Stimulus 1 – $10.4 billion in cash handouts in late 2008 (goodbye 50% of Howard surplus).  Stimulus 2 – another $42 billion in cash handouts and “nation-building”, beginning in … February/March 2009.

You remember. “Swift and decisive”. Rushed and bungled. $900 cheques to dead people. Electrifying foil insulation. Blazing pink batts. Rorted “green” schemes. Overpriced school halls. Literally billions more, to investigate and repair these Rudd-made disasters.

Finally, note the significant jump in both the frequency and the totals of short-term debt auctions, coinciding exactly with Ms Gillard’s rise to power. The fact is, she has presided over a $10.1bn (31.5%) increase in issuances of short-term debt in just 10 months, compared to the previous 12 months of the Rudd Government.

The big unanswered question that I have is this: WHY would a Gillard-led government suddenly need to bash the nation’s short-term credit card 31.5% harder than even the profligate Kevin Rudd did? After all, he had a GFC “stimulus” package or two to finance.

What is Ms Gillard’s excuse?

According to the government’s own budget records, we-the-taxpayers are already wearing an Interest-on-debt bill of more than $10 Billion per year:

MYEFO 2010-11, Appendix B, Note 10: Interest Expense

According to the AOFM, short-term Treasury debt is supposed to be used for financing “within-year”, daily cashflow requirements of the Government. And then there’s this official prediction:

Treasury Notes are not expected to make a major contribution to overall funding for the 2010-11 financial year as a whole.

Why has the Gillard-led government apparently been so incapable of planning their week-to-week expenses, that since that statement was published they have resorted to bashing the national credit card more than 31.5% harder than Kevin Rudd “needed” to?

The data supports the increasingly widespread view that the Gillard minority government is a shambles.  They have no financial plan – even over the short-term.  And so, from Day 1, have had to pull out the national credit card 31.5% more than Kevin Rudd, just to manage the week-to-week cashflow requirements of government.

One can only wonder just how much Interest-on-debt we will end up paying in total over the coming years.

While Gillard and Co comfortably retire.  On mega-buck, index-linked, taxpayer-funded pensions.

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