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EYE-BALL’s Herman on – Gone – Ski Part II (Gone is Gonski)

The-EYE-BALL-Opinion-Header-2
Links to Previous ‘Herman’ Posts:


- 27th June – Gone-Ski: Prime Minister Julia Gillard -


- 24th June – The Ashes -


- 21st June – The Senate -


- 5th June – Zombies -


- 1st June – Canberra – and black holes -


-30th May – What is an adequate Contrition? -


- 24th May – Simplex -


- 19th May – The Tears of a Prime Minister -


- 24th Mar - An Example of bureaucracy gone mad -


- 10th Mar – The Carbon Tax – Post Election …


- 7th Mar – Wayne Swan – Please Stop


28th Feb – The Australian Labor Party View


- 6th Feb – Corruption


- 25th Jan – Anti Discrimination -


- 17th Jan 2013 – Atheism -


- 12th Nov - Hegemony


- 2nd Nov – A March early Federal election -


To see more EYE-BALL ‘Herman’ posts:

click here …


Title:
Gone – Ski Part II (Gone is Gonski)
| Author: EYE-BALL’s Herman O’Hermitage | 5th July 2013 |
In the last week, much has unfolded. Simon Crean has announced his retirement, so has Greg Combet, Stephen Smith has taken as respectable a retirement as circumstances will allow. Federal ALP has intervened in the NSW State branch. Dead wood is being pruned. Backyard blitz takes on a new meaning.

The makeover is starting to take shape. Tony Burke attempted to resign, and his resignation was not accepted. Tanya Plibersek is still Minister for Health. Jenny Macklin is still there and ministerial positions are musical chairs (deck chairs on the Titanic). Can these weeds be realistically controlled or made useful?

What really matters is policy, and why do we forgive them now? They created this mess so why should we believe they will really fix it, can fix it.

For a start, this parliament has only run it’s course through the support of amongst others Craig Thomson. Had Thomson been forced to vacate his seat 18 months ago at a by election Dobell would have gone Coalition. Therefore Tony Abbott would be PM today. Windsor and Oakeshott both former Nationals but now independent have played their part. They are both not contesting their seats and that means a notional 76 (tiny majority) to Coalition as things stand.

Then comes the question why did Rudd not challenge sooner?

If Rudd had have stood last March, he would have had 3 months more to turn things around. As policies change, why did he leave it until there was no apparent parliamentary sittings to debate these shifts in policy. It is left to journalists to get admissions of culpability over matters like the shift in immigration?

Why is Rudd scared of the opposition on the parliamentary floor?

He keeps taunting Abbott with debate me on Prime Time TV. Abbott is saying I won’t play the game. But at some stage he needs to play the game. He needs to give the electorate time to develop belief in the team he leads.

To find any rationality in all that is now upon us we have to go back further in recent history. Exactly how Rudd was overthrown in June 2010 and what were the real motives and who were the real players?

When Rudd and Gillard first came together as a leadership team, both were considered young and neither more chance. Rudd was prepared to serve under Gillard but Rudd was the better spokesperson. The ALP was desperate to end the Howard reign. Rudd had no factional allegiances, and Gillard was all things to all people. Rudd due to his diplomatic background won over.

Roll on to November 2007, they did the unbelievable, they won. Queensland turned a narrow victory into a massive one because for the 1st time there was a Qld Prime Minister. A golden period ensued. Costello retired. Howard was defeated in his own seat. Some was attributable to Workchoices other decisions were just human frailty.

Brendan Nelson was anointed Liberal leader. He said he would have a go. There was no heir apparent beyond Costello. There was Kyoto and Sorry and Rudd was walking on water, metaphorically. Nelson called a leadership contest, he was happy to get out. The Liberal party’s electoral stocks were atrocious.

The leadership was given to Turnbull. He wasn’t ready. Then came Godwin Grech and Utegate. Turnbull had no traction. Then came Carbon Tax and Copenhagen. Abbott took over, in a contest that included Hockey. The Liberal party was happy with 2nd best.

After Copenhagen Rudd was petulant. He spat the dummy.

The fools got in the way. Rudd dropped Carbon Tax cold and switched to a mining super profits tax.  Some virtual unknown announced the coup on ABC TV by the name of Paul Howes, of the AWU. By the time that was decided Rudd was the first 1st term prime minister knifed by his own party. Gillard spoke of a good government who had lost their way.

Australia was in shock. Leaks were everywhere. All scuttlebutt. What was the truth? Arbib according to Wikileaks had been informing Washington what was really happening. Shorten and Howes were spokespersons. Richardson claimed a part, and implicated the Victorian right. All was based on gossip and leaks. The ALP went ever so close to losing the unlosable election. Gillard formed a minority government. Abbott had brought the Coalition back from the grave. Gillard show her real chameleon persona, she was simply do what it takes. In her words “the Little Doer” in public perception, power is everything. Australia gave her a very good go. Abbott acted as if he was just waiting for government to fall to the Coalition. The broken promise on Carbon Tax was just the beginning. The Coalition played it like a broken record.

The shambles that parlayed from there on in was just too hard to believe. HSU, Slipper, more broken promises, parliamentary salary increases, a budget surplus set in stone, oops an $18bn deficit, Eddie Obeid. When it was first announced on Christmas Eve that the guaranteed surplus was abandoned, because jobs matter, the death knoll had rung for the last time. Maybe not, maybe it was the NSW ICAC enquiries into Tripodi, Obeid and McDonald. Nothing will save the Gillard government. Don’t put away that gong too fast. The death knolls just get louder.

By the May Budget there was a massive disconnect. Coming from Caucus was this nonsense of a j curve. Sell our positive agenda, harp on about the Coalition negative agenda. But no one is listening.

The ALP needed desperately a circuit breaker. The only one was Rudd. Rudd the Dud according to prominent front benchers. They lined up to tell us what a dud he was in 2012. Those who spoke most freely and at length are all gone now. Those that spoke less candidly, knowing how foolish they looked, have survived, just.

Gillard had to find a way out, the ALP had to find a face saving exit. Shorten switches to the Rudd forces.

Was Rudd guaranteed an open mandate to fix the underlying issues? Please be clear on what issues.

We now wait.

Intervention in NSW ALP. ASIC claims the banks are gauging on term deposit rollover rates.

Hang on ASIC is a government agency but they have been silent for far too many years on the banks not passing on full interest rate cuts. Why is that pitched at the retiree sector rather than the mortgagee belt? Where is Glenn Stevens and the RBA or APRA. Oh investments! Australian Securities and Investments Commission!

So Rudd has got a friend, one at ASIC.

Rudd does a flying visit to Indonesia. Carbon tax moving to Emissions Trading System. Nothing is firm, not even the election date. Wow this is much more the opening lines of Macbeth than Act V Scene II.

Bubble, bubble, toil and trouble. Eye of newt & and toe of frog, Wool of bat, and tongue of dog, Adder’s fork, and blind-worm’s sting, Lizard’s leg, and howlet’s wing, For a charm of powerful trouble, Like a hell-broth boil and bubble. Double, double, toil and trouble; Fire burn and cauldron bubble. [Macbeth Act I]

What is left?

A 2nd string (journey man) Coalition leader. One that is easily labelled negative, and having little by way of policy. A closer run race where confusion reigns. He though he was MacDuff, but it was always Rudd, the understudy who was going to play the part.

Where and How will the ALP secure not only seats to counter New England and Lyne, but hold Dobell and Robertson and many many more. I can now believe that some seats like Kingsford Smith will be a stronger majority to the ALP. Garrett has gone. But winning 5 seats is different. Safe seats like Batman or Lalor, Melbourne or maybe even Denison don’t change the scenario.

They won’t. They can’t.

What will happen is that the Coalition will form government and be on the back foot from day 1. The Greens will struggle to win a senate seat but will still be the balance of power in the Upper House. Going for a double dissolution will not achieve anything. They might well lose the lot. Opposition leader Rudd could well be in a position to take back the government benches. No initiative allowing them to expunge the Carbon Tax will be possible. Only waiting until 2016 will see the Greens finished. It will be very difficult for the Coalition to make any significant difference.

The best thing about Shakespeare is that it does have an ending. How surreal!

Believing in sanity is indeed insanity.

Please – if you found this story to your liking and would like to promote it to your social media contacts – i.e. Twitter, Facebook, or other icon linked account below – please click your favoured Icon(s) to promote the story.Thankyou.


Have your say where it counts: – contact your Local Federal Representative via the links below and let them know how you feel about this, or any other topic that you feel strongly about – or you can just post a comment below and let off some steam.

Links to Australian Parliamentary Website – MP’s


EYE-BALL’s ‘Herman’ …

EYE-BALL’s Herman on – Political Double Speak

The-EYE-BALL-Opinion-Header-2
Links to Previous ‘Herman’ Posts:


- 27th June – Gone-Ski: Prime Minister Julia Gillard -


- 24th June – The Ashes -


- 21st June – The Senate -


- 5th June – Zombies -


- 1st June – Canberra – and black holes -


-30th May – What is an adequate Contrition? -


- 24th May – Simplex -


- 19th May – The Tears of a Prime Minister -


- 24th Mar - An Example of bureaucracy gone mad -


- 10th Mar – The Carbon Tax – Post Election …


- 7th Mar – Wayne Swan – Please Stop


28th Feb – The Australian Labor Party View


- 6th Feb – Corruption


- 25th Jan – Anti Discrimination -


- 17th Jan 2013 – Atheism -


- 12th Nov - Hegemony


- 2nd Nov – A March early Federal election -


To see more EYE-BALL ‘Herman’ posts:

click here …


Title:
- Political Double Speak -
| Author: EYE-BALL’s Herman O’Hermitage | 28th June 2013 |
W

hile the dogs may have been called off on Wednesday and tethered or kennelled on Wednesday night, newly installed PM Rudd would do very well to remember what he has been forced to endure during his hiatus.

On Yom Kippur;

Those of the Jewish faith, rarely vote in person on polling day at a polling station. Saturday is their Sabbath. They can and do vote postal, or pre poll. Postal and pre poll numbers grow at every election. In this modern era of communication most people do not understand why voting takes place only on the Saturday, and do not understand why fines are issued when you fail to vote. Many believe getting your name marked off and going to a cardboard screen and using a blunt pencil to mark a valid voting paper is not just archaic it is beyond pre historic. There are so many diverse opinions, it is hard to condense, but those of the Jewish faith routinely vote pre poll or postal. So do many others.

The AEC makes extraordinary accommodations to attempt to uphold compulsory voting. You might find the occasional officer who takes himself just a little too seriously. For every one of those you will also find one equally lackadaisical.

The real reason you intend to re address September 14 as polling day is because you intend to get as much mileage from G20 in Moscow on September 7th as is possible, and ideally you would return from Moscow to conduct the official launch of the ALP election launch thereafter.

Nothing has changed. On September 21 football finals are at fever pitch. September 28 is worse. On October 5th you not only encounter football finals (NRL) but long weekend in NSW (Labour Day) and Sydney spring carnival horse racing. Any date after that means the scheduled sitting of Parliament in late August will proceed due to the fact that the electoral writs have not been issued.

This comes back to going to the polls in August. The electoral writs need 32 (or 33) days. You want to be in Moscow on September 7th and not let Tony Abbott have that honour. If you go in August can you guarantee that? August 3rd means you need to dissolve parliament by July 1st. By Monday you will not be ready. How many weeks do you need to get ready? Hmmm?

We are watching you clearly. We know you and the way you work.

On Electricity, Gas, GST and Carbon Tax.

David Murray said the Carbon Tax was an extremely inefficient tax. I cite him as a respected business leader. I absolutely agree.

Too many have forgotten, that GST was applied to electricity and gas in 2001 while not on water and other domestic services such as rates to address the concept of externalities (pollution). No steps were taken at that time with those revenues to force cleaner energy.

GST applies to domestic and commercial vehicles. In petrol there is double edged sword in the petrol excise.

A small part of domestic budget stress comes from electricity and gas prices. There are other factors. It also manifests in industrial competitiveness. There should be a proper rationalisation.

Tony Abbott has promised to not only remove the carbon tax, but have a white paper on tax reform, and move Deregulation out of Finance and put it into Department of Prime Minister and Cabinet. To say that the coalition does not have clearly elucidated policies is a furphy. It is more than that, it borders on contempt. We are sick and tired of being told what to think.

On the Australian Dollar;

The very core of this issue is the inflation target of the RBA. It is always in the too hard basket.

In the SPC Ardmona v tinned tomatoes dispute, we are now starting to address tariffs and restrictions again. In the J R Simplot talk of closing canneries in Tasmania the issues are similar. It keeps going, education sector decimated (foreign students), tourism at a competitive disadvantage. Shell closing first Clyde then any thoughts over Geelong. Caltex at Kurnell then at Lytton. Ford and more. Bonds closing manufacturing in Australia. Target and Rivers buying in Bangladesh without any conscience. We the consumer not caring nor knowing what we are buying. Labelling.

SPC is owned by Coca-cola. Simplot is American, must I go on.

Why is it mandatory for Australian commercial TV to have local content? That extends to BHP Billiton, or Rio.

Why are we subsidising production of petrol cars when we export so much gas.

Synopsis

Cut the double speak. As a child I always laughed in westerns when apache accused white man of speaking with a forked tongue. We are sick of being the play thing of foreign interests, and government being complicit. Ignorance or apathy or base stupidity.

Why are 2,000,000 Australian not participating in employment sufficiently? They are unemployed, not participating or want more hours.

Basic truth is a very rare commodity. We all must play our part, and our leaders must play their part.

Believing in sanity is indeed insanity.

Please – if you found this story to your liking and would like to promote it to your social media contacts – i.e. Twitter, Facebook, or other icon linked account below – please click your favoured Icon(s) to promote the story.Thankyou.


Have your say where it counts: – contact your Local Federal Representative via the links below and let them know how you feel about this, or any other topic that you feel strongly about – or you can just post a comment below and let off some steam.

Links to Australian Parliamentary Website – MP’s


EYE-BALL’s ‘Herman’ …

EYE-BALL’s Guru on – When is Government a Business and – when is Government a Government -

May 14, 2013 Comments off
The-EYE-BALL-Opinion-Header-2
Latest GURU Posts:


- 13th May – Wayne Swan’s “Treasury Mistakes” – The Evidence of Incompetence – a Ponzi expert in the making.


- 10th May – Wayne Swan’s “Treasury Mistakes” – A Follow-Up -


- 29th Apr – Wayne Swan’s “Treasury Mistakes” – Heads must roll – Swan and Bradbury must accept responsibility’ -


- 23rd Apr – Wayne Swan’s – “Investment pipeline” - disappearing before his eyes – where does he go for his next ‘bunny excuse’ -


- 21st Apr – Wayne Swan’s legitimacy – He Says … ‘high A$ causes $7.5b hole since Oct ’12′ – He’s a unique type of idiot  -


- 14th Apr – The Debt Clock ticks … Tic Toc … – Gillard just spent another $3,000 – counting the real cost of this ALP Disaster -


- 5th Apr - Superannuation 2013-14 -  the Government’s new Slush Fund – Proposed Changes show SWAN and SHORTEN’s stupidity -


- 4th Apr - Australia’s Parliamentary Remunerations -
– Part III – Superannuation – The Future Fund -


- 3rd Apr – Government not happy about its tax collect – Claims Tax Minimisation deserves ‘Naming and Shaming’ -


To see more GURU posts: – click here …


Title:
- When is Government a Business and -
- when is Government a Government -
| Author: EYE-BALL Guru | 14th May 2013 |
Talk for some time now from the Opposition Treasury spokesperson Mr Joe Hockey,  has been about the developed world facing the end of the era of ‘universal entitlement’.

Where does a Government get the ‘creds’ to measure its own responsibilities in business like terms when forecast revenues, budgets, and underlying debt become challenging?

Mr Hockey is heir to the Treasurer throne and will be the Treasurer in a few months.  Understanding his belief system is very important to what he will bring to the table as a Treasurer.

In a speech delivered a little over 12 months ago to the INSTITUTE OF ECONOMIC AFFAIRS in Londonlink to full speech – Mr Hockey spoke at length about the ‘era of entitlement’.

The speech is a road map to Hockey’s mindset about Government and its overriding responsibilities.

At face value the comments may seem naive and Liberal policy sabre rattling.   If Mr Hockey believes everything he said in his address, then that is a little frightening when we look at the developed world, the GFC after taste, the ongoing and unsolved global debt burden, and the extent of the people suffering under austerity measures.

Hockey’s vision can be seen as a Government trying to implement business type models and act like a business wanting to disengage from the true and overriding responsibilities of Government.  If that is overstated, then at the very least he wants to hit the reset button and allow a review on the real purpose of where Government sees itself into the future.

An example of Hockey’s belief system …:

“THE END OF THE AGE OF ENTITLEMENT”

ADDRESS TO THE INSTITUTE OF ECONOMIC AFFAIRS – LONDON

17 APRIL 2012

By: JOE HOCKEY MP


Introduction: …

“… So, ultimately the fiscal impact of popular programs must be brought to account no matter what the political values of the government are or how popular a spending program may be.

Let me put it to you this way: The Age of Entitlement is over.

We should not take this as cause for despair. It is our market based economies which have forced this change on unwilling participants. What we have seen is that the market is mandating policy changes that common sense and years of lectures from small government advocates have failed to achieve. And we have subsequently witnessed over the last twelve months a raging battle.

This has been a battle between the fiscal reality of paying for what you spend, set against the expectation of majority public opinion that each generation will receive the same or increased support from the state than their forebears.

The entitlements bestowed on tens of millions of people by successive governments, fuelled by short-term electoral cycles and the politics of outbidding your opponents is, in essence, undermining our ability to ensure democracy, fair representation and economic sustainability for future generations.” …

continues

Surely Mr Hockey understands that it is the politician who makes the promises to get re-elected, and then spends the money on policies to remain elected.   Does he suggest his Government will be different?

Identifying the problem does not solve the problem!!!

In contrast, my last few posts have taken Mr Swan out for a spin and proved his dunce-hat status when it comes to his ability to understand currency value, and its impact on the trade wars that exists and ignite around labour costs, the efficiencies of Industrial Law, and with a workforce and welfare receipent base all resistant to any form of wage/pension reductions.

Mr Swan’s answer has been to fund the revenue shortfall with new debt, and rather then rein in new spending, his Government has set the wheels in motion with more and new large ticket policies that will mortgage the Nation even further into the future.

Mr Hockey in his address above sees the madness in Swan’s logic and intent.  But then Mr Hockey swings the pendulum toward a commercial context and that puts his position as a politician serving the people,  at odds with the responsibilities of any true democratic Government.

It is only with a review of history that the mistakes made back then can be revealed in the present.

Howard’s middle class welfare spend is where the problems started and currently exist.  Having given that welfare help to people who did not really need it, how does a Government try to take it back from those who already have it.  And in the face of a GFC aftermath that has seen reduced work hours and the only real jobs growth in part-time employment.

For voters the choice is easy – give Gillard the reins and see the Nation become another Greece, or Spain within 3-5 years, of give the keys to Abbott, hoping and trusting his team know what they are doing.

Hockey’s Budget reply response on Thursday will be a real test for the ‘big’ now ‘much smaller’ man.  He is yet to shine on his own in matters of finance and Treasury.

His financial blueprint for an Abbott Government could set up an early election via a ‘no-confidence’ motion in coming weeks.

If he fails – it’ll be back to the drawing board and Mr Swan will get to swoon for a few more months – all to Australia’s detriment.

 

Please – if you found this story to your liking and would like to promote it to your social media contacts – i.e. Twitter, Facebook, or other icon linked account below – please click your favoured Icon(s) to promote the story.  Thank you


Have your say where it counts: – contact your Local Federal Representative via the links below and let them know how you feel about this, or any other topic that you feel strongly about – or you can just post a comment below and let off some steam.


The EYE-BALL Guru …

EYE-BALL’s Guru on – Wayne Swan’s “Treasury Mistakes” – The Evidence of Incompetence – a Ponzi expert in the making.

May 12, 2013 6 comments
The-EYE-BALL-Opinion-Header-2
Latest GURU Posts:


- 10th May – Wayne Swan’s “Treasury Mistakes” – A Follow-Up -


- 29th Apr – Wayne Swan’s “Treasury Mistakes” – Heads must roll – Swan and Bradbury must accept responsibility’ -


- 23rd Apr – Wayne Swan’s – “Investment pipeline” - disappearing before his eyes – where does he go for his next ‘bunny excuse’ -


- 21st Apr – Wayne Swan’s legitimacy – He Says … ‘high A$ causes $7.5b hole since Oct ’12′ – He’s a unique type of idiot  -


- 14th Apr – The Debt Clock ticks … Tic Toc … – Gillard just spent another $3,000 – counting the real cost of this ALP Disaster -


- 5th Apr - Superannuation 2013-14 -  the Government’s new Slush Fund – Proposed Changes show SWAN and SHORTEN’s stupidity -


- 4th Apr - Australia’s Parliamentary Remunerations -
– Part III – Superannuation – The Future Fund -


- 3rd Apr – Government not happy about its tax collect – Claims Tax Minimisation deserves ‘Naming and Shaming’ -


- 31st Mar – The Cyprus Bail-out -


- 31st Mar - Australia’s Debt – and the idiots Managing the Treasury -


- 20th Feb – Australia’s Parliamentary Remunerations - Part II – Entitlements and Allowances -


- 13th Feb - Australia’s Public Sector Remunerations Part I – Parliamentarians “Base-Salary” and “Additional” entitlements -


- 31st Jan – The Devil is in the Detail, there is none – Gillard chooses shock, awe & Spin over Policy -


- 23rd Jan – The Turmoil is Already here – We just have to accept what is coming -


- 22nd Jan – The Turmoil is beginning - Japan’s Economic Stimulus to tip the scales -


To see more GURU posts: – click here …


Title:
- Wayne Swan’s – “Treasury Mistakes” -
- The Evidence of Incompetence -
- A Ponzi expert in the making –

| Author: EYE-BALL Guru | 12th May 2013 |
Link to all Post in Series:


This post has been edited 13th May 2013.

The RBA produce a spreadsheet of Federal Budget expenditures and revenues  on both a monthly, and annual basis.  Link to these spreadsheets provided here.

Extensive extraction of the data allows a full disclosure of the 2012-13 Swan budget.  That research is further produced below.

Financial analysts working for media outlets have the same information as do the countless Bank and other Financial Institution Economists.  These ‘plebs’ or would be discoverers number crunch every day looking for the dark holes in financial reports.

The Federal Budget is the biggest game in town – and yet the void of challengers prepared to call Treasurer Swan out as fraud and liar number so few.

The collective voice has been to allow the Government to sell its ‘revenue write-down’ message whilst those who would and should oppose appear content.

As with the 2013-14 and every other Budget before, Journalists are locked away in the days before the Budget speech with their expert number crunchers and given free rein to do their analysis ahead of the Treasurer speech.

Nobody pays any attention to the full Financial statements – all the attention is on the cash flows and the bottom headline line number outlining whether it be a surplus or deficit.   The tweaks within the budget impacting taxpayer ‘gives and takes’ are the other half of the story.

This author has skills in this type of research and the data represented hereto is an honest appraisal of the facts available, and with the use of some basic logic, and applying some human instinct, and behavioural expectations, the summaries and outcomes made hereto have foundation.

Up first – Treasurer Swan deliberately mislead the House in his 2012-13 Budget forecasts.   He stood and announced a set of numbers he knew to be false – i.e. revenue expectations, and all to a purpose to allow the Government to live the fantasy they delivered on the 2010 promised budget surplus for 2012-13.  The House jeered Mr Swan when he made his speech – see YouTube link here.

Treasurer Swan gave an increased revenue forecast of 11.23% over the previous years than unconfirmed growth of 9.11%.   The 2010-11 forecast number was an overreach as well missing its target by some $12 billion – see Revenues Table below.

Trend growth before these numbers and since 1997 was 6.6%.   Why would Mr Swan predict revenue growth year on year above a 15 year average trend growth?

The only other time since 2000 where revenues have increased anywhere near or above the forecast 9.11% predicted in 2011-12, happened in Howard’s term during 2005-06 when the forecast was 10.48%, and again in 2007-08 when it was almost 27%.

That 27% remains double any previous years best performance.  See link here to see Table to prove these numbers.

New Revenue and Expenditure Tables below compare ‘actuals’ and ‘forecast’ budget numbers.

Revenues:



[Note - the 2012-13 'Actual' number - i.e. $17,000 - is derived from Finance Minister Penny Wong's statement during last week that the budget revenues will be down by $17 billion. This has been taken at face value and used to provide a 2012-13 number for the series.]

This Table presents Forecast Budget Revenues as declared every May for the following Financial year, and then measures that forecast against the actual reported result.  These results report from 2001.

As can be seen, under Howard revenues always exceeded forecast, but under Labor, revenue forecast always exceeded actuals except for the 2009-10 year.

In fact – during the Howard years the forecast verses actual provided windfall revenues of $88.8 billion from 2001 to 2008.  Yet – the ALP record since 2009 shows revenue shortfalls in the same context of  $59.2 billion.

Swan has overestimated revenues every Budget he has delivered and wants us all to believe the 2012-13 failed surplus is yet again because of revenue writedowns because of the high $A and the effects of the GFC.

Mr Swan excels in his magicians ‘rabbits in a hat’ and ‘jokers’ he pulls from his deck of card trick.  He often confuses himself with his interchangeable reasoning.

Expenditures:

Under this ‘Expenditure’ Table extraction – both Howard and the ALP Government’s allowed actual expenditures to exceed their forecast values.

In Howard’s era from 2001 the total spend excess value was $56.7 billion, and under the ALP since 2009 the value is $46.5 billion to the end of the 2012 year.  The 2012-13 number is not available but according to announcements, it is expected to be near forecast values.

The Carbon and Mineral Rent Resources Taxes:

Carbon Tax:

The Carbon Tax came into law as the Clean Energy Future Legislation in Dec 2011.   See Legislation link here

This new Tax had the following agenda – and as paste from AustralianPolitics.com[Note ... this resource has publicly advised that it is closing down and all links used from the source will be broken.  In that light, the text in the above link is pasted below. The media statement referred to is no longer available on the Greg Combet Media Release statement library.]

Carbon Tax Legislation Becomes Law Dec 09, 2011

Royal Assent has been given to the Gillard government’s Clean Energy Future legislation.

The legislation, a package of 21 bills, introduces a carbon tax and associated measures.

Text of media release from Treasurer Wayne Swan, Climate Change Minister Greg Combet, and Families Minister Jenny Macklin:

Clean Energy Reforms Receive Royal Assent

The Gillard Government welcome the Royal Assent of a further 21 bills of the Clean Energy Future Legislative Package and the proclamation of their commencement dates.

The completion of this process means that the Government has the central legislative pieces in place to deliver a clean energy future for Australia.

The Clean Energy Act 2011, Clean Energy (Household Assistance Amendments) Act 2011, Steel Transformation Plan Act 2011 and Australian Renewable Energy Agency Act 2011 and 17 related bills have all now received Royal Assent.

The Carbon Farming Initiative and Australian National Registry of Emissions Units commenced operation yesterday, after those acts received Royal Assent in September of this year.

The administrative provisions of the Clean Energy Act 2011 will commence on 2 April 2012, meaning that the Clean Energy Regulator can start operations to prepare for the introduction of the carbon price on 1 July 2012.

These laws will drive a fundamental transformation of the Australian economy and provide support to low and middle income households as we cut pollution and continue to grow our economy.

With the formal commencement of the national registry, Carbon Farming Initiative and the certainty provided by these acts, clean energy investment and the further development of carbon markets in Australia can begin in earnest.

Australia’s Clean Energy laws will deliver the following:

  • A carbon price of $23 per tonne will apply to around 500 of the nation’s biggest polluters from 1 July 2012;
  • The carbon price will transition to a flexible price cap-and-trade emissions trading scheme on 1 July 2015, linking Australia to international carbon markets;
  • The tax free threshold from 1 July 2012 will be tripled from $6,000 to $18,200, freeing up to a million people from having to lodge a tax return;
  • There will be payment increases for pensioners, equivalent to a 1.7 per cent increase in the maximum rate of the pension. There will also be similar increased payments for other government payment recipients, including eligible families, self-funded retirees, students and job-seekers. These payments will total around $7 billion in the period to 1 July 2015;
  • The Jobs and Competitiveness Program will support our emissions-intensive trade-exposed industries and help them to reduce their carbon and energy intensity;
  • The $300 million Steel Transformation Plan will support our steel industry;
  • The Energy Security Fund will provide assistance to the most emissions-intensive coal-fired generators, support energy security and help transition to cleaner energy;
  • An independent Climate Change Authority will be established on 1 July 2012 to advise on pollution caps and climate change policies, taking into account Australia’s legislated reduction target of 80 per cent below 2000 levels by 2050.

These measures will drive substantial reductions in the carbon pollution of the sectors they cover. The Government expects reductions by 2050 of 90 per cent of expected waste emissions, 76 per cent of expected electricity emissions, 62 per cent of expected fugitive emissions and 53 per cent of expected industrial process emissions.

The first household assistance payments will be made in May and June 2012, to help households get ready for the modest impact of a carbon price.

The initial Clean Energy regulations covering the landfill waste prescribed distance and applications for the Energy Security Fund have now been made.

The provisions of the Climate Change Authority Act 2011 to formally establish the Land Sector Carbon and Biodiversity Board commenced today.

In 2012, the Government will add the Clean Energy Finance Corporation (CEFC) to this legislative framework. The $10 billion CEFC will invest in commercialising clean energy projects, unlocking significant new private investment in renewable energy, low pollution and energy efficiency technologies.

… can still be read on-line at: Wayne Swan’s Media Release library

Noise … Noise … Noise …

You read the ‘Clean Energy’ promised spends right … Greg Combet believed in everything he was saying on that night and would never have entertained a view would turn out to be mostly fairy tales, all made up to sell a new tax to create a revenue illusion.  A tax that has no direct benefit in the global warming hoax,  a tax that was hatched on the back of the alarmist theory to the global climate change phenomena engulfing the globe.

Combet is now knee-deep in his own ICAC inquiry into his relationship to disgraced former NSW Resource Minister Ian MacDonald.   Combet’s demons are coming back to haunt him.  see story here …

The forecast Carbon Tax  revenues were estimated as: Source linked here

  • 2012-13 = $4.010 billion
  • 2013-14 = $6.640 billion
  • 2014-15 = $7.340 billion
  • 2015-16 = $6.750 billion

The forecast revenues from the Carbon Tax across the forward estimates amount to almost $21 billion from 2013-14.   Mr Swan is now using these numbers to justify revenue writedowns across the forward estimates.   Talk about floating a boat …

The forecast MRRT and PRRT revenues i.e. Resources Rent taxes were estimated as:  Source linked here

  • 2011-12 = $1.463 billion
  • 2012-13 = $5.400 billion – MRRT commenced.
  • 2013-14 = $6.400 billion
  • 2014-15 = $5.630 billion
  • 2015-16 = $6.620 billion

These forecast revenues from the Rent Resources taxes across the forward estimates amount to almost $18.5 billion from 2013-14.

Combined with the Carbon Tax forward estimates, this makes a total of $40 billion of lost revenue across the forward estimates.   That represents 50% of the $80 billion Mr Swan claims has gone missing across the forward estimates.

Can it be said that the forward estimates were inflated in the first place?

That Mr Swan was creating a false set of numbers so he could deliver a promised budget surplus?

And if that be so – that then leads to the allegations that Mr Swan mislead the House on Budget night in his Budget estimates and deliberately so… the only other explanation can be that gross incompetence was involved – and yet he is still the Treasurer.

The Carbon emissions trading scheme was to be introduced with a floor carbon price of $23/tonne.  In the last week Combet announced the abolishment of the promised tax concession worth $1.4 billion that came attached to this scheme.  Link to media release

All the future promises made as outlined in the Clean Energy Bill media released published above are all now doubtful, with exceptions for those already paid, and/or already locked into future benefits payments.

With all the ‘mendacious’ pomp and ceremony Combet used to promote the Carbon Tax and its Emissions Trading scheme, and the ‘mud-in-you-eye’ slurs aimed at the Opposition, will Combet now eat his ‘humble-pie’ and line up for the free shots aimed at him?

Budget Forecasts:

Let’s face it – crystal ball forecasting is all Treasury estimates can offer given the global economic turmoil we and the rest of the world are dealing with.

That is not to diminish the Government’s responsibility in any way to deliver honest Governance.  How dare they hide behind what they do not know.

If the future is uncertain on any scale where revenues are circumspect, surely the prudent and responsible thing to do is the practice restraint and try to encourage the same with the electorate.   You do remember the 40% pay increases the Federal Government all voted themselves after Gillard ousted Rudd in 2010?

Previously Rudd had imposed a freeze on Parliamentary pay increases.

Decades of Government’s getting into power based of election promises and once there,  applying a different set of policies and rules to stay in Government is the cause of the GFC in the first place.

Prime Ministers come and go as do Treasurers and the like, their mistakes remain for the next lot to fix and the likes of Gillard and Swan get to walk off into the sunset on lifetime pensions we can only dream about.

If the Government were to have the same accounting and prudential standards as public listed companies, and the electorate were the shareholders, the shareholders would have receive no dividends since Labor took office.  In addition they would have had to top up their shareholdings with new equity to cover the ‘deficit(s)’ and the new debt created  as a result.

Under Howard’s 11 years in office – those same shareholders would have received dividends each and every year.

This is the measurement of the competence of this ALP Government in a business like assessments.  They SUCK!!! 

In fact – the laws Swan and his minions have broken in corporate fraud terms would see them off to serve some serious time.   The reality – $300 billion of gross incompetence … that’s 300 times what Madoff ripped from his clients.

Many of the projected offsets from the Carbon Tax have been implemented before the revenues came home or were verified.

The same with the MRRT and as those mistakes came home to roost, and became a reality for Gillard and Swan to deal with, all that could be done was to inflate the revenue numbers as a fraud to cover up the broken promise of a budget surplus for 2012-13.

Those who understood what was afoot mostly stayed silent or were no heard, and that would have included many Treasury bureaucrats who were a part of the number output.  They would have known every time Swan fronted the media he told porkies, as did every other Minister, MP, and Senator trying to sell Swan’s fanciful reasoning about revenue writedowns.

Technically – to say there were revenue shortfalls as measured against the forecast revenues is correct – but in the context of a larger responsibility, a forecast revenue inflated so as to justify expenditures, and election promises,  is as big a fraud as there is.   Swan has facilitated a climate where they have run the Nation into the ground with expenditures they knew could not be paid for from existing revenue collections.

The MRRT:

See ‘Guide to MRRT’ published by Hawker Britton here.

Treasurer Swan and his fellow Ministers have presented the shortfall in tax collections from the MRRT as a result of an economic slowdown.  He claims that the tax is a ‘profits based tax’ and that the mining industry is facing harder times then the Government expected.

Poppycock!!!

The MRRT was a tax grab to fund expenditures – the States own the mining royalties and the Federal Government wanted a slice of the pie.   There is still a legal challenge before the High Court on the validity of the MRRT and whether it has purchase up against the States constitutional entitlements.

The forward estimates from this Tax have been shown to be a sham from the first quarter collect in Sept 2012.   Already this year,  [2012-13] the shortfall looks like being $2-3 billion against the budget estimates.

It has been revealed that to placate the Mining Industry campaign against MRRT mark 1 under Rudd, Gillard used the issue to oust Rudd and did a deal with the miners that made the tax collect impotent.   It was doomed by the Legislation from the outset yet the Government kept the forward estimates in place.

What would be the Government’s Motives to lie:

The revenue table above proves that the ALP have overstated their budget and forward estimates well above trend growth of 6.6% for the period 1996-2008.

The reasons are obvious – from 2010 Gillard and Swan made promises about returning the budget to surplus by 2012-13, and when the new Carbon and MRR taxes failed to provide the forecast buffer revenues needed to fulfil those promises – they had to make a decision to either come clean about the promised 2012-13 surplus, or fudge the revenue numbers to create the illusion of a budget surplus.

This is evidence by the increased revenue forecast growth year on year from 2011-12 at 8.74%, itself well above the trend growth of 6.6%, to 11.23% for 2012-13.   With this growth forecast, Swan was able to announce the small $1.5 billion surplus in May ’12.

That decision created a fraud about the budget revenue position and the Government used this lie to cover its promised budget surplus for 2012-13.  It was a fraud upon the Australian people.  That fraud is still on-going today and more will be added on Tuesday during Treasurer Swan’s 2013-14 Budget speech.

Some further evidence to support this theory is provided below.

The 2012-13 Budget Speech May 2012:linked here

Spending Savings:

A headline feature in Swan’s Budget preamble for the 2012-13 Budget was a forecast savings in expenditures across the forward estimates.  The chart used to highlight these savings in the Budget Papers appears below:

The commentary produced with this chart can be read in full here – but states in part:

Targeted spending cuts

In returning to surplus the Government has ensured the budget is in good shape over the long term while maintaining our commitment to fairness and improving skills, health and education services.

Ensuring balance

We are returning the budget to surplus through targeted spending cuts, which retain fairness, place the budget on firmer ground and achieve better value for taxpayers’ money.

Over $33.6 billion in saves have been identified in this Budget with less than half being tax. This builds on the over $100 billion of savings we identified over the last four Budgets.

In making these decisions we have applied our core values of protecting the most vulnerable in our community and the frontline services Australian families rely on.

We remain committed to providing the skills for tomorrow’s workforce and continuing to improve our health and education systems.

By focusing on fairness and value for money the Government has been able to prioritise spending to people most in need… continues …

Nothing in this statement makes any sense when comparisons with the forecast numbers produced in the 2012-13 budget are analysed.

If Mr Swan claims to have made $33.6 billion in saves … would that not generate an expenditure downgrade of a similar amount in the forward estimates?

The forecast expenditure growth for 2012-13 over the 2011-12 Financial years only reduced by 0.39%, or $1.466 billion.  That would mean that after having trimmed/identified $33.6 billion in savings, the Government went and spend all but $1.466 billion on other new policy initiatives.

What creditability can Swan claim after finding savings but decided to spend it elsewhere?

2012-13 Budget Overview:  linked here

This Overview is 40 odd pages of expenditure highlights and one or two pages of revenue explanations – a summary where revenues have been tweaked to pay for the expenditures.

This again provides evidence that Government’s focus is all on the expenditures trying to sell the electorate about the extra ‘goodies’ they will receive in their pay packets.

The ‘bad’ news in how those ‘goodies’ are to be paid for is something all Government’s want to play down.  This is the politics and as a factor in any equation, the factor used is what makes the formula look good or bad.

In this instance that factor used is the propaganda and it has become of greater importance than any reality attached to the hard numbers.

Tax Revenue as a % of GDP:

In the 2012-13 budget papers a chart was used to show Australia’s low rate of tax revenues to GDP ratio.  Linked here …

The linked chart appears below: – [click to enlarge in a new window.]

What the chart does not tell you is that all State and Local taxes imposed in this Nation are not included in this chart, a propaganda mis-direction that works every time because nobody asked the questions.  See reference here …

Nobody is ever going to paint themselves or use data that portrays them in a bad light.  One has to go looking for the mistakes, the holes, the cover-ups and that is what our Media are charged with.

We are a Nation of blind idiots and continue to accept what our Leaders tell us all the time.   Those who should know better have become apathetic to their responsibilities. This allows the likes of Swan and Bradbury to roll out their agendarised version of what the Government wants us to believe.

We deserve every thing that a Government does during its term in office – when is the watchdog watching the watchdog, who in turn is also watching the watchdog so to speak, going to expose the truth.

GDP Growth:

Another angle or perspective is to look at long-term GDP growth – see chart pack below – Source Trading Economics[click on charts to enlarge in a new window.]

Between the 1990 figure of $305 billion, and the 2004 number of $455 billion, we see a growth rate of near 50% over 15 years.   By comparison, we’ve seen GDP grow to $1.37 billion by 2012 according to ‘Trading Economics’ updates, and we know that the RBA has the GDP number at $1.45 billion at the end of 2012, that represents some 300% growth in the last 8 years.   That growth had to come from somewhere!!!

The only economic events of importance during that 2005-2013 period were the continuing resources boom, the GFC, and the stimulus supplied by the Federal Government post GFC.  Look to the growth acceleration post 2008 when the Governments stimulus started.

On this basis alone – it can be argued that this GDP growth as another example of how Government spending influences crucial and relevant economic indicators.

By comparison, the USA and other Trading partner GDP growth rates for the same period are exemplified in the following chart pack:

 

Canada:

About the only Nation with a similar chart structure, if not the same growth percentages.

The UK:

Japan:

China:

By far a chart with extraordinary growth numbers. No wonder Australia survived the GFC and then that poses the question – why the continued stimulus spend into 2010 and beyond?

EuroZone

These comparisons re all Northern Hemisphere verses Southern hemisphere, and explain the reasons how Australia survived the GFC – China’s growth alone provided us with GFC insulation.

No other western Nation has GDP growth like Australia and it is hard to fault the Government on that point.

Given the cost of the high A$ and its impact on revenues and economic downturns in all Industry, jobs, and infrastructure, where does one look to find reasons for the exponential GDP growth?

It can only be Government debt induced – and that is not what an economist would call genuine growth.

Inflation Index:

It’s been a long-held belief that the ‘inflation’ index as used to spike annual Government budgets,  is also used to ensure the economy moves forward in GDP terms.

Yet the inflation CPI index is the barometer used to measure the strength of the economy and what feeds from that drives every other economic indicator.

In other words it’s a ‘loop’ equation, without one i.e. the positive CPI – the economy would stall and all Government revenues would also stall and fall away – commonly referred to as ‘deflation’…

All commerce is a supply and demand equation – inflation indexing just gives the right to increase as a part of the loop equation.  If supply is abundant you would think prices would come down – this happens in produce in seasonal terms, yet in Labour terms when unemployment grows, the response should be cheaper labour costs.

When Government services are cut and staff laid off, those staff without jobs would surely work for the Government at a lesser cost then the staff who were not laid off.  This should bring wage cost dow in a true and free market.  But – the Unions enter the equation here and in coming years you can expect immense pressures on wage costs as Australia’s competitiveness with the rest of the world erodes further – another by-product of the high A$ policy.

The point being – the inflation index is not a true nor realistic economic indicator in free market terms.  Yet – the Government’s use of it to frame year on year Departmental Budgets creates the illusion they have to increase budgets, pensions, and the like in tandem to the CPI increases.

This view is truly a black and white view and not so much applicable or tried in any modern economy.     Modern economics is in disarray because of the GFC and its destruction to forecast modeling.

If the revenue side of Governments budget is derived from a multiplier of the targeted inflation forecasts,  then again multiplied out across the forward estimates using a variable multiplier, how can a forecast be treated with any accuracy?

Any public listed Company, or medium to small business who produced budgets like this would have their shareholders and Bankers sacking CEO’s and the Board.

Revenues are where all profit based business’ operate from.  Why is it different for Governments?

Opposition Creditability:

The research on display hereto is available to anyone interested in exposing Swan’s Budget lies, and to that point, why is the Opposition spokesperson Joe Hockey,  unable to land any real blows against Swan.

Me thinks that the Opposition Treasury understanding and knowledge base is challenged in theory and conditioned by the same Treasury modelling in trying to find real fault with Swan and his Treasury performance.

It might be because they don’t what to discredit Swan too early before the election and let some new Treasurer they don’t know run the show – hardly.

I can advise the Opposition there is nobody on the ALP side who could do the job, and if Swan is the best of them,  Australia deserves everything Swan leaves as an aftertaste when he exits.

Best Treasurer in the World – ha … a gong awarded by overseas investors who have had their siphon hoses plugged into Australia’s wealth for the last 10 years.

Swan lives in a fantasy land:

Swan gave an interview with Laurie Oakes Sunday morning.  That interview can be read in full here… and in part Swan responded as pasted below:

OAKES:

But a year ago you budgeted for a surplus of $1.5 billion.

TREASURER:

That’s right.

OAKES:

Now wwe are now facing a massive deficit, rather than a surplus. The Fin Review says $17 billion. Is that close?

TREASURER:

Certainly $17 billion [write-down] in 2012-13, and the nature of the revenue write-downs do spread across the forward estimates. But I was faced with a choice, the government was faced with a choice. We could turn around in the face of those revenue write-downs and cut to the bone, slash spending right now and hit jobs, and push up unemployment. Or, stand up and explain to the Australian people that our number one priority is to support jobs and growth, and that’s what I’m doing…

OAKES:

Just about everybody said a year ago that you were mad, that you couldn’t achieve it.

TREASURER:

I’m sorry, that’s not right. There is no credible economic forecaster who predicted this nature of revenue write-down for this year, or across the revenue estimates. Can I just explain why? What we have had happen in our economy in the last three quarters of last year is that nominal GDP growth for the first time in 50 years has fallen below real GDP growth [for three quarters]. We also had a situation where the Australian dollar remained high, when the price of our exports fell – something that has never happened before. The combination of those factors is what has hit all of the profit-based taxes in our revenue lines, and are resulting in these revenue write-downs. And Laurie, that wasn’t predicted by any serious economic forecaster last year.

OAKES:

Joe Hockey predicted it.

TREASURER:

Well Joe Hockey’s always always out there preaching doom and gloom…

OAKES:

He’s been proved right.

TREASURER:

No, he hasn’t been proven right. Our economy is among the strongest in the developed world. But what has happened in the past year is that our revenues have been hit. The responsible course of action when faced with that is to support gobs and growth. So I stood up last December and said it would be unlikely that we would come back to surplus in 2012-13. At that stage, the revenue write-down from the mid-year budget update of $4 billion had been achieved over the first four months of the financial year. And as we’ve gone through this year, the revenue write-downs have got larger and larger, and at every stage of that process I’ve informed the Australian people about what has been happening, and I have taken the responsible course. I’ll take my medicine; I’ll accept the politics of this are very uncomfortable. But getting the big economic decisions right to support Australian jobs is what people expect of me, no matter how uncomfortable that is politically.

… continues …

Oakes nailed him, skinned him, all but pissed on him … and Swan sat there and kept telling lies … and they say there is no crime in a Politician telling a little white lie …  Oakes … you are over and need to get a new gig …

Summary:

To offer up some mitigation – Gillard and Swan did try to plug the revenue gap with the Carbon and MRR Taxes.   Neither came near forecast predictions and are now in tatters with the collapse of the Carbon Price in Europe, and the end to the mining boom from Australia’s perspective upon us.

Swan and the Treasury should have known tax collections would be down after the GFC because of the equity and other GFC writedowns carried forward.  Also the property investor with negative gearing assets has been able to offset their payee tax with property writedowns because of the lackluster property markets.

All the revenue forecasts took none of the GFC aftermath into account. That is all on Swan.

Next Tuesday 14th May ’13 is Budget night and Swan will put on his magicians cloak yet again and try to mesmerize Australia with his own brand of magic numbers.

Unfortunately – this little Aussie battler will have to be content with throwing rotten tomatoes at the TV because he can’t be at Parliament House to do it personally from the public gallery.

Believe what Mr Swan has to say at your peril …

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The EYE-BALL Guru …

EYE-BALL’s Guru on – Wayne Swan’s “Treasury Mistakes” – A Follow-Up -

May 10, 2013 6 comments
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Latest GURU Posts:


- 29th Apr – Wayne Swan’s “Treasury Mistakes” – Heads must roll – Swan and Bradbury must accept responsibility’ -


- 23rd Apr – Wayne Swan’s – “Investment pipeline” - disappearing before his eyes – where does he go for his next ‘bunny excuse’ -


- 21st Apr – Wayne Swan’s legitimacy – He Says … ‘high A$ causes $7.5b hole since Oct ’12′ – He’s a unique type of idiot  -


- 14th Apr – The Debt Clock ticks … Tic Toc … – Gillard just spent another $3,000 – counting the real cost of this ALP Disaster -


- 5th Apr - Superannuation 2013-14 -  the Government’s new Slush Fund – Proposed Changes show SWAN and SHORTEN’s stupidity -


- 4th Apr - Australia’s Parliamentary Remunerations -
– Part III – Superannuation – The Future Fund -


- 3rd Apr – Government not happy about its tax collect – Claims Tax Minimisation deserves ‘Naming and Shaming’ -


- 31st Mar – The Cyprus Bail-out -


- 31st Mar - Australia’s Debt – and the idiots Managing the Treasury -


- 20th Feb – Australia’s Parliamentary Remunerations - Part II – Entitlements and Allowances -


- 13th Feb - Australia’s Public Sector Remunerations Part I – Parliamentarians “Base-Salary” and “Additional” entitlements -


- 31st Jan – The Devil is in the Detail, there is none – Gillard chooses shock, awe & Spin over Policy -


- 23rd Jan – The Turmoil is Already here – We just have to accept what is coming -


- 22nd Jan – The Turmoil is beginning - Japan’s Economic Stimulus to tip the scales -


To see more GURU posts: – click here …


Title:
- Wayne Swan’s “Treasury Mistakes” -
- A Follow-Up -
| Author: EYE-BALL Guru | 10th May 2013 |
Link to Previous Post in Series:


The media cycle has become polarised around the ‘BUDGET’ black-hole … and the Government’s inability to sell the message that it is not to blame.

Common … nominal GDP verses real GDP … we’ll get to that a bit later …

Then there was the ‘Citizen John’ example Gillard used in her own budget write-down explanation whilst trying to sell another Government mis-direction.

When stupidity and ignorance combined it makes for a special kind of dumb.  Gillard, Swan and all the other Team Gillard neanderthals have constantly shown their preponderance to change their stories to suit the moment.

Australian’s are not buying the excuses for the revenue shortfalls – and they have every right to think that way.  Everybody is looking at this from the wrong angle – the Government has been selling the message that it is revenue writedowns as the reason for the widening deficit.  Every economist out there has happily jumped on board and supported the claims with facts against forecasts and actuals.

If they were good at their job rather than follow the scent laid down by the Government, if they had a ‘light-bulb’ moment and look at the flip side, a place the Government does not want anyone poking around – you will see where the carnage really is.

The Table and Chart presented in the previous post, and again displayed hereto – shows the expenditure growth from 2007-8 and paints a clear picture of how the Rudd and then Gillard Government went on their spending sprees.

[Click on Image below to enlarge Table and Chart in a new window.  The 2013 figures are from latest estimates.]

It’s quite simple really – Rudd came to power in late 2007 – and the 2007-08 budget set under Costello was on target for a monster surplus.   That surplus ended up being $28 billion – by far the largest surplus of any Government in Australia’s history.

From that $28 billion surplus in ’07 – ’08, to a $32 billion deficit in ’08 – ’09 is some sort of crazy madhouse spending spree.  This was still Rudd and we know about GFC educed:

  1. the ‘School Building program’,
  2. the ‘Pink Bats’,
  3. the $1000 cash handout just before Xmas 2009 to all pension recipients, and then there was the,
  4. the second $1000 cash handout to families a few months later.

To get your head around a $60 billion single year increased spend:

  • the total Defence budget has averaged $15 billion per year since 1996 -
  • the total Education yearly spend average over that same 17 years is $17.5 Billion,
  • Health has averaged $36 billion, and
  • Welfare averaged $84 billion since 1996 and the 2009 spend was $124 billion – an increase of $27 billion over the 2008 number.

This was in the middle of a GFC panic and it was global – some four years later the Central Banks spend has proved crippling to all across the Nth hemisphere – Australia claims to have escaped the worst and that optimism is about to crumble.

Rudd’s GFC panic has amounted to short-term gain for a long term pain.  Whatever Rudd’s agenda was to reign in the budget spend was superceded when he was booted in a night of back room deals and Union movement and all to a plan.

Gillard’s appointment gave he and her backers the socialist platform and the stage from where they could execute their agenda.  The spending would not stop and the evidence is there.

To placate alarmist economists the 2012-13 budget was promised to be in surplus and still the new policies and their expenditure rolled out.  Nobody minded because Gillard sounded sincere about the surplus budget in 12-13 … and it was so up until Dec ’12 when the Government came clean and announced it was abandoning its surplus target.   That surplus has now been revise several times i.e.

  1. Nov ’12 from 1.5 billion surplus to $.5 billion surplus,
  2. Dec ’12 from a small surplus to a small deficit,
  3. Feb ’13 due to revenue writedowns looking like a $5 billion deficit,
  4. Apr ’13 due to further revenue writedowns it looks like being $12 billion,
  5. May ’13 revised again when Finance Minister announced that writedowns now look like being $17 billion.

The true is they have no idea … they have put in place irreversible policy spending and the revenues have increased well above trend/average as the table above shows – but the problem the forward estimates created has come back to haunt Gillard, Swan and the Gillard sideshow of Ministers.

None of them can explain because none of then knew from the outset how bad a Treasurer Wayne Swan really was.   Spending is easy when all you have to do is ask … is just plain crazy to believe that in a GFC impacted world  – finding new revenues to fund new spending will happen without cuts in other areas and restraint.

The writedowns from the equity markets since 2008, the property market flatline,  the interest returns in a low-interest rate environment,  whoever did the forecast numbers on forward estimates for:

  • corporate tax revenues,
  • the property negative gearing impact,
  • the increased pension payouts to self funded retirees when their investment income fell off a cliff,
  • the high A$ impact on tourism, trade, manufacturing, retail, agriculture, mining, and
  • the increased subsidies – i.e. the car manufacturing industry

… had to have some idea what was going to happen.

These writedowns should have been obvious to Treasury, the RBA, and Government advisors in economic terms, and the advice would have been given up the chain.

The issue then becomes why did the Government and its policy advisors ignore the obvious downstream impact issues that would arise if they continued with their spending programs?

There was a magnificent opportunity offered up when the A$ v US$ fell from parity to below A$0.50c in the turmoil of the GFC in late 2008 and early 2009.  This happened as off-shore investors pulling their funds out because they saw the end of the resource ‘cash and carry’ trade.

A decision was made then and there that off-shore capital was more important to the Nation than a devalued currency.   Having got the monkey off our backs in that A$ sell-down,  the RBA and Swan invited the carpetbaggers to hop on board again, and that saw the A$ rise just as quickly, retracing all it’s lost value and more within the next 8 months.

Glen Stevens has to wear the ‘dunce-hat’ on this one along with Wayne Swan – why did the Government allow the off-shore investors to return without a levy?

They should have known what a high A$ would mean in terms of long-term trade and labour costs, and was the reason why the Australia’s resources had lifted the value of the currency in the first place.

This mistake has cost the Nation A$trillion’s in lost trade, industry, labour force, and other domestic revenues, and will continue to harm all Australian industry well into the future as we will continue to export jobs offshore.

We are not in the same position as Spain, Greece or any other members of the P.I.G.S – but give us time.

Our real unemployment number is well above 10%, and perhaps as high as 20% if the measure was against those seeking full-time work.  The 960k jobs Swan boasts about having created is made up of near 55% part-time jobs … see Guru post here – the table data to prove these facts is reproduced at right – [click to enlarge.]

The boasts about our 5.5% unemployment is really ‘sock-in-mouth’ stuff … why highlight a weakness and promote it as a strength.   For many years long-term unemployed have been shifted off the number and parked in some other category … the ABS numbers come from sampling and have done so for many years.  If anyone understands the sampling methodology then you know that the error margin in regional areas is very high.

This all gets us to the Welfare spend – the ‘third-rail’ of all politics – you ride it at your own peril as President Jed Bartlett put it – [West Wing] …

Yet a most interesting stat revealed has the ALP government Welfare spending reduced signficantly as a % spend of all expenditures – look at the Welfare spent Chart at right to get an appreciation of the difference – [again - click to enlarge.]

Crazy to believe right – how can an ALP Government spend less on Welfare than Howard did?

To get to that answer,  the Budget Accounts requires a lot more research.  Where else could the Rudd/Gillard tenure spending be hidden in the accounts … that and more information will be forthcoming in another post.  Now to the nominal GDP verses real GDP explanation.

Nominal GDP v Real GDP:

Who out there understands Treasurer Swan when he gets a ‘gimmick’ study from his Treasury baboons to explain away the point he is trying to make. read what Wikipedia has to say about Nominal GDP -

Nominal GDP and adjustments to GDP

The raw GDP figure as given by the equations linked here is called the nominal, historical, or current, GDP.

When one compares GDP figures from one year to another, it is desirable to compensate for changes in the value of money – i.e., for the effects of inflation or deflation. To make it more meaningful for year-to-year comparisons, it may be multiplied by the ratio between the value of money in the year the GDP was measured and the value of money in a base year. For example, suppose a country’s GDP in 1990 was $100 million and its GDP in 2000 was $300 million. Suppose also that inflation had halved the value of its currency over that period. To meaningfully compare its GDP in 2000 to its GDP in 1990, we could multiply the GDP in 2000 by one-half, to make it relative to 1990 as a base year. The result would be that the GDP in 2000 equals $300 million × one-half = $150 million, in 1990 monetary terms. We would see that the country’s GDP had realistically increased 50 percent over that period, not 200 percent, as it might appear from the raw GDP data. The GDP adjusted for changes in money value in this way is called the real, or constant, GDP.

The factor used to convert GDP from current to constant values in this way is called the GDP deflator. Unlike consumer price index, which measures inflation or deflation in the price of household consumer goods, the GDP deflator measures changes in the prices of all domestically produced goods and services in an economy including investment goods and government services, as well as household consumption goods.

Constant-GDP figures allow us to calculate a GDP growth rate, which indicates how much a country’s production has increased (or decreased, if the growth rate is negative) compared to the previous year.

Real GDP growth rate for year n = [(Real GDP in year n) − (Real GDP in year n − 1)] / (Real GDP in year n − 1)

Another thing that it may be desirable to account for is population growth. If a country’s GDP doubled over a certain period, but its population tripled, the increase in GDP may not mean that the standard of living increased for the country’s residents; the average person in the country is producing less than they were before. Per-capita GDP is a measure to account for population growth.

Here is a YouTube clip to help you understand -

In Principal it’s part of a card shuffle number crunchers use to confuse the audience when numbers don’t give you the answer you want.

This was Wayne Swan’s explanation … [the GDP explanation begins near the 5min 30sec mark.]

I counted 50+ outright lies Swan told to cover his mistakes and incompetence. The lies are subjective if we use the ‘nominal’ verses ‘real’ argument …

Blaming the high A$:

Swan uses the high A$ value as a reason for revenue writedowns – yet the A$ has been well – some 40%-50% above its mean average – [A$0.75c v US$] since the float in 1983. No Government has used the value of the A$v as a reason previously – yet it has been at these levels for over 10 years … it is desperate in the extreme to blame revenues when they have actually grown at 7%+ in 2012-13 and above trend of 6% since 1996. The 2012-13 forecast revenue growth at 25% to cover the expenditure that had to be funded to allow the Government to bring its forecast budget surplus in when they announced the 1012-13 budget in May ’12.

Blaming the Treasury Forecasts:

Yes – that’s right – the Government knew in May ’12 that it was selling a budget that misrepresented the facts. The Nov ’12 review revised it ever so slightly – and four months later is was a $12 billion budget hole, and now it is a $17 billion budget hole.

Treasury don’t make these mistakes – or are we to believe that the $11 billion black hole they found in the Coalition’s 2010 election policy initiative might have been equally wrong. It raises more questions then it answers.

Are the Treasury ALP stooges … are they prepared to ‘cook’ the books for political outcomes?

Truly legitimate questions now that the modeling used to predict the surplus has proved to be so horribly wrong.

No matter who the Government, i.e. Swan, Wong, Bradbury, and any other MInister or spokesperson sent out to sell and gift the media the next story in this crumbling facade – the reality is that Government’s lock in spending via policy’s they make to win elections.  Been happening for 40 plus years.

The revenue side of the equation comes after the fact and if they screw-up the economy then we get to where we are now.

The high A$ has cost Australia $trillion’s in trade, revenue, GDP growth, and many other connective opportunities over the last 10 years or so … yet no one thought to think about currency intervention to protect the economy – hell they still think it is wrong to do so despite RBA Governor Glen Stevens comments made when he announced the .25% interest rate reduction this week – see comments here.

For the educated observer and some who understands logical argument – Swan has no creditability, nor any entitlement to be a Treasurer.   His baboons beneath him are appointed on the basis that are not allowed to be any smarter than Wayne Swan.  In fact that type of hiring mentality is across all the public service hiring policy.  It’s the reason the asylum has been taken over by nutjobs – nobody has a clue from the top down.

Abbott and Hockey have their work cut out because in matters of finance – they hold no better credentials that Swan or any other of the current bushranger pack.

You have to be able to trust the Treasury modeling if in fact it is not doctored for political outcomes.  For Treasury to have got it so wrong creates a smell that just won’t do away.

Was Gillard’s forcefulness and commitment to her agenda of spending – when stacked up against a choice for the bureaucrats to either do what I tell you to do, or find another job, the reason they are being blamed for getting it so wrong?

Support argument comes in the fact that the Public Service offers very generous perks and the like – and rather than lose those benefits, senior bureaucrats and the like shut their mouths and do as they are told.

It would seem that integrity, or the standing up for what you believe in is no longer regarded as a personal quality required to work in Government anymore.

Another piece of advice for Mr Abbott – sack every Department head and three rungs down when you take office – hire people from the private sector on MP parliamentary ‘base salary’ levels and offer a bonus to those who get the job done.   Use the – ‘Serve your Country’, or ‘your Country needs you’ motif to sucker some high flyers in to give back.   I don’t see it happening – but you can only try to improve the collective brain value of so-called experts in the Treasury.

The next Guru post will be about the Budget Expenditure breakdowns …

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The EYE-BALL Guru …

EYE-BALL Opinion – EYE-BALL MediaZone Growl No: 2 – The SMH’s – Mark Kenny … Chief Political Correspondent

The-EYE-BALL-Opinion-Header-2
Title:
- EYE-BALL MediaZone Growl No: 2 -
- The SMH’s – Mark Kenny – chief political Correspondent -
- on a story titled -

“Gillard’s fine reforms slip between the gap…”
| Author: EYE-BALL MediaZone | 9th May 2013 |
The EYE-BALL MediaZone aims to highlight media content that misleads, is inaccurate in its reporting, and has an agenda other than to report the facts as they relate to the content and context of the story.Today’s story was a clanger and was to be expected from the ALP loving Fairfax Media owned Sydney Morning Herald.   Their Chief Political Correspondent Mark Kenny penned a story that told us:

‘ … The PM’s policy record holds up well. It’s her political skills that let her down, badly…’

‘…But for the bulk of Labor’s reforms, the policy progress holds up well. And often, where the final result has lacked sheen or has been a failure – as in the mining tax – it is precisely because the politics came to overwhelm the original policy…

It is a stretch by any journalist to claim that Gillard’s record – ‘holds up well’ … any journalist who does have an agenda that is in conflict with reality often writes about what troubles them most.  That is why editors are there to ensure objectivity … but what can you do when the Editors have the same problem.

What motivates a journalist to promote ‘chuck stake’ as ‘prime rib’ as Gillard is to Paul Keating, or Bob Hawke. Surely a journalist understands the difference and that they should never slant a story to promote their own political views … yet, we live in an age where the media have become mouthpieces of the message the Government wants sold.   The Media industry have become street beggars, street walkers prepared to sell their column space for an inside tip to a bigger story.  Politicians use these media whores like masters abuse their slaves … and the media keep coming back for more.

Sadly – there are not too many alternatives when trying to understand Mark Kenny’s point of view in his version of Gillard history reproduced in full below:

Gillard’s fine reforms slip between the gap


| Author: Mark Kenny | Date: May 8th, 2013| Link to On-Line Story. |

The PM’s policy record holds up well. It’s her political skills that let her down, badly.

In his first 30 days in office, an impatient Gough Whitlam introduced a vast array of reforms such as ending conscription and releasing draft-resisters, protecting crocodiles (then being hunted to extinction) and removing what some called the ”luxury tax” on female contraception. Equal pay for women was also given fresh impetus.

More reform was to come over the next three years – arguably too much. After Labor’s 23 years in the wilderness, expectations were high. It didn’t end well.

For all the arcane arguments about constitutionality, convention and chaos, the common reduction was that Whitlam tried to do too much.

Now, as the polls presage an ALP slap-down of similar proportions in September, the question arises: how will people shorthand the Gillard era once the fog of war has cleared? Perhaps this: good at policy/bad at politics.
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Critics will bristle even at this concession, pointing to the carbon ”tax”, the mining tax, the dissembling confusion over asylum seekers, the botched media laws, the live cattle debacle and so on.

Certainly in some policy areas this government has failed to make progress – with border protection leading the field.

But for the bulk of Labor’s reforms, the policy progress holds up well. And often, where the final result has lacked sheen or has been a failure – as in the mining tax – it is precisely because the politics came to overwhelm the original policy.

Gillard’s position on same-sex marriage aside, there is a case to be made that her social reform record might rival Whitlam’s and that her economic reforms rank with those of the Hawke/Keating and Howard periods.

Sure, she didn’t start universal healthcare, float the dollar, end centralised wage fixing or deregulate the financial sector. Those things had been done. Labor’s task since 2007 was more complicated, more nuanced, yet just as urgent: modernise the economy, rescue a failing education system and, crucially, square up to the big new threats and opportunities posed by global warming and the digital age.

Measured against these weighty imperatives, the list of actual achievements stacks up well. It includes: settling the supposedly unfixable Murray-Darling Basin wrangle (remember that?); building the NBN; reforming school funding (a work in progress); establishing paid parental leave for the first time; reforming aged care; investing more in rail than all previous governments put together; articulating a new foreign policy by balancing the divergent interests of the US, China, India and Indonesia; becoming a world leader against the scourge of smoking through hard-fought reforms such as plain packaging of cigarettes; initiating a royal commission on institutional sex abuse; and, most recently, a national disability insurance scheme – itself a social and economic reform to rival any. And nearly all of this within a toxic political culture and a minority parliament. If the September 14 election goes the way it looks from here, Labor’s consolation will be the ability to point to these reforms in dinner party conversations.

Examples of the gap between the government’s reform score card on the one hand and its abysmal standing with voters on the other are legion. The past eight days alone provided another pearler in the form of two revenue downgrades, taking the shortfall from an already concerning $12 billion to an eye-popping $17 billion.

Obviously, announcing these figures was part of Labor’s carefully thought-through softening-up process in the lead-up to its toughest budget yet. But with the two numbers separated by just days, voters could be excused for concluding the budget was spinning out of control, haemorrhaging before their very eyes. What was next? What other horrors awaited?

After all, the $12 billion downgrade was supposedly the full-year figure after a previous $7.5 billion write-down for the period since the Mid-Year Economic and Fiscal Outlook was published in October.

We have since learnt that the actual shortfall, for financial year 2012-13 (against Treasury forecasts in last year’s budget), is $17 billion.

The government explained, to anyone who was still listening, that this was the result of the $12 billion plus a previously unmentioned shortfall of $5 billion, booked before the MYEFO statement.

This confusing, even alarming deterioration, might have made sense to the cardigans in Treasury but it made no sense politically for Gillard to structure a public message this way. It presented another easy mark for Tony Abbott, who said: ”You can’t run the country if can’t manage the budget.”

Again, we see this gap between policy reality and political reality. An $11 billion or $12 billion deficit would not be a bad result measured against the real economy and last year’s $44.4 billion deficit. But Labor’s yardstick is the surplus that it stubbornly promised for political reasons and will not now deliver.

Read more:

When Kenny writes – [bullet points added]

‘… Measured against these weighty imperatives, the list of actual achievements stacks up well. It includes:

  • settling the supposedly unfixable Murray-Darling Basin wrangle (remember that?);
  • building the NBN;
  • reforming school funding (a work in progress);
  • establishing paid parental leave for the first time;
  • reforming aged care;
  • investing more in rail than all previous governments put together;
  • articulating a new foreign policy by balancing the divergent interests of the US, China, India and Indonesia;
  • becoming a world leader against the scourge of smoking through hard-fought reforms such as plain packaging of cigarettes;
  • initiating a royal commission on institutional sex abuse; and, most recently,
  • a national disability insurance scheme – itself a social and economic reform to rival any.

And nearly all of this within a toxic political culture and a minority parliament. If the September 14 election goes the way it looks from here, Labor’s consolation will be the ability to point to these reforms in dinner party conversations.

… I laughed my arse off – and that is no mean fit given how big it is …

Government has three main stay obligations, Welfare, Health and Education … Defence runs a distant fourth to these other three.   Collectively, Welfare, Health and Education make up 60% of all Government expenditure … add defence and the number jumps to 66%.

Any Government who understand their charter tinker with these numbers according to political views – ALP are more generous on welfare and social programs, Coalition Governments lean toward less welfare and more business incentives.   A political journalist has to know this … yet Kenny sees the NBN as a success yet Minister Conroy is yet to deliver a success story on any forecast NBN targets.

The School funding on top of the ‘Schools building Program’ fiasco where ALP loving contractors made themselves filthy rich at the taxpayers expense and all to the generosity of one Julia Eileen Gillard who was in charge of the program and had criminal history with the Thiess Contractors who won a large share of the rebuilding program.

Reforming aged care – a no brainer for a Government with an aging population and less hospital beds, less nursing home beds, and a growing need for both.   What are the reforms Mr Kenny – again you flash a policy initiative and claim it to have been a success yet you don’t produce the rhetoric that backs and supports your view.  Honest and truthful facts gets a journalist creds with readers – Kenny is but one of many Journalists inflicted with the Gillard/Swan disease – tell it like you know what you’re talking about, and then let others write about what they know … nobody writes about the facts anymore – it’s all about the illusion and the perception that every word is indeed about the message the Government wants told.

Who is Mr Kenny kidding – the intent to do good does no measure or count when all we see is ‘failure’ to honour the promise made by the Government of the day.  Implementing a policy that is funded and cost neutral at the outset,  and then due to gross incompetence, or a deliberate fraud about the numbers when the revenues raised, or the new taxes to pay for the policies fail to raise the revenues expected, does not give the Government a pass mark.

Kenny says -

‘… yet just as urgent: modernise the economy, rescue a failing education system and, crucially, square up to the big new threats and opportunities posed by global warming and the digital age …’

Global warming and the Digital age … these are crux phrases, waffle words, a macro stretch and  used by Kenny as a smoke screen for what lies beneath … the Carbon Tax – Gillard’s plan to fight global warming is in meltdown, the digital age – was here long before Gillard walked on stage …

I have no idea in what context Kenny was trying to portray Gillard as a success story in this story – and as such his article won the MediaZone Growl award for today.   Kenny’s story is about painting Gillard in positive terms when 70+% of Australia believe she is a negative for the welfare of the Nation.  What makes a journalist take on those types of odds …


The EYE-BALL Opinion plea for action:

A Note:  This site is dedicated to having Gillard as Prime Minster removed by all legal means in the shortest timeframe possible.

Gillard’s Government is poison to this Nation … how do we get rid of her now?

The message has to be sent – there are some 14 million registered voters represented by 150 MP’s – 72 of which are ALP.    If each of these 72 ALP MP’s received an e-mail, a fax, a phone call, or a letter from all the people who want her gone with a simple message like the one below -  :

This is a protest message …
GET RID OF GILLARD

… do you think it might motivate caucus …

Please – send this message to as many and as often as you can – bombard the Caucus Members with a message so clear and with weight of numbers that it will force them to act.

You could also think about sending it to the Independents, Oakeshott, Windsor, Wilkie, and Brandt,  as well … Katter already votes with the Coalition, and Slipper and Thompson are a lost cause and their fate already sealed.

Links to every MP e-mail can be found using the Australian Parliamentary Website Members and Senator links below … pick your ALP MP or Senator, or send it to all – voice your opinion now.

Please – if you found this story to your liking and would like to promote it to your social media contacts – i.e. Twitter, Facebook, or other icon linked account below – please use/click on your favoured Icon(s) to promote the story.  Thankyou.


Have your say where it counts: – contact your Local Federal Representative via the links below and let them know how you feel about this, or any other topic that you feel strongly about – or you can just post a comment below and let off some steam.

Links to Australian Parliamentary Website – MP’s


The EYE-BALL Opinion’s – MEDIAZONE …

EYE-BALL Opinion – EYE-BALL MediaZone Growl No: 1 – The Australian’s – Adam Creighton

The-EYE-BALL-Opinion-Header-2
Title:
– EYE-BALL MediaZone Growl No: 1 -
- The Australian’s - Adam Creighton on a story titled -
“Interest rates fall to record low as RBA fires first shot in currency war…”
| Author: EYE-BALL MediaZone | 8th May 2013 |

This post under the new EYE-BALL MediaZone header is the first of a new category of stories aimed at a MediaWatch type critique.  The aim is to highlight media content that misleads, is inaccurate in its reporting, and has an agenda other than to report the true facts as they relate to the content and context of the story.

The first story on what was a big day for choices is a story by Adam Creighton from the Australian.  The Title of his story is:  “Interest rates fall to record low as RBA fires first shot in currency war…” and was published on the 8th May 2013 in The Australian.   The story is reproduced below:

Interest rates fall to record low as RBA fires first shot in currency war


| Author: Adam Creighton | Date: May 8th, 2013| Link to On-Line Story. |

Click here to see video link with story:

THE Reserve Bank is being drawn reluctantly into the global currency wars, surprising economists and financial markets yesterday by cutting rates to a record low largely to take pressure off the stubbornly high Australian dollar

Governor Glenn Stevens pointed to waning economic growth and weaker than expected consumer price inflation in cutting the cash rate to 2.75 per cent yesterday, but dwelt on the prolonged high level of the local currency.

“The level of the exchange rate is playing a bigger part in the Reserve Bank’s policy settings,” said Matthew Johnson, a currency strategist at UBS, suggesting the high dollar had hobbled the effectiveness of the RBA’s series of seven rate cuts since late 2011.

Governor Glenn Stevens said the board had “judged that a further decline in the cash rate was appropriate to encourage sustainable growth in the economy”, which should drag Australia’s key lending rate to global financial crisis lows.

He said in his accompanying statement that “the exchange rate has been little changed at historically high levels over the past 18 months, which is unusual given the decline in export prices and interest rates during that time”, singling out for the first time this year Japan’s new extreme quantitative easing and fiscal stimulus, which have depreciated the yen by more than 20 per cent against the Australian dollar since December.

“Easing by other central banks increases the likelihood the Reserve Bank will have to ease policy, too,” added Mr Johnson.

The European Central Bank eased its policy rate for the first time in 10 months earlier this month to 0.5 per cent, while the US Federal Reserve has suggested it is in no rush to return policy rates to normal levels.

Rob Henderson, chief markets economist at National Australia Bank who had been expecting a cut in June, said the case for a cut had been “compelling” based on domestic economic conditions including rising unemployment.

“We’ve seen ongoing weakness in business conditions, and the strong retail figures earlier this year now appear to be consistent with other data,” he said.

The announcement at 2.30pm AEST yesterday knocked more than half a US cent off the dollar, which closed at $US1.019, down US0.82c, while the S&P/ASX 200 climbed almost half a per cent on the announcement but still finished the day 12.4 points lower at 5143.7 points.

The RBA’s controversial move followed calls from Westpac chief executive Gail Kelly, who in The Australian yesterday suggested weak consumer confidence and the high dollar should be enough to convince the Reserve to cut.

CommSec chief economist Craig James said “with the Aussie dollar still high the Reserve Bank embraced the new mantra of global central banks — ‘do whatever it takes’ to lift economic growth”.

Wayne Swan said he was pleased that all the major banks — except ANZ, which has a strict rate-setting timetable — had reacted quickly to pass the 25-basis-point reduction on in full to mortgage holders.

The Treasurer’s opposition counterpart, Joe Hockey, said the record low rate settings reflected badly on the government’s economic management.

“The government’s budget is in chaos, the Reserve Bank is now in uncharted territory and yet Wayne Swan says Australia is doing well,” Mr Hockey said.

Mr Swan said it was “utterly irresponsible” to suggest that because the cash rate was now below GFC levels it reflected a poorly performing economy.

Nationals Senate leader Barnaby Joyce welcomed the cut in rates and the fall in the dollar, pointing to falling cattle prices

“We manufacture a lot more than cars in this country and the importance of our rural sector is often overlooked,” Senator Joyce said.

“Other countries are manipulating their currencies but we’ve been standing by.”

Mr Stevens conceded that inflation had been lower than expected, and would be even lower were it not for the impact of the carbon price.

Although the Reserve Bank has now cut interest rates seven times by a total of 200 basis points since late 2011, Australia’s official cash rate remains far in excess of policy rates near zero in other advanced economies.

Markets yesterday afternoon were pricing in a 36 per cent chance of another quarter-point rate cut next month. “My guess is they’ll sit on their hands for a while to see what asset prices do,” Mr Henderson said.

Mr James said the RBA was taking a calculated risk, that “this is a new environment where rate cuts don’t spark spending and borrowing booms or higher inflation”.

Bank shares were sold off despite the rate cut, surprising brokers who expected that a cut would make them more attractive because of their high yield.

Where to start – the A$ has been above trend/average values for more than 10 years, it returned to below its mean average since 1983 during the worst of the GFC crisis late 2008 and 2009. It sold off from above parity levels to hit lows of below A$0.60c as off shore investor unwound the ‘cash and carry resource’ trade. When markets settled they returned with a vengeance and drove the value of the A$ from A$.60c levels to above parity and highs of $1.10c levels. For the past 4 years it has averaged in the $1.04 range and still some $0.30c above its mean average of $0.75c. See 1998 – current A$ v US$ Chart below for confirmation. [click on chart to enlarge in a new window.]

In the Creighton story above the author talks of the 0.25% reduction from 3.00% to 2.75% as being the RBA’s first shot in a looming currency war.  Where is the evidence to make such an assumption?

Since the GFC – European and Nth America interest rates have been at or near 0.00 -0.50%.  In all of that time the interest rate differential with Australia has allowed offshore investors to strip wealth from the Nation.  The RBA’s singular focus during that timeframe, and since the early 90′s has been to keep inflation targets within set parameters set by agreements between both sides of politics.  the RBA has never targeted currency in the time since the A$ began to rise above its 30 year mean average .

I ask the question – why is it now as reported in the story above, why has the RBA waited some 10 years to think that it can influence a high A$ value with a 0.25% interest rate reduction?

The answer is simple – the writer of the story hasn’t a clue about currency, interest rates, global investment, labour costs, or any of the other interconnected motives behind global investment.

This story does more harm than good to investors and the moms and dads readers listening to an unqualified journo reporting a story that should never have been published.

The story misrepresents the truth about the reasoning behind the .25% reduction in official interest rates.  The RBA has stated publicly that it has no interest in intervening in currency markets to stem the capital inflow to the A$ – see Oct ’12 story here.

More to the point – the RBA themselves have been targeting inflation when the rest of the world has had zero interest rates for 5 years and inflation has never been a problem.

EYE-BALL Guru has been writing about this stuff for years and it is only now when Australia’s finances and projected revenues are at a crisis level – have Government spokespersons and media commentators started to talk about the cost of the high A$.

Creighton’s “largely to take pressure off the stubbornly high Australian dollar” comment in his first paragraph has no research creditability whatsoever.  The RBA has reduced interest rates since the early part of 2009 in .25% increments and never has the move had any lasting impact on the A$.  In fact any fall on the announcement encourage more buying.   From the above comment onwards – the story has no basis in fact or truth.

In fact the RBA Governor at times during these interest rate reductions talked the A$ up giving confidence to off-shore investors to keep pouring funds into the Nation.  Sadly – the old adage remains – ‘… what went up, must and will come down…’

When Australia has become too expensive for the rest of the world, and we are on our way to being the most expensive Nation in the world – I think we were ranked 6th last time I review the rankings,  and when jobs have been exported, when farmers no longer get value for their crops, when miners are receiving a fraction of $A returns they were receiving in the early times of the mining boom, then the off-shore investors will see they have sucked us dry and look elsewhere for value investment.

Why do you thing the P.I.G.S want out of the EuroZone – they need their currency back so they can become a competitor on global markets once again.

For 10 years the Government, yes both Howard and Costello, and the idiots there now got this wrong.  The RBA and Treasury were no help as advisors – they all had a think-tank that may have been useful 20 odd years ago and none have upgraded their modeling to factor in the current global marketplace incentives .

It’s journalism like this – and there had to be an editor who approved the story mixed in there as well – that makes the Australian media at large hopeless at their jobs.

Wayne Swan’s attributed comments highlight just how insignificant he is as a financial manager – his track record on budget forecasts and the ability to explain the numbers – i.e. Nominal GDP as opposed to Real GDP shows his and the journalists ability to read the numbers and call Swan out when he is telling them porkies and misrepresenting the facts.

Creighton should take a good look at his output and ask a recognised economist of other market operative about his story.  The shock advice about his inaccuracies will do harm … and another less than qualified journalist might bite the dust.


The EYE-BALL Opinion plea for action:

A Note:  This site is dedicated to having Gillard as Prime Minster removed by all legal means in the shortest timeframe possible.

Gillard’s Government is poison to this Nation … how do we get rid of her now?

The message has to be sent – there are some 14 million registered voters represented by 150 MP’s – 72 of which are ALP.    If each of these 72 ALP MP’s received an e-mail, a fax, a phone call, or a letter from all the people who want her gone with a simple message like the one below -  :

This is a protest message …
GET RID OF GILLARD

… do you think it might motivate caucus …

Please – send this message to as many and as often as you can – bombard the Caucus Members with a message so clear and with weight of numbers that it will force them to act.

You could also think about sending it to the Independents, Oakeshott, Windsor, Wilkie, and Brandt,  as well … Katter already votes with the Coalition, and Slipper and Thompson are a lost cause and their fate already sealed.

Links to every MP e-mail can be found using the Australian Parliamentary Website Members and Senator links below … pick your ALP MP or Senator, or send it to all – voice your opinion now.

Please – if you found this story to your liking and would like to promote it to your social media contacts – i.e. Twitter, Facebook, or other icon linked account below – please use/click on your favoured Icon(s) to promote the story.  Thankyou.

Have your say where it counts: – contact your Local Federal Representative via the links below and let them know how you feel about this, or any other topic that you feel strongly about – or you can just post a comment below and let off some steam.

Links to Australian Parliamentary Website – MP’s


The EYE-BALL Opinion’s – MEDIAZONE …

EYE-BALL’s Guru on – Wayne Swan’s “Treasury Mistakes” – Heads must roll – Swan and Bradbury must accept responsibility’ -

April 29, 2013 3 comments
The-EYE-BALL-Opinion-Header-2
Latest GURU Posts:


- 23rd Apr – Wayne Swan’s – “Investment pipeline” - disappearing before his eyes – where does he go for his next ‘bunny excuse’ -


- 21st Apr – Wayne Swan’s legitimacy – He Says … ‘high A$ causes $7.5b hole since Oct ’12′ – He’s a unique type of idiot  -


- 14th Apr – The Debt Clock ticks … Tic Toc … – Gillard just spent another $3,000 – counting the real cost of this ALP Disaster -


- 5th Apr - Superannuation 2013-14 -  the Government’s new Slush Fund – Proposed Changes show SWAN and SHORTEN’s stupidity -


- 4th Apr - Australia’s Parliamentary Remunerations -
– Part III – Superannuation – The Future Fund -


- 3rd Apr – Government not happy about its tax collect – Claims Tax Minimisation deserves ‘Naming and Shaming’ -


- 31st Mar – The Cyprus Bail-out -


- 31st Mar - Australia’s Debt – and the idiots Managing the Treasury -


- 20th Feb – Australia’s Parliamentary Remunerations - Part II – Entitlements and Allowances -


- 13th Feb - Australia’s Public Sector Remunerations Part I – Parliamentarians “Base-Salary” and “Additional” entitlements -


- 31st Jan – The Devil is in the Detail, there is none – Gillard chooses shock, awe & Spin over Policy -


- 23rd Jan – The Turmoil is Already here – We just have to accept what is coming -


- 22nd Jan – The Turmoil is beginning - Japan’s Economic Stimulus to tip the scales -


To see more GURU posts: – click here …


Title:
- Wayne Swan’s “Treasury Mistakes” -
- Heads must roll -
- Gillard, Swan and Bradbury must accept responsibility’ -
| Author: EYE-BALL Guru | 29th Apr 2013 |
We all remember the emphasis Swan and the rest of the Government placed on “Jobs – Jobs – Jobs” in the 2009+ era.

The Government made a conscious decision in the aftermath of the GFC and took liberty with fiscal policy and used employment as the trigger to allow themselves to let debt escalate.

The Nation has not arrived at it’s current financial abyss without a collective brain’s trust failing.

Working in the background feeding the Budget forward estimates up the ladder to their political masters are the Treasury bureaucrats and their yuppy underlings – all with starts in their eyes and willing to do the bidding of any taskmaster.

The question has to be asked about in the way these subordinates go about their business and do their best for the Nation – which came first – ‘the chicken of the egg’.

This is the crux – who feeds the pony?

Do the bureaucrats have a responsibility to the Nation that separates them from the political will of their masters – or do they protect their careers and appease the political masters at the expense of the Nation – The forward estimates have been way off target for years … who fudged the forward estimates based on a dodgy MRRT revenue expectation?   Who relented under Gillards pressure to spend her way to her own agenda?

Politicians formulate policy and throw the ball to the Treasury to find ways to fund and cost the policies and deliver accurate forward estimates.  It is only then that a Government should consider the policy and its impact on the economy.  The question is not whether the Treasury fudges the forward estimates to give the Government the news it wants to hear – it’s about Treasury staff being incompetent to understand the modern variations of economic measurements and not understanding the MRRT policy impact, or the Carbon Tax forecast against a carbon price underpinned by the European carbon price.

Sadly – this Gillard led Government has had stars in it eyes from the get-go … Gillard was in a rush as all Labor Government’s tend to be.   Gillard had the Rudd GFC response to build upon and she and Swan continued to use the GFC excuse to push new expenditure policies believing the Debt/GDP ratio comparisons allowed Australia to continue with the spending.

History has now shown us that that spending was not needed as China handed Australia an economic lifeline.  If the truth be told – Australia’s GFC fallout was postponed and awaits us downstream.   China will not be there to bail us out a second time as resources are now off the boil and aplenty, other Nations are coming on stream and are much more competitive than Australia – China will do what is best for China.

The $300 billion debt created by successive ALP Government’s since 2009 have fueled GDP growth and propped up the private sector. The single reason for Australia’s uncompetitiveness has been the continue lack of response for the RBA and Government to enact measures to weaken the high A$.   So much so that the damage done to our export industries has been by and large overlooked.

The high A$ is the sole reason  for our nightmare if anyone is looking for a pivot.  Swan thinks it a good thing, but then he does not understand the $trillions of lost export revenue over the last 10 odd years.

This single offset to what should have been Australia’s most profitable mining boom was diminished because the rest of the world invested in Australia and took all those profits offshore.   Only idiots could allow this to happen and Howard and Costello were equally ignorant of the undercurrent happening in global investment from the early 2000′s.

Treasury and RBA are the most to blame because they serve all Masters – they should have been advising and readjusting the forward estimates on growth and reduced export earnings all as a result of the hig A$.   They were grossly incompetent and deserve every criticism they have coming their way.

Treasury created a complete misread on revenues and expenditures right across all the forward estimates.  The Government also allowed itself to use it’s own policy expectations of forecast revenues from the ‘Carbon Tax’ and the ‘MRRT’ to hedge their bets on continued spending for their new policies.

In real terms – the Government spent before it could confirm the tax collect.  This was a decision Gillard and Swan made as a collective to initiate policy’s that would paint them in a better light.  Gillard gambled again and has been caught out – just as she has gambled on the AWU scandal never coming back to haunt her.

Since that abandonment in Dec ’12 – the excuse used has been reduced revenues.  Any economist or financial commentator can used the budget numbers and extract the hard data and disprove this Government excuse.  See the table and chart below to help … or click here to see Table and Chart in a new window now.

In recent weeks Swan tried to change the excuse – he changed the message and it became about the high A$ and its direct responsibility on the revenues.  This was a more plausible argument and should have been where Swan and Bradbury and all the other Cabinet minions went with their message last December.  But alas it did not gain traction and the original ‘revenue writedowns’ has again be installed as the excuse message.

Confirmation of this came overnight when the Government leaked there has been a $12 billion ‘black-hole’ caused by revenue writedowns.  Hockey explained later that the $39 billion increased revenue over and above the 2011-12 number will now be a $27 billion increase – still an increase of 7.6% and well ahead of the average year on year increase in revenues since 1996-97.

This leak followed up by an official media address is a deliberate and well-tried strategy to soften the media and electorate.  We can expect more of this in the lead up to the budget speech due in a fortnight [14th May].   The tactic is predictable – if its bad news – deliver it in small doses, if its is good news – do it with panache and flash …

A full text of Gillards speech today is produced below: [critiqued with Guru comments ...]

MON 29 APRIL 2013

Prime Minister, Canberra

[ACKNOWLEDGEMENTS OMITTED]

It’s a great sign of the growing recognition of Per Capita’s work that your Executive Director David has been in such good company at the international Policy Network’s Progressive Governance and Global Progress conference in Denmark.

Congratulations to you on the fine contribution Per Capita is making in the world of ideas.

With the Federal Budget just fifteen days away, I thank you for this opportunity to share with you the clearest possible picture of the purpose and context of our Budget deliberations.  … bullshitttttt …

This year’s Budget will be about a national challenge – and a national plan.

A challenge for Australia: to respond to the huge reductions in revenue growth over the next four years.

A plan for Australia: to make necessary investments in the nation’s future, to ensure that none of our people is left behind.

Tuesday 14 May will be no old-fashioned pre-election Budget night.

What the Treasurer will deliver will not be a political pamphlet – he will outline an economic program.

The Budget will outline the fiscal path for the coming four years, one designed both to take account of the nation’s current circumstances and to shape the nation’s future.   … we heard this three years ago predicting a surplus in 2012-13 …

Our key long term objective, the progressive purpose of this Government’s fiscal policy is enduring.

It is:

  • to maximise jobs and economic growth;
  • to ensure sustainable funding over the long-term for the investments that strengthen our economy and the services our whole community relies on; and
  • to keep inflation in check and give the Reserve Bank maximum opportunity to keep interest rates low.

The Government’s medium-term fiscal strategy – to deliver fiscal surpluses on average over the economic cycle – is designed to give effect to this purpose in practice.

It commits us to support jobs and economic growth when private sector demand is weak.

This is what we did so successfully during the Global Financial Crisis and, as a result, we kept around 200 000 more Australians in work. … bullshitttttt …

It commits us to making Budget decisions so that in the good times and the hard times, through the inevitable variations in economic activity and Government revenue from year to year, we can afford the investments and services that make our nation stronger, smarter and fairer.

It also ensures that we don’t simply “chase revenue down” – we don’t cut to the bone and spurn wise investments, damaging jobs and growth now and in the future.

Instead our fiscal strategy responds to the economic cycle.  … bullshitttttt …

In the language of economists, we allow the Budget’s automatic stabilisers to do their work as well as actively controlling spending to reach surplus at the right part of the economic cycle.  … don’t use terms you don’t understand … it makes you look more stupid …

That means for the coming Budget, we must fund new initiatives by making savings.

This is a necessary discipline.  … it would be a better discipline if you stopped spending …

This need for balance over the cycle has been summed up nicely by the Treasurer many times: if we are Keynesians on the way down, we have to be Keynesians on the way up – Keynesians right through the economic cycle.

The need to understand how the cycle is changing is summed up best in the remark so famously attributed to Keynes himself:

“When the facts change, I change my mind – what do you do, sir?”  … a comment for all people who can’t keep a promise … and misused in this context …

In the face of the challenges we now face as a nation, this is what any smart leader, any forward-looking government, must be prepared to do. ... smart leader … you oversell yourself …

So today I want to set out the facts that underpin the decisions our nation faces as we approach this year’s Budget.

First, the good news, the shared achievement that we should never take for granted.

Unlike so many nations, Australia’s economy is stable and resilient. … bullshittttttt … three years after your 2010 forecast – your predictions for the future are as poor now as they were then …

Our economic fundamentals are sound. … bullshittttttt … the high A$ has killed our competitiveness and in the next two years the reality of our high labour costs will cost 10,000′s jobs.

We have contained inflation, low interest rates, low public debt.  … bullshittttttt … the rest of the world have has 0% interest rates and inflation has not impacted – why do we have a 3% higher interest rate differential with the rest of the world … interest rates could be 2% lower and there would be no impact in inflation … the RBA are stuck in a late 80′s early 90′s inflation mentality – the world has moved on … the RBA have not …

We are one of only eight nations in the world to have a triple-A rating with a stable outlook from all three major ratings agencies – something Australia has never previously achieved. … not because we are getting better, but because the others are failing the benchmark tests and we are headed that way as well …

Our economy is now more than thirteen per cent larger than it was in December 2007.  …. when a Governemnt spends $300 billion growth in the economy can not truly be measured … this number is misleading on a grand scale … and cannot be used to accredit the Government with economic growth …

We have bounced back from the Global Financial Crisis better than any major advanced economy.  … no-no-no … China saved us …we did nothing but ship the resources whilst others purchased A$’s and transferred wealth offshore …

If we had made the wrong decisions during the Global Financial Crisis our nation could easily be struggling with recession today.   … you made several … currency, trade, interest rate policy, inflation targeting, bank guarantees, industry subsidies targeted wrongly and so on …

Instead, Australia is now the twelfth-largest economy in the world – when Labor came to Government we were fifteenth.  … this is a cheap grab and total crap … attrition does us nobody any good in the end …

Unlike the rest of the world, we have very modest debt – because we have borrowed in the right way and at the right time, to support growth during the global financial crisis.   … subjective … and what happens when our GFC does hit …

Our level of debt is the same as a person earning $100,000 a year with a $10,000 mortgage.

Millions of Australians with mortgages and personal loans would love to be in a position where their only debt was equal to ten per cent of their income.

Similarly, countries around the world would love to be in Australia’s debt position and have an unemployment rate as low as ours.   … amounts to spitting in the eye of those less fortunate than ourselves … when our once only resources are done and gone … what will save us then …

Indeed, the fundamental proof of our resilience is our ability to create and support jobs.

Since 2007, we have created almost 900 000 jobs in this country, in a period when twenty eight million new people joined the jobless queues world-wide.   … now this is provable … 500,000 of that 900,000 figure are part-time jobs … see here ..

Our national prospects in the Asian Century are bright.

As the centre of global economic gravity shifts east, it shifts towards Australia.

Our diplomatic and trade successes in China last month, our improved relationship with India, our strengthening economic ties with Indonesia and our flourishing alliance with the United States – these are all proof that our plan to be one of the winners in the Asian Century is bearing fruit.

However – and this is key – while Australia is stable, resilient and close to centres of growth, the wider world economy is quite a different story.

There is serious, persistent weakness in global growth – and continued volatility in the global economy.

To take one example, a resource-rich nation like Canada has only grown by five per cent in total over the last five years.

The advanced economies grew at only 1.2 per cent last year and global growth reached only around 3 per cent.

This global weakness creates important economic pressures in Australia.

The contrast between our stability and resilience and the volatility and fragility of so much of the rest of the world is a reason for the continuing strength of the Australian dollar –consider this.

Today over 30 central banks around the world hold Australian currency in their reserves. … this is nothing to brag about as the returns on those investments harm us and benefits them …

The increasing importance of our currency for central bank reserves worldwide is recognised by the International Monetary Fund.  … this is ego stuff and underpins just how much Swan and his goons don’t understand …

Later this year, the IMF will begin quarterly reporting on central bank holdings of seven currencies and the Australian dollar will be one of them.

This shows we are a great investment, but that comes at a price.

The dollar’s strength puts pressures on our economy, particularly our trade-exposed industries.   … what a trade-off … prosperity for Australians in lieu of a stake at the world table where MP’s and diplomat’s can party all night on the taxpayers dime …

It would be irresponsible simply to wait in hope for these pressures to ease.

So the Government has a plan to create and support jobs, based on our five pillars of productivity, designed to seize the opportunities that proximity to Asia creates.

This back drop to our Budget decision making – Australia’s resilience, global weakness, a persistently high dollar – have been known for some time.

What is new is how strong the revenue pressures on the nation’s Budget are.

We must plan for these strengthening pressures – and that is a key part of preparing our Budget for this year.

The persistent high dollar, as well as squeezing exporting jobs, also squeezes the profits of exporting firms: with lower profits for these companies comes lower company tax going to Government.

We can’t assume this will change soon.

The high dollar is also placing competitive pressures on firms here, who face new pressures from cheaper imports – holding down prices across the board, with the high dollar making it hard for these firms to pass on price increases, holding down profits – and in turn holding down company tax.  … hells bells … someone gave her a quick class in reality … but does she understand all that it means …

Consumers do benefit, but many businesses are doing it tough.

All this means the data on our economy now reveals a significant new fact.

This is the striking and continuing divergence between what economists refer to as real GDP growth and nominal GDP growth.

My best shorthand description of those terms is this.

Real GDP growth is growth in the volume of the economy.

The actual activity in the economy, how many jobs there are, the quantity of infrastructure we build, the amount of goods and services we export – how many tonnes of coal, how many international students pay for a course here, how many houses are built.

Nominal GDP growth counts this growth in volume and it also counts growth of the prices of all these things.

Today, real GDP is growing solidly – we’re creating more jobs, exporting more goods and services and buying and selling more from each other, just as we planned.   … all underpinned by the creation of new debt to fund new policies introduce over the last few years …

However prices are growing at a slower rate than is usual for this stage of the economic cycle, a slower rate than was forecast – and so nominal GDP growth for this current year is significantly slower than was forecast and we expect nominal GDP growth for future years to be revised down.

The current data shows nominal GDP growth after the first half of the 2012-13 year was an annual rate of two per cent.

At Budget last year, we had forecast nominal GDP to grow at five per cent.

What’s changed?

While the prices of our exports continue to be lower than their recent peaks because of weak global demand and increasing global supply, the prices of imports are now lower than forecast because of the strength of our dollar.

The prices of goods produced at home are also lower than forecast because competition from imports is so fierce.

This is now putting so much downward pressure on prices that growth in nominal GDP is actually lower than growth in real GDP.

What’s more, this has now been true for nearly an entire financial year – since the beginning of the June quarter last year.

This has never happened for such a long period in the whole half a century and more of the National Accounts.

Not during the global financial crisis, not during the 1991 or 1982 recessions.

Not even during the Menzies “credit squeeze” of 1961, which was effectively a deliberate policy attempt to slow price growth, do we find a similar effect.

Now, that’s a long explanation of a pretty technical fact.  … so – all this confirms is that the modelling the RBA and Treasury have been usuing is out of date and not upgraded with new thinking …

But for the Budget bottom line, it’s a very meaningful fact – because, naturally enough, companies don’t pay tax on volume, they pay tax on value, which is driven by price.

The Pharaoh might have kept one fifth part of the grain from the field but the Tax Commissioner collects in dollars and cents.  … fanciful commentary – not serious enough …

So even if the economy is growing as much as expected, when prices are growing much less than expected, tax grows much less too.

The “bottom line for the Budget bottom line” is this: the amount of tax revenue the Government has collected so far this financial year is already $7.5 billion less than was forecast last October.   … that just proves the point – the forecasts were wrong …

Treasury now estimates that this reduction will increase to around $12 billion by the end of the financial year.   … can you believe this number … it changes every month … the real numbers released on the monthly Dept Finance and Deregulation point to a deficit between $15-$20 billion … the $12 billion is not trustworthy …

This unusually low revenue, which wasn’t forecast even a few months ago, creates a significant fiscal gap over the Budget period.

Put simply, spending is controlled but the amount of tax money coming to the government is growing much slower than expected.

Inevitably, confronted with the facts, the economic simpletons and sloganeers will squirm and throw in arguments to distract.   … no-no-no … economic simpletons … that is the pot calling the kettle black …

First, you will be told that revenue for the next financial year is still expected to be more than this financial year. That’s true – at the same time our population will be larger, more people will be on the age pension, health costs will continue to rise.   … the forecasters predicted revenue growth from the MRRT and Carbon tax and it did not eventuate – that was the first of many errors that concertina themselves into this train-wreck …

Indeed the growth in health and in the age pension will be far higher than the growth in tax money. … that’s because you handed out carbon tax refunds and pension increased based of bad forecasts …

So revenue growth will be less than natural growth in key areas of expenditure and is spectacularly lower than reasonably predicted.   … blah-blah-blah … waffle at best …

It is the failure of growth in tax money to match reasonable predictions that creates the Budget challenge.   … unreasonable more likely …

Second, you will be told it isn’t about less tax money in but about spending.   … you know its coming and using the double negative argument to try to lessen the impact is about as foolhardy as you can get ….

However, as informed commentators like Tim Colebatch pointed out last week, excluding east Asia, total government spending in Australia is already the second lowest in the developed world. … is that just Federal, or does it include State and Local …

Of the advanced Western economies, only Switzerland spends a smaller share of its economy on government than does Australia.

The total size of government here is less than the US, less than the UK.

Not as measured in revenue either, measured in spending.   … is that per capita or gross numbers …

And let me reiterate, for the future we will continue to match new spending in the Budget with savings.

Given all this, tax money down, spending controlled, the question for Budget planners is difficult to answer, but simple to state: how, and how fast, to fill that significant fiscal gap?

Some of the above factors will return to trend – overall, revenue is being revised downward over the coming four years, not permanently.

However in part, this is a return to normality – returning to long-term averages.

Australia will not go back to the extraordinary revenue peaks of “mining boom mark I” from 2002-03 to 2007-08.  … I give up … just accept there is little that you can believe in anything Gillard has said here …

While we should expect revenue to improve as we move to the production and export phase of the current mining boom, it’s clear that the extraordinary revenue peaks of the mid-2000s won’t be repeated.

The overall story: by 2005-06 the share of the economy taken in tax reached a peak of 24.2 per cent – compared to 22.4 in 1996 and 22.2 as we reported in our last update in October.

The huge profits of that time meant that company tax revenue reached an astonishing 5.3 per cent of GDP in 2006-07 compared to a share of 4.5 per cent of GDP last financial year – a fall of around $10 billion in company tax a year.

Capital gains tax was 1.5 per cent of GDP in 2006-07 – last financial year it was 0.4 per cent.

We collect less than one-third of the amount compared to seven years ago and in dollar terms the drop in tax collection is around $15 billion a year.

Quite apart from any other factor, remaining competitive in the contemporary global economy doesn’t allow us simply to turn back time on tax collection by dialling up tax revenue to these levels.

If I can summarise a complex picture in a few brush strokes, it’s these:

The prices for what Australian companies sell overseas are lower, imports are cheaper, local competition is fierce.

Those things add up to business making less profit than planned.

That puts pressures on our stable and resilient economy and it is one reason businesses and workers still need to work so hard to get ahead.

When businesses make less profit than planned, it also means Government gets less money in tax than expected.

That’s the big challenge for the nation in this Budget – and it defines the decisions the Government’s confronting as we put the Budget together.

Once again, to break this complex picture down in to a personal story.

Imagine a wage earner, John, employed in the same job throughout the last 20 years.

For a period in 2003 to 2007 every year his employer gave him a sizeable bonus.

He was grateful but in his bones knew it wouldn’t last.

The bonuses did stop and John was told that his income would rise by around five per cent each year over the years to come.

That’s the basis for his financial plans.

Now, very late, John has been told he won’t get those promised increases for the next few years – but his income will get back up after that to where he was promised it would be.

What is John’s rational reaction?

To respond to this temporary loss of income by selling his home and car, dropping his private health insurance, replacing every second evening meal with two-minute noodles.

Of course not.

A rational response would be to make some responsible savings, to engage in some moderate borrowing, to get through to the time of higher income with his family and lifestyle intact and then to use the higher income to pay off the extra borrowing undertaken in the lean years.

Running a nation is always more complex than running a family budget and analogies only work so far.

But I trust the nature of the challenge we confront is now clearer, understood within the framework of the purpose of our fiscal policy and the detail of our medium-term fiscal strategy – and I trust that all would acknowledge the Government has some serious decisions to make and announce in the coming two weeks.

As we make those decisions let me be crystal clear about what we will and won’t do.

We won’t, during this time of reduced revenue, fail the future by not making the wise investments that will make us a stronger and smarter nation.

Better school funding and school improvement will not be jeopardised.

Our nation cannot afford to leave children behind or to leave our nation’s future economy limping behind the pack, unable to attract the high wage, high skill jobs of the future.

To return to John, you would not expect him to stop funding his son’s top quality schooling or his daughter’s university studies.

He would know that to do so would be to condemn his family to a poorer future.

And we won’t fail to make the wise investments that make us a fairer nation.

DisabilityCare must not be jeopardised.

A fragmented, unfair, inefficient system hurting 400 000 Australians with disability and their families and carers – and putting at risk anyone who could acquire a disability – cannot be left in place.

Once again, we wouldn’t expect John to deal with his temporary loss of income by failing to properly support the care of his wife, who has a profound disability.

What is more, these necessary investments are affordable if we make smart decisions.

So the way we proceed with these investments is to fund new structural spending with new structural savings.

But, because we now are confronted with new facts and far more significant reductions in tax money than was expected, we are going through the process now of making decisions to spend less in some areas than we had hoped, to raise more in revenue in some areas than we had planned.

Guiding us as we make these decisions is the key principle of burden-sharing.

Because I lead a Labor Government, I lead a Government which understands that the whole of society benefits from the services Government provides.

In turn we believe that the whole of society should carry a fair share of the burden of funding Government, that the whole of society shares the burden of these saving decisions.

The more who share the work, the lighter the load for all.

Business, families, institutions.

Everyone benefits – so everyone contributes.

In the national interest, for the common good.

Now, there are no easy choices.

Of course as a Labor Prime Minister, I find these decisions both urgent and grave.

This revenue discussion is not historical, it’s very contemporary.

There is new news here compared to six months ago – and new news here compared even to three months ago.

Therefore, I have expressly determined we need to have every reasonable option on the table to meet the needs of the times, even options previously taken off the table.

The nation and the Government must have maximum flexibility to deal with these complex – and rapidly changing – events.

That is my approach.

In the Budget, the Government will do the right thing by the nation, the right thing for the long-term.

We will save responsibly, even when that means spending less on things which are important and valuable.

We will invest wisely for the future.

No one will be singled out, the burden of our decisions will be shared across the whole Australian community.

We will not cut to the bone.

That is the Government’s approach – and it is a bright dividing line in Australian politics today.

I began by saying that this Budget will be about a challenge and about a plan.

It will also be about a choice.

Our opponents and their friends crudely flaunt the bitter language of the cut throat and the brandished axe.

We govern for all Australians, we govern to strengthen the economy and to spread the benefits to all.

Those values illuminate modern Labor every day we govern.

I thank you for the opportunity to discuss them with you today.

It was lengthy and I apologise about that – but you had to get the bullshit context in the message and I did not want to allow for ambiguity.  If one was to go trough paragraph by paragraph, point by freakin point, lie by lie – we’d be here for a long time as critiqued above.

However – Opposition Treasury spokesperson Joe Hockey came out and gave one of his best response comments ever – watch video of his response here[A full transcript of speech is not yet available.]

One cannot count the lies masked throughout Gillard’s lengthy address – the biggest lie was again the reason for the revenue shortfalls.

If a Government uses forward estimates based upon unproven new taxes – [i.e. the MRRT and Carbon Tax] – and uses that forecast to spend in the current and next years budget, the Government deserves to be punished for the fallout.   More importantly – the people need to know the truth.

Gillard has not had reduced budget revenues – she has over the last three years had revenue increases year on year amounting to:

  1. 2010-11: – 5.9%,
  2. 2011-12: – 9.1%,
  3. 2012-13: – 10.5% [Budget Forecast as at Feb 2013.]

This is against an average of 6.98% growth in revenues year on year since 1996-97.

Any attempt to tell it different is criminal in its intent.   Company Directors would face court and jail terms if that tried to hoodwink shareholders with a lie and misrepresentations like this.

This outrage once again shows how Members of Parliament are at the bottom end of regulatory policing – it shows just how little private sector experience they have and how that inexperience gets the Nation to the position we are now in.

Gillard used a illusionary man named ‘John’ to help paint her analogy to explain the Government’s predicament – it was all spin and polish based on a cover-up to blame the economy and GFC for the reduced revenues.   Her speech writer is a novice and also does not understand what it is they do not understand.

In an exhaustive extraction of RBA Budget data the following Table with Chart provides hard data of revenue and expenditure growth (%), and in $dollar terms since 1996-97.   [Click on Image to enlarge in a new window.]

In coming days economists will all have their say – and they have their political sway that will dictate what they write – what is published here is done so without such malice but an exposed truth.   Gillard is a criminal and that is my gripe – how she became the Prime Minister is what I want someone to explain given her history … Australia needs to know that truth as well …

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The EYE-BALL Guru …

EYE-BALL’s Guru on – The Debt Clock ticks … Tic Toc – Gillard just spent another $3,000 – counting the real cost of this ALP Disaster -

April 15, 2013 6 comments
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Latest GURU Posts:


- 5th Apr - Superannuation 2013-14 -  the Government’s new Slush Fund – Proposed Changes show SWAN and SHORTEN’s stupidity -


- 4th Apr - Australia’s Parliamentary Remunerations -
– Part III – Superannuation – The Future Fund -


- 3rd Apr – Government not happy about its tax collect – Claims Tax Minimisation deserves ‘Naming and Shaming’ -


- 31st Mar – The Cyprus Bail-out -


- 31st Mar - Australia’s Debt – and the idiots Managing the Treasury -


- 20th Feb – Australia’s Parliamentary Remunerations - Part II – Entitlements and Allowances -


- 13th Feb - Australia’s Public Sector Remunerations Part I – Parliamentarians “Base-Salary” and “Additional” entitlements -


- 31st Jan – The Devil is in the Detail, there is none – Gillard chooses shock, awe & Spin over Policy -


- 23rd Jan – The Turmoil is Already here – We just have to accept what is coming -


- 22nd Jan – The Turmoil is beginning - Japan’s Economic Stimulus to tip the scales -


- 20th Jan – Wayne Swan Tips his hat at New Yorker’s -


- 10th Jan – The ANZ Whitehaven Hoax -


- 5th Jan 2013 – Financial ‘Ghosts’ from the Past – Hawke and Keating v Gillard and Swan -


- 29th Dec – The Great Big Financial Swindle – Part II – The ‘Budget Surplus’ Backflip – Swan tells his own Porkies …


- 22nd Dec – The Great Big Financial Swindle – Part 1 – The ‘Budget Surplus’ Backflip – Swan serves up Senator Wong


- 14th Dec – The Walls are crumbling – Government admits High A$ policy is hurting -


- 4th Dec – Retailers and bureaucrats don’t understand – high A$ value responsible for off-shore purchases -


- 19th Nov – Government Expenditures Part I – Department of Prime Minister and Cabinet – DPMC – STAFFING -


- 3rd Nov – Shareholders – Holding back the world – scared money – scared boss’s -


To see more GURU posts: – click here …


Title:
- The Debt Clock ticks … Tic Toc …
- Gillard just spent another $3,000 -
-  counting the real cost of this ALP Disaster -
| Author: EYE-BALL Guru | 14th Apr 2013 |
Agood measure for any  Government, past or presence, can be assessed by the impact their policies have on an electorate, and imposed on any new incoming Government.

This Gillard led Government has debt as its legacy, and a hatful of policies that have not worked.   To help with the measure the Australian Debt Clocklinked here – is a must see presentation of ann Australian debt, both public and private.

The Global Debt Clock is also interesting – linked here … some $50.5 trillion is owed around the world – with a global population of 7.1 billion – source linked here – that means we each owe about $7,000.

Australia’s Public debt totals $466 billion – made up of $272 billion [Federal] and $194 [States], against a total public and private sector debt of $4.5 trillion.   That means every Australian owes $205,000, some 30 times the global average.

Debt is responsible for all the globes current economic problems.  A bit like saying religion is responsible for all wars.   Remember – ‘Greed is Good‘, out of the 1987 Oliver Stone produced ‘Wall Street’ – it was Gordon Gecko’s famous catchcry and definitely representative of the times … in fact it never went away despite the ’87 crash and beyond.

As the Corporate world became more prudential post ’87, Western Governments stepped up and filled the void of debt issuer’s and it continues today.   When Governments owe so much, and the interest cost on the debt owed has the capacity to break a Nation, i.e. the EuroZone P.I.G.S. and more to come, what vested interests ar at play to keep interest low to protect budgets.

A 1-2% rise in interest rates around the globe and almost all the Eurozone goes to the wall – America goes over the cliff much sooner then its current timing has forecast, and Swan and Gillard ride off into the sunset cheering along with their Union mates saying – ‘it’s not our problem now!’

When you put nutters in charge of the finances what else can you expect?

We the voters are to blame … we are so easily duped … this ‘red’ or ‘blue’ personality disorder in the way we think about electing our Leaders is so unrepresentative of an educated population … why can’t people seek out the truth rather than rely of others to tell it to them.

Idiot Swan posted this on his Facebook page yesterday – linked here

This Sunday, thought I’d share seven important facts about the Australian economy that often get overlooked:

1. Australia has a Triple-A credit rating from all three global ratings agencies for the first time in our history.

2. Since Labor came to office, our economy has added about 900,000 jobs – while 28 million jobs have been shed around the world over the same period.

3. The tax-to-GDP ratio will be under 22 per cent of GDP in 2012-13 – lower than every year of the previous Government. In fact, if tax-to-GDP stayed at the same rate of the last year of the Howard Govt, Australians would be paying an extra $23 billion in tax in 2012-13.

4. Taxes under the coalition government grew at 7.5% on average, compared to average growth of 4% under this government.

5. Our net debt is 10% of GDP, which is around one-tenth of the expected peak across the major advanced economies (around 95% of GDP).

6. We have made $154 billion of saves in our five budgets – eight times what the Coalition delivered in their last five. And we’ve offset all new decisions since mid-09.

7. We have seen revenue write downs of more than $160 billion over 5 years, compared to $334 billion of upward revisions between 2004 to 2007.

Guru posted the following response …

There is so much crap written here – desperate people who have their belief system challenged often turn feral – of the seven points Treasurer Swan made – not one is true if you were to compare like with like …

1 – The AAA rating – who trusts Rating agencies anymore – they accept bribes for favourable ratings – was that not the reason for the sub-prime crisis in the first place …

2 – of the 900,000 new jobs only 400k are full-time – the rest is part time – the number of monthly hours worked has fallen to 140 hours down from 149 10 years earlier … check the facts here

3 – tax to GDP – common … when you spend some $300 billion over 3 years the impact on GDP is artificial at best … any measure of a tax base comparison has to be tainted …

4 – What is the premise – based on revenues … check this out and you will see that it was never a revenue problem but an expenditure problem … Treasurer Swan’s story tellers are fiction writers … see evidence here

5 – Debt to GDP is more like 21-25% depending on sources – see confirming link here

6 – Absolute poppycock – $154 billion in saves … robbing Peter to pay Paul and then spending another $300 billion over 3-4 years is not saving $154 billion – this is so crass … wake up Mr Swan – we are educated …

7 – and the biggest lie of them all – the revenue write downs … proven to be all lies here

… continues …

What a waste of energy reading the conversation thread that preceded the comment … how is Swan allowed to lie so openly … and why are people so gullible so as to defend Swan when they have no idea whether what he said is a falsehood or a misrepresentation … we truly are a numbed Nation and deserve everything we are served up with …

Liken it to a trip to the zoo – yea that’s right … we are the animals and it is the Politicians walking around throwing us a few peanuts, pointing, laughing, and saying how dumb are these animals to take the crap we feed them.

… Read on … you might just be convinced that there is a problem …


Gillards Spendathon:

This Gillard/Swan Government have spent some $3,000 a second, some $190k a minute, $11 million an hour,  and some $275 million a day every day for the last three years  – i.e. {$300,000,000,000/3/365/24/60/60} = $3,171… - it’s been a spendathon without peer in this Nation.

Where is the visible value in a $300 billion spend – where are the policy achievements, what do we have as a by-product value from this new debt creation – can anyone see any real tangible benefit?

Swan has been the facilitator and Gillard the deliverer of ill-conceived policy that has no accountability.  Together they make Bernie Madoff look positively tame.   This ‘PONZI’ spending Government has no idea where they will get the funds to pay back what they have wasted.  It will fall to future generations to pick up the pieces and that is a legacy no one can be allowed to forget.

The legacies of good Government are long remembered by historians, whereas the memories of bad Government are most reviled and forgotten in the short-term.  Ridding ourselves of bad Government is an election privilege  and ridding ourselves of this horrendous minority Government experiment is something we are all gasping for – the sooner the better.

Always – a bad Government leaves behind a string of expensive and unworkable policies that have to be fixed, un-legislated, or rewritten.   And then there is the debt overload bearing down on all of us.  Gillard – someone who openly admits she struggles with finances not remembering who deposited $5,000 to her account whilst she worked as a lawyer at Slater and Gordon … Gillard is responsible for the greatest fraud ever committed on Australian’s in our history.

When the performance of the Rudd and Gillard Governments are put into any true perspective, the most mitigating reasoning will surround the GFC and the management of the economy in and during the crisis.  Rudd had cause to be concerned about preventing en economic crisis – yet in 2010 when Australia’s performance beat all the forecast doomsayers – Gillard unseated Rudd and implemented her own socialist agenda spending programs using the GFC as a reason to continue pumping the printing of money.

The EuroZone crisis was upon us all and given what was happening to Greece and the other P.I.G.S. Nations, Australia was always insulated because China kept our mining and resource boom alive – why was there need to continue the spendathon after we escaped the worst of the GFC?

Assessment: – An abysmal failure …


The MRRT:

As Gillard realised she needed funding to pay for her spending agenda,  new taxes – i.e. the Carbon Tax, and the revised MRRT – were introduced.

The original draft of the MRRT being unpopular with the Mining industry,  provided the catalyst for Gillard to move on Rudd as PM – she wanted his job.

To appease the miners and resolve the dispute over the original MRRT that made Rudd unpopular, Gillard went looking for ways to appease the miners and caved into their demands to lessen the impact of the MRRT, giving her a shot at winning the impending 2010 election.

This Gillard/Swan school of economics and responsible financial management has proven to be an unmitigated disaster.  They could not balance a balloon flight – misjudging weigh ratio with air temperature In the three years since 2010 where they guaranteed a budget surplus in 2012-13, they have proved they have no understanding on how our economy works.

The original MRRT forecast was $5 billion, revised to $2 billion, and the reality is a poultry $130 million collected in the first 8 months.  Whoever the bureaucrats were who produced the forward estimates – unless they can claim they were acting under instruction from a Swan directive to fudge the numbers, they should be sacked for gross incompetence.

In fact – the reality has been that the ‘mining boom’ in A$ terms has been over for a number of years – the returns for our resources have diminished some 30-40% yet the volumes shipped are ever-increasing.   This is not good for Australian’s or for the future.

Prudent business’s often hold back selling their produce when the returns offered diminish.  Some of these miners are dependent on off-shore funding i.e. FMG [Twiggy], Clive Palmer, and the like and are locked in on delivery contracts that impact if not met.   Yet who owns the resources?

The miners only hold leases to mine the resources and pay a royalty to do so.  The people of Australia own these resources and the Government [State] hold them in trust on behalf of the people.   The Feds want in on the so-called ‘boom’ times, but it is just an easy cash grab with no real thought to prudent business practices.

If the returns on our resources are not at a premium, why does the State Government not raise royalties to discourage their sale?

Easy answer – the State Government’s can’t do without the revenue.  How fu_ked is that – Government’s are so desperate and dependent for any revenue source.

The Federal Government’s MRRT is such a pox tax – if the intent was to offset the high A$ value and its impact on A$ revenues – one could see merit, but it was not.   It was a tax grab in direct competition with the States and signaled an intention to mess with State Government revenues on a larger scale.

All that was promised with the revenues the MRRT would raise is now in the toilet – reduce Company tax, superannuation to 12% … etc …

Gillard and Swan stand before you with egg all over their faces and yet they still claim creditability in how they have managed the economy.

In fact, Federal and State Governments are heading for a show down over revenues.  They are all in the markets competing for and pressuring corporate borrowing costs to fund ongoing and new debt.   They don’t realise it but they are killing the mining industry to the exclusion of all the other industries compounding under the impact of the high A$ value.

If the Federal and State Government’s had any concerns over the reduced returns these natural resources are yielding – they would impose additional royalty tariffs to offset the currency impact and try to protect these resources and save them for future generations.  But when RBA’s advice is that they don’t see the A$ as overvalued – what can be done.

As reported countless times over the last three odd years – the high value A$ has cost miners, farmers, tourism, manufacturing, employment, education, somewhere between A$1 and A$2 trillion  in lost revenues since the early 2000′s when the rest of the world began to invest in the ‘cash and carry resource trade’.

Swan, Bradbury, Stevens, Lowe and the like know this and rather then act to correct the continued wealth transference off-shore, they all lie to protect themselves and their incompetence in managing a global assault on the Australian economy.

We are losing the global economic WAR and the resources being pumped and stripped to far off lands only to have the value added product imported back to Australia at a huge premium.

Assessment: – An abysmal failure …


Treasurer Swan and RBA’s Stevens at odds:

In recent days RBA Governor Glen Stevens has gone public over Treasurer Swan’s renege on a promise to leave RBA profits alone to shore up capital reserves – see story below:

Wayne Swan ‘went back on word’ in taking $500m from RBA


| Author: David Uren, Economics editor | Date: Apr 12th, 2013 | Link to On-Line Story. |

WAYNE Swan’s order forcing the Reserve Bank to pay the government a $500 million dividend last year overturned his earlier agreement that the bank should use its profits to rebuild badly depleted reserves.

The Treasurer demanded the dividend in the face of pleas from governor Glenn Stevens that it would leave the bank “significantly” short of capital.

Following the release of correspondence between the two men under Freedom of Information laws, Coalition Treasury spokesman Joe Hockey accused Mr Swan of putting his “political survival ahead of the national interest”.

“In raiding one of Australia’s most important and trusted institutions, Mr Swan has compromised both the integrity and functioning of the Reserve Bank,” he said.

In a letter to the Treasurer on July 13 last year, Mr Stevens pleaded with Mr Swan to honour his word, allowing the bank to transfer all its 2011-12 profit to its reserve fund.

“This would be consistent with your earlier agreement to this approach to begin the process of restoring the balance of this reserve, which had been largely depleted by the losses of the previous two years,” Mr Stevens wrote. The rise in the value of the Australian dollar has left the Reserve Bank with huge foreign exchange losses on the holdings of foreign exchange which it is required to maintain.

The bank recorded a loss of $4.9 billion in 2011-12 and $800 million in the previous year, reducing its reserve fund to $1.3bn. The reserve fund is essentially the bank’s capital, needed to cover any losses from its $80bn in assets.

Mr Stevens acknowledged Mr Swan’s earlier agreement that the bank could transfer all its profits to the reserve had been “in-principle” and subject to formal approval, which he sought.

Mr Stevens underlined the bank faced critical shortage of capital.

“If you were agreeable to such a transfer, the balance of the Reserve Fund — the bank’s permanent capital — would stand at $2.4bn, a balance that remains significantly below a level appropriate for the risks held on the bank’s balance sheet in the medium term,” he wrote.

Mr Stevens noted that in June 2009, before the bank incurred huge losses, the reserve fund stood at $6.9bn. However, in an undated letter, Mr Swan rejected Mr Stevens’s request.

“Consistent with long-standing practice, the government believes it appropriate that taxpayers receive a dividend from the Reserve Bank where circumstances permit.”

He said he agreed it was prudent the bank should work towards rebuilding its reserves and said that for this reason it should retain “a portion” of its 2011-12 profits; however, he said he had decided that $500m should be “made available to the commonwealth as a dividend, to be paid in the 2012-13 financial year”.

A spokeswoman for Mr Swan said last night that by leaving more than half the bank’s earnings to be put into reserves, the government had ensured the bank’s reserve fund was “appropriately capitalised”. She said it was not the government’s intention to take a dividend from the bank this year.

This Steven’s ‘pissed-off’ story has been about for several months and continues to gain traction on the back of Swan’s desperate needs for budget savings.

This is a serious issue – the $2.4 billion RBA reserves, down from $6.9 billion in 2009 is hardly a solid stake to play the global currency game.  To expect the RBA to manage the global risk exposures on a $80 billion book of assets with a $2.4 billion capital base makes a complete mockery of prudential risks.

The gearing ratios involved here go far beyond those considered acceptable for Commercial Banks and the like.   There is no wonder the RBA does not intervene in currency markets to stem the high value of the A$.   The RBA is broke people, and the Government does not understand what it does not understand in what the true nature of the RBA’s position represents.

Having lost $4.9 billion in the 2011-12 year should signal to the Government the risks involved – with a poultry $2.4 billion left – the $500 million Swan wants to take shows how desperate he is, and more importantly how little he understands financial management.   That $500 million is a days revaluation,  for a Central Bank to be operating with so little capital reserves already puts us in the ‘third-world’ category.

An IMF policy paper published Feb 2011 on Central Bank Balances and Reserve Requirementslinked here – gives reasoning and effects on managing and mis-managing Central Bank reserves.

Swan should be shoring up Central Bank reserves rather than looking for ways to strip funds to balance his budget – is ‘dunce’ too strong a word?

Assessment: – An abysmal failure …


Financial Management – Budget Control:

The size of the budget forecast for 2013-14 being put together now is already being mooted to be another large deficit, as will the next four (4) years of budget forecasts.

Given the creditability swan dive this Government suffered over its 2010 guarantee of a ‘surplus’ for 2012-13, and now looking to be close to a $25 billion deficit, Treasurer Swan’s personal creditability with remaining Caucus members hangs by a toenail.   The poll indicators show he is on track to lose his own seat of ‘Lilly’ in metropolitan Brisbane at the upcoming election.

Will that really be enough to reflect Swan’s true incompetence and the ‘debt’ legacy he will leave for the next Government to try and fix?

Swan will live the rest of his life with a guaranteed pension around $175k per year with additional parliamentary perks to top it up.

Swan will be allowed to walk away and pay no dues for the legacy he will leave behind.

Assessment: – An abysmal failure …


Labour Force Costs and the Global Economic War:

There is a global ‘WAR’ now being waged – now a military war as most of us understand – but a ‘financial and economic war’ that plays itself out on the global markets.  This market place trades in labour costs, returns on investment, political stability,  economic management, and currency value, all contributing and impacting on the global investment community and the choices they make.

Australia’s domestic employment as seen from within seems normal – yet from an overseas investment perspective it is high risk.  Australia have priced itself out of the global labour market and that means 100k’s of job losses in coming years.

Gillard and Swan keep talking about ‘jobs, jobs, jobs,’ and they have backed it up with a spending program that in effect subsidised wage costs.

Even this has not stemmed the flow of corporations now relocating workforces off-shore because of the cheaper labour costs in doing so.

Australia is at the top of the ‘labour cost’ market.  Australia has become the most uncompetitive place for investment – a historical high currency, an unstable Government, an escalating Debt/GDP forecast, an absence of restructuring programs,  and a labour force unionised under a Gillard led Socialist Government intent on a blinkered protectionist policy’s.

Treasurer Swan carries in his back pocket a list of ‘investment pipeline’ projections that he keeps telling us is some $500 billion.  He pulls this rabbit every time he is cornered over his broken promises.  He trumpets this ‘investment pipeline’ rubbish trying to convince us we are the envy of the world.

They envy our climate most of all you dumb fu_k.

Assessment: – An abysmal failure …


Currency Wars:

The shock awaiting us all in coming months will be a ‘flight of funds’ as the rest of the world realises the party they have been celebrating on Australia’s dime has run its course.    This flight will hopefully correct the A$ and take the pressures off our labour force costs.  It is something we should all wish for …

Woodside announced through the week the cancellation of their $45 billion Gas project that was on Swan’s list. Shell announced the closure a an oil refinery mid-week. Ford and GMH have put the Government on notice they need more subsidies to keep the auto industry producing cars in this Nation. Tourism operators and staff are deserting the industry, housing has flatlined, manufacturing is moving off-shore, Telstra and several other customer service help lines have already moved off-shore – and as quoted above by Glen Stevens in an address he gave in Jun 2012 to the Prime Minister’s Economic Forum – see below for extract:

Mr Stevens told the Prime Minister’s Economic Forum in Brisbane that the high exchange rate was not necessarily a bad thing, but it did mean that businesses and governments must look at how workplaces can become more efficient.

He says Australia should stop “pretending” it can compete against the low-wage economies of Asia, and instead focus on productivity gains.

“Better productivity is the imperative to survive,” Mr Stevens told the audience.

“The test really is how many of those enterprises can get the productivity up, because that’s really the way out in terms of coping with a high exchange rate.”

The RBA governor issued a challenge to business leaders to adapt to the new economic environment, and for governments to ensure there were no impediments to such adaptation.

Mr Stevens says productivity growth has fallen in the past six to eight years, and it will take unpopular decisions to turn it around.

He is urging the Government to carry out the Productivity Commission’s “long list” of reform ideas, although he warns that some of the changes will be very difficult to implement, and “politically hard” for governments to achieve.

… Full audio of address can be heard using this link

The timeframe span will take some 20-30 years before any assessment of performance will be truly judged.

For those of us who know better – subjective judgement can and will be delivered as reflected in the September 2013 election, or not sooner.

Assessment: – An abysmal failure …


Forward Estimates:

One thing can be said of the John Howard and Peter Costello 11 years of Government, they left Australia in financially better shape than at any other time in political history.

Since – and under successive ALP Government’s for the last six years, Prime Minister’s Rudd and Gillard have created destruction across all the forward budgetary estimates. They claim it is because of revenue shortfalls. Yet the spending programs have accelerated at blinding speed based on new taxes introduced that have failed to produce revenue estimates.

You measure any financial situation, if you were to spend the projected incomes before the incomes materialised – that would create debt right. Well when debt is accumulated and the cost of that debt increases and the revenues still don’t arrive – what do you think a prudent Banker would do?

For starters the Banker would not have lent the money in the first place any anything like a prime rate cost – there would be risks. The head of those risks would be the creditability and track record of the clients, in this case the ALP Government.

There is no assessor to these spending programs other than the Treasury bureaucrats putting together their numbers on forward estimates to support the public policy legislation. Cooking the books is a criminal offence in the Private Sector – anyone loading up a prospectus with forward estimates known oto be unachievable will go to jail – regardless whether it was done knowingly and with vested interest motives.

PM Gillard, Treasurer Swan, and the whole of Cabinet are responsible for the so called budget ‘revenue writedowns’. Let us call it by its true assessment – ‘complete and utter incompetence’.

In addition – Finance Minister Penny Wong is out there telling us all about the reasons why the budget will continue to run at deficits for the next four (4) years – read below:

No early recovery, government warns


| Author: David Uren, Economics editor | Date: Apr 13, 2013 | Link to On-Line Story. |

SOFTENING individual income tax revenue is the latest headache for the government with the latest Finance Department report showing the budget is still in deficit by more than $20 billion.

The government is warning there will be no early recovery, with a spokeswoman for Finance Minister Penny Wong saying the revenue shortfall will affect the budget for at least the next four years.

The government’s February financial statement shows revenue in the first eight months of the financial year is $6.3bn lower than Treasury expected when it updated the budget last October, mainly because of disappointing company, superannuation and resource tax revenue.

The statement shows that the government’s debt is now up to $165.3bn, which is already more than $20bn higher than Treasury expected for the full financial year.

continues

link to Feb 2012 OFM Statement

This horse has bolted and the Gillard Government is intent on blaming everyone but themselves. What reputable Treasurer, one who had the title as ‘Best Treasurer in the World’, would not accept their responsibility for getting their forward estimates so horribly wrong?

Gillard herself is most responsible as a ‘shopaholic’ type spendthrift – she can’t help herself in front of a microphone – she just has to promise more spending so the crowds will cheer. Her Cabinet has the same disease and as they try to make Australia a socialist regime their intent cannot be misunderstood.

Three years of Gillard post GFC spending has seen some $175 billion of new debt, and the promise of another $100 billion or so of future debt. Where is the revenue forecasts to balance this expenditure – oh … that’s right – the forward estimates can be blamed.

The problem with Federal, State, and Locally elected members who have no financial creditability or understanding – is they can lead you over a cliff in a very short space of time.

Ignorance or stupidity can never be the excuse, yet that is what is demonstrated time after time … look at some of Treasurer Swan’s response to a simple questions about economics and finance when asked …  [Nov 2008]

… and again here … [5th Mar 2012] – make sure you count the times Swan obfuscates over the question and does not respond directly …he really is a poor performer in front of a camera and when speaking without his graphs and script to work from.

… and if you want to spend more time watching Swan make a fool of himself, check out the collection at this link

All highlighting the fact that Swan is no natural financial wizard … he has no clue just how bad he really is …

Assessment: – An abysmal failure …


Financial Management – Currency:

Global conflict has been a historical precedent for 1.000′s of years. It is not always a military conflict in traditional terms.

In modern times we’ve had the ‘Cold War’, ‘War on Terrorism’, and in most recent times we have had a new type of global conflict – ‘currency warfare’, and ‘labour cost warfare’.

These are not open conflict where troops are engaged in a traditional sense. The currency war ia about obtaining financial advantage by having a devalued currency to make your output cheaper to overseas buyers. The ‘labour force war’ is about the cost of production and how that impacts on domestic employment against overseas competition.

There is no doubt this ‘financial warfare’ has been going on for 15-20 years in a very aggressive way. The concept has been alive and well for 100′s of years happens since the ‘market forces’ concept was born.

Supply and demand is the center of the ‘capitalist dream’. In recent times the supply part of the equation is governed by who can supply the goods at the cheapest price. The demand follows the supply costs and whoever controls that cost base productivity controls the demand and the margins of profitability.

Add to this basis capitalist greed a currency market that in a free market would reflect the supply and demand equation – the relativity of a balanced global economy would be much fairer. However – we have those who enter the market with intent to manipulate their currency value for the purpose of gaining an advantage over all the other suppliers.

Now add to that the might of military power and a population almost 4-5 times that of their main competitors, and a labour force stuck in third world living standards – you can see why the Western World is in a manufacturing quagmire, and unable to compete with the Asian presence.

There have been mumblings about China and their pegged to the US$ advantage. Nobody can do anything about it unless China want to feel generous.

Does China have reason to want to be generous – other than a complete meltdown of the capitalist network if they don’t look to share – history would indicate that the West have plenty of reason not to expect unconditional favours from China.

Now we come to Treasurer Swan, previous Treasurer Costello, and RBA head honcho Glen Stevens.

In another speech on currency by Phil Lowe – RBA Deputy Governor – he spoke on ‘intervention’ and how the RBA viewed such action – his comments were reported in part and appear below: link to On-Line Story

October 30th, 2012:

THE Reserve Bank of Australia (RBA) says the conditions are not right for it to intervene in currency markets to reduce the value of the Australian dollar.

Reserve Bank of Australia (RBA) deputy governor Philip Lowe told the Commonwealth Bank’s Australasian Fixed Income Conference in Sydney the Australian dollar is not overvalued.

“The major influence on the currency is the terms of trade, the commodity prices,” Dr Lowe said.

“That’s why the exchange rate is high.”

Dr Lowe said in answer to questions at the conference that the current conditions were not right for an intervention.

“While it’s a bit surprising that the currency hasn’t come down – the outlook for the world economy has softened and interest rates have gone down – the currency is still not at a point where I think you can make a strong conclusion that it is fundamentally overvalued,” he said.

“Really you’re talking about whether the Reserve Bank should undertake a very large scale intervention in the currency markets.

“The argument for doing that would arise if we thought the currency was fundamentally overvalued and was having a really adverse affect on the Australian economy.”

A recent case when the RBA intervened in currency markets was in late October 2008, when it spent $3.15 billion propping up the Australian dollar after it fell below 61 US cents as the worst of the global financial crisis was setting in.

“Historically, we’ve been prepared to intervene for short periods of time when there is market dislocation or where the exchange rate has been fundamentally away from where it should be,” Dr Lowe said.

“So that possibility is not ruled out but it would be a very big step moving away from a system that has serve us very well for a very long period of time.”

Dr Lowe said the floating of the Australian dollar in December 1983 was one of the most fundamental economic reforms Australia has made over the past 30 years.

“It has been an incredibly stabilising influence, there have been periods where people may feel very uncomfortable about the movement but if you look back over the history it is difficult to escape the conclusion that a floating exchange rate has been a tremendous benefit to this country,” he said.

“A decision to to intervene by the Reserve Bank would be a very big one.”

Audio replay of full speech -


It would seem that the RBA are not overly concerned with the impact of a high A$ value – Stevens and his Deputy are bureaucrats and as such are a part of the problem. They are political appointments as is the make up of the RBA Board.   ALP friends and there to serve the cause …

When China pegged their currency to the US$ in the early 1990′s it was a master move by a regime with a 200 year agenda.  They knew that their biggest asset was their cheap labour.  Rather then have them serve as soldiers in a modern war game – they used their poverty to their advantage to beat the rest of the world on production costs and output.

Cheap and plentiful labour will always beat competing economies as evidenced in this and every other Western Nation in the last 10 years or so.

When the currency trap is added that favours weaker currencies – and the US$ weakness not only helps the USA economy, it keeps China so far ahead of everybody else, the rest of the Western world is fighting over the scraps left behind.

Yes folks – it is a War, a war of a different kind that will see populations turn on themselves as poverty bites … it’s a genius plan and the knots are would so tight with the over burden of debt attributed to Western Governments now fixed to the anchor dragging them all over the abyss … it is only a matter of time … and then China may have won a victory – but they will have no one left to trade with and they too will implode and that will be the ball-game.

It might take 50 years but that is small time scales when you think about history …

Assessment: – An abysmal failure …


Summary:

Do you think Treasurer Swan or any other Politician serving under Gillard has thought this through 10 years hence … thinkers are few and far between in this world and it is a case of ‘shoot the messenger’ from where Gillard stands and surveys her future …

She will not and cannot be convinced her time is done … or that she is bad for the Nation.  She intends to lead us all over that abyss in some majestic vision she has about her own place in history …

What a slapper she is … an idiot with extreme and gargantuan egotistical issues … she has never accepted she did anything wrong in the early 1990′s when connected with the AWU fraud – and ever since she has been driven to try to prove everybody else was wrong to punish her for the way it went down – and this Nation has and will continue to paid the price for her misguided socialist agenda for generations to come.

This whole Gillard minority Government hs been:

- An abysmal failure …

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The EYE-BALL Guru …

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