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EYE-BALL Guru on – Wayne SWAN – nothing graceful – but a turkey that needs roasting’ …

September 25, 2012
Latest GURU Posts:

17th Sept – “Twiggy” – What went wrong?

12th Sept: – The “Window” of life nobody wants to look through

19th Aug: – The ‘Lucky Country’ Tag – if you say it enough it must be true –

Aug 18th: – The Value of the A$ – Part II – another report from ‘The Australian’s’ David Uren –

Aug 15th: – The Value of the A$ – Part I – a report from ‘The Australian’s’ David Uren –

Aug 3rd: – Media Economic Commentary on June 2012 Retail Sales Figures – just naive …

Aug 2nd: – The Rise of the Australian $ – Finally someone from Academia Land agrees –

July 30th: – Greece – – Should they be allowed to leave the Eurozone –

July 27th: – Superannuation – a great big rip-off – Part III!!!

July 19th: The “LIBOR” Scandal …Part III – Banks a conduit for crime and corruption!!!

July 14th: – Link to Part IIThe LIBOR Scandal … The Banks are in Trouble … again!!!

July 8th: – Link to Part IThe LIBOR Scandal … about to explode …

July 7th: – The “CARBON v CLIMATE CHANGE” Debate – Part I – OIL and its Contribution –

June 15th: – The GFC – the right of reply … the right to question …

June 8th: – A Global Economic Snapshot …

June 6th: – Treasurer SWAN just won Lotto …

To see more GURU posts:

click here …

– Wayne Swan – nothing graceful –
but a turkey that needs roasting’ …
| Author: EYE-BALL Guru |25th Sept 2012 |
Treasurer Wayne Swan has had a tough couple of days.   The final 2011-12 budget numbers have been released and the News Ltd media are having a field day as is Opposition spokesperson Mr Joe Hockey.

Yesterday The Australian economics reporter David Uren filed the following story –

No fudging but RBA pressured to boost surplus

| Author: David Uren | Date: 24th Sept 2012 | Link to On-Line Story. |

WAYNE Swan has not fiddled the books over the Reserve Bank’s dividend, as Coalition Treasury spokesman Joe Hockey claimed yesterday. But the Treasurer has forced the Reserve Bank to contribute $500 million towards the return to budget surplus this year against the wishes of the bank’s board, which last year flagged it would be years before dividends were resumed.

Mr Hockey seized on a note in yesterday’s 2011-12 budget outcome report showing the Auditor-General had told Treasury that the Reserve Bank dividend had to be recorded in 2011-12 in the “accrual” accounts rather than in 2012-13 when the surplus is to be achieved.

The government keeps two sets of budget figures — the cash accounts, which record receipts and spending, and the accrual accounts, which also take account of money owing and owed.

“The Australian National Audit Office has belled the cat on Labor’s cook-the-books game,” Mr Hockey said.

He said the Auditor-General’s intervention suggested that the government told the Reserve Bank not to hand the cash over until it was really needed this year. He vowed to use Freedom of Information requests to get to the bottom of what occurred.

However, Finance Minister Penny Wong said Mr Hockey had muddled the two budgeting methods and declared his response to the budget outcome was “characterised by bluster and cheap shots”.

The effect of the Auditor-General’s advice is that the “accrual” budget result in 2012-13 will be $500m smaller than the $2.5 billion surplus that was projected, but this will have no effect on the underlying cash surplus, which is seen by both sides of politics as the key budget measure.

Mr Hockey is also incorrect in suggesting the government urged the RBA to defer paying the dividend until 2012-13, as the bank’s dividends are always made in the year after a profit is earned (as is the case with any other company).

Today, another story was filed –

Wayne Swan’s $45bn budget fix will shield bureaucrats

| Author: David Uren | Date: 25th Sept 2012 | Link to On-Line Story. |

WAYNE Swan is promising an unprecedented $45 billion turnaround in the nation’s fortunes without resorting to major cuts in the bureaucracy.

As economists yesterday cast doubt on the Treasurer’s ability to return the budget to a $1.5bn surplus this year, given the sharp fall in company tax revenue, Mr Swan vowed to meet what he said was a “significant” shortfall in tax revenue with fresh budget savings.

However, he promised they would be “cuts with Labor values”, signalling that the government would avoid the public service staff reductions that Queensland Premier Campbell Newman has implemented with the backing of Tony Abbott.

Mr Swan yesterday released the final results for the 2011-12 budget, showing the deficit reached $43.7bn, a slight improvement on the latest estimates but almost double the $22.6bn estimate when the budget was handed down in May last year.

The opposition Treasury spokesman, Joe Hockey, said the increase in the deficit had occurred despite healthy economic growth: “There is above-trend growth and they’re still raking in the third-biggest deficit in Australian history.

“It is a significant deterioration from the promise that was made 15 months ago,” he said.

The budget outcome documents reveal weakness in company tax, which contributed to the deficit blowout, in the final six weeks of the financial year after this year’s budget was delivered. Mr Swan said company tax had raised $876 million less than Treasury’s forecast in May and the trend had continued into the 2012-13 financial year.

“It is obvious that commodity prices have declined over recent months and do remain substantially lower than in our budget forecasts, and this will hit budget revenue significantly,” he said.

“It makes it harder to deliver a budget surplus and does mean we’ll have to find more savings.”

Deloitte Access Economics director Chris Richardson said the budget challenge had been made significantly harder since the financial year was ruled off on June 30, with economic weakness and billions of dollars in new spending commitments.

“The last few months have brought softening in the Chinese economy and sliding commodity prices and also new spending policies, from dental, disability and Gonski (school funding reform) announcements,” he said. “They have got to juggle. Their revenue is down and their expenditure wish-list is up.

“They don’t want to be ruling out too many sources of savings.”

At his joint media conference with Finance Minister Penny Wong, Mr Swan was pressed on whether “cuts with Labor values” meant the public sector would be spared.

“The public service has actually grown under Labor over the five year period,” Mr Swan replied. “That doesn’t mean to say that is always the same size every year; we certainly bulked up quite a bit during the global financial crisis to deal with the challenges. But it’s still got some growth in it.”

A spokesman for the Treasurer later clarified he was not suggesting there would be growth this year, with a staff reduction of 3000 already budgeted before any further cuts, but rather that the public sector has grown by an average of 0.8 per cent a year over the five years Labor has been in office.

In 2007, Kevin Rudd vowed to take a “meat axe” to the bloated public service in his final address before the election.

While declining to rule out mandatory staff cuts, Senator Wong said that in meeting demands for savings, departments had been instructed to do everything possible to avoid forced redundancies. “We’ve taken an approach – and we have had to make difficult decisions – but we’ve taken an approach which is very clearly focused on efficiencies and trying to prioritise non-staffing savings,” she said.

The budget papers reveal 2011-12 was the first financial year since 1998-99 in which public sector numbers dropped, although the fall of 254 people was a reduction of less than one in a thousand.

The government is basing its hope for a return to surplus on stronger-than-expected employment numbers, bringing higher PAYG payments to offset the weakness in company tax. “But what is really clear when you look at the figures here is that we’ve had strong employment numbers for some time,” Mr Swan said.

He said the jobs growth had been stronger than expected at budget time, when Treasury was expecting unemployment to rise from 5.2 to 5.5 per cent.

The government’s PAYG tax receipts grew 10.1 per cent in 2011-12 and are budgeted to gain another 5.9 per cent this year.

Mr Richardson said that while the jobs market had been stronger than anticipated, with unemployment holding at around 5.1 per cent, he said it would get more difficult over coming months as companies responded to falling profits.

Westpac senior economist Andrew Hanlan said the fall of commodity prices would result in the terms of trade falling by 7.7 per cent, compared with the government’s forecast of 5.75 per cent. This lowers taxable income, which Mr Hanlan estimated would cause a $65bn hit to the budget bottom line this financial year.

Principal with the economic consultancy Macroeconomics, Stephen Anthony, said the 2011-12 budget deficit had been achieved in a year marked by the highest prices paid for exports in 140 years.

“It is clear that 2012-13 is a year when the terms of trade are falling sharply and that means we’re moving into a difficult environment,” he said.

The May budget forecasted company tax would rise by 10.4 per cent or $6.9bn this year, while it was counting on mining and petroleum resource taxes rising by $5.7bn.

‘Dunce-hat’ Swan knew when he stood before Parliament in the May 2012 special Parliamentary Budget session just how the 2011-12 year budget result was looking, but elected to receive praise from his comrades as opposed to deliver honesty to the Parliament and the Australian people over the state of the Nations finances.

On that score alone he should be held accountable for misleading the House – he choose to leave everyone in the dark and mislead the Nation.

In doing so he was able to bring some of the 2012-13 Carbon Tax credits paid to the electorate as up front compensation into the 2011-12 fiscal year numbers all to help him achieve his 2012-13 promised Budget speech and forecasted $1.5 billion Budget surplus.  What other budget book-keeping was done as well?

The May 2012 Budget deficit as reported by the RBA accounts showed a $33.1 cumulative budget deficit for the Jun ’11-May ’12 period.  With an end of year result that meant the June deficit was  $10.6 billion – i.e. ($43.7 – $33.1).

Every man and his dog knew this was going to happen, but ‘once a dunce always a dunce’ Mr Swan believed he could convince the Australian electorate of his Government’s financial management credentials.

The June monthly result for the time this Government has been in office is recorded below:

  • June 2012 – $10.6 billion,
  • June 2011 – $8.3 billion,
  • June 2010 – $13.0 billion,
  • June 2009 – $6.8 billion,
  • June 2008 – $0.6 billion, and
  • June 2007 – $0.5 billion.

These final month results led to total year Surplus/Deficits as follows:

  • 2012 – $43.7 billion deficit (Gillard),
  • 2011 – $51.1 billion deficit (Gillard),
  • 2010 – $56.5 billion deficit (Rudd)
  • 2009 – $31.3 billion deficit (Rudd),
  • 2008 – $28.2 billion surplus (Rudd),
  • 2007 – $26.7 billion surplus (Howard).

Whilst the June 2012 number was not the highest under this current Government – the revised mid year forecast still had Mr Swan underestimate the final 2012 result by $10’s of billions.   For any Treasurer that can only be called incompetent.

In the above newspaper articles Mr Uren and Mr Hockey are having some fun at Mr Swan’s expense.  I doubt whether Mr Swan would even care given that he is currently the acting PM and no doubt taking advantage of all the trimmings he can until the ‘bulldog bitch’ arrives back home.

Much has been written about how Mr Swan expects to turn around a $44 billion deficit to a $1.5 billion surplus which he is still forecasting.  This is despite the pledged funding of an additional $120 billion in new spending as calculated by the Opposition.

Mr Swan is no genius with numbers, actually he is a dunce when it comes to understanding financial markets and the derivative products they use.  His Treasury advisors managed to get it terribly wrong on its forecast revenues for both Company and payee tax revenues in the 2011-12 year.

The RBA have also contributed with their total failure to stop the rise of the A$ and allow interest rates to remain high as compared with all our major trading partners.

This incompetence has turned the Nation into an uncompetitive and now debt burdened economy without so much as a whimper from the RBA’s Glen Stevens and his motley crew of advisors and experts.   Past RBA Board members are now becoming vocal over the inaction of the RBA and its high currency policy.

Australia is headed for its own GFC crisis in coming months and all this Government wants to do is throw money at the problem.   In that context – Swan should be held accountable for the 2012-13 deficit that will surely come.   He and the Government are doing what Premier Bligh did to QLD in her last term in office.

To get an idea of the Australian States and their indebtedness – please click on this link.

The numbers presented in the above link show the total of all State debt amounts to $180 billion as at the end of the 2012 year.   QLD has the largest at $64 billion and a per capita debt of $15k per head of population.   NSW’s ranks second with $57 billion and a per capita debt ratio of $8k.

The National Federal debt as at the end of 2012 is 22.9% of GDP.  GDP stands at $1.371 trillion, therefore the National debt stands at $314 billion.  Add the State debt and the per capita debt ratio for every Australian is $21.5k at 23 million population.

This is the worst level of indebtedness in Australian history.  Any tag the Government uses to explain that our financial position is better than the rest of the world is correct in essence – but collectively the World is bankrupt and has nowhere to turn.

All Western Governments have done for the last 10 years is print money and run high fiscal deficit policies.

A pet gall of mine is the rich who live off the income from their trust funds.   These fortunate people did nothing but be born into wealth.  The wealth they live upon was created decades, centuries, and perhaps even longer ago.  The point being – once the people who created this wealth invested and took risks to accumulate the wealth created.   They dd not leave it ‘invested’ and live off the income.

This money now lies dormant in some annuity because of some tax liability if any of the assets were liquidated.   If this wealth was used as capital for new investment as it could be used, it could start a new economic boom of which the world has never seen.

To ask the wealthy to do something with their wealth so as to at least appear to be deserving is a risk few would take, or be allowed to take given the structured trust deeds the wealth his trapped behind.

Treasurer Swan’s options are either to increase revenues, or print more money.   He is not smart enough to enginee the first option, and so is only left with the second.

I find it such a reflection of Government and its caretakers that they are the only business’s is the World that operate from a spending program structure and then decide how they are going to pay for it.  Whereas all Business operate in the opposite way – they look at revenues before they decide on spending allocations.

For fly in Politicians who may only serve a three-year term and them be gone – it is easy for them to make policy to spend in the efforts to get re-elected and if it works – they the same thing happens at the end of the next three years.

As with Anna Bligh – nobody is going to knock on her door and ask for her to make ammends and be accountable for all the bad decisions and spending she put in place.  There is just no accountability except at the next election.  In the current three year term of this Federal Government, it will have created near $200 billion of new debt and all incumbent on every Australian to pay back.

It’s time to ‘roast’ the turkey – but before that someone has to go and shoot the Swan.

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 …

  1. The Parable
    September 25, 2012 at 10:58 pm

    Wayne Swan is a turkey. He thinks he is a Swan!

    He believes anyone speaking the simple truth, is down talking our economy. Therefore it is good to lie. To give froth and bubble, to deny the obvious, to not dare to go near what is plain truth, you undermine the focus.

    This is sad. So sad.

    Nothing is so really wrong, but nothing is right. Truth is in the flux.

    In Australia it costs about $200,000 per annum to get a truck driver to get coal or iron ore out of the pit, to get it to export market. In Africa or Mongolia or South America there are workers happy to earn $1,000 a month to do the same thing. Most farmers in Afghanistan are happy to grow opium poppy for a measily $1000 whilever it pays the bills.

    We are harassed by Indian call centres while we try to prepare our evening meal. Do you want to change power companies? Would you like to save $3.50 per month on telephone and internet costs?

    Wayne swan you really are a turkey!

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