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EYE-BALL Guru on – Treasurer Wayne Swan – Mini Budget Part 1 – paints a false mirage to protect his legacy –

October 22, 2012
Latest GURU Posts:

– 21st Oct – Penny Wong – On the mid-year accounts –

– 16th Oct – The First Home Owners Grant – the fallout and a reflection on a stupid stupid Government policy …

– 10th Oct – Tony Abbott Talks the Talk – but he is on empty when it comes to detail –

– 25th Sept – Wayne Swan – nothing graceful – but a turkey that needs roasting …

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 …

– Treasurer Wayne Swan –
– Mini Budget Part 1 –
– paints a false mirage to protect his legacy –

| Author: EYE-BALL Guru | 22nd Oct 2012 |
In a news story out this morning covering the Treasurer Wayne Swan’s comments to the Nation about the mid-year budget review – he looked to cover his ass with the Australian people and did so with the full knowledge that he has mismanaged the Australian economy and is now looking for an excuse to paint the Government as an innocent.Mr Swans reported comments are produced below .

“Tax receipts are down by tens of billions of dollars every year compared to where we expected them to be before the global financial crisis struck,” the Treasurer said.

The full context of the story in which these words were stated appears below:

Wayne Swan opens with cuts of $20bn in mid-year budget update

| Author: David Uren, Economics editor | Date: 22nd Oct 2012 | Link to On-Line Story. |

MORE than $20 billion in budget savings to be announced today will not be enough to guarantee a long-term return to surplus, with Treasury’s calculations blown off-course by the China downturn.

Wayne Swan warned yesterday that the public should brace for “significant” savings in today’s mid-year budget update, but said the government would attempt to minimise the negative impact on the economy.

“Tax receipts are down by tens of billions of dollars every year compared to where we expected them to be before the global financial crisis struck,” the Treasurer said.

The savings will offset the latest revenue writedowns, but will not include further provision for long-term reforms announced in the past few months, including the Gonski education funding package and the National Disability Insurance Scheme.

The latest downgrade reflects the fact that the economy is not generating profits the way it did during the boom leading up to the global financial crisis, despite the healthy forecasts for growth and unemployment to be included in today’s update.

The budget remains vulnerable to the softening in economic growth that the Reserve Bank expects to set in as the boom in mining investment peaks from next year.

Tony Abbott said the budget was under pressure because of “unnecessary spending”, including $5bn on border protection. “If we can get our borders under control, if we can pause with unnecessary white elephants such as the National Broadband Network, I am confident we can make the savings that will be needed,” the Opposition Leader said.

Mining tax and company tax are expected to be down by as much as $5bn this financial year, with a larger shortfall in 2013-14.

The mining tax estimates have been compiled without the benefit of Treasury looking at the first instalment payments from the new tax, which fall due for payment to the Australian Taxation Office today.

Instead, Treasury will apply its latest estimates of where commodity prices are going to the pre-budget estimates of how much the new tax would raise.

“The biggest question hanging over the budget will remain largely unanswered in the budget update,” Deloitte Access Economics director Chris Richardson said. “There is a lot we don’t know about what the new mining tax will bring, but the bits we do know are all bad.

“The China slowdown equals bad news for a mining tax.”

He said there was a case for releasing the budget update, normally delivered in November or December, a few weeks early to allow maximum time for new savings measures to take effect.

“However, a delay of a few days to assess the first mining tax instalments might have been wise,” he said, adding that it raised the prospect that further revenue writedowns would be required over the months ahead.

Opposition Treasury spokesman Joe Hockey said the government was releasing the budget update earlier than usual in order to conceal the true state of the mining tax.

“The government is doing it to avoid the facts,” he said.

“It is meant to be a mid-year fiscal update; and if the government is in possession of information that directly affects the budget and is refusing to release that information, it underscores the fact that this is all about the internal politics of the Labor Party and nothing to do with the national interest.”

Finance minister Penny Wong today rejected accusations the government has brought forward the budget update to avoid the issue of mining tax revenue.

“MYEFO is being released today, in 2009 it was released in early November about nine or ten days from now, so it’s hardly the conspiracy theory timing (the Coalition) has made it out to be,” Senator Wong told ABC radio.

Although the update will show the economy is growing, with output produced rising at the trend-rate of about 3.25 per cent, the collapse in commodity prices has brought a sharp fall in the value of that output. The budget forecast that nominal GDP the value of everything produced would rise by 5 per cent this year.

Taking account of the commodity price falls since budget time, Deloitte Access Economics estimates the nominal growth will be no more than 3.6 per cent. This difference is equivalent to a $20bn shortfall in national income.

“The thing that matters for the budget is not how fast an economy is growing, but how fast income is growing.”

In his weekly note, Mr Swan emphasised the value that savings decisions had made to the structural strength of the budget.

Measures such as phasing out the dependent spouse tax offset, means-testing the baby bonus and increasing tobacco excise bring long-term savings. Mr Swan cited Treasury analysis showing the value of those savings, including measures to be announced today, would rise from 0.9 per cent of GDP this year to 2 per cent of GDP by 2022-23.

The government has given little indication of where it will make new savings. Superannuation was under active consideration for savings worth “billions” until about a month ago, when it was taken off the table, with only minor changes expected.

Treasury is understood to have opposed further harsh cuts to defence, while Julia Gillard has ruled out across-the-board public service cuts, such as those deployed by Queensland Premier Campbell Newman.

The government is raising visa permit fees for backpackers and temporary workers to raise an estimated $500 million a year, a move Mr Hockey said would be a blow to the one surviving growth market for the tourism industry, which was already battling a high Australian dollar.

Additional reporting: Lanai Vasek

It is not hard to prove the Government finances – the RBA budget papers – linked here – present the ‘Revenue’ collected by the Treasury from tax collections as detailed in the following data:

Net Payee Tax Revenues: [A$Billions]

  1. 2007 – $118
  2. 2008 – $126
  3. 2009 – $126
  4. 2010 – $123
  5. 2011 – $137
  6. 2012 – $151

Net Companies Tax: [A$Billions]

  1. 2007 – $59
  2. 2008 – $65
  3. 2009 – $61
  4. 2010 – $53
  5. 2011 – $57
  6. 2012 – $67

Superannuation: [A$Billions]

  1. 2007 – $8
  2. 2008 – $12
  3. 2009 – $9
  4. 2010 – $6
  5. 2011 – $7
  6. 2012 – $8

Other: [A$Billions]

  1. 2007 – $8
  2. 2008 – $12
  3. 2009 – $9
  4. 2010 – $6
  5. 2011 – $7
  6. 2012 – $8

Indirect: [A$Billions]

  1. 2007 – $32
  2. 2008 – $78
  3. 2009 – $77
  4. 2010 – $81
  5. 2011 – $84
  6. 2012 – $86

Sales and GST: [A$Billions]

  1. 2007 – $5
  2. 2008 – $5
  3. 2009 – $6
  4. 2010 – $8
  5. 2011 – $8
  6. 2012 – $8

Interest and Dividends: [A$Billions]

  1. 2007 – $9
  2. 2008 – $8
  3. 2009 – $9
  4. 2010 – $12
  5. 2011 – $8
  6. 2012 – $7

Other: [A$Billions]

  1. 2007 – $20
  2. 2008 – $4
  3. 2009 – $5
  4. 2010 – $5
  5. 2011 – $5
  6. 2012 – $6

And the summary of all Tax collections: [A$Billions]

  1. 2007 – $254
  2. 2008 – $303
  3. 2009 – $298
  4. 2010 – $292
  5. 2011 – $309
  6. 2012 – $338

Now if one was to turn to the ‘expenditure’ ledger then much more is revealed:

Summary of all Expenditure: [A$Billions]

  1. 2007 – $224
  2. 2008 – $281
  3. 2009 – $325
  4. 2010 – $339
  5. 2011 – $356
  6. 2012 – $378

There is an increase in yearly spending amounting to $154 billion in the period 2007-2012.   This compares with revenues that increased by $84 billion during the same period – a natural shortfall that cannot be blamed on revenues – forecast revenues perhaps, but then that comes back to the economic management and how horribly wrong this Government mis-managed the aftermath of the GFC crisis, and now we are all now going to start to pay for that mis-management.

The cumulative results of this Governments spending over the past four years is presented below:

  1. 2008-09 – A$31.336 billion
  2. 2009-10 – A$56.517 billion
  3. 2010-11 – A$51.106 billion
  4. 2011-12 – A$47.023 billion

[All data Sourced from RBA statistical data] … and this after consecutive budget surplus’ since 1997 amounting to A$163 billion  – of which A$80 billion happening since 2005/2007-08.

Treasurer Swan deceived the Australian people – the treasury shortfall is not because of falling revenues as can be seen – the 2007 number of $254 billion compares with the 2012 figure of $338 billion – that represents an increase of near 40% over the period.

There is much more to be said on this debate as the mid-year report is analysed further.   Please do not be fooled by our fool of a Treasurer …  they are looking for a way to escape their mismanagement culpability.

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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. david the pragmatist
    October 22, 2012 at 11:58 am

    Well Eye Ball, you cannot get it any more right than you have in this blog.
    God only knows you get it wrong often enough, but this time you are spot on!!!

    Hello Mr Swan, the GFC was 2008!!! what have you been doing for the past 4 years?
    Hello Mr Swan all the rhetoric you used about the wonderful Australian economy has been in the past 2 years, thats right! 2 years after the GFC.

    I know politicians especially disasters such as Swan like to treat the public as fools, but really does he hope do get away with the rhetorical crap that he has “spun” out this time.
    Mr Swan could not run a small business with this demonstration of planning and budgeting let alone the Federal budget. How do we have politicians who are fundamentally and financially illiterate in such positions? Where are his advisors and who are they?

    Now I must admit Eye Ball has been saying this for a while now with regard to “our” yes that means yours and mine, Federal Treasurer. Someone in the press needs to take him to task.
    Chris Richardson from Deloitte Access economics is a hopeless economist, always has been and the fact he gets quoted in the same article is scary. You know why? because obviously the Press have gone to him for an opinion! Its like asking the other monkey if the bananas’ taste all right and he replys no my one’s a different shade of yellow to his one, BUT whats it like inside? Oh you want me to taste it! Yuk! it tastes terrible but next years crop is a better colour. Eh! Whats all that supposed to mean? Well to start with Mr Swan can do a lot less damage to a banana crop than he can to the economy. Lets swap his position with the monkey, can’t do any worse!!

  2. October 22, 2012 at 12:44 pm

    Guru thanks you for your approval …

    But you do a disservice to Mr Swan in comparing him as less than or similar to a monkey – the monkey can be trained and does show intelligence that unfortunatly Mr Swan fails to demonstrate … you do the the monkey a injustice dear sir …

    It is appropiate to call Mr Swan a wearer of a ‘Dunce-Hat’ – and that opinion has been expressed several times before o this website …

    Harry HD

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