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EYE-BALL’s Guru on – Australia’s Parliamentary Remunerations – Part III – Superannuation – “The Future Fund”

April 4, 2013 1 comment
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Latest GURU Posts:


- 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:
- Australia’s Parliamentary Remunerations -
- Part III – Superannuation – The Future Fund -
| Author: EYE-BALL Guru | 4th Apr 2013 |
Continuing the Series – Australia’s Parliamentary Remunerations:

  1. Part I … Parliamentarians “Base-Salary” and “Additional” entitlements – and …
  2. Part II … Entitlements and Allowances -
  3. Part III … Superannuation – “The Future Fund” continues below:
  4. Part IV … Superannuation – MP’s and Senator benefits … coming soon.

For a long time there has been a desire to dissect and examine the Parliamentary remunerations structure, and the perks attached to being a ‘Member of Parliament, and a Senator – in Federal and at State levels.

Superannuation – ‘The Future Fund’:

Some interesting data has come forth from a long-term research investigation into Superannuation and in particular,  the ‘Future Fund’, and other Public Service Superannuation Funds, namely Federal, State, and municipal.

Before we go to the ‘Future Fund’ – I want to put the macro jigsaw puzzle in play and how this research is endeavoring to put the pieces of that puzzle and how it relates to the Australian Public Sector Superannuation landscape.

A well respected Financial Markets source in wrote an article in the ‘Business Speculator‘ published in Oct’ 2012.   The story provides commentary about the total ‘$’ value liability of Australia’s ‘unfunded’ Public Sector Superannuation schemes.

Mr Gottliebsen’s numbers paint a frightening landscape for Australian taxpayers whose task it will be to donate the revenues to provide for these future liabilities – i.e. Parliamentarians and other Public Servants retirement pensions.   His story appears below:

Canberra’s great superannuation rort


| Author: Robert Gottliebsen | Date: Oct 1st, 2012 | Link to On-Line Story. |

Former superannuation minister Nick Sherry has blown the lid on Australia’s greatest rort – the $210 billion unfunded public sector defined benefit superannuation schemes.

The Canberra public service beneficiaries of this rort are often the very people who are attacking legitimate savers in the private sectors who put money aside to pay for their retirement.

As we all know the public servant rorters are mounting another attack on legitimate private savers. This has led former ACTU boss Bill Kelty to demand that the public servants and their weak ministers stop attacking Australian savers. Now in The Australian, Nick Sherry advocates scrapping the generous super scheme enjoyed by public servants and politicians, pointing out it will raise billions of dollars in budget savings.

Defined benefit superannuation – particularly pensions – is a huge burden on the community because returns are now much lower than expected (the looming interest rate reductions will make returns even worse) and in the case of unfunded pensions people are living much longer.

State and federal public servants until the last decade enjoyed one of the greatest superannuation schemes ever devised. While they put money into a conventional fund there was a much larger benefit provided by future taxpayers which promised benefits irrespective of returns. In the private sector, savers take the return risks. In these bonanza schemes public servants were guaranteed benefits linked to their salary and/or the CPI irrespective of returns.

For a long time no money was set aside. Later former treasurer Peter Costello set up a future fund and state governments put money aside. Moreover, in most jurisdictions the bonanza defined benefit schemes have been frozen to new members but new pensions are still available to certain groups including politicians, judges and military personal.

Most senior public servants still have their enormous entitlements and appear oblivious to the irony that they are attacking those whose retirement benefits depend on the returns on the money they have set aside.

According to Joelle Fong, John Piggott, and Michael Sherris of the ARC Centre of Excellence in Population Ageing Research at the University of New South Wales, unfunded liabilities of Australian state and federal public service pensions rose from $136 billion in 2007 to $210 billion in 2011. With interest rates and returns falling my guess is that they will soon rise beyond $250 billion.

In the US and Europe public servants also went on sprees to commit future taxpayers to fund their retirement with unfunded schemes. These schemes are coming unstuck. The latest group in the US to find that they can’t pay is the US Post Office.

In Australia our wealth has enabled us to keep up the payments but as the University of NSW research shows we are falling behind.

That’s why it is outrageous that “protected” public servants should be plotting against private savers whose level of retirement savings depends on investment returns. If the public servants succeed in convincing weak politicians (who have their own defined benefit schemes) to attack genuine savers then its only fair that the public service unfunded liabilities be capped at $210 billion and that the public servants be told that their pension entitlements will be reduced in years when returns are down.

They will then be in the same position as those in the private sector and be required to use their own money. There will then be no more Canberra plotting against private superannuation funds.

Yip-pity-doh-dah-day – are you now sufficiently engaged and understand how much you and every other Australian owes to our illustrious Political Leaders …   $210 billion … maybe up to $250 billion by now … divide that by the 14 million eligible voters and it equates to $18,000 – yes that is right … $18,000 smackaroos is how much each one of us eligible voters owes our MP’s, Senator’s and other leeches feeding of the Federal Superannuation system.

This is the mother of all ‘Ponzi’ schemes.  It makes all others pale into significance … Madoff’s efforts were kindergarten stuff and they jail him forever …

The meaning of a ‘Ponzi’ scheme in the true sense of the word – ‘the future liabilities for present day entitlements’, and how does the Parliamentary Superannuation not fit this meaning.  All MP’s and their superannuation like entitlements are to be paid for by future taxes stripped from future taxpayers to pay for decade old superannuation schemes,  as legislated and voted for by these same MP’s who are to benefit from the scheme.

You – the taxpayer already donated $60+ billion to the Future Fund in 2006-07  when Treasurer Costello handed over Telstra shares and sale proceeds, and again in 2008 under Treasurer Swan when more Telstra shares were handed over.

Before these payments were made to the newly formed ‘Future Fund’, the previous superannuation entity only had $123 million in assets to cover the $91 billion liability – hence the ‘Ponzi’ scheme analogy.

A statement made in the 2005-06 ‘Future Fund’ Annual report allows speculation and opinion that up until 2005-06 – the Federal Government had not been funding is future superannuation obligations.   This in a corporate sense would have been pursued by regulators as criminal intent and a breech of employer employee guarantees.

That ‘Future Fund’ statement appears in highlight below:

Establishment of the Future Fund

The decision to maintain a CGS market while continuing to achieve a number of budget surpluses has allowed the Australian Government to accumulate significant financial assets, which have been used to assist in meeting within year financing requirements and to reduce the cost of its debt portfolio.

The outstanding stock of CGS is not the only significant liability on the Australian Government’s balance sheet. The Australian Government has never fully funded its superannuation liabilities which are now valued at around $91 billion. To offset these superannuation liabilities, the Government will use budget surpluses to build a dedicated financial asset fund — the Future Fund (the Fund). This will reduce calls on the budget in the future, at a time when significant intergenerational pressures are expected to emerge.

The Fund is expected to be established later this year with seed capital sourced from the 2004-05 Budget surplus and from previous surpluses held on deposit at the Reserve Bank, once the Final Budget Outcome for this financial year is known. The Fund will be invested in a broad range of financial assets and will be managed by an independent statutory agency governed by an appropriately qualified board. Contributions to the Fund will be made from future budget surpluses and assets sales with the aim of offsetting the superannuation liability by around 2020. Details of the financial implications of the Fund are in Statement 2.

The decision to establish the Future Fund will not affect the issuance strategy adopted by the Government as a result of the review of the CGS market in 2002-03. Issuance in 2004-05 and planned issuance for 2005-06 reflects the continuing policy stance consistent with maintaining liquidity in the CGS market. The transfer of assets to the Future Fund is likely to necessitate some additional use of Treasury notes to manage the Government’s within year financing requirements… continues

Very interesting indeed – the comment – ‘has never fully funded‘ – I would ask why The Federal Government would not cover its obligations in funding the Superannuation liabilities of all those covered under the Parliamentary Superannuation schemes – up until Costello and Swan stripped taxpayer owned assets/funds to do so in 2006-08..

Who is a member of the Future Fund:

Superannuation Schemes for Federal employees from the Site index above are listed below:

  • Arrangements for Australian Government employees – There is a variety of superannuation arrangements applying to Australian Government employees and statutory office holders. The linked page above describes the superannuation options available with links to the relevant Acts and further information on the superannuation schemes available.
  • Commonwealth Superannuation Scheme,  [CSS] – is a superannuation scheme for employees of the Australian Government and other participating employers… is largely ‘unfunded’.
  • Commonwealth Superannuation Corporation [CSC] – provides superannuation services and products to Australian Government employees and employers through nine Schemes covering the public sector and the defence forces.
  • Public Sector Superannuation Scheme [PSS] – provides defined benefits that are usually based on the average of the member’s superannuation salary on the member’s last three birthdays, multiplied by an accrued benefit multiple (which is dependent on the level of the member’s contributions and length of membership). The PSS was closed to new members from 1 July 2005,
  • The Defence Force Retirement and Death Benefits Scheme [DFRDB] – is a fully defined unfunded superannuation scheme which was closed to all new members on 1 October 1991. The Scheme is administered by ComSuper.
  • The Military Superannuation and Benefits Scheme [MSBS] – was established by the Military Superannuation and Benefits Act 1991 (the MSB Act). The MSBS is a defined contribution/defined benefit scheme administered by ComSuper.
  • ComSuper – ComSuper administers the major superannuation schemes available to Australian Defence Force members and the majority of Australian Government employees, under authority from the Commonwealth Superannuation Corporation.
  • The Public Sector Superannuation Accumulation Plan [PSSAP] – is set up to provide superannuation to employees of the Australian Government and participating employers.
  • Govenor General’s Superannuation Scheme – The Scheme is unfunded and no assets are held. Benefits are financed from Consolidated Revenue as they become due for payment. Current and former Governors-General do not contribute to the Scheme and the Commonwealth meets the costs of benefits.
  • The Judges Pensionn Scheme – the Scheme is unfunded and no assets are held. Benefits are financed from Consolidated Revenue as they become due for payment. Judges and retired Judges do not contribute to the Scheme and the Commonwealth meets the costs of benefits. The scheme covers the following office holders:

The Fed’s have a superannuation deal where the taxpayers pay 15.4% of their salary as a superannuation entitlement.  Whether this includes the 9% employer contribution is still a question not answered.   If it is – that means a 6.4% super windfall that no Australian workers can count on.   Why not … that is one of my questions – with many more to come.

For information purposes to help with what follows -

  • an ‘Unfunded’ Superannuation scheme is a scheme funded by employer contributions,
  • a ‘Funded’ superannuation scheme is one funded by employee contributions.

Linked here is a Government website offering an indexed Superannuation Site map.

Parliamentary Superannuation Act 2004:

Overview …

  • The Parliamentary Contributory Superannuation Scheme (PCSS) was closed to new members from 9 October 2004 and superannuation accumulation arrangements were established for Parliamentarians joining Parliament on or after that date.
  • The accumulation arrangements were established under the Parliamentary Superannuation Act 2004 (2004 Act) and involve a Government contribution of 15.4% which is calculated on total parliamentary salaries. The Government contribution is payable into a superannuation fund chosen by the Parliamentarian.
  • The 2004 Act arrangements apply only to Parliamentarians joining the Parliament who were not sitting Parliamentarians on 31 August 2004. They also apply to such Parliamentarians who return to the Parliament after a break in service.
  • Existing members of the PCSS may not transfer to the 2004 Act arrangements.

The 15.4% employer funded [Unfunded scheme] is by far the best Superannuation scheme in Australia.  Why?

Early Access to Superannuation Entitlements:

How do politicians get the nerve to vote themselves such a generous pension scheme, allowing themselves full pension access from whenever they leave parliament regardless of age.   The debate is of course about when an MP is voted out and has to re-establish a career and needs seed capital – you tell me how the public differ when loss of career happens through natural market place events, and often caused by Government policy.

Why are they denied superannuation entitlement access yet parliamentarians are?

It was reported in a news story that Treasurer Swan would need a private Superannuation scheme with a $5.6 million balance for him to be able to draw his $166k per annum pension.   Because he is a Federal politician he does not have to contribute a cent to earn his Parliamentary pension.   Does anyone think that fair?   [See story link here.]

A further story on Gillard’s pension entitlements can be read here … this really will blow your mind in how much the MP’s superannuation is costing the Australian public.

Pre 1992 Superannuation:

Before 1992 – a great number of employers made tax deductible superannuation contributions to their employees as superannuation contributions.   Post 1992 the 3% Superannuation levee was introduced – i.e. award wage increase decisions were used as superannuation contributions as opposed to salary increases.

Laws on underfunded superannuation payments:

The laws pertaining to under-funding employee superannuation entitlements in the Private sector are quite specific.

… Where an employer fails to provide the minimum level of support, the employer is liable to pay a nondeductible charge called the Superannuation Guarantee Charge (SGC).

The ATO is charged with the general administration of SGC and collects the charge where employers do not provide a minimum level of superannuation support for their employees and redistributes the charge to the super fund of the employees impacted. Rules require employers to pay this penalty to the ATO if they don’t pay enough super or don’t pay within 28 days of the end of the quarter or don’t direct the contribution into the employee’s chosen fund.

Non-complying employers must lodge a statement and pay a penalty known as the Superannuation Guarantee Charge (SGC). SGC is the equal to the amount of required contribution, plus interest at 10% p.a. on the amount outstanding plus an administration charge of $20 per employee. It is important to make special note that the SGC is not a tax deductible business expense, unlike employer contributions that are paid fully and on time to the correct funds.

read more

Determining what component of the ‘Future Fund’s’ under-funding is a result of the employer employee contribution, and/or the penalty component as reference above is an impossibility.

A story published with detail about the Future Funds’s obligations had this to say:

Feb 06, 2013 …

… THE Future Fund’s healthy return of 12.8 per cent last year has boosted its coffers to more than $82.3 billion.

But this leaves it more than $8bn short of where it would have been had it met its official long-term target rate of return. And it still leaves the fund well short of meeting the federal government’s superannuation liabilities of more than $138bn as of June last year.

read full story on-line

This comment suggests the Future Fund is still some $56 billion short of funding the total obligations of the Public service superannuation entitlements.

In an extract from the 2011-12 Annual Report background the following is claimed: [Page 11 of Report.]

… Contributions totalling $40.4 billion in cash were made to the Fund in the period from May 2006 to June 2007 with a further $10.9 billion being contributed by June 2008. This brought the total cash contributions to the Fund to $51.3 billion. No further cash contributions have since been made.

In addition, 2,105 million shares in Telstra (ASX:TLS) were transferred to the Fund in February 2007 and a further 57 million shares were transferred during 2007 and 2008. The total value of these shares on their respective transfer dates was $9.209 billion. All transferred shares were subject to a restriction that they could not be traded until 20 November 2008, subject to certain limited exceptions including disposal through a dividend reinvestment plan (DRP) initiated by Telstra. 126 million shares were disposed of via this mechanism during the Lock-up Period. During the 2011/12 year the Board announced that it had completed its strategy for rebalancing the portfolio and reduced its holding in Telstra to market weight or 100 million shares.

Under the Future Fund Act 2006 withdrawals may not be made from the Fund (apart from meeting operating costs) until at least 1 July 2020 unless the value of the Fund exceeds the target asset level (TAL). This is the amount that is expected to offset the present value of projected unfunded superannuation liabilities. The office of the Australian Government Actuary, in its 2010 report, specified the TAL for the years to 2013/14. The assets of the Future Fund at year end were below the TAL and, at this stage, no withdrawal before 2020 is expected. …

link to Annual Report

Again referring to  report above – his report of a $91 billion ‘Future Fund’ shortfall refers to the gap from the start balance of the transferred funds to the Future Fund in 2005-6 of less that $200 million, and the outstanding liabilities.

In the first year of the ‘Future Fund’s‘ operations the Federal Government handed over $18 billion in May 2006,  the June 2006 balance date showed total assets of $18.163 billion.

Another $22.2 billion in cash was transferred in 2007, along with 8.1 billion Telstra shares worth $8.9 billion. In 2008, another $10.9 billion in cash, and 57 million Telstra shares worth $309 million was transferred from the Federal Government. This made the total Federal Governments cash contribution a total of $51.3 billion – and the share value of the Telstra stock valued at $9.209, totaling $60.509 billion of taxpayers funds was used to part fund the 2005-6 underfunded estimated of $91 billion.

There is irony here – politician’s voted themselves these very generous ‘unfunded’ superannuation schemes over time – they chose not to fund the scheme to its obligations on an ongoing basis, and then when a few Politicians get a little nervous they might miss out and their change of career entitlements – they legislate to strip taxpayer funds to cover the liability.

The Howard Government had control of both the Upper and Lower Houses, and this allowed them to push through this legislation.  Was it an abuse of the political position the Howard Government was given?  Some $60 billion of taxpayers fund used to provide retirement pensions for so few Federal Government employees.

Would it have happened if the Senate was not controlled by Howard at the time?   Did it have bipartisan support?

There have been no more funds transferred to the ‘Future Fund’ since the 2008 transfers.

The 2005-06 establishment of the ‘Future Fund‘ was only about addressing the Federal $91 billion under-funded problem.  The States and Local Government Superannuation form the balance of the $210 billion Gottliebsen talks about in his article above.   [Note: The $91 billion is a Federal 2005-6 estimate - the 2007 $136 billion used in Gottliebsen article above is an unconfirmed number - as is the 2011 $210 billion number.]  

Is this not frightening – some $210 billion – that is 80% of the total Government debt owed at the moment – the $210 billion could be as high as the current $265 billion Federal debt as no funds have been paid into the ‘Future Fund‘ since 2007.

If one was to add the Superannuation obligations to National debt – the current 25% Debt/GDP ratio that Wayne Swan and Treasury use as a reason to compare Australia favourably with the rest of the World, and a basis to justify more borrowing programs – suddenly looks less creditable.

Again – how did our State, Council, and Federal Leaders allow this taxpayer obligation to get so far behind?  On whose watch did it start – and why does this liability not form part of the State and Federal Budget structures as a debt liability owed by all State and Federal taxpayers?

We’ve known for decades the ‘rich vein of gold’ – i.e. apathetic taxpayers our Politicians draw from to create their own ‘super-duper’ pension entitlements –  has always been a contentious issue.  Perhaps by not exposing the depth of the unfunded problem they felt they could hide it forever.  Is it a case that the entitlements are just not sustainable?

Again – one of the claws that sticks is why are Parliamentarian’s allowed to trigger their pension payments when they leave the Parliament and not when they turn 55 or more?

Why do they only have to serve a minimum of 8 years if thrown out, or a minimum of 12 years to be eligible to receive a lifetime indexed pension linked to their remuneration at the time of their exit?

Available answers to questions like these are hard to find – or to find someone prepared to talk and answer questions like those being raised hereto.

This report shows some 67% of all investments are invested off-shore as at 30th June 2012. This investment strategy is wise if an expected fall in the A$ was imminent – the dividends off these off shore investments are subject to currency fluctuations and whilst the A$ remains high their value in A$ terms are neutral but driven by a higher rate of return that what is available in Australia.

I do find a conflict with the structure of the Future Fund – it has a targeted rate of return some 4.5-5% above the rate of inflation or around 8% as a benchmark. Investment has been driven off-shore to chase those types of returns.

This is the conflict – given the precarious Global Financial markets and the on-going GFC fallout – the risk attached to having 67% invested across Northern Hemisphere regions carries a risk greater that the shortfall in investment returns offered in Australia.

The other issue is that the Legislation provides no controls over how the investment portfolio is to be structured, either in a geographical nor ethical context – i.e. the Future Fund currently has a significant investment in American tobacco stocks.  This at a time when the Government is wagering a war against the effects of tobacco on health costs across the Nation.

There is much at play here – the research has uncovered so many abnormalities and further research is ongoing. Part IV will get a little bit more into the individual MP’s entitlements to super and pension …

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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 …

EYE-BALL’s Guru on – Australia’s Parliamentary Remunerations – Part II – Entitlements and Allowances -

February 20, 2013 1 comment
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Latest GURU Posts:


- 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:
- Australia’s Parliamentary Remunerations  -
- Part II – Entitlements and Allowances -
| Author: EYE-BALL Guru | 20th Feb 2013 |
In ‘Part I’ of this – ‘Australian Parliamentary Remunerations’ series, the focused was on the Parliamentary ‘base-salary’ structure – read that post here.

In this ‘Part II’ post – additional Parliamentary allowances and entitlements are the focus.  In addition to their base-salary structures, MP’s and Senators are further guided by a ‘Members Handbook’ that explains all their additional entitlements.

  1. Click here to read full ‘Ministers’ entitlements.
  2. Click here to read full ‘Members’ and ‘Senators’ entitlements.

The Headline Index in the ‘Members and Senators’ Handbook of Allowances and Entitlements is listed below:

Part 2: Salary -

  1. - Salary - [The base-salary has already been covered in Part 1]
  2. - Electoral Allowance – see below … and
  3. - Resettlement Allowance - see below … and
  4. - Superannuation, – ['Superannuation' will be covered in 'Part III' in more detail.]

Electoral Allowance:

  • All Senators $32,000 per year …
  • Members representing electorates less than 2,000km2 in area $32,000 per year …
  • Members representing electorates between 2,000km2 and 4,999km2 in area $38,000 per year …
  • Members representing electorates greater than or equal to 5,000km2 in area $46,000 …

Handbook Explanation: -

Each Senator and Member is paid an electorate allowance for expenses necessarily incurred in the performance of a Senator or Member’s duty. The taxation requirements relating to electorate allowance is a matter between the Australian Taxation Office and the Senator or Member. The Australian Taxation Office has issued a ruling on what may be claimed as an exemption for income tax purposes. … continues …

Resettlement Allowance: -

Handbook Explanation: -

A Resettlement Allowance is paid, under limited conditions, to certain Senators and Members who retire involuntarily from the Parliament. In order to be eligible for the allowance, a Senator or Member must ‘retire involuntarily’ from the Parliament by:

  1. choosing not to stand for re-election following loss of party endorsement, for reasons other than misconduct; or
  2. being defeated at an election (including an election where the Senator or Member has campaigned to be elected to represent a different electoral division, or to the other House of the Parliament).

The Senator or Member must also have been:

  1. first elected before 9 October 2004, and whose retiring allowance under the Parliamentary Contributory Superannuation Act 1948 is not payable immediately on retirement because of the deferral provisions of that Act; or
  2. first elected on or after 9 October 2004, and declare in writing to the Clerk of the relevant House of Parliament that it is his or her intention to seek employment on leaving Parliament.
  3. A retiring Senator or Member who meets these conditions will be paid a Resettlement Allowance equal to three months of the base salary at the rate current on the date that the Parliament is prorogued prior to the election.

If a Senator or Member receives a Resettlement Allowance, he or she will also be paid an additional three months of the base salary at the same rate as the Resettlement Allowance if he or she is:

  1. a Senator for a state and has served more than three full years in the Parliament; or
  2. a Member, or a Senator for a territory, and has served more than one full term in the Parliament.

For the purposes of the payment of the additional allowance, the period of service referred to is the period of continuous service that ceases when the Senator or Member retires involuntarily. The Chamber Departments are responsible for paying the Resettlement Allowance to eligible Senators and Members. Any queries relating to the Resettlement Allowance should be referred to the relevant Chamber Department. Contact details are available to Senators, Members and their employees from the Ministerial and Parliamentary Services help desks or on the Senators and Members’ Portal on the Extended Parliamentary Network.


Part 3: Accommodation and Office Facilities -

  1. - Electorate Offices,
  2. - Electorate Office furniture and fittings,
  3. - Electorate Office equipment,
  4. - Electorate Office Information Technology Services and training,
  5. - Telephone services in the Electorate Office,
  6. - Telephone services in Residences,
  7. - Office requisites and stationary,
  8. - Publications,
  9. - Printing and communications,
  10. - Privately Funded Electorate offices,
  11. - Commonwealth Parliament offices,

Again, the Handbook explains the entitlements and guidelines under which expenditures can be made. Handbook Link Here.


Part 4: Travel -

  1. - Travel in Australia by Senators and Members,
  2. - Travel on schedules services ,
  3. - Entitlements to travel by car,
  4. - Private plated vehicles,
  5. - Private vehicle allowances,
  6. - Charter entitlements,
  7. - Special purpose aircraft,
  8. - Travelling allowance,
  9. - Family reunion travel within Australia,
  10. - Overseas travel,
  11. - Overseas study travel,
  12. - Overseas delegation travel,
  13. - Travel after retirement,

Again, the Handbook explains the entitlements and guidelines under which expenditures can be made. Handbook Link Here.


Part 5: Staff Matters: -

  1. - Electoral employees,
  2. - Salary matters,
  3. - Electorate staff allowance,
  4. - Leave and Public Holidays,
  5. - Other Employment Matters,
  6. - Electorate employee travel,
  7. - Training and Professional development,
  8. - Workplace practices,
  9. - Employment of Trainees in electorate offices,
  10. - Liability for volunteers,
  11. - Cessation of employment,

Again, the Handbook explains the entitlements and guidelines under which expenditures can be made. Handbook Link Here.


Part 6: Other Matters: -

  1. - Supplement of capped entitlements in exceptional circumstances,
  2. - Interests and gifts,
  3. - Personal compensation for accidents,
  4. - Authorisation of Powers,
  5. - Badge of Office/Electorate medallion,
  6. - Photographic services,
  7. - Awards and National symbols,
  8. - Constituents’ request program,
  9. - Management of electorate office records.

Again, the Handbook explains the entitlements and guidelines under which expenditures can be made. Handbook Link Here.


To get a grip on the extent of Ministerial and MP’s expenses, the scope, the actual cost, and the reporting procedures, it is best to look at a published report of a six month summarised snapshot of MP, Senator, and Ministerial Expenses. As an example of of MP and Senator expenses for the period – [Jan '12 - Jun '12] – can be viewed using this link.

This method of public reporting the Ministerial, MP and Senator expenses has only been in vogue since 2009. In 2008 only Travel expenses claims are available on-line. This Link will take you to the APH Dept Finance website where all the links provided below can be accessed independently.

These links cover six monthly expense claims between Jan 2009, and Jun 2012 by all current and former MP’s and Senators. The report for July – Dec 2012 is not yet available.

  1. Current MP’s and Senators - 1st Jan – 30th Jun 2012 …
  2. Former MP’s and Senators - 1st Jan – 30th Jun 2012 …
  3. Current MP’s and Senators - 1st July – 31st Dec 2011 …
  4. Former MP’s and Senators - 1st July – 31st Dec 2011 …
  5. Current MP’s and Senators - 1st Jan – 30th Jun 2011 …
  6. Former MP’s and Senators - 1st Jan – 30th Jun 2011 …
  7. Current MP’s and Senators - 1st July – 31st Dec 2010 …
  8. Former MP’s and Senators - 1st July – 31st Dec 2010 …
  9. Current MP’s and Senators - 1st Jan – 30th Jun 2010 …
  10. Former MP’s and Senators - 1st Jan – 30th Jun 2010 …
  11. Current MP’s and Senators - 1st July – 31st Dec 2009 …
  12. Former MP’s and Senators - 1st July – 31st Dec 2009 …
  13. Current MP’s and Senators - 1st Jan – 30th Jun 2009 …
  14. Former MP’s and Senators - 1st Jan – 30th Jun 2009 …

[Further Explanatory Notes on these expenses can be read here ...]

Despite exhaustive efforts and requests to have the data contained in the above linked ‘expense’ ledgers to be made available as a ‘database’ file, the Department of Ministerial and Parliamentary Services – [MAPS] – have advised that the data used to compile the  PDF expense files linked above, is extracted from a host of different sources, thus rendering a single file option impossible.

Advice was also given that there is no central registry where all expense claims are processed and accessible as a single database.

Despite the obvious ‘red flag’ indicators a central database would offer to any Audit assessment, it was further explained that the budget for ‘IT’ type upgrades to allow for a centralisation of the MP and Senator expense register to has not been allocated.

This is so hard to accept or believe at face value.  More investigative work is being done – there just has to be a central data base file and if it takes an FOI application to obtain such a file – that endeavour will be pursued.

The mind boggles at a manual type extraction … and if this is how the Dept Finance, MAPS produce the above expense files … no wonder it takes a cast of thousands.   At the moment I have my Local Federal Member looking into a specific request to retrieve this data in a database format.

Just thinking about extracting all the data manually from the above summary links, i.e. 6 fines of 230 MP’s and Senators spread across 12 different categories,  would be a time exposure nightmare.  Yet ‘MAPS’ has confirmed this is how they do the extraction for the above files … unbelievable!!!

The above data in a functioning database file that allowed ‘filters’ and the like to be applied, would produce some very interesting research data.

How does an Audit committee do or perform their task?

The next installment – ‘Part III’ – is on Superannuation, the Future Fund, and whether the whole superannuation is a construct based on a ‘Ponzi Scheme’ with a current $300 odd billion liability on the future generations of Australian’s to fund.

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 – Australia’s Parliamentary Remunerations – Part I – “Base-Salary” & “Additional” entitlements -

February 13, 2013 1 comment
The-EYE-BALL-Opinion-Header-2
Latest GURU Posts:


- 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:
- Australia’s Parliamentary Remunerations -
- Part I – “Base-Salary” & “Additional” entitlements -
| Author: EYE-BALL Guru | 13th Feb 2013 |
For a long time the desire to dissect and examine the Parliamentary remunerations structure has been something that I wanted to do.   This series of posts is an in-depth expose on the remunerations and perks of our Federal and State Parliamentarians,  and other senior Public Servants. 

Introduction:

The research was prompted by the 35% increase in the base-salary scale in late 2011 and 2012.

The nagging issue has been whether the quality of Candidate we have in positions to ‘Lead’ our Nation, our States and Territory’s, are good enough. A lingering question is whether the Candidates coming into the Parliament have come because of the generous pay scales, the superannuation schemes attached to post Parliamentary life,  and all the additional perks available.

This then leads to more questions about whether the pay scales on offer are adequate to attract the best people, people with demonstrated Leadership skills?

An outcome of this research might lead to some recommendations and suggestions that provide a different perspective.

When Prime Minister Kevin Rudd froze Parliamentary remunerations at their then levels when the GFC fallout began to impact in 2008 – his popularity as the Prime Minister was at record highs.  The electorate responded to the restraint.

This decision went through both Houses unchallenged.   Rudd’s demise is linked to this legislation and the ‘perceived’ angst of backbenches  who saw Rudd making no real sacrifice because he was married to a very wealth wife, where most of his fellow parliamentarians depended on their salary to cover their living costs.  

Rudd’s demise bought forward an immediate change to the ‘restraint’ mandate and within weeks the new regime was preparing for a substantial overhaul of Parliamentary entitlements and remunerations.    The outcome of this Remuneration Tribunal overhaul resulted in 35% increases to the ‘base-salary’ levels.   The Prime Minister’s salary went to almost $500,000 p/a from $370,000.  

This compared with the American President’s then and current salary of US$400,000 p/a.

What is the ‘Base Salary’ and how it came about:

Can be read in detail here … to quote in part from this source -

… Since 1901, the Parliament has enacted legislation to define the parliamentary base salary for the purposes of Section 48 of the Constitution.

The Remuneration and Allowances Act 1990 defines a parliamentary allowance which is consistent with the arrangements whereby the Remuneration Tribunal determines the remuneration of parliamentarians.2 Section 8 provides that salaries and allowances are to be paid out of the Consolidated Revenue Fund. … continues …

… 1901–1973

At the Constitutional Convention at Sydney in 1891, Sir Samuel Griffith said:

“One of the first things to be done by the parliament of the commonwealth in its first session would be to settle the salaries of ministers, and a great number of other matters of that kind. We have, therefore, given them power to deal with this subject. We did not think it necessary to make this in any sense a payment of members bill. We lay down, however, the principle that they, are to receive an annual allowance for their services, and we thought that it should start in the first instance at £500.”

At the Adelaide Convention, however, the draft constitution bill debated specified an amount of £400 and this was the annual allowance subsequently enacted in the Constitution.

In 1907 parliamentarians made themselves liable to the payment of State income taxes. Tax concessions for electorate expenses were allowed from 1925.

Between 1901 and the establishment of the Remuneration Tribunal in 1973, Parliament adjusted allowances following decisions of executive government or as the result of recommendations from committees of inquiry.

Justice Kerr in 1971 noted that during this time there was ‘no fixed pattern of approach’ to the timing and method of reviewing base salaries—a process that invariably attracted criticism. In 1971 the Kerr Inquiry suggested the establishment of a ‘Salaries Tribunal … authorised by legislation to review salaries and report at regular stated intervals.’

Kerr also wrote:

Nothing … should prevent the Parliament or the Government from rejecting recommendations or from taking action not in accordance with what is recommended.

Remuneration Tribunal:

From its establishment in 1973, the Remuneration Tribunal, using a range of evidence and indicators, determined the ‘base-salary’ with reference to second division officers of the Commonwealth Public Service. Adjustments were then made by applying National Wage Case decisions. In 1979 the Government legislated to remove the Tribunal’s recent determination that these adjustments be automatic.

In 1987 the Tribunal convened a conference for interested parties to examine parliamentarians’ salaries. An independent review was consequently conducted for the Tribunal in 1988. The resulting report recommended increases based on work value and community pay standards. The review strongly recommended that there be no linkage between the base-salary and APS salaries. Increases determined by the Tribunal at that time were deferred.

With the Remuneration and Allowances Act 1990, the Government removed the Tribunal’s power to determine base salaries and allowed a phased increase to the allowance over three years. The legislation also provided a link with SES Band 1 salaries in the APS—in contrast to the recommendation in the 1988 review. Adjustments to the base salary were made by means of national wage case decisions and, from 1992, agreements between the Government and public sector unions.

Legislation enacted in 1994 ensured that the base salary was equivalent to the minimum APS SES Band 2 salary level. The then Workplace Relations Act 1996 enabled SES salaries to be set through individual Australian Workplace Agreements (AWAs), thereby removing the standard against which the base salary was determined. With the expiry of the final APS Enterprise Agreement at the end of 1996, the mechanism by which adjustments were made to the base salary ceased.

Legislative changes to the APS in 1999, among other matters, amended the Remuneration and Allowances Act 1990 and the Remuneration Tribunal Act 1973.

Prior to 1901 there was no ‘base-salary’ for Members serving as Governor’s and the like.

History of the ‘Base-Salary’:

[The APH website database has been used in compiling the following information.  Links have been provided to documents used where applicable.]

The following Table provides Parliamentary increases in ‘base-salary’ increments since the late 1960′s through to the current ‘base-salary’ level of $190,500 p/a.

Links used to compile the above Table: Excel Spreadsheet – APH Data- , APH PDF file, and ABS Spreadsheet.

The Headline outcome in this Table is the ‘male average wage’ comparison with the ‘Base-Salary’ of parliamentarians.

The 2012 number – 35.16% – is the lowest number since 1968 – giving rise to a debate that Politicians have never been better paid in comparison to those they seek to govern.   It can also be said that a large portion of this ‘base-salary’ increase came in the period after the worst of the GFC when wage outcomes in the private sector, job security, and industry shutdowns are at their worst in 20+ years.

The restraint imposed under Rudd has not been replicated under the current Government.  The Opposition, the Greens, and the Independents could have blocked the passing of the new Tribunal recommendations – it would appear that Mr Rudd’s initiative was not long on the conscience of Members and Senators.

The Remuneration Tribunal who provide the advice on increases to the ‘base-salary’  are themselves public servants and in turn also benefit from any increase to the ‘base-salary’ increments.  

This has to be considered a ‘conflict of interest’.  

Any productivity or other scale used to warrant or benchmark these increases – i.e. CPI and the like, ultimately become self-fulfilling.   There has never been a year of negative inflation in the Table above – nor GDP growth, nor Parliamentary ‘base-salary’ level.   This is the same for private sector wage outcomes.   But those outcomes often have productivity based clauses – Parliamentarians do not have that exposed accountability.

‘Base-Salary’ Multipliers:

The ‘base-salary’ is used to measure all annual remuneration salaries of Parliament and other senior Public Servant appointments.

A schedule of the multipliers used for Federal Parliamentarians is delivered below, bearing in mind that everybody serving as a MP or Senator earns the base-salary.  These multipliers are additional remuneration.

Various Federal Parliamentary Positions/Offices: [As a percentage of the base salary, per annum.] – see on-line source here for Non-Ministerial MP’s … and here for Ministers

  1. Prime Minister – 160% – Julia Gillard
  2. Deputy PM - 105% – Wayne Swan
  3. Government Leader of the Senate – 87% – Stephen Conroy
  4. Leader of the Opposition - 85.0% – Tony Abbott
  5. Leader of the House – 75% – Anthony Albanese
  6. Other Minister in Cabinet who is also Manager of Government Business in the Senate – 75%
  7. President of the Senate - 75.0%
  8. Speaker of the House of Representatives - 75.0%
  9. Other Ministers in Cabinet – 75%
  10. Other Minister who is also Manager of Government Business in the Senate – 67.5%
  11. Other Ministers – 57.5%
  12. Deputy Leader of the Opposition – 57.5%
  13. Leader of the Opposition in the Senate – 57.5%
  14. Leader of a recognised party of more than 10 members of Parliament, other than a party whose Leader is the Prime Minister or the Leader of the Opposition – 45.0%
  15. Leader of a recognised party of at least 5, and no more than 10, members of Parliament – 42.5%
  16. Manager of Opposition Business in the House of Representatives – 27.5%
  17. Chief Government Whip in the House of Representatives – 26.0%
  18. Shadow Minister (see clause 2.4) – 25.0%
  19. Chief Opposition Whip in the House of Representatives – 23.0%
  20. Shadow Minister (see clause 2.4) – 20.0%
  21. Deputy President and Chair of Committees in the Senate – 20.0%
  22. Deputy Speaker in the House of Representatives – 20.0%
  23. Deputy Leader of the Opposition in the Senate – 20.0%
  24. Chief Government Whip in the Senate – 20.0%
  25. Chief Opposition Whip in the Senate – 18.0%
  26. Second Deputy Speaker in the House of Representatives – 13.0%
  27. Whip in the House of Representatives of a Government party with more than 10 Members in the House 13.0%
  28. Whip in the House of Representatives of an Opposition party with more than 10 Members in the House – 12.0%
  29. Head of a recognised party, not being a party whose Leader is the Prime Minister or the Leader of the Opposition, with at least five members in each house, sitting in the house other than that in which the Leader of the party sits – 11.0%
  30. Whip in the House of Representatives of a party with at least 5, and no more than 10, Members in the House – 9.0%
  31. Whip in the Senate of a recognised party of at least 5, and no more than 10, Senators – 9.0%
  32. Government Deputy Whip in the Senate – 5.0%
  33. Opposition Deputy Whip in the Senate – 5.0%
  34. Deputy Whip in the House of Representatives of a Government party with more than 10 Members in the House – 3.0%
  35. Deputy Whip in the House of Representatives of an Opposition party with more than 10 Members in the House – 3.0%
  36. Member of the Speaker’s Panel in the House of Representatives – 3.0%
  37. Temporary Chairman of Committees in the Senate – 3.0%
  38. Deputy Whip in the House of Representatives of a party with at least 5, and no more than 10, Members in the House – 2.0%
  39. Chair of the Joint Statutory Committee of Public Accounts and Audit – 16%
  40. Chair of the Joint Statutory Committee on Public Works – 16%
  41. Chair of the Joint Standing Committee on Foreign Affairs, Defence and Trade – 16%
  42. Chair of the Joint Standing Committee on Treaties – 16%
  43. Chair of a Joint Statutory Committee or Joint Standing Committee, not otherwise specified (except the Joint Standing Committee on the Parliamentary Library) – 11%
  44. Chair of a Senate Legislative and General Purpose Standing Committee – 11%
  45. Chair of a House of Representatives General Purpose Standing Committee – 11%
  46. Chair of a Joint Select Committee or Select Committee in the Senate or the House of Representatives – 11%
  47. Chair of an Investigating Standing Committee established by resolution of either House – 11%
  48. Chair of the Senate Standing Committee of Privileges – 11%
  49. Chair of the House of Representatives Standing Committee of Privileges – 11%
  50. Chair of the Senate Standing Committee on Regulations and Ordinances – 11%
  51. Chair of the Senate Standing Committee for the Scrutiny of Bills – 11%
  52. Chair of the House of Representatives Standing Committee on Procedure – 11%
  53. Deputy Chair of the Joint Statutory Committee on Public Accounts and Audit – 8%
  54. Deputy Chair of the Joint Statutory Committee on Public Works – 8%
  55. Deputy Chair of the Joint Standing Committee on Foreign Affairs, Defence and Trade – 8%
  56. Deputy Chair of the Joint Standing Committee on Treaties – 8%
  57. Deputy Chair of a Joint Statutory Committee or Joint Standing Committee, not otherwise specified (except the Joint Standing Committee on the Parliamentary Library) – 5.5%
  58. Deputy Chair of a House of Representatives General Purpose Standing Committee – 5.5%
  59. Deputy Chair of a Joint Select Committee or Select Committee in the Senate or the House of Representatives – 5.5%
  60. Deputy Chair of an Investigating Standing Committee established by resolution of either House – 5.5%
  61. Deputy Chair of the Senate Standing Committee of Privileges – 5.5%
  62. Deputy Chair of the House of Representatives Standing Committee of Privileges – 5.5%
  63. Deputy Chair of the Senate Standing Committee on Regulations and Ordinances – 5.5%
  64. Deputy Chair of the Senate Standing Committee for the Scrutiny of Bills – 5.5%
  65. Deputy Chair of the House of Representatives Standing Committee on Procedure – 5.5%
  66. Chair of the Senate Standing Committee of Senators’ Interests – 3%
  67. Chair of the House of Representatives Committee of Members’ Interests – 3%
  68. Chair of a Parliamentary Committee concerned with public affairs rather than the domestic affairs of Parliament not otherwise specified – 3%

Can you imagine the accountancy required in keeping track of these appointments and the additional perks that go with the Committee members and the like?

There is no private sector job where any Senior Executive like an MP of Senator gets paid additional remuneration for time and effort spent. What they do have is a bonus opportunity and that is negotiated and contingent on specific profit outcomes.

A senior MP or Senator might serve on three or four committees, have a Parliamentary appointment as well, and boosts their ‘base-salary’ by 50% or so.

Base Salary of other Senior Government Appointees:

  1. Judges: High Court, Federal, State, etc … see link here
  2. Chief of the Defence Force – see Link here.
  3. Commissioner of Taxation – see Link here.
  4. CEO of Australian Customs & Border Protection Service – see Link here.
  5. Auditor-General for Australia, Australian Statistician – see Link here.
  6. To see CEO Remuneration scales for APRA, ASIC, ACCC, Federal Police, DPP, FWA, and the Management line under these Departments – see link here.

There is a lot more to Members and Senators entitlements – to read a full list contained in the Members Handbook 43rd edition use this – link here[this file is almost 4MB and will take a few moments to load.]

Superannuation:

In addition to the above base-salary and other MP and Senator entitlements, there is of course the employer contribution to the Members and Senators personal superannuation scheme – some 15.4% of the annual salary – [i.e. base salary plus all other entitlements as outlined above.] –

The next Part of this series will be about Parliamentary ‘Superannuation’ schemes and the ‘Future Fund’,  now considered to be a Sovereign Wealth Fund. 

 

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

January 31, 2013 5 comments
The-EYE-BALL-Opinion-Header-2
Latest GURU Posts:


- 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 Devil is in the Detail, there is none -
- Gillard chooses shock, awe & Spin over Policy -
| Author: EYE-BALL Guru | 31st Jan 2013 |

As the Nation recovers from the ‘shock and awe’ desperation Gillard presented yesterday at her National Press Club address – the reality of what a 230 odd day election campaign represents is emerging from the fog and clouded waters.

What was Gillard’s motive – EYE-BALL covered this yesterday in some detail – it has been revealed that her Cabinet were largely left in the dark about the announcement – Gillard admitted that The Greens, Oakeshott and Windsor were advised shortly before she announced the election date – Ministers like Bill Shorten and Crean were not advised.

Australia’s economy tethers with continued large firm job losses and closures,  the flood and bushfire crisis across the eastern states were pushed aside to make way for Gillard’s attempt to muddy the political landscape.

Lack of respect for Natural Disaster efforts:

Her announcement came right in the middle of the aftermath of the floods and their ongoing cleanup, and when combined with the ravaging bush-fire damages, why did she pick yesterday to announce the election?  

The rebuild up and down the eastern seaboard will take months and even years.  Gillard’s announcement proves again the stupidity that comes from her and her advisers – or ‘poor judgement’ as Abbott called it in his address today.   The election announcement was a ‘crash-stunt’ meant to deflect the continued AWU scandal attacks and the police who are closing in.

Without and knowledge of how disrespectful she was being - Gillard’s election stunt diminished the efforts of the volunteers, the emergency services,  the victims and the hero’s all confronting the flood crisis, the bush fire damage up and down the eastern seaboard, and  all giving tirelessly to defend their communities.

Gillard chose to announce rather then hold back until the Nation was on the way to recovery.

This was nothing less than her own personal survival plan and designed to give her, her the best chance at being re-elected.

Whatever the Cabinet Ministers come out and say in the days to come – they were caught short and their true opinion will never be heard.  They are all now in survival mode and one might ponder which might be the greater natural disaster – Gillard’s leadership, the floods, or the bushfires.

The AWU Investigation:

Gillard is aware of the AWU investigation progress, and she feels threatened as if directs itself toward her testimony in the face of the newly uncovered evidence, and new witness statements.

The AWU investigation is closing in on Gillard and she had to respond if she was to prolong her survival – and she did by announcing the longest election campaign in history.  

Her immediate aim is to guarantee her leadership through to that election.  She then hopes to stall the Oppositions pursuit of her in the house over her AWU involvement.  That is a hail mary as she cannot control the Opposition and their agenda against her.  But by giving them an election to focus on she was at best hoping to distract them from the AWU pursuit.

Gillard knows her days as Leader and as a politician are numbered if this AWU scandal was allowed to run amok during an election year.   This again proves how desperate she is – and the electorate will not be fooled – nor should the Opposition – this election stunt as her last throw of the dice.

The Economic Void:

Gillard’s stunt gave us nothing on ALP economic policy, yet she challenged the Opposition to provide their economic policies saying there was now no excuses to not have them fully costed well before the election.

What of Gillard’s failures as an economic manager – they loom large and real – here is two relative examples …

  • The the failure on delivering a promised budget surplus for 2012-13 - back-flipped on during the Christmas recess in the hope that it would not have media churn in the new year.
  • The zero tax collect for the second consecutive quarter for the new MRRT was also doused as a story that would have had its day in Parliament next week.

Gillard sees herself as untouchable – as someone who is unable to  believe in her failures … she moves on and that is what she has done again …

Cabinet and Caucus are still to discuss and endorse the move – not that they will have any say in reversing the decision.  What Gillard wants Gillard gets is the new slogan doing the rounds of parliament House at the moment.  Her arrogance will have isolated her further.

As a financial commentator – Gillard’s will to introduce the National Disability scheme,  and the Gonski review recommendations before the election demonstrates another side of her desperation.

The $10-$15 billion of new spending these initiatives will trigger, and under a Government already drunk on the over-spend of recent years – should be looked at for what it really represents – sheer lunacy.

Given the odds for a ALP victory – why is Gillard so determined  to exhaust the Treasury and leave Abbott’s task that much harder?  

Where is the accountability given the hardship Australians are enduring in the aftermath of the floods and bushfires – where is her respect for the office she serves – and the people she represents?  Gillard has no economic credentials and for her to be demanding Opposition economic policies is political suicide.   She will spin this into another ‘misogynist’ rant trying to punish Abbott because she could not get her way.   She is more than dangerous, she is vile and nobody in the Government can stop her.  

Howes, Shorten, Ludwig and the like who put her in the chair now have to do what they did to Rudd … they haven’t the balls because it will make their June 2010 action look that much more damaging to the ALP brand.

most of Australia does not give a hoot about her election stunt – the percentage of people who care about the election announcement would fit into the prisons around the Nation – the irony is that some of them will be serving in those prisons at some time in the future.

Dismiss the media – dismiss the politicians – who is left that is affected or even interested by this early election call?  

Why not an early election?

Gillard could have easily have called an early election and that would have been news … it would have shocked everybody and given her creditability that may have won her support and votes.

Her advisers were not brave enough to debate that option with her – this election decision is all Gillard’s and she is now exposed and isolated more than ever – if only some of the ALP caucus were brave enough to do the right thing.  Their squeamishness is obvious – two PM’s assassinated in three years … the sad fact is that this one is more justified than the previous and therein lies the rub – this Government has completely lost its way – they can’t lead, they have no idea what’s up or down, they all are concerned about pre-selection contests and whether they are short listed.   

Failed ALP Policies: 

It’s time for some reality checks of failed promise’s by Gillard and her Government.   As a basis to justify the MRRT the Government promised a employer contribution to Superannuation taking it to 12%.  

Also – there was promised company tax relief for business – both these promised policies have failed to eventuate because the collect from the MRRT in the first six months has been zero. Gillard has moved on and there there has been no talk about how the promised super and tax relief are now to be funded.

If we move to other areas – the NBN – what a clusterfu_k that is – and now they have to find a way to flood proof the existing rollout before they can move on to new rollouts …

Then there is the health issues all around Australia with waiting lists getting longer and hospital beds being closed.

This government talks a good game but it is all hollow and no substance … what about failed border issues and an immigration policy that has stalled because nobody has an answer.

This PM makes these grandiose statements and when they fail – all to frequently – she makes a new round of initiatives i.e. education and recommendation from the Gonski report, and the National Disability scheme. How is she going to fund these new policies when she has not funded to shortfall from the MRRT expected tax collect.

You want to talk about economic management – there is no worse example of a PM spending for re-election purposes. She has no real interest in the welfare of the people impacted by her failed policies – she moves on and tries to capture a new audience and the Australian media follow her like lapdogs hanging on her every word waiting for their next headline.

Our pathetic Media:

It truly is pathetic – Gillard yesterday, and now Crean this morning on ‘News 24′ called for the Opposition to lay out their policies and have them fully costed.  Crean should know better – this Government has not delivered on any of its policies within budget forecasts.  Crean offered up an excuse this morning that it was a revenue problem – he should be taken out the back and wacked for being so dumb …

How dare Crean blame reduce revenues when they actually grew in the last two years by almost 10% and 8% respectively.

These growth numbers represent the highest revenue growth years since 1996 bar three (3). The problem is never about revenues – it has always been about expenditures and for Crean to be allowed to go unchallenged on his statements this morning, says more about how much of a void there is in our media presenters who actually understand economics and financial accountability.

ABC’s ‘News 24′ presenter Michael Rowlands was out of his skin trying to give Crean his platform for comment – both Rowlands and the ‘lipstick’ that sits beside him have their own ALP agendas – any creditability as political commentators they think they have is laughable.

Another ABC presenter Barry Cassidy was also given his opportunity to spruik the ALP message on the same program.   Cassidy as you know served as Bob Hawke’s press secretary.  It is a shame he lost his way as far as objectivity is concerned – get off you horse Barry and think about giving the game away, or go back to when you had some journalistic creditability and rediscover that objectivity.

The ‘News 24′ is a great concept and initiative – I do watch the live interviews but as for intelligent and inciteful commentary, Paul Jones, and Leigh Sales are about the only presenters who are brave enough to ask the tough questions.

The ABC don’t have a financial journalist presenter worth a pinch of salt – they pay so called experts to guest appear and that then lends those paid for comment speakers the soapbox to make comments that go unchallenged, and not necessary on topic, or provide the answers the audience want to hear.

This blog-site is mostly about macro issues, yet in all all the tripe that is dished up by Politicians and their leadership, it all focuses on the micro issues.   The media never ask the Politician to answer the question when they avoid it – when it does happen it never changes the message.  Politicians have been allowed to hoodwink the media and now treat it as their own message delivery system.

No media presenter goes to history in a big way – even recent history could prompt a question on why policies failed – why is their no tax collect from the MRRT – was it a bad tax – did Gillard water it down ahead of the 2010 election to give herself a shot of winning that election. If you recall the Mining lobby were running a staunch campaign against Rudd over the MRRT … was Gillard’s capitulation the reason the MRRT has a zero tax collect?

The answers given to this question are about commodity prices, about state royalties, about the ‘super-tax’ concept  - nobody will call it a bad tax and that the Miners beat the Government down on its original intent and collect.

Commodity prices, particular iron ore are seasonal – RIO, BHP, and Fortescue all announced record export volumes – and there we have it again – Crean says a fall in revenues I say the RBA and Government’s flawed inflation targeting policy, and its impact on continued high interest rates.

The economic upshot is that the Government has no idea what drivers are working in the economy, and/or what influences are impacting on it negativity. For them it is all a crap-shoot …

Summary:

The best thing Gillard could have done is go early – it would have served her better as well as the Nation.

As it stands – the continued economic downturn that will happen during the election campaign will further damage Labour as it should.

The damage Gillard can do in this 8 odd month period is serious – Abbott has to work at getting her out as early as possible, and to that aim he should be pressuring the WA and Victorian Premiers to do him a favour and get the AWU investigation to its conclusion as soon as it can.

The ALP caucus is asleep behind its Pied-Piper leader – there is no way any of them will stand up and deliver what the electorate demands …

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

January 23, 2013 10 comments
The-EYE-BALL-Opinion-Header-2
Latest GURU Posts:


- 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 Turmoil is Already here -
- We just have to accept what is coming -
| Author: EYE-BALL Guru | 22nd Jan 2013 |
Afew days ago I wrote about – ‘The Turmoil is Beginning’ – linked here  Today I read an article by former ASX head Maurice Newman – bio linked here – and the ‘beginning’ is a fallacy.

Newman wrote an opted piece titled – ‘Lifting lid on a Ponzi scheme’ – reproduced below – and I have to say … when someone with Newman’s experience talks the way he has in this article – plenty of people will take notice.

Lifting lid on a Ponzi scheme


| Author: MAURICE NEWMAN | Date: Jan 22nd, 2013 | Link to On-Line Story. |

IN a bright start to the new year we are reading that the global economic outlook is improving. Setbacks are transitory. The fiscal cliff is history and the debt ceiling is bound to be lifted. Stockmarkets everywhere, even those in Europe, are rising.

World leaders, after numerous false starts, ask us to believe that this time, their policies are working. All the while their central banks continue to grow their balance sheets, determined to kick the can further down the road and keep investors and households hanging in and hoping.

In Australia, Wayne Swan, accentuating the positive, repeatedly reassures us that our economy is strong and the envy of the world. Unemployment is low, the investment pipeline is impressive and the Australian dollar is high, an endorsement he says, of his claims.

If we show confidence and put our trust in the Treasurer’s economic management, we will return to the promised land of high growth and bigger government. Balancing the budget may take a little longer, but hey, Newspoll says voters are unconcerned about abandoning the surplus along with the International Monetary Fund and much of the commentariat, so no rush.

Surely only a curmudgeon would rain on this parade?

But say on closer analysis the outlook isn’t so rosy? What if those odd green shoots don’t blossom? And, what if the policies and confident tone being promoted by world leaders and their central banker colleagues are nothing more than a confidence trick, a giant Ponzi scheme, just like the one Bernie Madoff is doing 150 years for? Is it better to keep these concerns private?

Whose role is it to warn an unsuspecting public of an unsustainable situation? How can people prepare if they are unaware of the enormous changes that will impact their lives?

While we read headlines about a slowing US economy, or the prospects of a Greek or Spanish default, collective governments and central banks are quickly on the scene making soothing noises about how they will contain the risks. But their interventions have consequences.

For example, prominent American business economist Dave Rosenberg discovered that before the onset of quantitative easing, the Fed’s balance sheet had a 20 per cent correlation with the S&P 500. But since 2009, that relationship has surged to 85 per cent. Rosenberg writes: “There is a much tighter relationship between the stockmarket and the central bank balance sheet – via the P/E multiple – than there is between the stockmarket and corporate earnings.”

This development is concerning. The US had no earnings growth at all last year, yet the market was up by 12 per cent. This confirms that investors are more moved by the Fed’s operations than they are by corporate health. Faith substitutes for hard work. Yet it is rational to speculate when taxpayers and central banks provide a backstop.

This grotesque distortion of risk leads to volatility and the periodic burning of scarce productive capital. This is compounded by governments that also consume valuable investable funds when they borrow for recurrent purposes. Expect slower growth in future.

Asset misallocation gets short shrift in public policy considerations. After all, the leviathan has to be fed. It also seems there are more votes in spending than in fiscal consolidation. The timing of a surplus is rarely convenient. Attractive alternatives abound. So, when the chips are down, political cowardice is preferred to prudence.

The recent fiscal cliff negotiations make the point. Despite all the theatrics, as things now stand, in 10 years the US will end up $US4 trillion ($3.8 trillion) deeper in debt than now.

While officially projected to be $US1.089 trillion, John Williams of Shadow Government Statistics, says the real 2013 deficit, adopting US Generally Accepted Accounting Principles, will be $US7 trillion. Who knows what it will be in 2023? (It would be instructive to learn what Australia’s comparable number is.)

The West has now reached the point where total private and public debt, together with unfunded government liabilities, can never be repaid by an ageing demographic. One day even debt servicing will be an issue. With fewer taxpayers and lenders, the ability to take from the future to provide for the present will end. This is when we see the final collapse of the great international governmental Ponzi scheme.

Already in Europe, where lenders and taxpayers in the peripheral countries have either fled or are bankrupt, economies are surviving on the grace and favour of others. In America, we see the future with 11 states having more people on welfare than they have in work. The employee pension fund for the state of Illinois is $US95 billion in deficit and growing at $US17 million a day.

And central banks that became the last resort for empty treasuries now find their own balance sheets stretched, their liabilities too short and their asset quality increasingly suspect. For all their intervention, other than to defer the evil day and encourage speculation in assets, quantitative easing has done nothing for economic activity. Indeed, the Fed has recently lowered its growth forecasts.

What has differentiated Australia is that the Hawke-Keating and Howard-Costello governments largely eschewed the public policy excesses of the major economies. This changed in 2007 and Australia is now in the process of establishing its own Ponzi scheme.

As the federal opposition has found, it isn’t easy to hold the government to account. It is invariably portrayed as negativity. But this is a time for candour, not point-scoring.

As G20 members, Swan and his Treasury colleagues must know that the world cannot continue indefinitely as it is. They should be aware of the urgent need for restructuring. Yet, against this global backdrop we persist with policies that will dangerously expose us when the ultimate crisis hits.

Rather than platitudes about confidence, we need public policies that will provide us with a much-needed buffer against the inevitable day of reckoning, in the same way that the Howard government’s legacy allowed us to navigate the global financial crisis in relative comfort.

If the government won’t promise to do it, the opposition should.

Maurice Newman is a former chairman of Deutsche Bank, the Australian Securities Exchange and the ABC.

There is nothing in this article that has not been said by thousands of analysis’ all over the world for the last few years including this author.   America and many other Nations have all been heading towards the ‘cliff’,  and the people in the boat who could change the course have all been drunk at the wheel.

The whole US election campaign – some 18 months of if all was a party America could not really afford given where they have been header since the GFC.

As Obama walked the walk after his inauguration – all smiles and with the crowds cheering behind him – the reality of the moment was lost on me … don’t American’s know what’s ahead of them?

It’s important to read these words again -

… The West has now reached the point where total private and public debt, together with unfunded government liabilities, can never be repaid by an ageing demographic…

… and realise what it all means …

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

January 22, 2013 Comments off
The-EYE-BALL-Opinion-Header-2
Latest GURU Posts:


- 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 Turmoil is beginning -
- Japan’s Economic Stimulus to tip the scales -
| Author: EYE-BALL Guru | 22nd Jan 2013 |

The seeds to more global turmoil are currently being sown by our neighbours to our north.   Two of Australia’s largest export markets are playing brinkmanship in war terms over the Senkaku/Diaoyu islands, in addition, Japan have announced a stimulus package that sends a message that Japans decades long currency appreciation is about to end.

Japan have been an economic basket case since the early 90′s in the aftermath of the 87′ crash and its fallout.  See Yen (¥) currency, and Nikkei Charts below: [click on chart to enlarge in a new window - both charts linked from 'Trading Economics' website.]

Japanese ¥ v US$ since 1976: 

Japanese Nikkei Index 1996: 

Both these charts tell interesting stories – but first read below a brilliant synopsis published by the UK’s ‘Telegraph’ on what the sabre rattling, and the proposed Japanese stimulus might really mean for the rest of the world. 

Revolutionary Japan is suddenly the centre of world affairs


| Author: Ambrose Evans-Pritchard, International business editor | Date: Jan 20, 2013.| Link to On-Line Story. |

Photo Caption: On the fiscal side, Mr Abe will launch combined national and local stimulus worth 20 trillion yen (£140bn) or 4.4pc of GDP. No matter that the budget deficit is already 10pc of GDP, or that total financing needs are a record 60pc of GDP this year. Photo: Bloomberg News

So Japan may not slide into genteel oblivion after all. To the surprise of the Japanese people, their country is smack in the middle of two riveting dramas that threaten to upturn the global strategic landscape in short order.

Newspapers may soon have to re-open their Tokyo bureaux, shut down long ago when the investment bubble burst and one Lost Decade stretched into another. We all watch with disbelief as China and Japan rattle sabres over the Senkaku/Diaoyu islands, so like the seemingly minor events that drew Europe’s alliance systems into conflict from 1911 onwards.

Both graduated to fighter jets last week: Japan sending in F-15s; China deploying J-10s, and mobilising the East China Sea fleet for live ammo drills. China’s purpose is clear. It is testing the US security umbrella, and Washington’s willingness to risk conflict to back Asian allies.

There is a minority in Beijing who think America is a busted flush, a mistake made repeatedly by different powers over the last hundred years.

The possibility that the world’s three largest economies could come to blows — as feared by US defense secretary Leon Panetta — is a sobering thought.

Against this, Japan’s economic policy revolution seems tame. Yet forces are being unleashed that could have powerful effects through the world’s asset markets and trading system.

Premier Shinzo Abe has vowed an all-out assault on deflation, going for broke on multiple fronts with fiscal, monetary, and exchange stimulus. This is a near copy of the remarkable experiment in the early 1930s under Korekiyo Takahasi, described by Ben Bernanke as the man who “brilliantly rescued” his country from the Great Depression.

Takahasi was the first of his era to tear up rule book completely. He took Japan off gold in December 1931. He ran “Keynesian” budget deficits deliberately, launching a New Deal blitz before Franklin Roosevelt took office. He compelled the Bank of Japan to monetise debt until the economy was back on its feet. The bonds were later sold to banks to drain liquidity.

He devalued the yen by 60pc against the dollar, and 40pc on a trade-weighted basis. Japan’s textile, machinery, and chemical exports swept Asia, ultimately causing the British Empire and India to retaliate with Imperial Preference and all that was to follow — and there lies the rub, you might say.

Takahasi was assassinated by army officers in 1936 when he tried to tighten by cutting military costs. Policy degenerated. Japan later lurched into hyperinflation. Few dispute that Japan escaped from slump and pioneered the world’s most successful policy mix — in strictly economic terms — from 1932 to 1936.

The trick was to act with overpowering force and combine all forms of stimulus, each leavening the other. Monetarists say Japan’s great mistake over the last 20 years has been to launch one spending spree after another without monetary backing, like sending infantry over the top deprived of artillery support. The result has been to push net public debt to 145pc of GDP this year (gross debt is 245pc) without reaching “escape velocity”.

The Bank of Japan sat of on its hands for a decade. Only later did it buy bonds, but in dribs and drabs, on short maturities, from the banking system instead of the broader public, and all in a half-hearted spirit. Mr Abe has lost patience. This time the Bank of Japan (BoJ) will do what it is told, the first of the big central banks to be stripped of its independence, and probably not the last.

As Milton Friedman said — quoting Clemenceau — “monetary policy is far too important to be left to central bankers”. Mr Abe said the next governor to take office in April must be a soulmate “with the will and ability to pull the nation out of deflation”.

Leaks suggest that the BoJ will set an inflation target of 2pc this week, to be achieved by unlimited bond purchases. The liquidity effects of this by the world’s top external creditor could be large enough to leak into everything from New Zealand bonds, Brazilian equities, and Chelsea property, a sort of `carry trade’ on steroids.

On the fiscal side, Mr Abe will launch combined national and local stimulus worth 20 trillion yen (£140bn) or 4.4pc of GDP. No matter that the budget deficit is already 10pc of GDP, or that total financing needs are a record 60pc of GDP this year.

The IMF advises Japan not to push its luck, warning that the country has reached the point where even a “relatively small” rise in borrowing costs could set off havoc. “Europe’s recent experience offers a cautionary tale. Once market confidence is lost, regaining it becomes very difficult,” it said.

Mr Abe cares not a wit about such opinions, but he is taking a huge gamble. Japan is losing its safety buffers one by one. The trade surplus has evaporated, and will not recover soon after post – Fukushima closure of the nuclear industry. The savings rate has fallen to 2pc from 15pc in 1990.

The work force is shrinking every year. The state pension fund has become a net seller of government bonds as the aging effect reaches a critical point.

Japan’s banks have become the buyers or last resort instead, pushing their holdings to 85pc of GDP. The result is to starve small firms of credit.

Adam Posen, a former UK rate-setter and a Japan expert, says fiscal stimulus ceased to be any help a decade ago and is now counter-productive. The risk is not that Japan’s debt trajectory will fly out of control. The damage is slow and insidious.” When a large country with its own currency reaches its fiscal limit, growth ends not with a bang but a whimper of declining vitality,” he said.

Mr Posen advises Japan to rely on monetary policy alone to right the ship. I broadly agree, though this time the kindling wood of fiscal spending may be what is needed to ignite damp money.

If Mr Abe means what he says, this is not just more of the same. Needless to say, printing money has its perils too. The risk is that Japan could escape gentle but stable deflation — the Devil it knows — only to see a panic flight from bonds that overwhelms the Bank of Japan.

As Governor Masaaki Shirakawa told the Diet through gritted teeth, “long-term yields could rise, and that would be a problem for public finances.”

Banks hold JGBs worth 900pc of their Tier 1 capital. Their portfolios would be decimated if long rates punched above 2pc. Japan might then face a banking disaster as well.

These are the hard choices that Mr Abe has to make. Nor can he continue to weaken the yen without irking Washington and jeopardising the alliance on which he depends. His rhetoric alone has already triggered a 12pc fall in the yen against the dollar, and a 20pc fall against the euro. He seems to be eyeing a dollar rate near Y100.

Mr Abe’s frustration is understandable. Japan is cursed with a safen-haven currency that strengthens in times of trouble when least wanted, the cross that creditor states must bear. Japan did uphold the G20 deal in March 2009 to refrain from “competitive devaluations”, when others did not. But should Japan now buy foreign bonds on a mass scale to suppress the yen, there will be trouble. Tokyo will be blamed as the aggressor in the outbreak of currency wars.

Others will retaliate. Huge issues are at play here. The world’s trade system is fragile.

The wasting disease behind the Long Slump is a record high savings rate of 24pc of global GDP, and too little demand to go around. Everybody wants a weaker currency. They can’t all have it.

Japan’s great experiment cuts both ways for the rest of us: the reflation blitz helps lift the global economy out of the doldrums: but yen manipulation snatches market share, incites protectionism, and takes us into the brave new world of “actively managed exchange rates”, as Sir Mervyn King put it last month.

We will find out soon enough which is the more powerful effect.

The story above was re-branded in today’s edition of the SMH – link to that story here

Japan has spent a long time dealing with its deflation and its growing Debt/GDP ratio, its current position is where Australia is headed and how soon it happens depends on how quickly things escalate to our north.

When a nation like Japan draws a line – then the world had better take notice.   If the sabre rattling with China escalates and the US does become involved – how quickly things will change for everybody.  This involves our two largest export Nations, and our only real military ally – all involved in a tryst that would see our interests quickly shunted out and into the crapper – just as easy and natural as it is for a baby to fill its nappy.

Does anyone now question the strategic deployment of US armed forces to Darwin only a matter of months ago?

Do you think Gillard had, or has any idea what was really behind the deployment – the US wants dumb Leaders representing its allies … and we’ve had that for some time now …

The Chart Summary:

The Nikkei Index fell from its lofty highs of 37,000+ as shown by the chart – what it does not tell you is the decades long  financial disaster when Banks were allowed to sit on their losses arising from that equities crash and this is where the stagnation, and then deflation became a problem.

Rather then allow Banks and the like to fail because they became too greedy – just as they have done since the GFC … Japanese taxpayers through Leadership were forced to pay for the cost to prop up the economy through stimulus debt … all sound familiar.

20 years this has gone on for and our Leaders as with European and Nth American leaders are telling and trying to sell a story that does not end up the same way.

The ¥ has been a currency that has seen its US$ value appreciate from ¥300+ to the US$, to below ¥80 in a 35 year trend.   Since the Japanese PM has talked tough – it has caused a selling of the ¥ on global markets, and a sharp spike in the value of the Nikkei Index as reported above.

This is not good for Australia – some of that outflow of capital will find their way here and force our currency even higher.   What will Swan and his lab-rats at the Treasury, and the Glen Stevens led RBA do in response?

We live in times where all of Nth Africa is a powder keg, add Syria, Lebanon  Israel  Iran, Afghanistan, Pakistan,  and it can be seen that the possible seeds of a much larger and escalated War have already been sown …

Have America gone off to early in their claim that killing Bin-Laden will end the War on Terrorism and make the world safer?  Has Obama got a real handle on what is happened as America begins its slide from the top perch … are they going to slide willingly or will they try to hold No 1 position …

 Look around everybody – most are asleep at the wheel and oblivious to what is happening around them … this year is building to be so much and this Nation is at the face of an abyss that nobody really wants or is prepared to talk about …

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 Guru on – Wayne Swan Tips his hat at New Yorkers -

January 20, 2013 4 comments
The-EYE-BALL-Opinion-Header-2
Latest GURU Posts:


- 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:
- Wayne Swan Tips his hat at New Yorker’s -
| Author: EYE-BALL Guru | 19th Jan 2013 |

Our own ‘World’s Best Treasurer’ Wayne Swan has been globe-trotting on his end of year Season holidays.  On his travels he parked his ass in New York for a few days for a ‘sales pitch’ delivery about Australia’s ‘better than the rest of the world’ performance to the Harvard Club in New York.

With his ‘tip-hat’ open for more international ‘capital’, Mr Swan stood before some of the worlds most respected financial market operators and delivered his ego version of Australia’s remarkable aversion to all things ‘GFC’ related.

Without wanting to misquote the Treasurer – his full speech text can be read via his Treasury Minister Portal linked here

In part his address stated …

… You’d all be aware that despite being buffeted by the very worst the global financial crisis had to throw at us, Australia stood almost alone in the developed world in avoiding recession. I’m really proud that we got the big economic calls right in those dark days and stayed the course while the shrapnel whizzed past our ears. I know there’s a school of thought out there that puts a lot of our success down to the enormous mining boom we’ve got in Australia, and of course that’s an important part of our story …

… and further along in his address …

…Let me start by quickly mapping out our tremendous strengths. We are a young, inclusive and optimistic country. Our economy has notched up 21 consecutive years of growth, a record unmatched by any other advanced economy over this period. We recently became the 12th largest economy in the world – jumping three places in the last five years – and with only the 51st largest population in the world, so we continue to punch above our weight. Over the past five years, growth in Australia’s real GDP per capita has outperformed all of the major advanced economies, and we’ve moved up four places in the world rankings of GDP per person. The IMF expects our economy to outperform every major advanced economy this year and next. We’ve created over 800,000 jobs since November 2007 while something like 30 million people have lost their livelihoods around the world. We’ve got a high level of productivity and a highly skilled labour force. We are a capital hungry country and we’ve built on our strong reputation as one of the most attractive investment destinations in the world. At 4.3 per cent of GDP in 2011, Australia’s foreign direct investment inflows are more than double that of the OECD average. We’ve seen more than $1 trillion dollars of new business investment in our economy since this Government came to office. And we’ve got a massive pipeline of mining investment still to come, with the export phase of our mining boom still ramping up. We’ve got strong public finances with net debt only around a tenth the level of the major advanced economies. Which means Australia is now one of only eight countries in the world with the gold-plated, AAA rating with a stable outlook from all three global ratings agencies – a coveted trifecta. As a country, we are now paying our way more than ever before…

Swan’s comments represent living proof that if you keep feeding yourself the lie,  you will get to the point where it is so easy to sell the lie to yourself, and to others.

It gets to the point where you have no idea what the truth really is or was, and then when that truth stands up and bites you in the arse, i.e. the back-flip on the surplus … it is so easy to then use the economist’s who had been calling it ‘stupid’ to pursue a surplus in the first place, as reasons to support the fiscal impossibility of ever delivering the 1000 times promised surplus over the past 2-3 years.

Mr Swan has much to be answerable for …

The RBA’s website data allowed Table of revenue’s and expenditure’s to be extracted that reveals all talk about a drop off in revenue is a great big ‘hoax’, it is an outright lie to the Australian people.

The Table below shows there was no drop off in revenue – in fact the increases recorded for 2011 - 7.8% and 2012 – 9.6% represents numbers that rank among the top seven (7) revenue growth years since 1996.   The deficit for those two years measured $51 and $47 billion respectively.   It was never a revenue problem but an expenditure problem.  [click on Table image below to enlarge in a new window.]

As reported in a previous Guru’s blog - linked here – the following text quoted …

… In fact – Part I also highlighted the point that for the budget deficits in 2010 [$57 billion], 2011 [$51 billion], and 2012 [$47 billion] to have been balanced  – the revenue growth needed to create such a scenario would have had to have been, 16.5%, 26.9%, and 25.9% for each of those years.  These numbers represent multiple factor increases and were completely unrealistic in their forecast…

Swan is Australia’s representative to the world on all things financial – when he speaks to the worlds most eminent and influential financial market operators, we expect that he knows what he is talking about – he is out there selling a lie to the world and if the data in the above table is in plain sight – how do you think the rest of the world responds to Swan’s lies.  

Saying it is so, don’t make it so … polite people will shake your hand and hear what you have to say – all the while those same polite people know you are one dumb motherfu_ker trying to sell a lie … Swan is doing more harm than good when he opens his mouth in far off lands….

Read the following part of his address and ask yourself does he know what he is talking about …

…Let’s start with the global economy. I want to say upfront that I think 2013 could be a better year for the global recovery, but only if policymakers around the world do the right thing for growth and jobs. I think there’s a lot of evidence that China’s economy is stabilising. I’ve always been an optimist about China – and I think the data we’ve seen should give us confidence that they’ve still got the policy capacity to manage their economy and they’ve been getting it pretty right. We also need to keep China’s recent growth performance in perspective. China is now 40 per cent larger than it was in 2008. So its growth rate can be 20 per cent lower – say 8 per cent now versus 10 per cent back then – for China to make the same contribution to global growth. Yes there are risks – China will have to keep addressing its big structural challenges like the huge amount of unregulated lending in its financial system and its transition to more consumption-led growth…

… and further along in his address …

…Of course, governments must ensure their finances are on a sustainable path, but they must do so in a responsible, growth-friendly way. You don’t need to slash and burn now in order to deliver sound fiscal outcomes in the medium term. IMF Managing Director Christine Lagarde spoke of the importance of letting automatic stabilisers operate to support growth, in Europe and in economies right around the world. Which brings us to the United States. President Obama should be congratulated for his constructive efforts to reach a compromise to reduce economic harm to lower and middle-class Americans from the scheduled tax increases and cuts to entitlements. He has done a commendable job of protecting those who would have been hit hardest and who could have least afforded it, in the face of a determined political campaign to instead protect the very wealthy. But I agree with Christine Lagarde and Ben Bernanke when they say that nothing short of a comprehensive deal on US fiscal policy will do. The US economy – and therefore the global economy – needs to see a comprehensive deal beyond avoiding the fiscal cliff, which includes agreement on the debt ceiling and on a sustainable budget trajectory…

The whole address was typical Swan – it was much ado about nothing that he really understands .. the phrase – ‘he does not understand what he does not understand’ again comes to mind when talking about Wayne Swan and Treasury matters.

Now if he said to all these New York ‘robber-barons’ with their siphon hose’s firmly embedded in Australian bonds, and commerce – if he had of used this speech to let them know they might all now have to pay a price for the resultant high A$ value, and for the damage it has caused to Australia’s economy and competitiveness – if he place them on notice with out threatening them – then  it would have been enough to create substantial selling of the A$ and get us some relief on global markets.

Mr Swan does not think like that, and nor does the RBA – as political players they are goose eggs, and ripe for the plundering.  Mr Swan is the stooge guy allowing all overseas investors to strip wealth from Australia under his very nose.

Mr Swan does not get it … his advisers don’t get it … the RBA don’t get it … but smart operators based off-shore are not gonna wise him up … they’re making so much money out of Swan’s ignorance – all at the cost to Australia’s home owners paying far too high an interest rate reaping quick return rewards for all those off-shore investors.

Australian Fund Managers:

A few days ago, one of the largest fund managers in the World – BlackRock Investments, with some US$3.7 trillion under management has predicted huge consolidation of Australia’s industry super funds, all leading to a shake-out of Australian fund managers – read the full story here -

The Australian ‘Future-Fund’ set up off the proceeds of the Telstra sale by former Treasurer Costello, is investing off-shore to help it meet ‘investment return’ targets.   Soon all Australian super funds will be doing the same with greater portions of their portfolio – all because as the A$ holds its lofty heights and the Nation struggles to compete on a global stage … all that Swan boast’s as being a reason to invest in Australia will suddenly become a reason to get out.

Swan often talks about the ‘investment pipeline’ of some $500 billion still to eventuate … it’s a dream Mr Swan … no idiot investor is going to buy A$’s at these record levels against a mean average of A$0.75c for the past 30 odd years.  You create the circumstances where the A$ will free-fall for a few months and then you will see a rebound in interest from off-shore capital investors.   Your Harvard Club address was an opportunity Mr Swan and you never even knew about it.

Swan’s doorstop interview after the Harvard Club address:

Treasurer Swan gave a doorstop press conference after his Harvard Club address – the transcript can be read in full here

In part, the following text is copied from that press interview …

… JOURNALIST:

Were you able to convert any of the Tea Party in there into the idea of the deficit being something that is sustainable?

TREASURER:

I think we had a good discussion and good question and answer session there.

I think they understand the importance of good fiscal policy in Australia. Our fiscal consolidation has given the Reserve Bank the opportunity to adjust interest rates down very substantially. They understand the importance of good fiscal policy in Australia, and good fiscal policy in Australia has put us in the position of having an economy which is 13 per cent larger than it was five years ago.

JOURNALIST:

What’s the difference between what the US is doing and what Australia is doing in general terms? Or is it just pure luck in the commodities? What’s going on there?

TREASURER:

What Australia has put in place over a long period of time is good fiscal and monetary policy, and the consequence of that is strong growth. The Australian economy has a very substantial pipeline of investment in resources, but we’ve also seen very good growth over a long period of time right across our economy.

JOURNALIST:

The mining boom, is it over?

TREASURER:

Well, there are three phases of mining, investment and production in Australia. It started with a price boom which came off over the past year but now has got very substantial investment in mining. That’s got a long way to run. And that’s got to be followed by an expansion substantially in production and an expansion of exports. So the mining boom, if you like, and investment in mining has got a long way to run in Australia.

But I was at pains to point out that the Australian economy is much broader than mining and the opportunities for investment are much broader in agriculture, education and a whole range of service industries. That’s what I spoke to them about today.

JOURNALIST:

With the prospect of actually getting something out of that mining tax? Is that looking good in the future do you think?

TREASURER:

Well what we’ve seen in the last few months has been a substantial crash in the price of commodities, there’s been some return in that, but as we go forward we’ll have to see how the numbers pan out. The fact is that profits-based taxes depend on high prices, and when prices go down that has an impact on profits-based taxes.

JOURNALIST:

Any revenue from that tax?

TREASURER:

What we’ll have to do is we’ll have to see the future course of prices. We can’t draw conclusions from one particular month or one particular quarter.

JOURNALIST:

What about the six month period (inaudible)?

TREASURER:

We can’t draw conclusions over a short period of time when prices have been low. We have to have a look over a longer period of time and we’ll have to see where prices go.

JOURNALIST:

Are you able to give an indication to anybody, perhaps six months, how the tax has performed?

TREASURER:

Well, what I’ve said before and what the Tax Office and Treasury have said, is that there are confidentially provisions within the Tax Act which don’t allow the authorities to distinguish between resource rent taxes.

JOURNALIST:

So, there’s going to be no unveiling of how the mining tax is doing?

TREASURER:

Well these are matters not for me, these are matters for the Treasury and the Tax Office, and they follow the law.

JOURNALIST:

Simply change the law, isn’t that an option?

TREASURER:

Well, the confidentially provisions of the Tax Act are very important to every taxpayer. People should think very carefully about the importance of law in this area.

JOURNALIST:

(Inaudible) the deficit, there’s no prospect obviously of a surplus in the near future?

TREASURER:

Well, what we said at the end of last year is that a surplus in 2012-13 was unlikely as a consequence of very substantial revenue write-downs in all taxes associated with profits. The consequence of that is that a surplus will be unlikely in 2012-13 and that is what I outlined at the end of last year.

JOURNALIST:

(Inaudible) how have you found the reaction to Australia’s economic performance, and are people literally asking for (inaudible)

TREASURER:

There is very strong recognition of the resilience of the Australian economy because unlike other developed economies, Australia has got low levels of debt, Australia has solid growth, and Australia has bright economic prospects for the future.

JOURNALIST:

But surely at this time isn’t this the sort of trend when you should be in surplus, you should be handing down a surplus when the economy is buoyant and has been for so long?

TREASURER:

What the government has been doing has been putting in place a balanced, responsible fiscal policy, and we have put in place a very substantial fiscal consolidation over time. What we decided at the end of last year was to let the automatic stabilisers operate in an environment where further revenue write-downs would lead to a loss of jobs and growth should we cut harder.

JOURNALIST:

Have you identified somewhere where you can (inaudible)?

TREASURER:

We just said that it would hurt jobs and growth if we were to cut further as a consequence of a revenue write down which flowed from a higher dollar and lower commodity prices.

JOURNALIST:

Two other programs that are going to get guaranteed up and running are national disability and education is going to get a bit of kick along (inaudible)?

TREASURER:

Well, I don’t do budgets in interviews from New York.

The ‘inaudible’ tag is used a lot these days – remember the Jenny Macklin denial over her being able to live on $35 a day gaff … perhaps there were no cameras around to provide proof of the Q&A … but Mr Swan was not ‘putting-out’ so to speak.

The side step over the ‘MRRT‘ question was interesting … it’s obvious that this matter is being primed to be a media beat-up when Parliament resumes in February … but how do you answer a question that will make you look a fool no matter what response is given?   

The Government still does not have a working response to this issue.  

In all seriousness – the Government can’t claim blame a fall in revenue forecast – see Table above – they can’t blame the volume of exports as Rio and BHP have just announced record exports … they can’t blame the States for royalty changes … all they have left is to come clean and admit the cost the high A$ has caused, and they miscalculated the tax collect on MRRT and the Carbon Tax.    

This proves incompetence, and someone has to pay the price as another $5-$10 billion error adds to the people’s debt.

Swan’s Bio and Credentials:

When one screens Swan’s APH profile and bio of employment before he became a politician – linked here … his private sector work experience is non-existent.  Swan has no obvious financial credentials whatsoever, he became a career politician right out of higher education, he lectured for a few years on and off but all the while serving as a Ministerial staffer, all the while awaiting his turn to be anointed and promoted as a ALP MP.

What would Mr Swan know about Financial Markets and the real cause of the GFC other then what he has been told or read about.  What would he know about the Regulatory and Administrative involvement and negligence of the events that led to the GFC?  

When Prime Minister Rudd appointed Swan as Treasurer, was he making a political choice to appease Unions, or was Swan the best man for the job?   We know the latter is not true, so the political choice Rudd made came back to slap him in the face big time in June 2010.

Gillard – an even bugger dunce on financial matters than Swan needed Swan to help with the coup – Swan remained as Treasurer and printed the money Gillard told him to print – he never offered a ‘yelp’ in any direction – he did as he was told all the while trying to con the Australian people he knew what he was doing.

Now we have some $300 billion in new debt – an economy tanking because of the uncompetitiveness of Australia’s work force,  and all due to the 10 year-long appreciation of the A$ … 

must have known Swan’s lack of credentials to serve as Treasurer.   Yes – treasury Department provide all the backing and advice but they are also full of career bureaucrats who have never served in the private sector. 

Swan’s Re-election Chances:

A report out today on Swan’s chances of retaining his seat at the next Federal Election gives him little chance … read full story here … he has a 53%/47% margin and a 3.5% swing will unseat him – see last election results for Swan’s seat of Lilly here

This is how politicians get away with trashing an economy … the lose and walk away without responsibility – Swan’s cock-up’s will become the problem of the next guy.  Gillard may face criminal charges for her role in the AWU fraud – but when she is booted she will not face any charges for the $300 billing debt she has imposed on the Australian people.

The Age‘  ran a story on this same matter overnight – linked here – giving numbers and the results of a poll in Swan’s electorate.

Given Swan’s New York address, and his knowledge of how he will fare in the upcoming election – one ponders whether the New York trip was more about him preparing for life after politics, or if he was really in there rooting for Australia.

This year will be a year where politics stoops to new lows and the people will become enraged …  hell – they’re enraged now … they want an early election and if Slipper does what Slipper always does – look after himself and secure his Parliamentary Super – he will resign thus forcing a call for an early election.

If Gillard does not know it already – she is already on the spit and being basted as the heat flames the surface … will she jump out of the fire as well … or will she be skewered  like she skewered Rudd … what’s good for the goose is good for the gander – right.

Can’t wait to see it happen … it won’t be pretty … but then nor should it be given what this Nation has had to endure politically since Gillard took over.

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The EYE-BALL Guru …

EYE-BALL Guru on – The Lunacy of Idiots in Charge -

January 18, 2013 1 comment
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Latest GURU Posts:


- 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 Lunacy of Idiots in Charge -
| Author: EYE-BALL Guru | 18th Jan 2013 |
The recent attempts by Government and the Unions to come up with ways to counter the cost of the high A$, and its impact on domestic manufacturing, has again shown up the 90′s style thinking of a Government run by Union thugs who have not adapted to the new world order of Global Trade.

In an article published in The Australian today – what really is in question is why it has taken some 12 odd years of an appreciating A$ on global markets for Industry and Government to get serious about the financial cost of a high A$.   The Australian article is pasted below:

Unions demand taxpayer-funded firms buy local


| Author: National Affairs – David Crowe and Andrew Burrell | Date: Jan 18th, 2013 | Link to On-Line Story. |

UNIONS are pressing the Gillard government to impose tighter obligations on companies that receive taxpayer handouts, forcing them to “give back to the community” by purchasing more Australian products and services.

The toughened regime is on the agenda in the final talks over an industry statement due within weeks as Labor and the unions negotiate ways to shield manufacturing and construction companies from the damage inflicted by the higher Australian dollar.

ACTU president Ged Kearney told The Australian that stricter procurement rules had to be an option in the policy response to the pressure on jobs as local employers missed out on the flow-on spending from vast resource projects.

“We can’t be left with an economy that has no manufacturing. A services economy simply can’t survive,” Ms Kearney declared last night. “We must take a long-term view of this, otherwise we’ll be left with a devastating legacy.”

The Australian revealed yesterday that stronger procurement rules for big resource and infrastructure projects would be part of an innovation statement that Julia Gillard and her ministers are preparing for release next month.

While the government does not want to mandate the level of local content a big investor must buy, the union movement is urging the inclusion of stringent requirements on the private sector.

Ms Kearney backed the use of mandatory local content rules as part of the policy outcome.

“It’s something that should be considered,” the ACTU President said.

One option being discussed is a union proposal to make industry assistance for big companies conditional on guarantees that the companies would buy local goods and services rather than imports.

There would be a threshold to apply the rules to the biggest resource and infrastructure projects.

“When people receive assistance from the commonwealth they have an obligation to give back to the community,” said Construction, Forestry, Energy and Mining Union national secretary Michael O’Connor.

Mr O’Connor questioned whether the community was getting the best return from the current level of industry assistance and said there were direct and indirect jobs to be created from stronger procurement rules.

“If the companies are receiving assistance, there should be some obligations on them,” he said.

“It needs to be on the table. And if it’s not being pursued, why not? Explain to taxpayers why it shouldn’t be.”

Mr O’Connor is a member of the government’s manufacturing taskforce, the forum for much of the discussion over the new industry statement.

The government helps industry with $9.8 billion in annual subsidies, tax breaks and tariff concessions.

While carmakers and clothing manufacturers get the biggest aid, the Productivity Commission’s annual survey showed that budgetary assistance to the mining industry climbed to $506 million last financial year.

Canberra changed its procurement rules in 2011 so that companies bidding for more than $20m in work had to sign up to Australian Industry Participation Plans and spend more on local supplies.

Union leaders said the rules for private companies receiving industry assistance could be similar to the commonwealth procurement policy, although it was not clear late yesterday what financial threshold might apply.

The labour movement is said to be comfortable with the government’s overall direction on the new industry statement, being led by Industry Minister Greg Combet.

The nation’s peak steel industry body, the Australian Steel Institute, welcomed the government’s move but warned that new measures must be accompanied by rigorous reporting obligations and strict enforcement.

ASI chief executive Don McDonald said a policy change was urgently needed due to the lack of domestic demand in the steel and heavy engineering sectors.

Mr McDonald pinned much of the blame for the decline on the booming resource sector, which he claimed had imported large amounts of fabricated steel.

“The ASI believes that a key component for better industry engagement, flowing to more jobs, would be a robust Australian Industry Participation Plan process and the ASI has put a detailed AIPP policy prescription to government,” he said.

“To be effective, AIPPs need to be adopted which provide meaningful and transparent disclosure of the levels of engagement and local industry supply by product sector.

“For AIPP processes to support job growth, there need to be clear guidelines on implementation, rigorous reporting obligations and strict enforcement of local content policy.”

Minerals Council of Australia chief executive Mitch Hooke rejected suggestions that mining companies spent too little on local content.

He said that federal government data from 2009 showed the mining industry’s total demand for goods and services was $85.7bn, of which $75.8bn – almost 90 per cent – was supplied by local industry.

More than 50 per cent of iron and steel used by the mining industry was locally supplied and almost two-thirds of structural metal products used by the industry was locally supplied.

Some 12 odd years into an obvious Global shift in how markets respond to economic data – i.e. strong economies encourage offshore investment driving up the currency … and ultimately as the cycle of this off-shore investment churns and siphons wealth from the targeted Nation,  Industry begin to realise they have become uncompetitive on the global stage and panic begins to set in.

This is where the above story is coming from … our Leaders, Treasury, and Industry have all been asleep thinking a high A$ and the cheaper imports it brings was good for Australia.

This Nation is 10 years behind the global change and that is too far back to begin catch-up with policy like forcing taxpayer subsidised handouts to but domestically.

This think-tank option proves the point in the stupidity of Unions defending their workforce and wage rates.   The value of the currency turns the key and unlocks a whole load of ‘whoop-ass’ on any economy not prepared to defend itself.  With an idiot like Swan and a kiss-ass RBA head and Board full of bureaucrats promoted from within – no wonder Australia is sitting upon a powder keg about to explode from within.

As was the case in late 2008 when the A$ fell off a cliff in response to the collapse of ‘Lehman Bros‘, and ‘Bear Sterns‘. These failures in a post Beijing Olympics 2008 set up the GFC and what ultimately became the ‘sub-prime’ scandal.   See charts below – same A$ v US$ chart over 15yr, 5yr, and 1yr time frames … click on chart to enlarge n a new window – Charts provided by Incredible Charts:

15yr Chart:

5yr Chart:

1yr Chart:

The price action on the 1yr chart indicates a breakout to the upside … on the 15yr chart this indicates new highs in the next 3-6 months …

This being a Federal election year in Australia you can be sure that the Government will be tweaking the numbers for its own self-serving agenda. The above story about ‘buy Australia’ is an old and tried version of trying to fix our trade imbalance. With downside in the A$ classed as ‘low risk’ – off-shore investors already invested will only become nervous investors if the political scene becomes unstable. That might happen if Gillard and the AWU scandal takes off given the Victorian and WA police investigations working in tandem and a steady flow of damaging evidence comes to light.

Rest assured the ALP caucus have their eyes on this story, as well as the Slipper fraud and the Thompson HSU court case.

If Tony Abbott was to do nothing he will win this election in a landslide …

The RBA have stated in the past as reported on this site they are scared to challenge other Central Banks over their buying of A$ bonds … an investment happily provided by this Labour Government with its $300 billion spend.

AN interesting research model would be to compare the performance of the top 200 publicly listed companies, with the top 50 companies, and then with the Banks, and the big miners since the heat of the GFC.

What you would find is that more concentration of Fund Management money has been placed in an ever narrowing group of Companies because the investment market does not trust the stock market anymore.

Everybody is leveraged ‘short’ or ‘neutral’ and all the risk is therefore to the upside.  A breakout of the A$ will create ‘short-covering’ and a spikes in the equity and bond markets as well.  Bond yields will again fall as a new wave of off-shore money arrives to help push the market … and then it will begin to flatline once again.

How the election interplay’s in this financial game of chess is a mind game in itself … Abbott’s win is factored in … if Gillard remains and her preferred PM numbers stay the same … the bookies odds will alter quickly and dramatically …

This is gonna be a volatile year folks … strap yourselves in and my money is on selling A$ assets on a breakout above A$1.10 v US$ looking for a long-term bubble burst in Property, Equities, and the A$ all crashing in a sharp reversal …

I’ve been here many times before over the last 25 odd years and whilst the theory and rhetoric has always been right … the Government has thwarted the best laid plans by printing more and more money – all in a vain attempt to delay the inevitable and push the Armageddon scenario on to some sucker of the future who will be left holding the poison chalice and with no musical chair left to use.

The next few weeks will just be warm-up rounds for what is to follow … the heavy hits won’t start until Mar/Apr … and if Slipper resigns and takes his super, as opposed to risking being found guilty and losing it all … the by-election could trigger an early call on the election … so whilst it will be gently gently in the next few weeks on all sides … much will be happening behind the scenes.

Slipper – as unimportant and morally bankrupt as he is – still may play a very big part on what happens this year – that is where he likes to position himself and his epitaph still has many possibilities.

Hunker down folks … this is gonna be some sort of ride!!!

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The EYE-BALL Guru …

EYE-BALL Opinion – 2013 Geo Political & Ecomonic Predictions – Global uncertainty at post 9/11 high -

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Latest ‘EYE-BALL Opinion’ Posts:


- 3rd Jan – Paul Howes joins the ‘idiot’ crowd  -
- He sees ‘lower interest rates’ as the answer -


- 27th Dec – Climate Change & The Human Factor  – The Silent Debate nobody wants to talk about -


- 17th Dec – American Gun Laws – will to change is just not there for Legislators


- 15th Dec – “International men of Mystery” – An Australian modern-day Bank Heist story -


- 13th Dec – eBay Traders on welfare tracked – for income and tax investigations -


- 12th Dec – Roxon joins Gillard as Enemy of the State – The Slipper verdict 1s Justice denied


- 11th Dec – Gillard is Dividing A NATION – It’s not about Politics, but rightful entitlement -


- 6th Dec – Gillard’s Judgement again challenged – what she’ll do for any positive publicity  -


- 5th Dec – ALP Senator John Faulkner – Perhaps a dark horse for the PM job  -


- 5th Dec – QLD ALP Badguys land plum jobs – Gillard continues to add to the mediocrity -


- 3rd Dec – Bob Katter’s Australian Party – an alternative -


- 3rd Dec – Some ‘Carbon-Tax’ reality -
- The World is not listening to the real facts -


- 29th Nov – A Slithering, Slimy, Spitting Lizard – Part II – Gillard’s been hiding in the Tall Grass – A follow-up Story -


- 28th Nov - A slithering, slimy, spitting Lizard – Gillard’s been hiding in the Tall Grass – now exposed -


- 26th Nov – The Collective v the Abstract – Gillard is aware of her wrong doings -


- 25th Nov – Distressed Damsel Gillard’s Black Knight – Bruce Wilson’s 11th hour offer to defend Gillard -


- 24th Nov – The Jewish v Arab problem – A naive perspective -


- 24th Nov – Hedley Thomas plunges the knife – Gillard mortally wounded -


- 23rd Nov – Immigration and Asylum Seekers – What is the real answer -


- 20th Nov – Schoolies Week Starts – The Booze for Kids debate again heats up -


- 16th Nov – How Deep does the AWU corruption cover-up go? – An exposé on innuendo, evidence, hearsay and conjecture


- 15th nov – Hedley Thomas exploding on Gillard – Gillard has a case to answer …


- 14th Nov – Gillard behaves like a Guilty Person – Asks for allegations to be made -


- 14th Nov – The Australian Media – Lapdog’s at best – absolutely lost the plot on integrity, and their charter of responsibility -


- 9th Nov – Open Letter to “The Independents” Re: -
- Julia Gillard, Peter Slipper, and Craig Thompson, three MP’s who bring continued shame to our Parliament -


- 9th Nov – “Courage is an Angle” – the difference between a good day and a great day -


- To see more EYE-BALL ‘Opinion’ posts:

click here …


Title:
- 2013 Geo Political & Economic Predictions -
- Global uncertainty at post 9/11 high -
| Author: EYE-BALL Opinion | 13th Jan 2013|
The Global euphoria that normally surrounds the aftermath of a US election is not there – in the weeks since Obama’s November’s landslide re-election the world has become more unstable as America tries to deal with its ‘fiscal-cliff’ and the new economic order of business.

2013 will become a perilous year dominated by extreme uncertainty in financial markets, political agenda’s, and as the global trade wars escalate, responses from those disadvantaged are as uncertain as at any time since WWII.

America’s demise:

When is an ally an ally?

The ‘cold-war’ theatre of yester year has been replaced with a new era and different type of war – war fought within the shadows of ‘terrorism’ threats, a war against perceived threats – this Bin Laden threat has bankrupted America, driven its hard-case military and clandestine services into a siege mentality where they think all the world is against them.

Leadership through these times has been less than truthful with the American and global audience … American President’s have looked their people in the face and outright lied about their intent and motives.

Can Australia really trust such a warped mind-set Nation as a true ally?

Who does America trust anymore … and for that matter who can Australia count on if China and Indonesia push toward Australia in any threatening way?

China are America’s ‘bankers’ … after decade long wars in Iraq and Afghanistan American will to fight is no longer there … their military hardware is old and used and America cannot afford to expend on the military as they once did … they will print the money to do so but in the end the fate will be the same – not unless they wage war for profit …

America’s $16.4 trillion debt ceiling needs to be raised again just so Government can function – nobody gets paid unless Congress passes new debt ceiling limits.

In real terms Greece, Spain, Ireland, and a few other EuroZone member Nations are basket cases … they joined because of the cheaper borrowing costs but the high Euro value decimated their economies …

America is similarly debt frozen … and just 12 odd months after the last debt ceiling raise … they are back there facing the same problems.

Both Houses are wary and are not prepared to allow unlimited budget spending that will last a Presidential term … the President of the USA is now a puppet controlled occupant of the White House – no policy initiatives will be forthcoming – all now controlled by debt constraints.

As such … decades in the making of American foreign policy structures are about to go the way the British Empire went after WWII … backwards and that will leave a void in global balances that nobody can predict an outcome  …

There is a new World order emerging and America’s ranking is already on the slide from 1st to 3rd … chaos theory is about to become the norm …

China and Russia – decade old foes of the USA and eachother have already overtaken the USA as economic power houses – militarily America will not be able to compete with the financial resources both China and Russia can bring to the table … all America has left is the bravado of a past era where they fought all foes in the legacy driven void of the Vietnam defeat and its crushing cost in both political and human terms.

We are at the beginning of a new era where America will not be able to come to the aid of its allies if threatened by those Nations that sustain America and allow it to live beyond its means – i.e. China …

In the real world it is obviously not as black on white at the picture painted … there is a rose coloured version if you are so inclined to want your news delivered in palatable doses … However the truth is that those blurred lines and shades of grey cloud the real picture.   One has to look beyond the obvious and the propaganda fed media to see what lies beneath.

On the Bin Laden killing:

I have some questions – why would America not try to capture Bin Laden alive – surely his knowledge and the propaganda value in the threat to all the live terror cells would have been an unknown that would have worked for America.

Why a quick death …. why not a taser or a dart set to knock him out … surely a kill order as opposed to a capture if possible order would have allowed the World to hear his motives if not edited … killing him allowed America to sweep under the carpet all the detail of the deals they did with him when America supported the Taliban against Russia in Afghanistan.   Bin Laden was once an American ally, as was Saddam …

What does that say about Australia’s trust in America as an ally?

American Politicians control their media … we talk of free press and the rights of free speech – it only exists in the minds of academics and the naive … espionage assets see to the death of many who speak out against repressive regimes and as history shows, American CIA assets kill abroad to suit their own political agenda.

America took 10+ years to track down Osama Bin Laden … 10+ plus years of hard-core CIA, FBI, NSA, Military, and all the resources of Interpol, and other International spy agencies to track and find a single man.   In that time-frame America’s debt grew from $5.7 trillion, to $16.4 trillion … it tripled and it was the WAR on terrorism and domestic security measures that accounted for the bulk of this exploding debt.

Oliver Stones – The Untold History of the United States:

American film Producer Oliver Stone has produced and narrated a 10 part Documentary series titled: The Untold History of the United States, EYE-BALL MovieZone has reviewed the series – linked here – [nine of ten episodes have been aired to date].

This mini-series documentary is a must see for all students of history and political accountability.  The exhaustive information and historical perspective portrayed in this series covering the period since WWII leave no doubt to America’s war mongering policies and their legacies.   It gives an honest account about how every successive US President since failed to grasp and act upon the enormity of their responsibilities.  It gives accurate accounts of how failure to look beyond and outward has dictated American WAR policy even since.

Stone’s narrative does not say it – but as an outsider and non-American … it can be easily seen that Leadership in America is not about idealism or vision, it’s about legacy and keeping the American people on-side with popularist decisions.   WAR is always used as the popularist decision and it is littered throughout successive Presidents who through short-sighted agenda’s targeted at re-election have contributed to the World current dark and desperate place.

Stone’s Documentary is a masterpiece in its retelling of American history, it is essential viewing from a historical perspective and sheds light on where the World should be looking for an escape route away from the half a century long war mongering carried out by the USA …

When one considers all the atrocities and dead as a result of America’s military involvement, both directly and indirectly throughout the South America’s, Asia, Baltic States, Africa, and Europe since WWII,  their Presidents in these different eras – i.e. the propaganda version of history we have all be forced fed now reads far different.

One might say that America can be likened to Hitler during the 30′s – but won the ensuring War and continued onto World dominance …

The assassination of Kennedy – portrayed by Stone in his ‘JFK’ epic … takes on new meaning and suspicion when Episode 7 of this series is viewed – ‘All the way with LBJ’ who took office after the assassination reversed Kennedy’s policy on Vietnam and set the tone of America’s war mongering for the next decade.

It is as if the humiliation of the Vietnam War has lingered in the corridors of the White House forever laughing at successive President’s and daring them to fight their own wars to prove to American’s that they are still the Leaders of the world.

Johnson, Nixon, Carter, Reagan, Bush, Clinton, Bush and now Obama have all involved themselves in foreign lands and fought wars in those lands to achieve friendly Governments willing to follow American policy.

The influence on this American War Mongering policy over 50+ years on world commerce, global stability, and human lives is a toll that could never be measured in any meaningful way … it is what it is, and to say that the world would be better or worse if it had not happened as it did is border-line lunacy.   What would have happened had America not entered the War after Pearl Harbour?

What can be said is that in the thousands of years of history littered with man’s ego to prove himself and to dominate in the theatre of war and the human killing – we are still none the wiser as a species, and all the bluff and bluster offered up as propaganda and reasoning cannot be walked away from … man kills man to impose his will … such a primitive instinct and a reason why we shall never rise above where we came from.

History is one persons retelling of an event that can have many different perspectives … who is to say that in a 100 years or so that America’s tyranny in terrorising the Globe, and imposing its form of dictatorial democracy will not be seen as another Hitler era, or a match with the history of 2000 years ago when the Roman Empire imposed its will on weaker Nations through force.

Returning to other predictions for 2013 and beyond:

Financial and Economic: Global

Global Markets will again be tested – the efforts of Governments since the GFC has seen global debt grow exponentially and become more uncertain in terms of its serviceability.

Yet – the main global equity markets are inching ever closer to their pre GFC highs … this cannot last – there will be an equinox tipping point that will make the 2008-9 crash pale in significance …

Global investors are finding it harder to secure safe havens for their investments and are turning to currency and trade markets for returns. This means Governments will have to modernise and cheapen their labour costs if they want to compete …

In Western Nations this will bring Government’s to a crisis point as they are forced to cut wages and budget spending to try and compete in a global marketplace.

Financial and Economic: Australia

For Australia it means further hardship – higher unemployment and the lagging housing-bubble burst will happen …

Australian Banks seen as secure and unexposed during the GFC thus far will suddenly be pressured and profit margins will fall as bad-debts and mortgage foreclosures abound.   Capital raising will be the norm, and the cost of funds from off-shore sources will ensure a rising domestic interest rate market.

The $300 billion Federal Government debt spiral in recent years used to stave off the worse of the GFC will be seen as largely wasted, and as GDP falls the debt/GDP ratio will increase to levels this Government bragged about as having avoided.

Our mineral and resource safety net is already overpriced both in terms of currency and labour costs – Mongolia, Brazil, and Africa offer the same resources at vastly cheaper prices.  China and India – our biggest markets will leverage the price advantages built into these new markets in extracting competitive prices from Australian miners.

Agriculture is a bright spot as we have the land mass if not the political vision to view the future prospects for a global food security opportunity.  It would require similar funding as the NBN – but to create a food bowl in central Australia has a vision and global positive that few can see the silver lining, and/or past their own survival in the current toxic political environment.

Political: Australia

The continuing NSW Obeid scandal ICAC enquiry will continue – the new Peter Slipper fraud charges over abuse of taxi cab charge vouchers, his sexual abuse allegations are set to be appealed, the Craig Thompson and Mike Williamson HSU fraud allegations will be front and center, and of course the criminality of our Prime Minister and her involvement in the AWU scandal will all play out before the next election is called later this year.

In essence – this Federal Government is toxic to the core and will go the same way as NSW and QLD Labour Governments at their last election.

The fear is that in ridding ourselves of a criminal Prime Minister and her partners in crime serving in her Cabinet, and replacing them with the mediocre Leadership of Tony Abbott does not do Australia any real favours.   There is a Leadership void in this Nation and the question is why?

Liberal/Coalition State Governments fresh from their victories in Victoria, NSW and QLD are all on the nose … is it the cleaning up of the mess left behind by long serving ALP State Governments … or is it that they are just as incompetent as the now Labour Opposition.

It is as if Leaders go through the motions with no idea how to right a crooked ship, how to meet the people’s needs and spend less as a Government.   None have the vision to inspire as opposed to talking down their predecessors to make themselves seem better.

What one can say is that there has never been a time in Australia’s past where public servants have been paid as well, where their pay packets and perks have exceed the private sector by such large amounts … excluding Public Listed CEO bonus payments etc …

When the NBN boss earns $2+ million and his deputies similar salaries as a Government owned subsidiary – there is reason to pause and ask where are the days when people entered Government to fulfil a sense of public duty and drew no salary at all.

In a past era wealthy businessmen who had made their fortunes in the private sector turned their skills to Nation building and we were all better for it – why do we now have a House full of failed lawyers masquerading as politicians who think they know how to run a Nation?

None have ever been highly regarded by the private sector, in fact none have any experience as a top 200 public company Director … none have built up a business and made a success story … most are party hacks from their teens forging their political careers off the backs of other political hacks who did the same thing.

These days as Mr Slipper and many others have shown – it is all about the perks, the super scheme and qualifying for a lifetime pension, the free lunches, the dinners, and travel accommodation,  modern day Politicians have never been rewarded as well – yet their output and collective performances have never been so bad.

There is correlation – the more you pay them the  more the low-life rise to the top through factional lobbying.   Just look at the quality of our Political representatives and ask – can or could we do better?

Unfortunately when you survey the candidates the answer is an emphatic NO!!!! … we are doomed as they said when the Titanic hit the iceberg … as surely as the financial wellbeing of many Nations is in a descending spiral, honourable, and visionary Leadership is nowhere to be found.

From adversity great men rise … Australia and the World awaits …


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 …

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