Showing posts with label Finance. Show all posts
Showing posts with label Finance. Show all posts

Wednesday 5 October 2016

Turnbull Government barely keeping its fiscal head above water?


The 2015‑16 Final Budget Outcome document was released on Friday 30 September 2016 by Australian Treasurer Scott Morrison and the Minister for Finance Mathias Cormann. It can be downloaded here.

This is Stephen Koukoulas writing on the subject in The Guardian on 3 October 2016:

The treasurer, Scott Morrison, and the finance minister, Mathias Cormann, "took out the garbage" last Friday afternoon, dumping the final budget outcome for 2015-16 on the Treasury website under the cover of the football grand finals, a long weekend and the start of school holidays around much of the country.

Morrison and Cormann came close to breaching the Charter of Budget Honesty, which requires the release of each budget outcome for the prior financial year by 30 September each year. They made it with a few hours to spare.

They also released it without a press conference or detailed media release, making sure there was miniscule coverage of something that would normally be a key area of economic and fiscal management. This is especially the case with "budget repair", the "return to surplus", "paying off debt" and dealing with the "budget emergency" being the basis that saw the Coalition elected to power in both September 2013 and July 2016.

Looking at the budget outcome document, it is clear why it was released in the shadows of the Friday night without any fanfare.

The 2015-16 budget deficit was $39.6bn or 2.4% of gross domestic product. When the former treasurer Joe Hockey delivered the first budget of the Coalition government in May 2014, the budget deficit for 2015-16 was forecast to be $17.1bn.

Much of the blowout was due to decisions of the Coalition government. Foregoing revenue from the carbon price, gifting $8.8bn to the RBA and ramping up spending on border protection without any offsets were vital.

The Coalition, contrary to all perceptions, has been spending at an alarming rate. In 2012-13, the last full year of the previous Labor government, the ratio of government spending to GDP was 24.1%. In 2014-15, this had risen to 25.6% and, in 2015-16, it rose to 25.7% of GDP. The 1.6% of GDP blowout in spending between 2012-13 and 2015-16 is about $26bn and accounts for more than the blowout in the deficit from the time of the 2014 budget.

The deficit blowout fed into the level of government debt as it had to ramp up its borrowing to cover the ever growing shortfall.

Net government debt rose to $296.4bn at June 2016, up from $153bn in June 2013 just before the Coalition took power. As a share of GDP, net government debt has risen from 10% to 18%, just off the all-time high in the wake of the second world war. When the 2016 Myefo is released before year end, net government debt will be at a 60-year high and rising.

Gross government debt, according to the final budget outcome documents, rose to $420.4bn, or 25.5% of GDP, in June 2016. This is at the highest since 1971-72 when the Vietnam war effort was being funded.

Government debt is growing at a pace that will no doubt be the focus of the credit ratings agencies. Unless there is some miracle in terms of a growth spurt that fuels an unexpected windfall revenue gain to the government, further large budget deficits are likely in the near term, as are further increases in government debt……

Wednesday 7 September 2016

Opposition Leader Bill Shorten and those 111 bankers, planners and advisers


Opposition Leader and MP for Maribyrnong Bill Shorten in Hansard on 31 August 2016:

No less than eight members of this cowardly government have previously called for a royal commission, and I am confident that there are many more who now support this move.

What is the case for the royal commission? We just cannot leave it to ASIC, despite what the government said. We need a royal commission. Let me go through the scandal. Whilst one does not presume to be a predictor of the future, let me describe the last few scandals and let's have a guess if it will happen again. The journalists and whistleblowers expose the scandal and there is a public outcry that follows. Maybe even some of the brave hearts opposite are outraged, with their crocodile tears. But then it is characterised as an isolated incident—mid-tier rogue sort of gunmen going off on their own—and not the conduct of the whole bank. There are heartfelt promises that it will never happen again. Perhaps there might even be a special inquiry by ASIC, APRA or a government appointed panel. And do you know what happens a few months later, Mr Speaker? We do it all again because the banks do not respect the government. They are not worried by the government's calls for action because they know that with this mob in power nothing will ever happen.

What we need is real action. Australians are sick and tired of the scandals being investigated after the harm and the damage is done. They are sick of the phoney apologies and they are sick of the speeding fines that this government issues to the banks. We need public scrutiny. The systemic problems of a royal commission require public scrutiny. Since 2009 at least 111 bankers, planners and advisers have been quietly sacked from their companies or reported to ASIC for misconduct. That is more than one a month. Australians do not know what led to these sackings or what any internal investigations uncovered afterwards.

Thursday 21 July 2016

Counting the coins as we wait for the 45th Parliament to commence


Before Malcolm Turnbull (as prime minister of a government in the third and final year of its first term in office) called a double dissolution election, the last Dept. of Finance Australian Government General Government Sector Monthly Financial Statement due was for May 2016 and, this revealed an underlying cash balance for the 2015-16 financial year to 31 May 2016 which was in deficit to the tune of $34,860 million.

total government revenue - $360,209 million of which $340,866 million was taxation revenue
total expenses - $388,061 million leaving a shortfall of $27,852 million
public debt interest - $14,101 million
net government debt - $284,657 million.

The June figures are yet to be published and it will be a case of track the Dept. of Finance website for the next three years as the Liberal-Nationals Coalition fails yet again to reign in its own discretionary spending.

Meanwhile Prime Minister-elect Turnbull - in an election so close that by 18 July 2016 only 13 of 150 House of Representatives seats have been officially declared - held an evening of champagne and canapés with a who’s who of Liberal and National MPs and senators at The Lodge in Canberra on 17 July.

The food included Pialligo ­Estate’ smoked salmon on rye toasties with horseradish cream, Moroccan lamb rissoles with harissa yoghurt, vegetable samosa with mint relish, roast beef en croute with stilton cream and tomato chutney, Vietnamese prawns with chilli jam and chicken satays.

I sincerely hope that Mr. Turnbull personally paid for use of The Lodge that night and for all catering and security at this event, as he didn’t become the official tenant again until after the Governor-General swore him in on 19 July 2016.

Mr. Turnbull's reportedly in excess of $1 million donation to the Liberal election campaign may possibly have brought him government but it could never buy the allocation of taxpayer funds for his private victory party.

Thursday 7 April 2016

Panama Papers: some of the corporations Malcolm and/or Lucy Turnbull created or invested in since 1981


A reader asked if North Coast Voices would look at the Australian Prime Minister’s investments in light of the release of information contained in the Panama Papers.

A searchable online database is yet to be created and information in the media on the ‘who and when’ of use of the Panamanian tax haven is still emerging, so there is not that much to compare Mr. Turnbull's extensive financial portfolio with at present.

However, I have created a short company list readers can refer to when the subject of Mossack Fonseca’s Australian clients is mentioned.

Companies/investments marked with a red asterisk denote association with a tax haven/low tax jurisdiction.

Private companies of which Malcolm Bligh Turnbull is known to be a director:

Turnbull & Partners Pty Limited –  created 1998, private investment company 
Turnbull & Partners Holdings Pty Ltd – created 1987, private investment company 
M.B. Turnbull Pty. Limited – created 1998, private investment company 
Wilcrow Pty. Limited –  created 1998, private investment company 
Pokana Pty Ltd – created 1981, private investment company/trustee of self-managed super fund 
Bonalil Pty Ltd – created 1985, private investment company 
Felix Bay Ltd – created 2000, not for profit company/trustee of the Turnbull Foundation 
Bonedale Pty Ltd – created 1987, intermediate holding company 

A selection of some of the corporations in which Malcolm and/or Lucy Turnbull invested from time to time, as set out in his Members’ Interests statements:

Century Turnbull LLC – created 2014 and incorporated in US, private holding company for Lucy Turnbull's New York property investments
Want Want China Holdings P/L,  – Chinese company, food manufacturing 
Hochtief AG – German company, construction. Taken to court by Australian Securities & Investment Commission for alleged insider trading of Leighton Holdings (now CIMIC) shares 
Melbourne IT Limited – incorporated Australia, domain registration company
Prima BioMed Limited – incorporated in Australia, German-Australian company, biotechnology
Porsche Automobil Holding – German-based holding company, automobile manufacture
Rubicor Group Limited – incorporated in Australia, contracting & recruitment services
Seadrill Limited – incorporated in Bermuda, offshore deepwater drilling 
CVB Financial Corporation – incorporated in U.S., holding company for Citizens Business Bank
Siemens AG – German company, industrial conglomerate. Certain Siemen managers were allegedly clients of Mossack Fonseca in the British Virgin Islands tax haven after corruption scandal *
Salzgitter AG – German-based company, steel production
Volkswagen AG VORZ - German automobile manufacturer
Centric Wealth – incorporated in Australia, financial services 
Lexmark International (?) – US company, printing and imaging equipment
New World Energy Ltd – incorporated in Australia, renewable energy 
Tarazz Pte Ltd – incorporated in Singapore,  IT *
Australia and New Zealand Banking Group allegedly facilitated clients use of Mossack Fonseca in the British Virgin Islands tax haven *
Commonwealth Bank of Australia – allegedly facilitated clients use of Mossack Fonseca in the British Virgin Islands tax haven *
Fiat Chrysler Automobiles – incorporated in The Netherlands, automobile manufacture 
Consumer Staples Select Sector SPDR ETF
BHP Billiton Limited – incorporated in UK, approx. 19 subsidiaries incorporated in British Virgin Islands, diversified resources, alleged client of Mossack Fonseca in the British Virgin Islands tax haven *
ETFS Physical Palladium Shares - shares issued by ETFS Palladium Trust aa company providing specialist investment solutions
Panoro Energy ASA – Norwegian-based company, exploration and production of oil and gas resources in West Africa
SPDR S&P 500 – incorporated in US,  exchange-traded fund 
Orocobre Ltd  Argentinian-based company, industrial chemicals and minerals 
Magellan Flagship Fund Limited  ASX-listed investment company
Forte Energy  – incorporated in Australia, minerals company focused on the exploration, evaluation and development of uranium and energy-related projects worldwide
JPMorgan USD Emerg Markets Bond  – incorporated in US, exchange-traded fund
iShares MSCI Brazil Index Fund – investment fund 
iShares iBoxx $ Invst Grade Crp Bond – investment fund trading in U.S. investment grade corporate bonds *
Utilities Select Sector SPDR Fund – incorporated  in US, exchange-traded fund 
Annaly Capital Management Inc  US-based company, mortgage real estate investment trust
Avita Medical Ltd – global medical technology company 
Revo Pty Ltd  – Australian-based company, custom computer programming service 
Goldman Sachs Private Equity Funds – part of a US-based investment group specializing in fund of funds and direct co-investments with 21 entities registered in Cayman Islands tax haven. The firm invests in other funds that invest in leveraged buyouts, growth financings, natural resources, venture capital, and distressed securities. It also acts as a co-investor in direct investments. The firm seeks to invest in private equity funds located in the United States, the United Kingdom, continental Europe, Latin America, and Asia *
Zebedee Growth Fund - incorporated in Cayman Islands, hedge fund *
Bowery  Opportunity Fund – incorporated in Cayman Islands, distressed debt *
3G Natural Resources Offshore Fund Ltd – Cayman Islands-based, hedge fund *
Predictive Discovery Limited – incorporated in Australia, gold and uranium exploration company
Vanguard Health Care ETF – incorporated in US, exchange-traded fund
CVC Global Credit Opportunity Fund  - incorporated in Cayman Islands, hedge fund *
MSD Torchlight Partners Ltd  - incorporated in Cayman Islands, hedge fund *
Seven Locks Enhanced Fund Ltd – registered in Cayman Islands, double-leveraged equity fund *
Elbrook Offshore Fund Ltd – registered in Cayman Islands, hedge fund *
 Brookfield Wells Street Offshore Fund – Cayman Islands-based, pooled fund global real estate equities *
 Morgan Stanley Real Estate Fund IV – US-based company, global commercial property portfolio.
First Eagle Global Fund – incorporated in US, long-term growth of capital

Malcolm Turnbull's last Register of Members' Interests statement dated December 2013 can be found here.

Wednesday 30 March 2016

Australian Federal Election 2016; debt, credit and GDP


So how is Australia’s economy faring under the Abbott-Turnbull Government in the lead-up to the 3 May 2016 federal budget and the following general election?


The underlying cash balance for the 2015-16 financial year to 29 February 2016 was a deficit of $38,719 million.1
The fiscal balance for the 2015-16 financial year to 29 February 2016 was a deficit of $35,292 million…..

Total revenue was $1,223 million lower than the MYEFO profile, primarily due to lower than expected taxation revenue and dividend income.
Total expenses were $2,831 million lower than the MYEFO profile, primarily due to lower than expected supply of goods and services, wages and salaries and grants expenses…..

Net worth is negative $352,423 million;
Net debt is $287,920 million; and
Net financial liabilities are $516,561 million.

Financial Review, 28 March 2016:

Australia is one of seven countries that Forbes magazine says is the "most likely to suffer a debt crisis" within the next three years. 

China, whose economy has faltered in the past two years, comes No. 1 on the list of seven, but Australia is No. 2. Sweden, Hong Kong, South Korea, Canada and Norway complete the list of infamy.

Using data for both private and public debt compiled by Switzerland-based Bank of International Settlements, the magazine looks at the rate of growth of credit compared with gross domestic product, paying particular attention to when credit growth begins to fall……

"The bottom line is that private sector expenditure in an economy can be measured as the sum of GDP plus the change in credit, and crises occur when (a) the ratio of private debt to GDP is large; (b) growing quickly compared to GDP," the magazine says.

When credit growth slips as servicing debt exhausts funds available to finance it, "new borrowers baulk at entry costs to house purchases, and numerous euphoric and Ponzi-based debt-financed schemes fail" leading to a change in available credit.

Australia, like the other six countries on the list, fill the two key prerequisites, a high level of private debt to GDP, and a rapid growth of that ratio in the last few years, the report says.
Economic crises often coincide with private debt exceeding 1.5 times GDP and the level of private debt grows by about 20 per cent over a five-year period.


The Guardian, 15 January 2016:

The results are in: Australian households have more debt compared to the size of the country’s economy than any other in the world.

Research by the Federal Reserve has shown the consolidated household debt to GDP ratio increased the most for Australia between 1960 and 2010 out of a select group of OECD nations. Australia’s household sector has accumulated massive unconsolidated debt compared with other countries. As of the third quarter of 2015, it now has the world’s most indebted household sector relative to GDP, according to LF Economics’ analysis of national statistics……

Australia has around $2 trillion in unconsolidated household debt relative to $1.6 trillion in GDP. Australia’s ratio is 123.08%.....

Australian property investors and homeowners are burdened with massive mortgages, especially new and marginal entrants. Unlike winning a gold medal at the Olympics, having the world’s most indebted household sector is not an achievement the nation should be proud of. This is where Australia’s real debt and deficit problem lies, not in the public sector.

Footnotes

1. Compare with the 2013-14 financial year to 30 September 2013 which covers the last eight months of the former federal Labor government:

The underlying cash balance for the 2013-14 financial year to 30 September 2013 was a deficit of $22,929 million.
The fiscal balance for the 2013-14 financial year to 30 September 2013 was a deficit of $19,659 million…..

Total revenue was $4,580 million lower than the Budget profile primarily due to lower than expected taxation revenue. This reflects lower than expected individuals and other withholding taxation, company tax, superannuation fund tax and resource rent taxes.
Total expenses were $4,636 million lower than the Budget profile primarily due to lower than expected grants and subsidies, suppliers and personal benefits expenditure.  This is in part consistent with reduced expenditure during the election caretaker period and reflecting timing differences, particularly for grants and subsidies…...

The net worth of the General Government sector is a negative net asset position of $220,670 million at 30 September 2013.
The net debt of the General Government sector is $174,557 million at 30 September 2013.

Sunday 27 March 2016

Australian Federal Election 2016: how Liberal Senator for Tasmania Eric Abetz is said to have become a millionaire in 2005


Another bona fide millionaire is discovered within Liberal Party ranks? 

This appears to be how Senator Eric Abetz made the grade when he was Special Minister for State in the Howard Coalition Government….

The Sydney Morning Herald, 26 March 2016:

In early 2000, Abetz paid $100,000 for almost four hectares of government land adjoining his house block in the Hobart suburb of Kingston. In March 2005, the area was rezoned from "residential" to "business and civic". Four months later, Abetz sold both the house block and the adjoining land to property developer Robert Rockefeller's company, AAD Nominees, for a combined total of $1.9 million.

Here's where Abetz got lucky. For the big vacant block (3.8 hectares), Rockefeller paid him only $400,000. For the house block (0.6 hectare), Rockefeller paid $1.5 million – more than five times the government valuation. This meant the bulk of Abetz's proceeds from the two sales was not subject to capital gains tax (a person's residence is exempt from the tax). The enormous discrepancy in the two sale prices cannot be attributed to the value of the house, a six-room weatherboard construction which has since been demolished.

In 2014, the capital value of Abetz's vacant former house block was assessed by the Tasmanian Valuer General at just $470,000. John Hawkins, the columnist on the Tasmanian Times website who first drew attention to the land deals, believes an explanation is long overdue. Abetz's attitude is calmly dismissive. The house block had more road frontage than the bigger block, which enhanced its commercial value, he tells me. The whole thing was entirely above board.

The Tasmanian Times, 10 September 2010:

Snapshot of Document 1

Mr Rockefeller through his company AAD Nominees Pty Ltd has applied to Kingborough Council to build a shopping centre, car park and other facilities on the adjoining block of land with Channel Highway street numbers 163, 167, 191 and a section of 203 (Document 1).

Kingborough Councillors have recently knocked back the Development Application (Document 2) which had been approved by the Planning Department of the Council. Two of these lots, 191 and 167 have an interesting recent history, of which I became aware as a result of checking the residential address provided by Senator Abetz on his nomination forms for the 1998 and 2004 Senate elections.

Lot 191 (191 Channel Highway) appears to have been owned by Senator & Mrs Abetz and was their family home. The land area was 0.6206 hectares and on it stood a weatherboard house with an imitation tile roof with six main rooms built circa 1910. The property was acquired prior to the introduction of Capital Gains Tax (CGT) so was free of CGT when the Abetz family decided to sell.

An adjoining block, Lot 167 comprising some 3.894 hectares or approximately 10 acres, was purchased by E and MA Abetz from the Tasmanian State Government on 1 June 2000. Lot 167 was purchased for $100,000. The purchase price was $20,000 less than the Government capital valuation price (Cap) and I can find no trace of it ever being put out to tender.

Senator & Mrs Abetz were lucky with the rezoning of their land as a result of the completely new Kingborough Planning Scheme introduced in 2000. The Kingborough Council prepared a Report for an Amendment to its Planning Scheme, and the matter was referred to the Resource Planning and Development Commission (RPDC). Lots 163, 167,  and part of 203 were rezoned from Residential to Business and Civic in March 2005. (Document 3)

The RPDC archives provide a good background to the matter but do not show who applied for the change of use. The Council Planning Officer, Andrew Goodsell, for some reason incorrectly describes the Abetz land as “167 Channel Highway in two titles (owner E Abetz) ….includes a small title of .3662 ha incorporating the house Lynden Rise” he continues and places emphasis on Lot 167 thus, “Of these lots it is this rear lot of 167 Channel Highway that potentially has the most potential, providing potential for facilities and services that interconnect with those of the Antarctic Division site”.

Interestingly Goodsell in this application reduces the land area of title 191 which gets no mention, only the house is named.

Lot 163, the adjoining house block on a larger land area 0.8232 hectares, had been purchased prior to the RPDC’s agreement to rezone from a Mrs V Wiseman on 10 December 2004 for $565,000 by AAD Nominees Pty Ltd. The Government valuation in 2004 (Cap) was $208,000 (the house was built in 1968). The Capital Value as of 1 March 2009 is $670,000 with a land value of $490,000.

Lot 203 was subdivided from the Antarctic Division block already owned by AAD Nominees Pty Ltd.

In summary therefore the blocks owned by Senator & Mrs Abetz Lots 191 (although not specified) and 167 were attached to 163 and 203 then owned by AAD Nominees Pty Ltd for the purposes of a rezoning in an application referred to the RPDC for approval.

Following approval by the RPDC on 24 Feb 2005, Senator & Mrs Abetz immediately sold 191 and 167, with completion on 18 July 2005, to AAD Nominees Pty Ltd for $1.9m with Abetz apportioning $1.5m to the family home, 191 Channel Highway, and $400,000 to Lot 167, the 10 acres purchased from the State Government for $100,000. It should be noted that the Abetz name does not feature on the Title to Lot 191 in this transfer; why?

Since the purchase, AAD Nominees Pty Ltd has obtained two reductions in the rated value on Lot 191 - the Abetz family home, now a land value of $430,000 and a capital value of $840,000. In a rarity for Kingston this loss of value over the past five years, must put a question mark over the assigned value of the Abetz residence in 2005.

Is it a case of Lot 191 having been overvalued by Abetz? This would reduce his capital gains tax liability on the adjoining 10 acre land Lot 167. Perhaps Abetz can elucidate further.

The Senate requires all Senators to maintain a “Statement of Registrable Interests”. This is kept at the Senate in Parliament House, Canberra.

Regarding real estate, the Register requires that the suburb or area is provided and makes a distinction between residential and investment property, and whether the property is used as a residence, as a holiday home, as a farm, or is held for investment or other business purposes. For all purchases or disposals of real estate, the date of settlement is to be considered the date of alteration of interests and notification should be made within 28 days of that date.

Senator Abetz’s information in his Statement of Registrable Interests for each of his terms of office reveals, in part, his real estate interests. The 1994 Register, his first in Parliament, gives his only property as ”Kingston Tasmania Residence”; in an alteration to Senators’ Interests (Document 4) he cancels his loans but he makes this addition to his interests, “Consultant to Abetz & Co in association with Shields Heritage”.

He declares the purchase of two investment properties at Gagebrook in 1995 and 77 Beach Road Kingston - a block of four units or flats overlooking the golf course - in 1998, with a sale in 1999.

There is no mention on the Register of Assets of the separate purchase from the State Government of Tasmania of Lot 167, yet he informed the Register: “My wife and I have contracted to purchase land adjacent to our residence through a nominee” possibly the Abetz Family Trust on 14 Feb 2000. He later confirmed the purchase but in joint names (Document 5) on 5 June 2000, with no mention of investment that would turn out to be financially beneficial. Eighteen months later, in Dec 2002, still no mention, but he informs the Register that he has paid out the loan.

Someone must have been looking into Erich’s affairs, for his former legal office Abetz Curtis at 83 Davey Street was the subject of Documents 6 and 7. It may be that Gagebrook, Beach Road and Davey Street should be subject to audit if a check is to be run over 167 and 191 Channel Highway.

The acquisition of 10 acres of land, Lot 167 Channel Highway, from the Tasmanian State Government, followed by rezoning from Residential to Business and Civic, must turn this transaction to a “property held for investment” and as such it becomes very much a “Registrable Interest.” This property as 167 Channel Highway has never been declared as either a purchase or sale to the Senate of Australia.

Abetz still gives, “Kingston Residence” as his only property even after 167 and 191 are sold with completion, 18 July 2005, yet he has to inform the Register within 28 days of sale. I ask why the delay? The sale was declared as Residential on 3/Jan/2006 (Document 8)

The sale of Lot 167 within five years, at a declared profit of $300,000 - but arguably an actual profit of approximately $1.3m - makes this a very good investment indeed. If this is so the capital gain is in excess of $1m and the Capital Gains Tax unpaid would be in excess of $200,000.

This begs the question, why did the Tasmanian Government not arrange itself for the rezoning in conjunction with the developer, so as to benefit the people of Tasmania rather than a well-connected Senator?


It is noted that as of 19 March 2008 the very expensively purchased house and land package known "Lynden Rise", 191 Channel Highway, Kingston remained undeveloped and only became the subject of a development application in 2014. While the larger but less expensively acquired Lot 167 appears to remain undeveloped to date.

Google Earth snapshot, 26 March 2016

Friday 6 March 2015

The Abbott Government's first Intergenerational Report examined through jaundiced eyes


Peter Martin, Economics Editor of The Age newspaper observed on 3 March 2015:

The Intergenerational Report is required by law every 5 years. It assesses the long-term sustainability of the government's policies 40 years into the future. This one will take us through to 2055. It's 2 month's late, although that's not the fault of the treasury. Finance minister Mathias Cormann was keen to tell the Senate that it's a report of the government, not the treasury. It's inherently political. Sensitivities over its immigration projections (and possibly what it will say about climate change) have delayed it as government ministers have tossed drafts back and forth.

So what does the Abbott Government tell us in its first and Australia’s fourth Intergenerational Report?

Well, it tells us in those 145 pages that Australia has an economy that has had an unprecedented 23 year stretch of unbroken economic growth that is continuing today as I write.

It seems the nation also has a well-functioning health system.

Both of these admissions will come as a surprise to many because since the Coalition won government in September 2013 we have been repeatedly told that the country was facing a ‘debt and deficit disaster’ and, the health system was on the financial sick list so we needed to put our hands in our pockets to pay GPs a bit extra because government couldn’t afford to continue paying the Medicare rebate bill.

For some strange reason the federal government appears to believe that all males and females born since November 2013 have an average life expectancy at birth of 91.5 and 93.6 years today when what the Australian Bureau of Statistics actually said on 7 November 2013 was; "A boy born today could expect to live 79.9 years, while a girl could expect to live 84.3 years. For those approaching retirement age, say 65 years, males could expect to live a further 19 years and females a further 22 years". It defies belief that Joe Hockey and Mathias Cormann believe that in just on sixteen months life expectancy at birth has risen 11.6 years for males and 9.3 years for females.

The federal government also informs us that the elderly are living an inconveniently long time and, in its opinion more of them should remain at work or go back to work after retirement age because they are costing the government too much to keep alive - even at the minimum levels of income support and physical care it is willing to fund.

It tells us that workers’ average weekly wage will increase over the next forty years, but not at the rate wages have over the last forty years and government expects all workers to put shoulders to the wheel in order to be more productive – and swallow the reforms allegedly required to make them all that bit more competitive and flexible.

To that end its review of Australia’s workplace relations framework is apparently an important building block in facilitating the development of new markets, and allow businesses and the public sector to harness innovation.

The young had a national unemployment rate of 14.2% in January 2015 and will probably face a high unemployment rate into the future as it appears the only solution the Abbott Government has to date is to make applicants under 25 years of age wait six months before unemployment benefits and make them also ‘work for the dole’.  Presumably because, along with people with disabilities, young unemployed people are expected to generate gains in GDP and income growth over the next 40 years.

By 2055 the Abbott Government thinks that government will only need to spend an extra $400 of its own money per student to keep primary, high school and tertiary education in tip top shape.

It expects that federal government won’t be spending more money in forty years’ time on defence materiel than it does today.

Infrastructure is good to have and the nation needs MOAR & MOAR, but the Abbott Government is not quite sure how we are going to get all those roads, tunnels, by-passes, bridges, railway lines and ports it is lusting after - except perhaps by 'efficiently' selling off some which exist already to its rich mates and the foreign power best new friends of Tony Abbott.

The Abbott Government has included a handy little graph at Page 35 which shows that by 30 June 2014 its own spending spree had increased the underlying cash balance and output gap deficit to around 3% and 1.75% of GDP respectively.

Apparently the nation needs strong economic growth and a sustainable budget before it can tackle climate change. Part of any effort to mitigate those pesky adverse impacts caused by global warming is to take a proverbial broom to the countryside – because we need “Clean land” and “Clean air”– and one of the best ways to achieve that is to continue hacking away at ‘green tape’ thereby weakening the community’s ability to protect the environment.

Confident that it will get its data retention legislation through parliament the Abbott Government intends to deliver government services digitally, thereby making the forthcoming  mass surveillance of the populace as detailed as possible. Australia is about to become a hackers Nirvana sometime before 2055 and, people living in remote and rural regions will probably still face a level of difficulty in reliably accessing the Internet and therefore have intermittent problems accessing these same government services.

As for net migration, it is expected to be an est. 215,000 people per annum from 2018 onwards and, Australia’s population is predicted to be 39.7 million in 40 years’ time. Which must leave local governments across the country wondering where they are collectively going to put around 427,027 extra residents each year.

The bottom line appears to be that if Australia wants a bright and prosperous future, then every one of the Abbott Government’s punitive policies and budget cuts, rejected by voters and the Senate to date, need to be implemented.

Now who didn’t see that coming?

Monday 15 December 2014

So what is Australian Treasurer Joe Hockey telling the country in the December 2014 Mid-Year Economic Outlook (MYEFO)?


What has the implementation of the Abbott Government's ideologically-driven economic policy left Australian families and businesses facing for the rest of its term in office?

For an in-depth look at the nation's prospects go to the MID‑YEAR ECONOMIC AND FISCAL OUTLOOK 2014‑15.

For the time being here is the briefest of outlines:

The December 2013 MYEFO stated that tax receipts had reduced by more than $37 billion for the period 2013-14 to 2016-17 – now total taxation receipts have been revised down by $6.2 billion in 2014‑15 and $31.6 billion to 2017-18, bringing the total write down in tax receipts since the Government was elected to over $70 billion .

In December 2013 company tax receipts were revised down by $180 million in 2013-14 and $7.1 billion across the four years to 2016-17 – now a mere twelve months later company tax receipts are being revised down by $2.3 billion in 2014‑15 and $14.4 billion over the forward estimates.

Weaker wage and employment growth is expected to continue through to at least 2017-18 - with 2016-17 to 2017-18 wage growth now predicted to be much lower than was anticipated in the December 2013 MYEFO.

The unemployment rate will rise even further than the 6.25% predicted in December 2013 – it is now predicted to reach 6.5%* in 2015 and stay that high until at least June 2016.

In December 2013 the consumer price index for the 2014-15 financial year was supposed to come in at 2 – it is predicted to rise to 2.5.

Despite repeated warnings about a predicted sharp fall in commodity prices which the December 2013 MYEFO failed to fully recognise – by December 2014 there appears to be an element of faux surprise at finding how sharp that fall actually was and a decision made to cast iron ore prices as the arch-villain of the piece.

The December 2013 MYEFO stated that the underlying cash deficit would be $33.billion for 2014-15 – now an underlying cash deficit of $40.4 billion is expected in 2014‑15.

In 2013-14 net government debt was $191.5 billion. Public debt (on which interest has to be paid) will be $425 billion in 2014-15

Total interest expenses on all public debt have risen from an predicted $16.3 billion for 2014-15 in the December 2013 MYEFO to $16.3 billion for the same financial year in the December 2014 MYEFO and, are projected to rise to $19.9 billion by 2017-18.

Unsurprisingly, despite May 2014 budget cuts, further announced cutbacks in federal government agency numbers and public service employee numbers; Abbott Government gross operating expenses are predicted to rise from $119 billion in 2014-15 to $120.9 in 2016-17 and $125.2 billion in 2017-18.

Miraculously and perhaps over-optimistically, in the latest MYEFO the nation's real gross domestic product (GDP) growth has been revised up from 2.5% for the 2014-15 financial year and 3% for the 2015-16 to 2016-2017 financial years to 3% and 3.5% respectively. Nominal GDP has also been revised up.

In the face of all this Joe Hockey is telling the world that he will now have the budget back in a very small surplus by 2019-20. Presumably if the Abbott Government gets a second term and he remains as federal treasurer.

Hockeynomics at its best.

* An unemployment rate of 6.5% represents in excess of 803,952 Australians without a job and the regular pay packet which comes with it.

Tuesday 1 July 2014

The Real Age of Entitlement: State governments spent $17.6 billion supporting mineral & fossil fuel industries between 2008-2014 and Australian Government intends spending more than $40 billion over three years supporting fossil fuel industry



Supporters of the minerals and fossil fuel industries, like Queensland Premier Campbell Newman and the New South Wales Minerals Council, regularly emphasise the money that these industries pay to state governments. Much less is said about the money that state governments pay to assist these industries.

State government assistance to the minerals and fossil fuel industries is considerable.
Based on an analysis of state government budget papers, we estimate that a total of almost $18 billion has been contributed by the taxpayer over the last six budgets.

This assistance takes many forms. Sometimes it is a direct cash payment. For example, the New South Wales government gave multinational coal companies $10 million in 2009 as an ‘assistance package’. Other times it comes in the form of discounted access to services provided by the state and its businesses – Queensland has provided the coal industry with ‘concessions’ on access to rail services worth over $1 billion between 2012-13 and 2013-14.

Often assistance comes in the form of infrastructure or projects that wholly or partly benefit the minerals and fossil fuel industries. Sometimes this expenditure brings a financial return, as in the case of Western Australia’s hundreds of millions of dollars spent on developing port infrastructure. Sometimes it doesn’t – the New South Wales government is unlikely to see any return on its $76 million expenditure on the Cobbora Coal project…..

At the federal level, The Australia Institute publishes an annual study on subsidies of the mining industry, which totalled $4.5 billion in 2013, up from $4.0 billion in 2012.
Other organisations publish estimates of subsidies provided to fossil fuel use and production, which also focus largely on assistance at a federal level….

...the loss to the New South Wales government relating to the treatment of the Coal Research Levy.
This levy for $0.05 per tonne of coal mined is fully deductable from royalties that coal miners pay to the New South Wales government for the rights to mine the state’s coal. This deduction is effectively a subsidy of millions of dollars per year from the New South Wales government to the Australian Coal Association Research Program….


The assessment concludes that the Australian Government is set to spend over 
$40 billion (see Table on page 4) in the form of tax rebates and concessions,
foregone revenue and expedited write downs of assets per year from 2013/14 to 
2016/17. 
This assessment only includes tax measures, and does not include direct grants or 
State Government measures, which could add billions more to the annual totals.

UPDATE

Australian Productivity Commission, Trade & Assistance Review 2012-13:

Friday 31 January 2014

I'd laugh if the Abbott-Hockey ploy didn't presume Australian voters were idiots


To date the Abbott Government has run up at least an additional $29.3 billion dollars in national debt over the last 135 days.

This means as of today the nation owes in excess of $189,422.8 billion in gross public debt.

Having mapped out this level of rising debt some months ago, the Abbott Government abolished the legislated debt ceiling late last year.

On 22 January the Federal Treasurer Joe Hockey made this nonsense announcement:
The directive apparently expires rather appropriately on April Fool’s Day 2024, as at the rate it is currently borrowing this $500 billion debt cap (now unsupported in law and therefore meaningless) will be exceeded by Abbott, Hockey and Co in under three years.
After all, Abbott still hasn’t said how the nation will fund his proposed personal $250 million VIP aircraft and other little prime ministerial luxuries or compensate for the reduced revenue his industry level taxation cuts will produce before the next federal election in 2016.