Hockey accused of punting with taxpayer dollars

Is Australian Treasurer Joe Hockey taking a leaf out of Peter Costello’s game plan and 'cooking' the nation’s books....

The Sydney Morning Herald 29 October 2013:

Reserve Bank governor Glenn Stevens has effectively confirmed that Joe Hockey is blowing several hundred million dollars in an attempt to make his performance as Treasurer look good. Never underestimate the vanity of politicians.

Forget a few thousand here and there on the cost of weddings and Cairns “meetings”, Hockey’s petty budget politics will cost tax payers about $300 million over the next 12 months and another couple of hundred million the next year....

The RBA certainly didn’t ask for Hockey’s $8.8 billion capital injection and didn’t think it was necessary.

That’s the extra $8.8 billion the government is having to borrow and pay interest on while blowing out “Labor’s” 2013-14 budget deficit by the same amount....

But don’t take my word for it. Here’s how Stevens explains Hockey’s borrowing binge:

“The high exchange rate has also had a significant impact on the Reserve Bank's own balance sheet. It led to a decline in the value of the Bank's foreign assets and hence a diminution in the Bank's capital, to a level well below that judged by the Reserve Bank Board to be prudent. This has been a topic of some interest of late. Our annual reports have made quite clear over several years now that, while this rundown in capital in the face of a very large valuation loss was exactly what such reserves were designed for, we considered it prudent to rebuild the capital at the earliest opportunity. It has been clear that the Bank saw a strong case not to pay a dividend to the Commonwealth during this period, preferring instead to retain earnings, so far as possible, to increase the Bank's capital. That rebuilding could in fact have taken quite a few years, given the low level of earnings......

So “Labor’s” deficit blows out to about $40 billion this year, but Hockey’s heroic efforts to reduce the debt in the years ahead will be enhanced by a rich stream of dividends from the RBA. The last time the Aussie had a sharp fall, the RBA paid the government a dividend of more than $5 billion. Trader Joe is playing the forex market with borrowed money.