Commonwealth Budget Papers 2012-13

Over at www.budget.gov.au the 2012-13 federal budget papers are available for those interested in delving deeper than tomorrow's tabloid newspaper headlines.

• Budget Speech
• Budget at a Glance
• Budget Overview
• Budget Paper No.1  Strategy and Outlook
• Budget Paper No.2  Budget Measures
• Budget Paper No.3  Australia's Federal Relations
• Budget Paper No.4  Agency Resources
• Appropriation Bills

• Mid-Year Economic and Fiscal Outlook
• Final Budget Outcome

• Portfolio Budget Statements
• Portfolio Additional Estimates Statements
• Portfolio Supplementary Additional Estimates Statements

• Ministerial Statements

Past Budgets

The Abbott-Hockey Economic Theory of Small Government

With so many conflicting explanations of how a Tony Abbott-led federal government (with Joe Hockey as Treasurer) would manage Australia's economy, I went in search of the theoretical basis of various Coalition claims about small government, lower taxes, budget costings and wandering surpluses.

This is where I think it all starts for these maestros of mathematics.................

(a + b) (a - b) = a² - b²  + 1

Graphic from io9.com

Uncle Joe puckers up and blows the first dog whistle of the season

On the 3^rd January 2012 @JoeHockey tweeted that “I warned of this a year ago!!!”

I clicked on the link wondering what financial horror the federal shadow treasurer had uncovered.

The article merely confirmed the bleeding obvious; “Among banks trading in Australia, the major lenders account for 86.7 per cent of the home loan market.
Well, knock me down with a roo’s tail feather!

Now mortgage holders can switch between banks with no financial penalty for doing so, they are still sticking with the big banks.

I wonder why?

Could it possibly be that these aspirational borrowers believe that solid reputations built up over decades or centuries by the banks really matter in periods of global financial uncertainty?

Or did many of them approve of the big banks following the November 2011 example of the Reserve Bank rate cut? After all there was a surge in mortgage lending to first home buyers and investors right after that – mostly within the banking sector.

Were they cheered by the fact that in December all four of the big banks had passed on another rate cut to their borrowers?

Now Uncle Joe likes to blow his dog whistle loudly over Twitter, this time crying out that Teh Big Four are still big!
A few street mutts might even scamper his way. This old mongrel won't be one of them.
I may hail from a long gone time where you actually knew your bank manager and it was the price of our schooners which concerned us all, but for the life of me I can’t see that consumers exercising choice is a problem for the country. Specially those consumers taking out a new mortgage.

Why should they go and pay higher borrowing rates in the non-banking sector just to please Hockey’s notion of how the world should turn?

Running dogs from http://www.halhigdon.com/
Dog cartoon from http://www.webweaver.nu/

Overall Australians are going into the 2011 festive season still confident that the economy and home finances are faring well

From the last Essential Report for 2011:

Click on graphs to enlarge

Overall, respondents were optimistic that 2012 would be a good year for themselves overall (52%) and their workplace (45%). They tended to be less optimistic about their financial situation (33% good/27% bad) and somewhat pessimistic about the Australian economy (29%/35%).
Compared to expectations 12 months ago, respondents were much less optimistic about the Australian economy (48% good last year compared to 29% good this year) and also rather less optimistic about their own financial situation (39%/20% last year compared to 33%/27% this year).
When compared with last week’s questions on perceptions of 2011, these figures suggest that respondents expect 2012 to be better than 2011 for themselves and their family (net +36% for next year compared to net +24% for this year), a little better for their workplace (+25% next year, +20% last year) and their own financial situation (+6% next year, -2% this year). The Australian economy is expected to be a little worse in 2012 (-6% next year compared to +2% last year).

UPDATE:

Moody’s Investor Service Global Credit Research - 21 Dec 2011

New York, December 21, 2011 -- Moody's maintains the following ratings on Australia, Government of:

Long Term Issuer (domestic and foreign currency) ratings of Aaa

Senior Unsecured (domestic and foreign currency) ratings of Aaa

Senior Unsecured Shelf (foreign currency) rating of (P)Aaa

RATINGS RATIONALE

Australia's Aaa ratings are based on the country's very high economic resiliency, very high government financial strength, and very low susceptibility to event risk. Economic resiliency is demonstrated by the country's very high per capita income, large size, and economic diversity. As one of the world's most advanced economies, the country has not only a significant natural resource sector--including minerals,hydrocarbons, and agriculture--but also well developed manufacturing and service sectors. It also demonstrates strong governance indicators. In particular, the framework for fiscal policy is transparent and has, until now, consistently kept government debt at low levels.

The government's debt rating of Aaa takes into account the aim of maintaining a balanced budget, on average, over the business cycle. It is supported by the very low level of public debt and the country's strong financial system. In comparison to most other Aaa-rated countries, Australia's government financial strength is very high, with very low gross debt that is easily affordable and provides a high degree of fiscal flexibility...... [my bolding]

Hatip to Latika Bourke for tweeting this information.

Now before you indulge in très grande panic with Dr. No - actually look at the 2011-12 MYEFO

Don't rely on the spin - knock yourself out with a bit of 29th November number crunching!

"The Mid‑Year Economic and Fiscal Outlook 2011‑12 (MYEFO) has been prepared in accordance with the Charter of Budget Honesty Act 1998. The Charter requires that the Government provide a mid‑year budget report which provides updated information to allow the assessment of the Government's fiscal performance against its fiscal strategy."

Mid-year Economic and Fiscal Outlook 2011‑12 1.7 MB

Preliminaries and Foreword 205 KB

Part 1: Overview 147 KB

Part 2: Economic outlook 221 KB

Part 3: Fiscal strategy and outlook 254 KB
Attachment A: Sensitivity of budget estimates to economic developments 122 KB
Attachment B: Tax expenditures 100 KB
Attachment C: Supplementary expenses table and the Contingency Reserve 119 KB
Attachment D: Australia's Federal Relations 406 KB

Appendix A: Policy decisions taken since the 2011‑12 Budget
Revenue Measures  293 KB

Expense Measures 566 KB
Capital Measures 163 KB
Appendix B: Australian Government budget financial statements 296 KB
Appendix C: Statement of risks 218 KB
Appendix D: Historical Australian Government data 182 KB

Now this is something you won't hear Tony Abbott be man enough to admit

http://youtu.be/dme0nyz0OgU

O'Farrell Government to rob 68,000 NSW pensioners of millions every year

In 2009 the Rudd Labor Government increased the base rate of Australian pensions.

Since then those NSW pensioners renting social housing (who comprised less than 5 per cent of all public/community housing tenants in the state in 2010) have been fighting a rapacious state government which immediately saw this increase as a jam pot which it could dip into in order to improve its fiscal bottom line.

It would do this by taking 25% of the payment increase from the approximately 68,000 pensioners in NSW public housing, nearly one-third of whom are probably 65 years of age or older.

The windfall would come to an estimated $13.2 to $16.5 million annually for the NSW Government – depending on how many lone person households there are in this group.

In September 2011 the O’Farrell Coalition Government announced in the budget papers that it intends to commence stealing these millions from elderly, disabled and widowed pensioners.

NSW Nationals MPs who dominate North Coast electorates are remarkably silent concerning this theft. Why should they care - after all they are sitting quite comfortably on a salary package of over $140,000 per year plus an electoral allowance.

What a difference having a genuine national fiscal policy makes

The Economist’s Global Public Debt Clock 2011
Click on image to enlarge

Now before we all give into any international media-inspired hysteria and cry the sky is falling, here is Australia’s sovereign credit rating according to Standard and Poor’s (S&P) as of 5 August 2011:

Commonwealth of Australia

Sovereign local currency ratings (LT/Outlook/ST)  
AAA/Stable/A-1+

Sovereign foreign currency ratings (LT/Outlook/ST)
AAA/Stable/A-1+

Transfer and convertibility assessment  
AAA

The Commonwealth of Australia has retained an excellent Triple A credit rating from Standard and Poor's (as well as from Moody’s and Fitch) for the last eight years - for which successive federal governments of different political persuasions can take credit.

In 2011 its public debt as a percentage of its Gross Domestic Product (GDP) is running in the vicinity of 23 per cent, the current account deficit is around 2.5 per cent of GDP and total combined public, corporate and private individual foreign debt only resulted in a 3.9 per cent net income deficit as a percentage of GDP in the March 2011 Quarter - according to the figures I can find.


Just as importantly, one of the nation's major Asian trading partners China continues to see Australia as "stable" and gives a domestic currency credit rating of AAA and a foreign currency credit rating of AA+ at a time when Dangong Global Credit Rating has downgraded 
America's rating to "negative" and the official Xinhua news agency is stating; China, the largest creditor of the world's sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China's dollar assets.

Now compare that brief fiscal thumbnail with the recent credit rating history for the USA, courtesy of a Democrat Government incapable of dominating the Congress and a Republican Party which has lost its way.

Standard and Poor’s release on 18 April 2011:

We have affirmed our 'AAA/A-1+' sovereign credit ratings on the United States of America.

The economy of the U.S. is flexible and highly diversified, the country's effective monetary policies have supported output growth while containing inflationary pressures, and a consistent global preference for the U.S. dollar over all other currencies gives the country unique external liquidity.

Because the U.S. has, relative to its 'AAA' peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating to negative from stable.

We believe there is a material risk that U.S. policymakers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013; if an agreement is not reached and meaningful implementation is not begun by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer 'AAA' sovereigns.

Standard and Poor’s release on 5 August 2011:

We have lowered our long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA' and affirmed the 'A-1+' short-term rating.

We have also removed both the short- and long-term ratings from CreditWatch negative.

The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics.

More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policy making and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.

Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government's debt dynamics any time soon.

The outlook on the long-term rating is negative. We could lower the long-term rating to 'AA' within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case….

We have taken the ratings off CreditWatch because the Aug. 2 passage of the Budget Control Act Amendment of 2011 has removed any perceived immediate threat of payment default posed by delays to raising the government's debt ceiling. In addition, we believe that the act provides sufficient clarity to allow us to evaluate the likely course of U.S. fiscal policy for the next few years.....

United States of America

Sovereign local currency ratings (LT/Outlook/ST)  
AA+/Negative/A-1+

Sovereign foreign currency ratings (LT/Outlook/ST)
AA+/Negative/A-1+

Transfer and convertibility assessment  

AAA


According to The Australian on 5 August 2011; Australian 3-year government bond prices posted their biggest one-day rise since 1991 as investors rushed en masse to the safety of risk-free assets.

In addition, The graph below shows historical exchange rates between the Australian Dollar (AUD) and the US Dollar (USD) between 7/7/2011 and 8/5/2011 as the international financial markets began to panic:

At 12pm (AEST) 6 August 2011 the Australian dollar was trading at 104.91 US cents....down from $US1.0665 late yesterday and off a 30-year high of $US1.1080 last week.  By 8 August the dollar was at 1.0343 US. 

On 5 August 2011 NASDAQ placed this recently high currency rate into perspective with this statement; the latest ascent comes about three months after the Australian dollar last hit a 30-year high. The initial push higher that started in June of 2010 came as a continuing mining boom and a series of interest rate hikes from Australia's central bank that began in October 2009 lifted the currency more than 30% against the U.S. dollar in a year.

According to the Herald-Sun the Australian stock market fell by 4 per cent on 5 August and at close of business yesterday the ASX All Ords and S&P/ASX200 graphs were not catastophic:

Placing that fall within an historical context is this ASX All Ordinaries (XAO) Index chart 1988 - 2011 graph:

Even the International Monetary Fund doesn't consider the Australian economy an overtly risky proposition. So the next time either the Opposition Shadow Treasurer Joe Hockey, unidentified Liberal/National sources or elements in the Murdoch press  attempt to slyly suggest that Australia's economy is inevitably on the way to the poor house without drastic regime change - yawn loudly and turn aside.

The only thing Australia has to fear at this point in time is the contagion of fear itself and perhaps being overly irritated by the silly political point scoring of conservative politicians and big business lobbyists alike.

Federal Budget 2011 Preview

The Federal Member for Page prepares the ground for tonight’s Australian Federal Government Budget Speech on ABC TV at 7.30pm

MEDIA RELEASE

Budget Preview

The Federal Budget will be brought down in Canberra tonight, and there is much speculation in the media about what might or might not be in it.

Page MP Janelle Saffin said the Budget will be well targeted to support those who need it most.

“This Budget has to address the dual challenges of lower revenues due to natural disasters and a patchwork economy where some sectors are still weak, and the price pressures caused by the massive mining boom which is gearing up again.

“The Budget will get us back in the black, get more Australians in jobs and spread the opportunities of the mining boom.

“Already we have had a number of pre-budget announcements of benefit to our region including almost $1 million extra for the Our House patient accommodation near Lismore Base Hospital. Health is always my top priority and I have been lobbying the Health Minister Nicola Roxon for health funding for our region and will be keen to see the health announcements in the Budget.

“In roads funding I can confirm that the Budget will include $62 million to start work on duplication a five-kilometre stretch of highway at Devils Pulpit State Forest (south of the Tabbimobile floodways) this financial year 2011-12.

“There is also $554.1 million in the Budget for duplicating 17.3 kilometres of the Pacific Highway between Tintenbar and Ewingsdale. This starts on the border of my electorate and will be of great interest to local motorists who regularly commute north on the highway,”

“The Budget will include $54.9 million to secure the Rural Financial Counselling Service over the next four years. I strongly lobbied Agriculture Minister Senator Joe Ludwig for this funding to continue, because of the invaluable service the Casino-based RFCS provides to farmers and rural communities in northern NSW.

“I am delighted to see that former Prisoners of War living in Page will receive a long-awaited special supplement of $500 a fortnight in recognition of their service and sacrifice in POW camps during the Second World War and the Korean War.”

Other Budget measures that will be of significant benefit to local people include the increase in the Family Tax Benefit Part A for families with teenagers.

“This is something I had lobbied for since I was first elected, because many local families were disadvantaged by the system where FTB payments were drastically cut when their son or daughter turned 16, while the costs of caring for their teenage child had not reduced.

“The changes in the Budget will mean an increase of up over $4000 for some families with 16 to 19 year olds attending school or vocational training. In Page there are about 5,900 families receiving FTB A who have children turning 16 in the next five years.

“There will be changes to the Low Income Tax Offset , increasing the proportion of the offset that is delivered in week to week pay packets from 50 to 70 per cent, so low income earners are taxed less during the year.

“This means a bit more money through the year to help with cost of living pressures, instead of waiting for it at end of financial year.

“And Budget measures for small business will include an instant tax write-off for the first $5000 of any motor vehicle purchased from 2012-13.

“The Government will continue to address skill shortages, with $281 million for additional tax free payments to encourage apprentices in critical trades to complete their qualifications.

“The $1700 Trades Apprentice Income Bonus is expected to support an extra 200,000 trade apprentices over four years in skills shortage occupations.

“This apprentice bonus scheme has been popular in the Page electorate and I am pleased to see this system of training bonuses continue to support our apprentices in completing their training.

Janelle Saffin MP
Member for Page
Tuesday 10 May, 2011

Advance Australia the Plastic

I was having a yarn with a local shopkeeper the other day when he remarked that most of his over-the-counter sales involved plastic.
I was rather surprised, being addicted to the feel of a roll of readies myself, but it was an observation borne out by the Australian Crime Commission’s latest report this year:

“Card transactions have continued to increase substantially over the past decade.
For example, during that period credit card transactions have increased from 42.8 million to 118.8 million per month.
Australians spend A$17.8 billion per month on credit cards and A$11.3 billion per month on EFTPOS transactions, and they withdraw A$12.4 billion per month from ATMs……
More than 657 000 cases of card fraud on Australian issued credit and debit cards were reported in Australia during 2009.
The value of credit card fraud was estimated at 57.15 cents per $1000 transacted in 2009. The value of debit card fraud during that year was estimated at 9.43 cents per $1000 transacted.”

Saffin on the attack over those bank interest rate hikes

The big banks close ranks over rates
Image: Herald-Sun 13 November 2010

In the wake of the financial feeding frenzy as big banks raise interests rates between 10 to 20 basis points above the recent Australian Reserve Bank increase of 0.25 per cent (affecting an estimated 80 per cent of homeowners), Federal Labor Member for Page Janelle Saffin sent out this media release which would appear to accurately reflect the mood of many people living on the NSW North Coast:

Page MP Janelle Saffin has joined the attack on the Commonwealth, NAB and ANZ banks for raising interest rates above and beyond moves by the Reserve Bank.

“The time is not right and mortgage holders rightly feel ripped off.

The banks have a guaranteed profit making business, with less risk than our small businesses and family operated businesses but pay their executives at the top levels as though they are running really risky businesses.

The grab these higher fees and yet they provide us with the most basic services.

It is time the big banks were held to account.

Our banks came out of the global financial crisis strong, and there is no justification for moving interest rates above Reserve Bank rates.

Local customers are tired of the arrogant way the banks treat them.

“This is yet another case of the big banks putting profits before their customers and before the community’s standards,” Ms Saffin said.

“It is because of this arrogance that so many people turn to the community-based banks and credit unions.”

Bank finances in pictures to compare with the Commonwealth Bank's overblown rhetoric

With Commonwealth Bank CEO Norris (of the $16M salary package) currently defending that bank's blatant cash grab when it raised its loan rate 45 points on the back of the latest official interest rate rise of 25 points, perhaps it's time to look at what The Reserve Bank of Australia had to say on domestic financial markets in November 2010:

The average cost of the major banks’ long-term
funding continues to rise as maturities are rolled over
at higher spreads. However, in recent months, this has
been largely offset by the narrowing in the spread
between bank bills and OIS rates. Overall, this suggests
that, in aggregate, the major banks’ funding costs are
likely to have been little changed over recent months,
though trends differ for individual banks depending
on their mix of funding.

In terms of net interest margins, banks have recently
reported mixed results; most have experienced a small
decrease in margins, though some have experienced
a small increase. In aggregate, the net interest margin
of the major banks has fluctuated in a relatively narrow
range since 2004, between 2¼ and 2½ percentage
points......

Financials’ profits rose by 10 per cent, largely as a result

of lower bad and doubtful debt charges and an increase in net
interest income.

UPDATE:

Commonwealth Bank chief executive Sir Ralph Norris has conceded his bank's 0.45 per cent interest rate hike will cost some of his customers their homes, a reality he says troubles him.
But in defence of his bank's Melbourne Cup Day hike, Sir Ralph said it was better to see "a few" foreclosures than have an economy hamstrung by a low-profit banking system.

Read more in The Courier Mail here.

Hockey one, hockey two, hockey three.....

Poor Uncle Joe. It felt so right when he practiced his indignation in front of the bathroom mirror, but then it all started to unravel after the Australian Industry Group’s national forum wound down.
First his fearless leader publicly failed to support him – not once but thrice.”
“Back home on the political front today, the spotlight was on the Opposition after Coalition Leader Tony Abbott declined three times to back his Shadow Treasurer's nine-point plan for a more competitive banking system before finally rectifying the matter.”
Then the banks began to bite back at his 9 Point Banking Plan. With “populism” being the kindest term used for his wish list.
Finally Joe fronts the cameras and tells the world that the Federal Treasurer agreed with him in Parliament, but neglected to point out that it was Graham Samuels with whom Swan was agreeing.
Joe obviously forgets that both Hansard and Open Australia have the exchange word for word
And I was actually beginning to feel for the bloke – until that pork pie on national television.

That's the Ocker spirit!

"AUSTRALIANS drank less beer, smoked fewer cigarettes and left the car in the garage more often during the global financial crisis.
Figures contained in final Budget figures for the past financial year reveal the nation tightened its collective belt amid the fiscal gloom."

Seems we're a hardy lot when the chips are down according to the Final Budget Outcome 2009-10.

The Federal Treasurer is skiting that "international credit ratings agency Standard & Poor's said Australia has "exceptionally strong public sector finances even among the 'AAA' rated sovereigns" and Tony Teh Wrecker is not saying much on the subject at all.

Last Friday also saw Treasury release redacted versions of the Red Book for those interested in doing a bit of trawling:

In light of the public interest in the Incoming Government Brief for a returned Labor Government (the so-called Red Book) and consistent with the policy intent that material be published where there is a general interest in its contents, the Treasury has decided to publish the information released under the Freedom of Information Act 1982 (the Act) in relation to the Red Book. Also published is the Treasury’s brief providing an overview of the Treasury portfolio and the related support services (referred to as the administration brief).

Treasury Incoming Government Brief - Red Book - Redacted - Part 1
3,482.31kb
Treasury Incoming Government Brief - Red Book - Redacted - Part 2
3,354.36kb
Treasury Incoming Government Brief - Red Book - Redacted - Part 3
1,461.28kb
Treasury Incoming Government Brief - Red Book - Redacted - Part 4
3,805.27kb
Treasury - Administration Brief - Red Book 572.75kb

WHK Horwath has verified Abbott & Co policy costings? G'arn!

Doesn't bluddy bode well. One of the only concrete things Abbott and Co actually do in the middle of all their campaign spin is to sidestep the Australian Treasury and contract the frequently rebranded accounting firm WHK Horwath (which is a listed company and the member firm representing Crowe Horwath International throughout Australia and New Zealand) to run a calculator over their policy costings.
"We aim to establish strong relationships with our clients, becoming an integral part of their organisation, adding value every step of the way through our proactive approach and driving their success." sez Horwath.
Gawd, I 'opes not!
In 2006 as Horwath & Horwath this company settled a claim "made in respect of 6 audits conducted by Horwath & Horwath as well as in relation to the preparation and verification of various financial reports pursuant to certain provisions of the trust deed. In particular the claim relates to the way Horwath & Horwath reported on, and failed to conclude that the provision for bad and doubtful debts in Geneva's financial statements was materially understated. It also concerns their failure to report on how Geneva did not have in place and maintain a satisfactory system of internal controls, as a result of which it followed poor lending practices."
And in its current manifestation it's into online footy tipping!
In 2010 WHK as it's now known may have agreed to honestly report on Coalition costings, but really, what in earth was it thinking to land the accountancy group in the middle of this particular political pottage.

Stimulus package debate - so who do you believe?

Still wondering if Tony Abbott and Co are right about the Rudd-Gillard Government stimulus packages?
This might assist..........

On ABC TV Q&A Opposition last night Leader Tony Abbott said this:

Well, again, it's horses for courses and don't expect miracles. Now, if spending was the sure fire answer to any problem like this, why is it that the Americans are in recession? Why is it that the British have been in a recession, because their stimulus packages were roughly the same as ours and it didn't work? What got us through the global financial crisis was not fundamentally the stimulus package. It was fundamentally the strength of our economy and I've got to say that that owes far more to the reforms of previous governments, including the Hawke Keating Government, than it does to the spending spree of the current one.

Yesterday John Quiggin also published this:

An Open Letter

We the undersigned economists are convinced by the evidence that the coordinated policies of the Australian Labor Government have prevented the Australian economy from a deep recession and prevented a massive increase in unemployment. Unlike most OECD economies we have come out of the Global Financial Crisis and the subsequent world recession with only one quarter of negative GDP growth and a smaller increase in unemployment.

We note that during a recession automatic stabilizers (increase in total unemployment benefit payments and decreased tax revenues) lead to an increased government budget deficit. In almost all the OECD countries there has been a massive increase in unemployment and in budget deficits. In Australia both have been trivial by comparison.

The Government Fiscal Stimulus package that was introduced was carefully crafted and implemented in a clever sequence. The first stage, the payment of $900 to most households, helped to boost confidence in the retail industry.

The second stage of the stimulus package (the Building Education Revolution, and the First Home Owners Grant) boosted the construction industry and created thousands of new jobs. Besides the employment effect, it also provided a much needed increase in the stock of public capital (better and greener homes, better schools) and prevented a sudden fall in house prices.

The last stage of the fiscal stimulus package (as it takes time to prepare plans etc.) was the infrastructure program that increased employment as well as increasing the stock of public capital and helping to overcome the significant short fall in Australian public infrastructure, and hence would increase future productivity, taxable capacity and the ability to repay public debt.

Just as a major corporation goes into debt to invest in its stock of capital, so does a government. Just as many householders have a debt to a bank or mortgage company, so does a government. A government has a budget deficit and a government debt, but it also has capital assets (roads, ports, better equipped schools, Broadband, etc.).

The performance of the Australian economy has been outstanding: the International Monetary Fund (IMF) and the Organisation for the Economic Cooperation and Development (OECD) have show-cased Australia as a model economy.

We hope that the economic achievements of the Australian Labor Government will be recognized by the population.

Signed by:

P.N. (Raja) Junankar Emeritus Professor UWS, UNSW, and IZA

G. C. Harcourt Emeritus Professor UNSW and Jesus College, Cambridge

Peter Kriesler Associate Professor UNSW

John Nevile Emeritus Professor UNSW

George Argyrous Senior Lecturer University Of New South Wales

Harry Bloch Professor Curtin University

Tony Bryant Associate Professor Macquarie University

John Buchanan Director, Workplace Research Centre University of Sydney

Jerry Courvisanos Associate Professor University of Ballarat

Mamta B Chowdhury Senior Lecturer University of Western Sydney

Barrie Dyster Senior Lecturer University Of New South Wales

Corrado Di Guilmi Post Doctoral Research Fellow University of Technology

Geoff Dow Reader The University of Queensland

Steve Dowrick Professor Australian National University

Chris Evans Professor University Of New South Wales

Peter E. Earl Associate Professor University of Queensland

Craig Freedman Associate Professor Macquarie University

Giuseppe Fontana Professor of Monetary Economics LUBS - University of Leeds

James Farrell Senior Lecturer University of Western Sydney

Roy Green Dean, Faculty of Business University of Technology

Boyd Hunter Associate Professor/Senior Fellow The Australian National University

Joseph Halevi Senior Lecturer University of Sydney

Neil Hart Senior Lecturer University of Western Sydney

Sasha Holley PhD student University of Sydney

Michael Johnson Associate Professor University Of New South Wales

Steve Keen Associate Professor University of Western Sydney

Bill Lucarelli Senior Lecturer University of Western Sydney

Bruce Littleboy Senior Lecturer University of Queensland

Marc Lombard Senior Lecturer Macquarie University

Elisabetta Magnani Associate Professor University Of New South Wales

Fiona Martin Senior Lecturer University Of New South Wales

Girijasankar Mallik Senior Lecturer University of Western Sydney

Robert Marks Visiting Professor University Of New South Wales

Stephane Mahuteau Senior Lecturer Macquarie University

Eddie Oczkowski Professor Charles Sturt University

Brian Pinkstone Associate Professor University of Western Sydney

John Quiggin Australian Research Council Federation Fellow, University of Queensland

B. Bhaskara (Bill) Rao Professor University of Western Sydney

Colin Richardson Visiting Professor of Economics Imperial College, London

Tim Robinson Professor University of Technology

Frank Stilwell Professor of Political Economy University of Sydney

Ingrid Schraner Senior Lecturer University of Western Sydney

Michael Schneider Honorary Fellow. La Trobe University

Ruhul Salim Associate Professor Curtin University

Chris Terry Associate Professor University of Technology

David Throsby Professor of Economics Macquarie University

Tim Thornton Associate Lecturer La Trobe

Phillip Toner Senior Research Fellow University of Western Sydney

Roger Tonkin Lecturer Macquarie University

Sean Turnell Senior Lecturer Macquarie University

Michael White Senior Lecturer Monash university

Other Signatories

James Arvanitakis Lecturer, Centre for Cultural Research University of Western SydneyNixon Apple Industry and Economic Advisor Australian Manufacturing Workers Union

Grant Belchamber Economist ACTU

Ross Buckley Professor of International Finance Law University Of New South Wales

Brad Crofts National Economist Australian Workers' Union

Rajinder Cullinan Client Services Accountant University Of New South Wales

Sandra Egger Associate Professor Faculty of Law, University of New South Wales

Rolf Gerritsen Professor, School for Social Policy and Research Charles Darwin University

Alan Morris Senior Lecturer University Of New South Wales

George McFarlane Retired Consultant, Sanders & Associates Pty Ltd

Gillian Moon Senior Lecturer University Of New South Wales

John Milfull Emeritus Professor University Of New South Wales

J. F. Pixley Senior Research Fellow Macquarie University

Ben Spies-Butcher Lecturer Macquarie University

Peter Sheldon Associate Professor University Of New South Wales

2010 Election Campaign Day 28 - Abbott puts government savings ahead of jobs

ABC TV "7.30 Report" 10th August 2010:

KERRY O'BRIEN: But you're talking about the big bang spending sprees; the big bang spending spree would have been $20 billion more than your big bang spending spree that Joe Hockey has already acknowledge a Coalition government would have spent. And in fact, if you're fair you would acknowledged that before the global crisis came along, the Rudd Government also delivered a budget that was more than $20 billion in surplus.

TONY ABBOTT: Which they did not deliver a budget. They did not deliver a budget outcome. Sure they told us ...

KERRY O'BRIEN: Because the Global Financial Crisis came along.

TONY ABBOTT: And they started spending like drunken sailors.

KERRY O'BRIEN: As you would have done.

TONY ABBOTT: And the point I make, Kerry, is that $20 billion is a very, very significant outcome.

KERRY O'BRIEN: But when you talk ...

TONY ABBOTT: And getting $20 billion off the bottom line is surely worth doing.

KERRY O'BRIEN: But when you talk about the massive amount of money overall that this country would have been in deficit - or the Government would have been in deficit - $110 billion in revenue that would have happened to you if you'd been in government, plus the $25 to $30 billion that you would have committed to a stimulus program - I mean, is that spending like a drunken - is $25 to $30 billion not spending like a drunken sailor, but $50 billion is

TONY ABBOTT: Well $25 billion! That's quite a lotta money, Kerry!

KERRY O'BRIEN: But at what point do you become a drunken sailor, is what I'm asking?

TONY ABBOTT: What I'm saying is you don't waste money, and this mob wasted ...

KERRY O'BRIEN: 200,000 unemployed.

TONY ABBOTT: ... - they wasted money. It's never right to waste money, and one of the extraordinary things is a prime minister who says a bit of waste is neither here nor there. It is always important to treat the taxpayer dollar with respect.

Clarence Valley Council: when does a précis turn into an attempt to censor and distort?

In response to "So What": the face of not-so-good governance on the NSW North Coast.

The Clarence Valley community is entitled to be concerned in regard to the process adopted by the Clarence Valley Council to reduce public budget submissions to a précis form, then respond to the précis.

It is not unreasonable for our elected council representatives to be pressed for time, so one can understand the beneficial logic behind such process. Unfortunately it has not taken long for Council's unelected bureaucrats to exploit the foibles of this process.

It had been pointed out in previous budget submissions that Grafton came into amalgamation carrying a $1.2m deficit while Maclean came in with a surplus. But I could not find any evidence that Council had ever reconciled that deficit.

It is on public record that Council's rates and service expenditures are calculated on the percentage levels that existed at time of amalgamation. Consequently an unreconciled $1.2m deficit more than likely still exists, undetected and negatively influencing council finances.
Naturally I raised this query in my budget submission.

In its infinite wisdom, administration responded that the deficit had been offset by:-

a) Purchase of sections of Stage 2 Yamba Bypass (est. $1m)
b) Purchase of open space at Townsend (est $216k)

I pointed out in my subsequent budget submission that a) and b) are debts and when paid appreciate in value generating direct/indirect revenues for Council. Therefore a debt cannot reconcile/offset a deficit which is an imbalance in council ledgers and continues until reconciled.

Embarrassed by its faux pas, administration reduced my submission to précis form, to read:-

"Concern that the issue of the GCC bringing a $1.2m deficit into amalgamation while the MSC brought in a surplus has not been adequately answered."

Administration then boldly answered its (misinterpreted) précis:-

"Amalgamation occurred on 25-2-04. This response is written on 21 June 2010 and it is "so what".

These are public monies administration are mismanaging. To properly reconcile this deficit, Grafton rates should have been increased in line with its service expenditures or, its service expenditures should have been reduced in line with its income.
As neither was done, Grafton has continued to live beyond its means at the expense of the rest of the shire.

If these self-serving unelected bureaucrats can be indicted for their inept administration, then they must also stand indicted for their self-indulgent and less than totally frank integrity, ethics and moral values.

Their contemptuous disregard for the community consultation process undermines public confidence and erodes public trust as energetically as it mutilates democracy.

Ray Hunt
Yamba

Guest Speak is a North Coast Voices segment allowing serious or satirical comment from NSW Northern Rivers residents.Email ncvguestpeak at live dot com dot au to submit comment for consideration.