It's an election year and some Coalition candidates will probably mention productivity growth and labour costs

 

Whenever a Coalition candidate mentions ‘low’ annual productivity growth or ‘rising’ labour costs, in the lead up to the 2013 federal general election, remember these graphs from Greg Jericho .

Australia is doing very nicely thank you.

http://www.abc.net.au/news/2013-01-16/jericho-big-1/4466256

 

Oops! Uncle Joe spoke too soon

Australian Shadow Treasurer Joe Hockey on the 19^th September 2012 at 2.17pm, presumably waving a report he hadn't read and relying on something he watched on the tube or heard on the radio as he chomped his morning cornflakes:

“I seek to table the report of S&P that says Australia is heading for a $20 billion deficit this year,“

ABC News on 20^th September at 6.44am:

“Global ratings agency Standard and Poor's has moved to correct an earlier statement it made about the Federal Government's prospects of returning to surplus.

An S&P analyst originally told the ABC the agency was predicting a budget deficit of up to $25 billion this year.

But S&P now says the analyst was referring to old figures from the last financial year.

It says the Federal Government remains on track to deliver the predicted modest surplus in 2012-13.

The agency says given the current forecasts the surplus is likely to be about $1 billion.”

49 Days Since That Carbon Tax Ended Life As We Know It

Or is it?

Opposition Leader Tony Abbott has now spent years telling Australians that the sky would fall and our way of life would end once the Gillard Government put a price on industrial greenhouse gas emissions.

Forty-nine days have now past and there appears to be little discernible difference to life before and after July 1, 2012.

At Day Two according to Peter Martin:

Also from July 1...
PAY RISE $17.10 per week for low-paid workers
TAX FREE THRESHOLD No tax until $18,200
TAX CUTS For everyone up to $80,000
PENSION INCREASE 1.7% from May 2013
FAMILY TAX BENEFIT BOOST $300 per child
DOUBLE NSW FIRST HOME BUYERS GRANT $15,000 for purchase of new home
CREDIT CARD LENDERS Forced to clear high interest debts first
TICK AND FLICK BANK SWITCHING Sign one form once
TOUGHER MEDICARE LEVY SURCHARGE 1.25% to 1.5% for high earners without private insurance
LOWER PRIVATE HEALTH INSURANCE REBATE 10% to 20% instead of 30% for high earners
INSTANT ASSET WRITE-OFF Up to $6500 per small business
MINERALS RESOURCE RENT TAX To raise to $3 billion in its first year

On Day 20 according to Market Economics:

Since November 2007, there have been a series of income tax cuts, some large, some small and all set across different income brackets. Suffice to say that for the high income earner in the above example, they will be paying around $1,850 less income tax than had the tax scales prevailing in November 2007 been left in place. The lower income earner in this household is paying around $2,050 less in income tax, meaning an ongoing saving of around $3,900 a year. The combined effect of the wage increases and lower income tax rate translates to a rise in take-home income in this household is around $16,500 a year.

Day 21 from The Finnigan's Home of The BISONs:

No interest rise for the 20th consecutive month Vs 10 consecutive rises under Howard/Costello. Last interest rise was Nov2010. At July 2012. And an economy that is travelling well above trend growth.

Again at Day 27 according to Market Economics:

Indicator	Change since end June 2012
Market Indicators
Official cash rate	No change
Australian dollar (vs USD)	+2.0%
10 year govt bond yield	-0.14 percentage points
ASX200	+2.1%
Change in market cap of ASX	+$23 billion
Economic Indicators
RP Data house prices	+0.6%
Change in Housing Wealth	+$24 billion
Westpac index of Consumer sentiment	+3.7%

Day 32 per the Australian Competition & Consumer Commission:

In April 2012, GFC Berwick Pty Ltd sent a letter to 2,122 of its members promoting a 'RATE FREEZE' offer, which offered members a range of lengthy contract extensions at current or reduced membership rates. The letter represented to members that by taking up this offer members could avoid a fee increase of 9-15 per cent due to the carbon price.

ACCC chairman Rod Sims said, "The ACCC believes that GFC Berwick did not have a reasonable basis for claiming the carbon price would increase the cost of gym memberships by 9-15 per cent. We understand that over 200 members took up the offer and extended their contract. We are concerned that the false claims about the carbon price may have encouraged these people to sign lengthy contract extensions they otherwise would not have."

"Businesses are free to set their prices as they see fit but must carefully consider the basis for making carbon price claims and ensure such claims are truthful and have a reasonable basis," Mr Sims said.

As part of the resolution of this matter, the CEO of the Genesis Division of Belgravia Health & Leisure Group Pty Ltd, the company which manages the franchise network, wrote to all affected members on behalf of GFC Berwick offering them the opportunity to withdraw from the contract extensions at no cost.

Day 37 on Twitter:

TheFinnigans天地有道人无道‏@Thefinnigans

Australia's GOLD GOLD GOLD GOLD GOLD - Unemployment 5.1%, GDP 4.3% - Inflation 1.2% - Interest 3.5% with $500B investment pipeline

On Day 49 according to The Sydney Morning Herald:

In a Treasury research paper released yesterday, economists Will Devlin and Deepika Patwardhan used prices in the so-called inflation swaps market to derive traders' expectations about the price impact of the tax.

Inflation swaps allow one trader to agree to pay another the inflation rate on a specified sum in return for a price. It is worth $12 billion per year.

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The paper said inflation swaps pricing was a good guide to what the market thought would happen because it ''reflects the collective actions of actors who have to back their views by putting their money where their mouths are''.

Their analysis found the market expected a one-off jump in inflation of between 0.6 per cent and 0.7 per cent followed by a return to the previous rate, as forecast by the government. It did not support claims by the Coalition spokesman, Greg Hunt, that price rises would "take time to flow through the economy" or that "this is just the beginning as the carbon tax goes up every year".

The first TD Securities-Melbourne Institute inflation reading since the start of the tax showed a total price increase for the month of just 0.2 per cent, even after accounting for a rise in electricity prices of 14.9 per cent and in household gas prices of 10.3 per cent.

Reserve Bank Governor reminds Australia that its economy is sound

Peter Martin quoting Governor Glenn Stevens on 8th June 2012:

"According to data published this week by the Australian Statistician, real GDP rose by over 4 per cent over the past year. This outcome includes the recovery from the effects of flooding a year ago, so the underlying pace of growth is probably not quite that fast, but it is quite respectable – something close to trend. Unemployment is about 5 per cent. Core inflation is a bit above 2 per cent. The financial system is sound. Our government is one among only a small number rated AAA, with manageable debt. We have received a truly enormous boost in national income courtesy of the high terms of trade. This, in turn, has engendered one of the biggest resource investment upswings in our history, which will see business capital spending rise by another 2 percentage points of GDP over 2012/13, to reach a 50-year high."

Of course that didn't stop a privileged blowin like South African-Israeli-Australian Ivan teh Grate from spouting this nonsense, from atop the dizzying peak of his 'on paper' fortune, to the Herald Sun on the very same day:

"IVAN Glasenberg, the nation's second wealthiest person, says Australia is a less attractive place to invest than the world's poorest country, the Congo.
Mr Glasenberg, pictured, the South-African-born head of commodities giant Glencore, said the carbon tax and mining resources rent tax had damaged Australia's reputation.
He told an industry dinner in London that mining companies were disadvantaged in Australia as they had less leverage.
"At least in the Congo they need you, they want you there, and if they start changing the rules you may not continue investing," said Mr Glasenberg, an Australian citizen whose wealth is estimated at more than $7 billion.
The war-torn Democratic Republic of Congo this year was named by The Richest magazine as the world's poorest nation."

Teh Kouk kicks out at Abbott's economic credentials and Pure Poison follows with a boot to the rear

Stephen Koukoulas of Market Economics had this response to the Australian Leader of the Opposition’s Budget Reply Speech on his blog on 10 May 2012:

ABBOTT: People who work hard and put money aside so they won’t be a burden on others should be encouraged, not hit with higher taxes.
FACT: The tax to GDP ratio of the first 5 Labor Budgets averaged 21.1%. The lowest ever tax to GDP recorded under the Howard government was 22.2% and the average was 23.4%. The last time a Coalition Government delivered a tax to GDP ratio below 21.1% was in 1979-80. Cannot see where the “hit with higher taxes” statement fits these facts in the current Budget context.

ABBOTT: And people earning $83,000 a year and families on $150,000 a year are not rich, especially if they’re paying mortgages in our big cities.
FACT: Average annual earnings are around $53,500 in NSW and $51,500 in Victoria. Maybe they are “not rich”, but someone on $83,000 is earning around 60% above the average wage whether they have a mortgage or not.

ABBOTT: Madam Deputy Speaker, from an economic perspective, the worst aspect of this year’s budget is that there is no plan for economic growth; nothing whatsoever to promote investment or employment.
FACT: After registering a 19^th straight year of economic growth in 2010-11, the Budget shows Australia growing at 3% in 2011-12, 3.25% in 2012-13 and 3% in 2013-14. Having risen a Chinese-type 18% in 2011-12, business investment is forecast to rise a further 12.5% in 2012-13. Employment is forecast to rise by 1.25% in 2012-13, which will see the creation of around 175,000 new jobs from now until June 2013.

Read the rest here.

The full transcript of Tony Abbott's budget reply (containing no specific economic/funding information concerning his own inchoate policies) can be found here.

Over at Pure Poison they are wondering when the press gallery is finally going to call Abbott out on the rubbish he's spouting:

Contrasting the GFC deficits with the pre-GFC boom as if there wasn’t a GFC – surely someone could ask Abbott if he even noticed the existence of a global financial crisis or if he’s a weirdo conspiracy theorist who thinks the rest of the world just made it up.

The “cuts to defence” line, which are mainly to do with delaying the disastrous Joint Strike Fighter that’s running late and is a step backward anyway. Could someone ask Abbott whether he’d insist on going ahead with it right now while other buyers are backing away?

The “we’ll find savings” line – could someone ask Abbott just why any Australians should believe that he’ll find $70 billion savings in a way that none of us will mind? And why he thinks we shouldn’t all be very worried that something we or a family member or friend rely on might not be one of the things he slashes in order to give “incentives” to big polluting companies?

How about his “trickle down” theory, where you don’t need any actual plan for growth other than slashing taxes for big business (except when Labor proposes them) and the super rich?

You could question his complaints about not enough money going into the NDIS and dental care given that the Liberals haven’t promised to put in any more either.

How about asking him to reconcile his demand for “growth” with his previous fixation on interest rates being low? Is that suddenly not important now that interest rates are lower under Labor than they ever were under the Coalition?

Australia's unemployment hits 4.9% low. Something the Federal Coalition has to suck up before Abbott's Budget Reply Speech 10 May 2012

ABS MEDIA RELEASE
10 May 2012		67/2012
Australia's unemployment rate decreased 0.2 percentage points to 4.9 per cent in April 2012

Australia's seasonally adjusted unemployment rate decreased 0.2 percentage points to 4.9 per cent in April, as announced by the Australian Bureau of Statistics (ABS) today. There was also a decrease in the labour force participation rate of 0.1 percentage points in April to 65.2 per cent.
The ABS reported the number of people employed increased by 15,500 to 11,501,000 in April. The increase in employment was driven by increased part-time employment, up 26,000 people to 3,438,200, and was offset by decrease in full-time employment, down 10,500 people to 8,062,800. The increase in employment was mainly driven by an increase in male part-time employment.
The number of people unemployed decreased by 28,800 people to 598,200 in April, the ABS reported.
The ABS monthly aggregate hours worked series showed an increase in April, up 6.6 million hours to 1,633.9 million hours.
There has been some interest recently in how changes in the Australian population impact on the estimates of employment from the Labour Force Survey. The responses collected from the sample of people in the survey are weighted to projections of the Australian population for the current quarter. These population projections are based on the most up-to-date information available, but are different to the official estimates of resident population that are calculated at a later date. In order to explain these issues, the ABS has produced a special feature article "Population Benchmarks and the Labour Force Survey" in this month's publication.
More details are in the April 2012 issue of Labour Force, Australia (cat. no. 6202.0), as well as the upcoming April 2012 issue of Labour Force, Australia, Detailed (cat. no. 6291.0.55.001) due for release next week on May 17. Both publications are available for free download (after release) from the ABS website - www.abs.gov.au.

Sometimes I wonder into which alternate universe I have wandered

Australia successfully survived the Global Financial Crisis under the stewardship of a federal Labor Government which did not panic and, with the cooperation of states and territories, acted swiftly to support weak points in the national economy.

So well did the nation weather this financial tsunami that a year on from the initial rolling economic destruction it was being openly stated by northern hemisphere economic commentators that Australia was the envy of the rest of the developed world and, in 2012 in comparison with that same developed world we still have low unemployment, low levels of government debt, low interest rates, an economy which is holding its own despite an historically weak manufacturing sector and good international credit ratings.

Which begs the question of why this Essential Report survey question elicited negative attitudes in these responses below - from 42 per cent of the very people who barely felt any effect of this global crisis.

Trust to deal with GFC

May 7, 2012

Q. If there was another Global Financial Crisis, which party would you trust most to deal with it?

	15 Aug 11	Total	Vote Labor	Vote Lib/Nat	Vote Greens
The Labor Party	31%	25%	68%	2%	42%
The Liberal Party	40%	42%	5%	83%	5%
No difference	20%	23%	19%	11%	39%
Don’t know	9%	10%	8%	4%	14%

If there was another GFC, 42% would trust the Liberal Party more to handle it and 25% would trust the Labor Party more. This represents a shift to the Liberal Party from net +9% to net +17%

The Liberal Party was rated higher than Labor with all demographic groups. Those most likely to trust the Liberal Party more were men (47%), aged 55+ (48%), full-time workers (50%) and income over $1,600 pw (50%).

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

A look back at the lack of Coalition economic theory expertise - as Australia waits for the 2012-13 federal budget to be revealed

Hours out from the 2012-13 federal budget, a look back at 2011....

Gross debt - gross ignorance on Saturday, 12 November 2011:  

Admittedly, the notion of gross and net government debt is a little complex, but when someone speaks authoritatively about gross debt in particular, one would hope they understood the intricacies of the concepts involved and how the government debt market works before they opened their mouth. It is embarrassing and disturbing, therefore, to hear the Shadow Finance Minister Andrew Robb, join with the Leader of the Opposition in the Senate, Barnaby Joyce and Leader of the Opposition, Tony Abbott deliver sensational criticisms about the rise in gross debt in Australia.

The views of the Liberal and National Party leaders - the alternative government in other words - highlight a gross misunderstanding of markets, economics and conceptualising what is big and small.

Read the rest here.

The End of the Age of Entitlement: Hockey's speech (link to full transcript)

In April 2012 the Australian Federal Opposition’s Shadow Treasurer Joe Hockey delivered a speech to the Institute of Economic Affairs in London titled The End of the Age of Entitlement.

In this speech Hockey stated;

Entitlement is a concept that corrodes the very heart of the process of free enterprise which drives our economy…

The social contract between government and its citizens needs to be urgently and significantly redefined. The reality is that we cannot have greater government services and more government involvement in our lives coupled with significantly lower taxation…..

You will remember it was Margaret Thatcher who interpreted community entitlements as the right for our children to “grow tall and some taller than others if they have the ability in them to do so”. This broader and timeless conservative definition of our end game lays down some foundations for the role of government. Equality of opportunity rather than equality of outcome is my preferred model for contemporary society.…..

Defined benefit schemes need to be phased out worldwide, including in Australia, whether they are for public servants or private sector employees. All government-funded pensions and other such payments must be means tested so that people who do not need them do not get them.

The first we heard about the Coalition’s plan to review Commonwealth welfare payments/tax concessions/other forms of government assistance with a view to reducing and/or eliminating some of these is found in an ABC TV Lateline interview on 18 April 2012.

Hockey told Lateline that:

Well, with an ageing population and an entitlement system that has seen extraordinary largesse built up over the last 50 years, Western communities, Western societies are going to have to make some very hard and unpopular decisions to wind back the involvement of the state in people's lives……

we need to be ever-vigilant. We need to compare ourselves with our Asian neighbours where the entitlements programs of the state are far less than they are in Australia…

Australia's heading in one direction, that's a reduction of entitlements and it's empowerment of people.

The full transcript of Hockey’s IEA speech can be found here.

Despite Hockey past protestations otherwise, he appears to be following the Liberal Party’s tendency to take its policy straight from Margaret Thatcher’s old playbook and the more conservative elements of the U.S. Republican Party and its Tea Party adherents.

Margaret Thatcher in October 1987:

I think we've been through a period where too many people have been given to understand that if they have a problem, it's the government's job to cope with it. 'I have a problem, I'll get a grant.' 'I'm homeless, the government must house me.' They're casting their problem on society. And, you know, there is no such thing as society. There are individual men and women, and there are families. And no government can do anything except through people, and people must look to themselves first. It's our duty to look after ourselves and then, also to look after our neighbour. People have got the entitlements too much in mind, without the obligations. There's no such thing as entitlement, unless someone has first met an obligation.

One Tea Party leader Phillip Dennis in CNN Opinion, April 2010:

Welfare and unemployment benefits must be drastically cut.

Here is a statement on one right-wing public policy think tank, The Heritage Foundation, made in August 2010:

If we really want to get our nation back on track, one of our top priorities must be to end the age of entitlements.

Ohio Republican Rep Jim Jordan told The Washington Times in April 2011:

Unless we start looking at this fractured system as one unit, exploding costs will bring the whole thing down.

Republican Rep. Paul Ryan said in The Huffington Post on 20 March 2012:

We don't want to turn the safety net into a hammock that lulls able-bodied people ... into complacency and dependence.

Australians trust in the national economy but remain ambivalent concerning the future

This media release of 5 January 2011 from Paris-based Ipsos Social Research Institute illustrates that Australians remain ambivalent concerning the future:

Australia confident about economy,
yet worried about cost of living

Three-quarters (74%) of Australians believe that our current economic situation is ‘very good’ or ‘somewhat good’ according to the December 2010 Ipsos-Eureka Social Research Institute’s Global Advisor study. At the same time, one-third of Australians (33%) believe that ‘inflation/cost of living’ is a top issue facing the nation, according to the December 2010 Ipsos-Eureka Issues Monitor.

The Ipsos-Eureka Global Advisor report for December 2010, which draws on a global Ipsos study conducted monthly in 24 countries since April 2007, asks survey participants to rate their own country’s economic situation on a scale of ‘very good’ to ‘very bad’. In December 2010, 74% of Australians rated our economic situation as ‘very good’ or ‘somewhat good’.

Australia’s most recent result compares favourably to the balance of nations surveyed, ranking equal fourth (China also scored 74%) behind India (88%), Saudi Arabia (81%) and Sweden (75%). Japan was least confident, with 6% reporting their economic situation was ‘very good’ or ‘somewhat good’.

The lowest Australia has performed on the confidence scale is 36% (April 2009). However scores have been consistently above 70% for each month in 2010. Established economies, notably the USA and Great Britain, have not recovered so well; with 20% (USA) and 16% (Great Britain) of people in these countries responding that their current economic situation was ‘very good’ or ‘somewhat good’ for the latest survey.

“These most recent Global Advisor results show that Australians continue to be confident in our post GFC economy, while countries like the USA and Great Britain are yet to recover. We are right at the very top among developed countries, and not far behind the leading emerging economies, particularly India and China,” said Ben Barnes, Managing Director of the Ipsos-Eureka Social Research Institute.

“The results also indicate that Australians are able to acknowledge confidence in the nation’s economy even while things may be getting tougher at a personal level. Confidence in Australia’s economy has been consistently above 70% for the past 12 months. In that time, however, we have seen the cash interest rate rise from 3.5% to 4.75%, growing disharmony about fair and equitable banking practices and a federal and Victorian state election where ‘cost of living’ was a major discussion point. Indeed, we have found that one-third of Australians (33%) believe that ‘inflation/cost of living’ is a top issue facing the nation.”

“The insight is that we, as Australians, are confident that the country is heading in the right direction, but have some worries about our own futures within that economy,” said Mr Barnes.

About Ipsos

Ipsos is one of the world's leading survey-based marketing research firms. Founded and run by market research professionals, Ipsos interprets, simulates, and anticipates the needs and reactions of consumers, customers and citizens – locally, nationally and around the world. Ipsos has a direct presence in more than 65 countries globally and conducts research in more than 100.

The Baltimore Sun 19 January 2012:

The world economy will lose momentum in 2012 but it will keep moving in the right direction, according to Reuters polls of around 600 economists who said crisis-hit Europe would drag on global growth…..

Backed by a mining boom, Australia's resource rich economy should lead the developed world in terms of growth, with a hearty 3.4 percent expansion this year.
"The mining investment boom is largely 'baked in' and is expected to contribute two-thirds of GDP growth in 2012," said Paul Bloxham, chief economist at HSBC Bank Australia.



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

O'Farrell Government treats people of the NSW North Coast with open contempt

From A Clarence Valley Protest on 9 October 2011:

Living in regional New South Wales often leads one to suspect that any state government of the day and its minsters rarely display an understanding of (or empathy with)  the aspirations, problems or concerns of distant local communities.

This was clearly demonstrated when a question raising concerns on behalf of residents and ratepayers living on the NSW North Coast in the Dorrigo, Belligen, Coffs Harbour and Clarence Valley districts was put to the Coalition Government in the NSW Legislative Council last month.

Highlighted below the contemptuous, party-politics-before-people response which was given by the O’Farrell Government:

The Hon. JEREMY BUCKINGHAM: My question is directed to the Minister for Finance and Services, representing the Minister for the Environment. I thank the Minister for his detailed answer previously revealing that the Macleay River has been contaminated by the Hillgrove antimony mine for millennia—which is thousands of years, in case he does not remember. Ancoa has a proposal to reopen the Hillgrove antimony mine responsible for much of this contamination. Anchor Resources plans a new antimony mine at Wild Cattle Creek at the top of the Nymboida River. Given the toxicity of antimony and history of contamination, what is the Government doing to ensure that these mines will not further contaminate the Macleay River and contaminate the Nymboida River?

The Hon. GREG PEARCE: Last week I commented upon the member's North Korean controller and the need to translate his questions from Korean to code, then from code to Korean, and then from Korean to English. I said that his questions are garbled. If anyone could make sense of that question, I invite them to answer it for me. I could not follow it at all—I really could not. I invite the member to put the question on notice to get a detailed answer.

[NSW Parliament, Hansard,14 September 2011]

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.