Commission of Audit released Today.

[Crabnet]

I rate the IMF and (relatively) impartial bureaucrats above a politician defending his own record.

I wouldn't trust Swan defending his record. I wouldn't trust Costello defending his.

Crabnet. Very fair analysis.

The structural deficit was identified well after Costello left office.
I remember when Costello was first asked about this matter he said something like "But Treasury didn't tell me that at the time."

Parliamentary Budget Office publication:

The estimated SBB declined steadily over the period 2002-03 to 2011-12. From a structural surplus in the range of 1? to 3? per cent of GDP in 2002-03, the estimated SBB moved into structural balance briefly somewhere in the period 2006-07 to 2007-08 before falling to a structural deficit of around 3? to 4? per cent of GDP in 2011-12. It then showed a sharp improvement in 2012-13 with the structural deficit recovering to around 1? to 2? per cent of GDP. Based on the latest budget estimates further improvement is expected from 2013-14 with the structural deficit in 2016-17 estimated at between ? and 1? per cent of GDP.

Key drivers of the structural budget balance

These trends in the SBB estimates can be explained by changes in the structural levels of government receipts and payments. From the SBB peak in 2002-03 to its trough in 2011-12, the structural level of receipts excluding GST fell by around 5 percentage points of GDP. The structural level of government payments excluding GST over this period rose by around 1 percentage point of GDP and hence the SBB fell into deficit1. Over the period 2011-12 to 2016-17 the structural level of receipts is expected to increase by approximately 1? percentage points of GDP while the structural level of payments is expected to decline by around 1 percentage point of GDP leading to the expected reduction in the structural deficit over the period of the 2013-14 budget and forward estimates years.

Over two thirds of the 5 percentage points of GDP decline in structural receipts over the period 2002-03 to 2011-12 was due to the cumulative effect of the successive personal income tax cuts granted between 2003-04 and 2008-09. A further quarter was the result of a decline in excise and customs duties as a proportion of GDP. Significant factors driving this trend included the abolition of petroleum fuels excise indexation in the 2001-02 Budget and the decline in the consumption of cigarettes and tobacco over the period. In contrast, the structural level of company tax receipts as a proportion of GDP remained relatively stable over the period. The estimated 1? percentage point increase in structural receipts over the period 2011-12 to 2016-17 is mainly the result of increasing personal tax receipts due to the impact of bracket creep (fiscal drag) and the net effect of government policy decisions. A further contributor to the increase in the structural level of receipts is the introduction of the Carbon Pricing Mechanism and the Minerals Resource Rent Tax in 2012-13.

Contributing to the decline in the estimated structural deficit over the period of the 2013-14 budget and forward estimates years is the impact of the savings that have been identified to fund the National Plan for School Improvement and DisabilityCare Australia. This is because the level of savings over this period is greater than the costs of these schemes. Beyond the forward estimates years, however, these savings will be largely consumed by the costs of the schemes and, therefore, they will no longer be available to alleviate

 

[Deltaberry]

About these bureaucrats go get a real job and make an honest living.

 

[datto]

About these bureaucrats go get a real job and make an honest living.

yeah, I'd like to see them on a building site till they hit 70. "sonny, can you help me lift this brick up?...pleeease"

 

[dan c]

Sometime this year, we taxpayers may again receive another 'Economic Stimulus' payment.

I saw this earlier today, from 2007.

The 2007-08 Federal Budget has reaffirmed the Howard Government?s commitment to older Australians by providing a one-off non taxable bonus payment of $500 to each person qualified for Utilities Allowance or Seniors Concession Allowance on Budget night.

Minister for Families, Community Services and Indigenous Affairs, Mal Brough, said that more than two million senior Australians would receive the payments before the end of June 2007, at a cost of $1.3 billion.

How quickly we forget. This pre-election bribe cost $1.3billion, and was a complete waste of money. (And it didn't work.)

The Commission of Audit is required to wind back the spend at all costs actions of the previous TWO governments.

Anyone who suggests it's the problem of solely one side of politics is talking out of their hat.

 

[HotRod]

I saw this earlier today, from 2007.

The 2007-08 Federal Budget has reaffirmed the Howard Government?s commitment to older Australians by providing a one-off non taxable bonus payment of $500 to each person qualified for Utilities Allowance or Seniors Concession Allowance on Budget night.

Minister for Families, Community Services and Indigenous Affairs, Mal Brough, said that more than two million senior Australians would receive the payments before the end of June 2007, at a cost of $1.3 billion.

How quickly we forget. This pre-election bribe cost $1.3billion, and was a complete waste of money. (And it didn't work.)

The Commission of Audit is required to wind back the spend at all costs actions of the previous TWO governments.

Anyone who suggests it's the problem of solely one side of politics is talking out of their hat.

At least it's money they had.

 

[Dazz]

At least it's money they had.

The Labor pollies and supporters are flat out pointing to how the Liberal pollies could have spent their surplus monies better, and if you look at some weird ratio divided by some other weird ratio, then really the 10 surplus' in 11 budget years that the Howard Govt delivered weren't really surplus' at all, despite it being documented and signed off fact ??

Meanwhile, the 6 massive deficits Rudd and Gillard delivered out of 6 budget years, the largest in Australia's history go unchallenged (also by the way documented and signed off fact), and the next 10 years under Labor forecasts were also going to be in deficit.

Seriously....the Aussie population are smarter than that to put up with that managerial incompetence demonstrated time and again by Labor.

Meanwhile, the Liberal pollies scratch their heads and wonder how on earth do we afford the interest bill left from Labor's debt, let alone, once again, be handed the task of paying the debt off and cleaning Labor's mess up....at the same time as Labor pollies stand there and criticise any effort to clean their own mess up....with them resisting every inch with tooth and nail to stop the clean up !!

Seriously, to bring it back to property terminology, it's like buying a run down neglected house in 2013 from a derelict Seller, with the intention of going in there and cleaning the place up and getting it back to some sort of order, and every day the Seller turns up and throws rocks over the fence at you and trips you up throughout the day whilst you go about cleaning their mess up. That's despite the Seller being handed a pristine clean and well maintained house with no mortgage in 2007 that they have trashed to pieces and hocked once again up to the eyeballs.

Crazy stuff.

 

[datto]

You forget to mention the GFC and the effect it had on the budget. Look at what the GFC did to the USA and Europe. We should think ourselves lucky.

 

[Dazz]

You forget to mention the GFC

You obviously fail to get the most basic of financial maxims.

Financial success comes from taking full responsibility for your mistakes, and full credit for their successes. Either way, they take full responsibilities for all of their actions and decisions, no matter what the circumstances and no matter what may come their way.

Budgeting for bad times, running surplus', having money put aside for a rainy day, all of these most basic things all add up to a smoother ride when rougher waters hit. This was the position of the Australian economy in late 2007, after 11 years of magnificent economic management. The Australian economy could not have been better placed to weather any unforeseen circumstances....and the GFC was only 8 months around the corner. Thanks to the magnificent position the Howard Govt left the economy in, with no debt and $ 22 Billion cash in the Bank, of course we weathered the GFC storm better than almost any country in the world. None of that was due to Labor.

On the other hand, financial losers moan and complain about everything. They blame anything good that comes their way on dumb luck, and anything bad they either blame on something or someone else. Either way, they never take any responsibility for their actions and decisions.

The Australian economy is not in good shape at all right now. If another GFC was around the corner, we would collectively be in a very bad position to weather any storm, thanks to the obsessive over-spending and inability of Labor to ever say NO.

The Libs during their term of Govt faced many global crises as well, including ;

1997....Asian financial crisis
2000....Y2K
2000....Dotcom bubble and bust
2001....9/11 and the war on terror
2003....War in Afghanistan starting

but they didn't go running around making continual excuses.

They got on with the job and regardless of any obstacle, came through with budget surplus after budget surplus.....the prize from having created a sound investing environment for business to thrive and the economy to grow and jobs to be created.

It's pretty basic stuff.....but unfortunately the union hacks and union bosses and environmental warriors just don't have any experience in this regard.

Anyway, you will keep hiding behind the GFC excuse, any excuse will do. As long as the blame isn't put squarely where it belongs - as the incompetent feet of the Labor Govt in charge for 6 dreadful years, you'll be happy.

The only bright light is that the vast majority of those incompetent clowns have quit the Parliament. Unfortunately the union factions that control the Labor Party have simply shuffled more incompetent union bosses into the spots to replace the old union bosses. They learnt nothing.

 

[Beanie Girl]

Okaay, let's get a few facts right about whether Australia is really in a 'budget crisis' or not,

From the mouthpiece of Big Business himself, David Koch (host of Ch 7 Sunrise) has debunked the myth of 'Budget Crisis'. Kochie has tweeted the following facts today:

david kochVerified account ‏@kochie_online

Fact; Australia's Government debt level is 11% of its GDP (size of economy). Germany's is 83% of its GDP, US 107%, Japan 237%, UK 89%

Germany is still the powerhouse of Europe in spite of the their debt, Germany is considered a robust economy and they bail other economies out, the US is still the largest military and economic superpower of the world, Japan is the world's third largest economy, UK's British Aerospace got a major contract for the manufacture of the Australia's Joint Strike Fighter project. Brit Tories still subsidize British manufacturing (Rolls Royce, Land Rover, Jaguar).

I don't understand why the political right is freaking everybody out by a so-called 'budget crisis'?

https://twitter.com/kochie_online/status/461989809955680258

 

[Beanie Girl]

By Peter Martin, Economics Editor, The Age, Sunday, 4 May 2014

"Australia has a serious spending problem" Keep repeating it until you believe it. Joe Hockey has. The Treasurer was at it again on Friday in the third and final of his scene-setting speeches before the budget.

"The problem at the heart of Labor's legacy was excessive spending", he told the Australia-Israel Chamber of Commerce .

It's a good line, but it isn't true.

Spending is running somewhat higher than it was when the Coalition was last in office, that's all. On the other hand, government revenue - most of it tax - is far lower.

Australia has a big budget problem - certainly a big revenue problem - but it doesn't yet have a spending problem.

.....

Australia goes into the budget with a projected deficit of $47 billion (a figure inflated by the government's decision to pay $8 billion to top up the Reserve Bank's reserve fund).

By itself, the level of debt doesn't matter much. Government debt is not like household debt. When you or I have a debt it is usually owed to a single institution, the one that provides our mortgage. We have no choice but to pay it off, either by making the payment in full or by dying and having it taken out of our estate.

But governments aren't like people. They are more like corporations with a multitude borrowings, each paid off when it falls due and each overlapping. There is no such thing as "the" government debt. Instead it is like the water in a bath being kept warm as old water escapes and new water flows in. The volume of water in the bath may not change, but the composition changes all the time. Lenders lend and get repaid continuously. And, unlike people, governments never die. There is never an end point at which "the government debt" has to be extinguished.

And extinguishing it would be a bad idea. In 2002-03, when the Howard government no longer needed government debt, it commissioned a review into whether it should bother continuing to issue government bonds. The review concluded that financial markets need government bonds in order to price private sector loans. Without them, interest rates would be higher. And financial institutions are required by regulators to hold some of their capital in extremely safe assets. Without government bonds they would be struggling. So the Howard government undertook to ensure it always borrowed at least $25 billion whether it needed it or not. It invested what it borrowed in shares and the like, allowing it to boast that it had no net debt while maintaining a gross debt

It's just as well it did. When the financial crisis hit, the Rudd government decided to borrow big time. Had the Australian government not kept its debt market open it would have found that difficult in the circumstances of the time. Few would now argue the government should be entirely debt free.

...............

Read more: http://www.smh.com.au/federal-polit...is-bleeding-20140503-zr3mo.html#ixzz30kMMMtDO

 

[Singo]

Well, as a relatively new comer to this country, what I see is lots of jokers from both sides running the country. As a reply to my post, you guys from both sides will prove me an idiot when it comes to budget, economy blah blah. No problems. Ones from labor will vote labor and ones from liberals will vote liberals. The votes from idiots like me will decide who will be in the government.

My observations
* The Rudd-Gillard circus was such an unbelievable joke. They couldn't even manage their own party but had power to manage the country. There was GFC and the stupid stimulus package. But then they introduced carbon tax. The list goes on.
* Abbot came in. Increase the pension age, changes to superannuation etc etc etc. Good. But then he insists his 75k (now 50k) parental leave. trying to leave a legacy? C'mon. Makes labor look not that bad.
* And then the media. Watched some journalist drilling a liberal member "you broke the promise? you broke the promise?" What a joke. It is a country. The biggest promise is to run the country properly. If something is found faulty, it has to be fixed. Waiting for another 3 years to fix the problem is breaking the promise.

 

[geoffw]

I've got no problem with increasing the pension age. It's been obvious for a long time that people are living longer and that there will be fewer taxpayers to pay for more older people. That's the reason compulsory super was introduced years ago, but it still isn't enough to pay everybody who will be eligible. Governments on both sides have taken steps to address the problem.

There was a proposal I saw for the family home to be included in the asset test for the pension. That I feel will hurt more people. It's not as if a family home is a liquid asset. Depending on the asset limit, it's possible that anybody who owns a house in Sydney or Melbourne will not be eligible for the pension.

 

[Beanie Girl]

I reckon you will escape Geoff, guessing that you were born before 1960?
You will probably escape, it's the younger people they intend to catch in their nets.

From the Australian Financial Review, 1 May 2014
Family home to count in pension assets test

The commission recommended individuals born before 1960 be ring-fenced from the new means testing for the pension, but the prospect of the family home being included in pension eligibility will worry savers in their 40s and early 50s who are preparing for retirement.

The Commission recommends to
Introduce a new pension means test from 2028 that will include the family home valued today at above $750,000 for a couple.

http://www.afr.com/p/national/family_home_to_count_in_pension_jfINygHr3FHoneTZnNQF6I

 

[geoffw]

This will have no effect on me personally- like many of us, assets excluding the family home will mean we are ineligible for the pension.

This will affect many people who have been financially responsible enough to buy a family home. These are people who would normally have been able to live in their home and to draw a pension- probably the only way many could survive on the pension. It's not a satisfactory step IMO.

 

[D.T.]

This will affect many people who have been financially responsible enough to buy a family home. These are people who would normally have been able to live in their home and to draw a pension- probably the only way many could survive on the pension. It's not a satisfactory step IMO.

Sounds like a job for the reverse mortgage parade

 

[dan c]

You forget to mention the GFC and the effect it had on the budget. Look at what the GFC did to the USA and Europe. We should think ourselves lucky.

He always 'forgets' the GFC. It doesn't fit his narrative.

EDIT. The Liberal Party also forget the China minerals boom was the main reason the country had money in the bank. It was coming in so fast the government couldn't spend it all.

And they certainly tried to spend it all. Baby bonuses, Family Tax Benefits, 30% of your Health Insurance, none of it means tested. So now, in leaner times, the current government has to scrap, or at least reduce, most of this largesse.

And this apparently is the definition of 11 years of magnificent economic management.

 

[dan c]

At least it's money they had.

So wasteful spending is not wasteful spending if you have the money to waste?

It's a ridiculous argument.

 

[Aaron_C]

But whether you own $1m in shares or $1m in your PPOR shouldn't make a difference? Net asset is still net asset, regardless of what the asset comprises of. It's become too much of a significant political problem because too many people are on the public teat in some form or another.

 

[Dazz]

He always 'forgets' the GFC. It doesn't fit his narrative.

Dan, I think I addressed it quite comprehensively in post # 48.

Unlike Labor supporters such as yourself, I refuse to use excuses like a crutch, continually leaning on them when management failures are a plenty. The GFC first kicked off in August 2008 or thereabouts.

The Labor Party are still clinging on to the excuse 6 years later.

As I said previously, the Australian people aren't fools. They saw straight through the financial incompetence of the Labor Party and all of their internal bickering and back-stabbing and summarily booted you out of office.

Job done.

EDIT. Labor party bleating....

And this apparently is the definition of 11 years of magnificent economic management.

No Dan, refer back to published Govt papers....the graph speaks for itself. Anyone who swallows the line that changing the Govt doesn't change the direction and attitude that forges the economic results of Australia is either blind or wilfully and deliberately ignorant.

You're about to spend a hell of a long time in opposition. Your red Labor team (in both party colours and the results of your budgets) have not changed a jot since the Australian public summarily booted you out.

You cannot get away from the facts...and the past budget numbers of history, as proven fact, cannot be twisted and contorted to suit your views. They are what they are.

Fixing Labor's debt mess in 1996, at $ 96,000 million took 9 or 10 years of prudent management to mop up.

Fixing Labor's debt mess in 2013, at around $ 280,000 million will take 25 or 30 years of prudent management. The task is massive compared with last time. Spending like drunken sailors and then promising to spend even more, hiding all of the really big stuff out in year 5 of the budgets so it's not in the forward estimates is a wicked trick pulled on the Australian people.

Has anyone else noticed that the people suggesting the Australian debt problem is small, and quickly compares it with some basket case economy like Greece, never actually suggests a viable way of paying it back.....only suggesting it is small and things are OK to slide down even further ??

Anyway, the adult's are back in charge of the economy, and working away feverishly on the Budget.

 

[HotRod]

So wasteful spending is not wasteful spending if you have the money to waste?

It's a ridiculous argument.

Not Realy.

It wAs well within their means.

If it was spending money they never had, then yes.

But all governments spend money willy nillily. It's called vote buying.