Saturday 27 September 2014

Abbott and Hockey’s debt and deficit disaster

Abbott and Hockey’s debt and deficit disaster



14


The Abbott Government has abandoned any pre-election
promises to reduce Australian public debt, with borrowing and interest
costs skyrocketing after their first year in power. Alan Austin reports.








Despite all their rhetoric and hyperbole, both debt and deficit has blown out under the Abbott Government (Image via @qldaah)



THE ABBOTT GOVERNMENT HAS ABANDONED all pre-election commitments to reduce the nation’s ‘skyrocketing debt’. Borrowings have increased dramatically since the last election.



Now we know by how much.



Debt has increased by 13.7% over Labor’s levels. Interest payments
have risen a staggering 28.6% to more than thirty million dollars per
day — in just the first nine months.




The Final Budget Outcome 2013-14 was released this week by Treasurer Joe Hockey and Finance Minister Mathias Cormann.
Buried in the long-awaited document is confirmation that net government
debt at the end of June, nine months after the Coalition took office,
has risen to $202.46 billion.








That’s quite a blow-out.



The last monthly Finance Department report prepared under the previous Labor Government, for 31 August 2013, showed forecast end of year net debt at $178.10 billion.



The following monthly report,
September 2013, prepared after the Coalition had taken charge, also
showed projected year-end debt steady at $178.10 bn. So did the October
and November reports.








In December, however, following several decisions by the incoming
treasurer, including abolishing the debt ceiling, the debt projection jumped to $191.52 billion.




This number was reaffirmed in January, February, March and April 2014. In May, it was increased to $197.85 billion. Then, without notice, monthly reports ceased.



Clearly, the actual outcome under the Coalition is a cool $24.36 billion more debt than forecast had Labor stayed on. Up 13.7%.



Hockey has, of course, attempted to blame Labor:



‘The Final Budget Outcome for the 2013-14 financial year is a
budget report card on the previous Government’s irresponsible fiscal and
economic management.’





Hardly. Mr Hockey has had more than 42 weeks – and a clear mandate –
to reverse anything ‘irresponsible’. Instead, wasteful spending has
increased, including dubious travel for ministers and their entourages, costly royal visits and expensive politically-motivated royal commissions.








Table 5
of this week’s Treasury document shows that in just seven weeks between
the May budget and June 30, expenditure on ‘legislative and executive
affairs’ blew out by a staggering $68 million.




That was not Labor’s doing.



Other unjustifiable spending by the Abbott Government includes its punitive border protection regime and an $8.8 billion grant paid to the Reserve Bank that it didn’t ask for and doesn’t need.
On the revenue side, equally damaging failures include abolishing the
carbon and mining taxes without adequate replacement income. Those were
not Labor decisions.




This week’s proof of the debt expansion follows confirmation after
the May budget that Abbott and Hockey had more than doubled the
projected budget deficits over Labor’s levels.




ABC Fact Check unit showed in June that government decisions increased the deficits for the four-year forward estimates period by more than $68 billion.





Clearly, there is no commitment whatsoever to



‘… balance the books, live within our means and return the budget to surplus as quickly as possible.’




Gone are the dire warnings before the last election of debt ‘spiralling out of control’.



So if the debt was more than $202 billion in June and rising rapidly,
what is it now, three months later? Well, we just don’t know. The debt reports produced monthly since December 1999 have suddenly stopped.




Independent Australia asked the Finance Department why this was and when the next statement would be released.



They replied:



‘The last Australian Government Monthly Financial Statements were
published in May 2014. The June data is incorporated in the Final
Budget Outcome document. Under the Charter of Budget Honesty Act 1998
the final date for the release of the Final Budget Outcome is 30
September.... The July and August 2014 Australian Government Monthly
Financial Statements are prepared and published after the release of the
Final Budget Outcome.’





How long after? We shall see.



Meanwhile, we now know what the extra debt is costing. A year ago, the Final Budget Outcome
for 2012-13, released by incoming treasurer Hockey, showed net interest
payments on the debt were $8.3 billion for that year – the last full
year Labor managed the economy. Labor’s projected interest bill for
2013-14 was then $8.4 billion, according to Treasury and Finance’s
Pre-election Economic and Fiscal Outlook.




The actual interest costs incurred for 2013-14, we discovered this week, was a thumping $10.8 billion. That’s up 28.6%.







So Hockey is not just borrowing more money, but borrowing more expensive money.



Of course, this debt increase is of no immediate economic concern provided the investments are well-managed. There are compelling arguments
that Australia’s debt has been too low given negative real interest
rates and the opportunity for investments in productive infrastructure.




Australia’s debt to GDP ratio is a mere 12.8% — even with the recent
Hockey blow-out. If that were doubled Australia’s debt would still be
less than Switzerland’s. If tripled it would be less than Canada’s. It could be multiplied by six and remain lower than Germany’s and the UK’s.




All these countries have a triple A credit rating and hence no discernible debt problem. And, of course, neither does Australia.



Australia does have, however, a surplus of government hypocrisy and a deficit in truthfulness and competence.



You can follow Alan Austin on Twitter @AlanTheAmazing.



Creative Commons Licence

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License










Friday 19 September 2014

Kings Tribune - Not Your Average Bio

Kings Tribune - Not Your Average Bio


Not Your Average Bio




Written by







What made Diamond Joe change from jovial, avuncular goof into angry, sulky goof?



We asked Andrew P Street to read the Joe Hockey biography so that you wouldn’t have to. You're welcome. 


Biographers, more or less by necessity, have to fall in love in with
their subject. Writing a book is a nightmarishly long ordeal and
Stockholm Syndrome must kick in at some point out of sheer
self-preservation.



So it’s no surprise that Not Your Average Joe’s author
Madonna King is clearly a fan of Joe Hockey and goes that extra mile to
spin his successes as mighty victories and his failures as being the
fault of lesser men (and always men) who either lack Hockey’s peerless
vision or are jealous of his incandescent talents.



The problem is that it all comes across like that friend who talks
about the awesome new guy they’re dating, or their hilarious colleague,
but every single story makes the guy sound like a bullying jerk.



It feels a bit like King is telling the reader breathless tales of
her new crush. You can just imagine her dishing over a coffee: “Joe was
criticised by feminist groups on campus during his election campaign for
the University of Sydney Student’s Representative Council, so when he
became President he immediately closed the Women’s Room! Isn’t that hilarious?”



“Um, actually, that sounds like he was, at best, being dickishly
ungracious in victory and at worst putting women at risk by eliminating a
safe space for them on campus,” you would hesitantly reply.



“Oh, you just have to get to know him!” King would presumably respond
with a dismissive guffaw. “It’s just his sense of humour! Like when he
claimed he’d signed up 80 new members to the local branch of the Liberal
Party on the North Shore and now admits that he mainly just added the
names of dead people to the register and was never caught – I mean, what
a caution!



Not Your Average Joe is not just a collection of
heart-warming tales of revenge-misogyny and voter fraud, it's also the
story of how one deeply insecure young man grew up to become the most
deeply entitled and self-aggrandising treasurer Australia has ever known
– which, in a field that includes such avowed Paul Keating fans as Paul
Keating, is no small achievement.



Then again, most of the evidence for Hockey’s inflated sense of his
own glorious significance is not contained within the covers of the
book, but in the fact that there’s a book with covers within which to
contain said glorious significance.



Put bluntly: why the ever-loving fuck would a man in the first year
of his job say yes to the writing and publication of his biography
unless he was a) utterly assured of his importance and felt there was a
genuine need to capture this historic moment, or b) knew in his heart of
hearts that no-one was going to remember what a Joe Hockey was after
the next election, and possibly by mid-way through the current
government?



The answer, told time and time again in the book, is a). Joe Hockey
wanted to be PM since he was four, we’re assured. Everyone – from his
unshakably supportive father to his indulgent schoolteachers to his
mates on the rugby field – repeatedly and unceasingly assured him that
he would be PM. The fact the wanted it when he was a preschooler
indicates that his desire for the role predated having any idea what
that role actually meant. This is primal gimme-I-want stuff, not a
cool-headed dedication to public service.



That theme – unshakable entitlement – is what comes through time and
again through the book. When he’s successful, he gloats. When he fails,
he explodes.



An illustrative example is that before he was the first to be
eliminated in the three-horse Liberal Party leadership spill in 2009 –
the one that toppled Malcolm Turnbull and installed Tony Abbott as
leader in opposition – he was so assured of his own victory that he
didn’t even bother to call MPs and lobby them for their vote, as Abbott
was comprehensively doing.



“That feeds the view that he has this destiny thing where he should
get things easily,” said one unnamed ‘senior Liberal’, echoing the
opinions expressed elsewhere by John Howard, Peter Costello, Peter
Dutton, Nick Minchin and practically everyone else.



Needless to say Joe sees it rather differently.


He didn’t lose the vote: he was betrayed by Turnbull, who assured him
he wouldn’t run (despite having declared his intention to do so on
television a mere two days before the vote, and who gently suggests in
the book that Joe’s version of events exists entirely in his own head)
and by Abbott who had pledged to support Hockey (who changed his mind
after they argued over giving a free vote for the Turnbull-and-Kevin
Rudd-endorsed Emissions Trading Scheme).



Among the other people that Joe accuses of betraying him – in a book
written by a sympathetic author who even fills several pages singing the
praises of the universally loathed WorkChoices – are the following
people:



Howard (for giving him bad advice about pushing for a free vote on
the Emissions Trading Scheme), Costello (for not supporting his desire
to be finance minister), Minchin (for backing Abbott after earlier
supporting Joe), Abbott (for running against him after he said he
wouldn’t), Rudd (for asking Hockey’s advice on how to be opposition
leader and then applying it), Ian Macdonald (for criticising Hockey as
senior tourism minister), Family First’s Steve Fielding (who agreed to a
free vote on the ETS, according to Hockey, and then announced on TV
that he didn’t), and pretty much everyone else.



He also gets some stories in about cool Terminator-like quips he made
to the faces of Howard and Turnbull during arguments, which both men
politely deny ever happened, lending weight to the idea that Hockey is
first and foremost a fabulist convinced of his own greatness.



It’s at times a genuinely sobering read: much of the first act of the
book covers Joe’s childhood and education, painting the picture of an
isolated little boy carrying his self-made immigrant father’s dreams of
greatness on his shoulders, teased for his size through school (gaining
the nickname “Sloppy Joe”) and looking for camaraderie through sport,
cadets and finally politics.



It’s also implied that Joe wasn’t exactly a hit with the ladies. It
doesn’t help that his wife, Melissa Babbage, comes across in the book as
the least sympathetic spouse since Lady Macbeth. The enormously
successful and mightily wealthy investment banker met Joe at a Young
Liberals function and every quote in the book suggests that she quickly
assessed him as a sound, if undervalued, investment and engineered a
matrimonial merger, speaking of their courtship and marriage as though
they were necessary obligations to be overcome rather than the glorious
unfolding of a love to last through the ages.



Mind you, he did allegedly propose to her while accompanied by a violinist playing music from The Phantom of the Opera which suggests that romance and creativity aren’t big concerns of Joe’s either.


The art of the hubrisography is a rich and noble one – why, right
this minute I have two music bios on my shelf, David Barnett’s Love and Poison: the authorised biography of Suede and Tony Fletcher’s Never Stop: the Echo & the Bunnymen Story,
both of which have penultimate chapters in which the respective bands
express their boundless optimism for their rosy, hit-filled future which
are followed by an immediate pre-publication epilogue essentially
reading “…and then they split up.”



In a similar spirit, the book ends with King mentioning that Joe was
photographed having a cheeky cigar with finance minister Mathias Corman
just after delivering his first triumphant budget, and then suggests, as
though in passing, that it remained to be seen how it would be
received. Which is sort of like writing a biography of Austria that ends
in 1914, mentioning that Archduke Franz Ferdinand had just been
assassinated in Sarajevo and idly speculating as to whether there’d be
any sort of official response.



One of her closing sentences, though, was meant to reiterate how much
Joe and Tones are BFFs these days, but now has a somewhat ominous tinge
as they both grow increasingly testy over who is failing to win the
nation’s hearts and minds: “Barnaby Joyce, who like Hockey is one of the
government’s best retail politicians, says the two will rise and fall
together.”



That may prove to be the most accurate line in the entire book.





Wednesday 17 September 2014

The Minister for Lost Opportunities - The AIM Network

The Minister for Lost Opportunities - The AIM Network





The Minister for Lost Opportunities














You have to hand to him. Joe Hockey would have to
be the eternal optimist. He says that we are on the threshold of
Australia’s greatest era. Really? He says his plan is to fix the budget
and pay down the debt left by Labor. The debt he is referring to, is the
ongoing sale of government treasury bonds issued since 2008
(approximately); these are the ones that protected Australia during the
Global Financial Crisis (GFC).



He’s a man on a mission; you can see that. The problem is, he can’t
see where the missionaries need to go. We should not forget that he was
part of the Coalition in opposition that opposed those stimulus measures
Labor used to avoid an economic catastrophe. One can only wonder if a
Coalition government were in power at the time of the GFC and failed to
act, in other words, did nothing, where, and in what condition, our
economy would be in now.



The likely outcome would have been up to 2 million unemployed, small
business’s going bankrupt, a massive reduction in bank depositors’
savings, a serious reduction in tax revenues and a gigantic ex nihilo
(money created from thin air) programme to save our failing banking
system and drag us out of the depression that would have ensued.



This imaginary Coalition government would have attacked social
programmes to minimise the structural deficits that would have followed.
But, having patted themselves on the back just two years earlier for
falsely claiming to have paid down debt when they were in government,
they would have found a new way of describing the debt they had now
reluctantly created. They might have opened a special account and called
it the Fiscal Expansion Account, or The Asset Minimisation Account and
denied that it was debt at all.



debtBut
we, as a nation avoided all of that thanks to Labor’s economic
management and now all Hockey has to do is manage those bonds. As of
right now, he’s not doing it very well. As of right now, those bonds
that totalled $280 billion at the end of August 2013 are $337 billion in
September 2014 and growing. That is an additional $57 billion which
translates to just under $5 billion a month of bonds issued in the first
12 months of a real Coalition government.



That’s slightly faster a rate of borrowing than Labor did in 6 years.
Compounding Hockey’s problems is the reality that current tax revenues
are not meeting expectations. That will mean further bond issues to
cover a continuing shortfall. I’m almost feeling sorry for him.



Joe could easily fix this annoying little matter by opening a new
account. He could call it the Asset Recovery Account and create $10
billion ex nihilo a month to pay out each bond issue as it becomes due.
At the same time he could continue to issue further bonds to meet
expenditures without impacting on inflationary pressures. It might also
have the effect of putting downward pressure on the Australian dollar.



That would do wonders for our export industries and create
opportunities to get the unemployment rate down. Then he could re-visit
his pathetic first attempt at constructing a budget and try
restructuring it to reflect a fairer balance of the heavy lifting.
Little things like removing mining subsidies and tax minimisation
schemes like negative gearing would do wonders.



trainsWith
all that now under sound management he could wave the green flag for
all those infrastructure programmes to tackle unemployment; the ones his
boss wants to be known for. But he won’t do this because, he’s too busy
looking back at what Labor did instead of looking forward at what he
could do. His boss wants to be known as the Infrastructure Prime
Minister but neither of them know how to go about making that happen.
Neither can see the bigger picture. Instead, they will let this false
debt accumulate and continue to blame Labor.



Joe could, if he knew how, become a Paul Keating Mk 2 and continue
reforming our monetary system. But he doesn’t know how, and even if he
did, his ideologically bound party, not to mention their masters, the
IPA, would not let them. They would much rather have us running off to
Iraq to help save the world from a handful of fundamentalist nut cases
who like beheading westerners. That’s money well spent; a new Crusade,
how original.



missed oppThey
would also like us to return to the Reaganomic and Thatcherite slash
and burn monetary policies of the 1980s; the same policies that led us
to the GFC thirty years later. They say what goes around, comes around.
And in the process, guess what? Another forward looking, nation building
opportunity goes down the toilet. Forget about Abbott being the
Infrastructure Prime Minister. Joe will become the Minister for Lost
Opportunities.