There might be a substantial number of people a bit gobsmacked that a Budget which started only last July 1 is after just four months some $16 billion out of whack. So out of kilter, in fact, that the Government today has had to effectively recast all its expectations and introduce some big-hit measures to get back on course.

LOL. Someone call Jonathan Cainer… Picture: Ray Strange

Consumers who already are close to deciding that the next few years might best be endured down in the onion cellar with a supply of can food and batteries might now feel their instincts are right.

But this is what happens to a 21st century economy exposed to global markets which dip and dive frequently and have almost instantaneous effects on domestic economies. And the response to these fluctuations is important.

The Government had to save a lot of money but it had to do so without putting the brakes on an economy which was battling a high Australian dollar and reduced prices for our iron and coal.

The Government believes it has done that, and so has not added to unemployment. The big changes announced today have been structural rather than direct fund raising through tax increases.

So the cost of the Private Health Insurance Rebates will be reduced to prevent them getting out of hand in the long run, and benefits granted under the Baby Bonus will be cut for second and third children.

Changes such as these are what Liberal and Labor front line economic managers would be looking at to ensure the schemes are sustainable, and to curb the demands based on a sense of welfare entitlement.

However, when these changes are made at a time of dislocated Budget forecasts they are seen as emergency measures, not carefully considered reforms. Those who lose out will probably feel they are being made pay for the Government’s Budget miscalculation.

Forecasters make presumptions, and Australia’s got some of the best around, said Wayne Swan. “But they can’t forecast the unknown,” he said. By that he meant the sudden decline in China’s growth and demand for our materials, which has caused much of the tax revenue drop.

Treasurer Swan said the economic “storm clouds” in Europe, Asia and the United States had made returning the Budget to surplus much harder.

“It’s pretty obvious to all that ... this mid-year review has been put together amid storm clouds which are hanging over the global economy,” he told reporters. “This lower global growth outlook has had another very big whack at government tax revenues and has made it harder to deliver a surplus.”

Economic growth is forecast now to be down a jot to about three per cent, unemployment at 5.5 per cent and inflation low.

All of that is much better than being reported from Europe and the United States where sustained growth was lost to the global financial crisis four years ago and not recovered.

Still, the magnitude of the Budget reappraisal is daunting and the Treasurer and his colleagues will be tested by voters seeking assurances it will won’t be necessary in another four months.

Comments on this post will close at 8pm AEST.

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81 comments

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    • Sam Scout says:

      01:18pm | 22/10/12

      Mal,

      The budget is not $16 billion out of whack after four months, its $4 billion - the govt announced $16 billion in spending cuts over four years - in future do a little more research.

      With that kind of in depth analysis its no wonder you support labor.

    • PJ says:

      02:17pm | 22/10/12

      :-D

      Excellent. If it was a Boxing match, they’ve had stopped it now.

    • Steve says:

      02:28pm | 22/10/12

      And those are the figures coming from the Labor stooges, imagine what the real nightmare figures are.

    • Greg in Chengdu says:

      03:33pm | 22/10/12

      What this boils down to is a whole list of broken promises. The Carbon tax is a prime example we all know it was a vote buying excercise but the small percentage that was to be given to research on alternative energy will now be shelved as vaguely detailed in the governments statement that research projects previously planned by the government would now be shelved.
      Cuts to the Baby budget,
      Cuts to the health care rebate
      and I don’t know how this is even legal they are going to TAKE the money from unused or so called lost bank accounts.
      This is a disgrace and absolutely stupid in its philosophy that if Labor actually manage to reach a surplus they will have a chance at getting voted back in, yet they are going to break a dozen promises and take more out of peoples pockets than ever before to do it.
      What this is called is austerity, Greece have to do it, The Labor government just want to do it because they can’t admit they have buggered EVERYTHING right up

    • Mahhrat says:

      01:23pm | 22/10/12

      My concern is they’ll break something important in forcing out a “Surplus” when such a thing simply isn’t necessary right now.  They’ve been suckerpunched by the LNP on it, with full credit to the LNP for achieving that outcome.

    • nihonin says:

      01:34pm | 22/10/12

      ‘They’ve been suckerpunched by the LNP on it, with full credit to the LNP for achieving that outcome.’

      So what your saying Mahhrat, is as a collective of individuals coming together to be a political party and as a result of an election and back room deals, to form government….......they’re all completely and utterly stupid.

    • Tim says:

      01:47pm | 22/10/12

      Nihonin,
      “they’re all completely and utterly stupid. “

      A true reflection of the electorate I think.

    • nihonin says:

      02:08pm | 22/10/12

      No Tim, my comment was meant towards the very people I intended it for Not because you want it to mean, not only voters of Labor or the Greens.  I’m sure there would be many people insulted by your comment.

    • Matt says:

      02:15pm | 22/10/12

      Ahh, so the LNP is to blame. Who is leading this country again?

    • Mahhrat says:

      02:35pm | 22/10/12

      Oh but f**k me, this is the second time I’ve made this point in a week, and both times people on the right of the fence have seen fit to extrapolate what I’m saying into somehow suggesting I’m absolving the ALP of the blame.  It’s one of the most extraordinary persecution complexes I’ve ever seen!

      Get this:

      The LNP have made it their mission to educate us all that we must always have a budget in surplus, largely because John Howard and his team managed it, not mentioning that they did it while enjoying a mining boom and through the sale of most of our national business assets.

      The ALP should be absolutely bloody castigated for not only not countering the argument, but signing up to it so whole-heartedly that they’ve pinned their re-election hopes on it.

      They could have had the most robust surplus in history coming out this year, and the LNP will find a way to interpret the figures to make it bad economic news, simply because it is GOOD POLITICS.

      The LNP have absolutely stolen a march on this, because a better ALP PR department would be able to explain, in simple terms, why a deficit now can be beneficial in the long term - the building of infrastructure being a good example.  Hello NBN.

      Are the ALP stupid?  Yes, but no more than any other group of politicians ever.  In spite of minority government fairly plagued with scandal, they are still governing the country and haven’t broken anything (yet). 

      The problem as I see it is they’re trying to fight the LNP on tyhe LNP’s home turf and they’re losing.  Howard tried to do that with Workchoices and look how that turned out.

    • Tim says:

      03:24pm | 22/10/12

      Nihonin,
      My point was the people in parliament are completely and utterly stupid because that’s the general level of intelligence of the electorate. It’s meant to be insulting, doesn’t mean it isn’t true.

      As long as a large proportion of the voting public can be swayed by silly one sentence slogans, or messages like “surplus good”, “deficit bad”, then we’ll have politicians who are too scared to act on matters that should be dealt with by taking a longer view and structurally planning for the future with real reforms.

    • Matt says:

      03:28pm | 22/10/12

      The real problem is ridiculous spending initiatives introduced by the Government over the last several years on the back of a now-faltering mining boom, not that they have been cornered into delivering a surplus by the LNP. In reality, this Government only cares about delivering itself another term in power.

      As for saying they haven’t broken anything yet, that is highly debatable to say the least.

    • Debbie says:

      03:36pm | 22/10/12

      @ Mahhrat. You can make the same point a thousand times and the response will be the same. You cannot have an intelligent conversation with one-eyed closed minded partisans on either side.

    • Super D says:

      03:36pm | 22/10/12

      @Mahhrat - I’m perfectly happy for there to be deficits on occasion.  If there were never deficits it would mean that the government is ripping far more tax out of the economy than they need.

      The point is since he started delivering budgets Swan has hidden behind this years surplus to deflect criticism of the current years deficit, (08, 09, 10,11).  Of course a compliant media let himget away with it.  It was nonsense then and it is nonsense now.  It’s the governmen tthough that decided to place its credibility atop a steaming pile of nonsense.

      I’d be happy with no surplus this year so long as the government were to apologise to the nation for sqandering so much in the past….

      Indeed I would really love the Greens and Independents to block these changes or make them contingent on a second MYEFO in another 4 months.

    • nihonin says:

      03:39pm | 22/10/12

      Oh but f**k me, this is the second time I’ve made this point in a week, and both times people on the right of the fence have seen fit to extrapolate what I’m saying into somehow suggesting I’m absolving the ALP of the blame.

      Where have I stated you’re trying to absolve Labor.  I was just putting it out there, that you believe the members of the Labor are as stupid as a majority of Australians do as well for trying to ‘outdo’ the Liberals.  I have Right leanings and Left leanings, but I don’t lean far enough Left to support this current government, as I’ve found them to be completely and utterly abysmal.

    • Ted says:

      04:53pm | 22/10/12

      @nihonin
      Direct democracy will put you on the right track in meantime enjoy when s***t happens.

    • JT says:

      05:41pm | 22/10/12

      @Mahhrat

      Sounds like no matter how many twists and turns you need to make, you will always find a way to lay blame for this governments absolute incompetence at the feet of the LNP.

    • nihonin says:

      05:49pm | 22/10/12

      Yes Ted (maria), I’m sure it will, but shouldn’t you be out poking holes in cheese or something.  wink

    • Where did all these bloody chickens come from? says:

      01:43pm | 22/10/12

      Did any one really believe that a Government could massively spend more than it earnt for 5 years without some chickens coming home to roost?

    • JB says:

      02:10pm | 22/10/12

      Labor did! and the electorate fell for it ROFL!!

    • PJ says:

      02:21pm | 22/10/12

      After having spend all the Carbon tax monies on middle class welfare and protecting industries from their toxic tax, Swannies got to find another $100 Billion to give to the UN:

      ‘Prime Minister Julia Gillard’s carbon tax will be used to allow Australia to meet its share of a $100 billion-a-year United Nations fund to transfer wealth from rich countries to help undeveloped nations adapt to global warming. The Gillard Government is party to a UN agreement which Climate Change Minister Greg Combet entered into in December at a meeting in Cancun, Mexico.’

      Taxpayer Money Laundering on a truly grand scale ! LOL!

    • PJ says:

      02:32pm | 22/10/12

      So while we face $20 Billion in cuts from Mr Swan, the Gillard Government prepares to give $100 Billion of our money to the UN!

      Discussions in Parlament about Australia’s Carbon tax been given to other countries as Aid:

      http://www.youtube.com/watch?v=XX5rlhbYTXY

      I bet that was a complete shock to everyone right?

      You’ll never know the truth of it…

    • Haxton Waag says:

      03:03pm | 22/10/12

      So, PJ, is it “$100 billion” or a “share of $100 billion”?

    • Anubis says:

      03:16pm | 22/10/12

      @ PJ - no shock there. It was known (and even discussed on these forums) that 10% of the revenue from the Carbon Tax was to go to the United Nations for distribution to tin pot dictators. A point neither Gillard or Swan (or any of the multitude of Labor rusties on this forum) would discuss openly. Now that Treasurer Duck Duck Goose is making mega cuts to acheive his pie in the sky surplus some public scrutiny will no doubt start to bear on this mega UN slush fund so ably assisted by the red headed queen of slush funds and her toady assistance the treasurer.

    • Tim says:

      03:31pm | 22/10/12

      PJ Babylon,
      you do realise that the $100B figure you’re throwing around is for the entire world not just Australia?
      It’s unlike you to deliberately mislead, tut tut.

    • Ryan says:

      03:53pm | 22/10/12

      @PJ, No, it’s not a shock!! Communists ( for example Labor as their representatives in Australia) don’t believe “nationality”, they believe to “global citizenship”. Therefore, they don’t care about Australians as a nation. They care about people in Mexico or Uganda more than people in Australia.
      We need an early election to stop this huge damage to our economy and society by this nasty communist Government. Enough is enough….

    • Don says:

      04:16pm | 22/10/12

      I am just disappointed that they literally chickened out and didn’t touch negative gearing. Not saying that I wish they did, just that they have been testing the waters for the last few months and obviously it was something that would have the polls going south. Wayne Chicken.

    • Haxton Waag says:

      05:22pm | 22/10/12

      @Ryan - You’re funny.

    • St. Michael says:

      01:57pm | 22/10/12

      “But this is what happens to a 21st century economy exposed to global markets which dip and dive frequently and have almost instantaneous effects on domestic economies. And the response to these fluctuations is important.”

      Mal, Mal, Mal…

      If only you were a first-time article writer and people didn’t have access to your posting history on the Punch to verify your views.  I have a distinct recollection of several smug, sneering articles, like—

      “Why did Chicken Little hijack the economic debate”;
      “Is mining saving us from jobs doom? Depends who you ask.”
      “The sun is shining but storms lie ahead for the surplus.”
      “Any surplus is a good surplus”
      “Mixing daiquiris and mining a top cocktail for the economy”
      “Sure, keep Swan honest but don’t talk down the economy”
      “Forget the cat calls, the economy still has claws”
      “Budget 2011: Quick! To the fiscal bunker!”

      —which basically tried to suggest the good times would be around for a long time to come regardless of anything happening past six feet deep at Bondi.  I was critical then, and I’m critical now; albeit my criticism rests now on your lack of integrity than your reasoning in those articles.

    • Matt says:

      02:17pm | 22/10/12

      Mal writes what Labor tells him to write.

    • Steve says:

      02:31pm | 22/10/12

      “All of that is much better than being reported from Europe and the United States” .......
      Except we are not in Europe or the US, we are in Asia and compared to our Asian neighbours we are doing very, very badly. Thanks Labor / Unions.

    • Freeman says:

      02:40pm | 22/10/12

      Next on the agenda for Mal; yet another ‘deconstruction’ of an ex Labor memeber’s tell-all book. This time it’s Maxine Mckew.

    • Cheap white trash says:

      05:00pm | 22/10/12

      Well who would of guessed,MAL,Just Remember.It,s not a LIE ......If u believe it…...The ALP 2012…...

    • Eddie says:

      02:02pm | 22/10/12

      Malcolm why don’t you write an article about how sensible politicians and economists said when the budget was first brought down that it was way too optimistic?  This result should be no surprise to anybody, least of all Wayne Swan, after all isn’t he the world’s best treasurer?  A bigger joke I’ve yet have heard.

    • PJ says:

      02:45pm | 22/10/12

      Yep Eddie, you cannot believe a word of it….

      From Bloomberg:
      Australian government statistics on business investment plans have overestimated the extent of the nation’s mining boom since 2010, a central bank research paper showed.
      “Forecasts derived from the capital expenditure survey must be interpreted with a fair degree of caution,” economists Natasha Cassidy, Emma Doherty and Troy Gill wrote in a report published today in the Reserve Bank of Australia’s quarterly bulletin.

    • Cheap white trash says:

      05:02pm | 22/10/12

      Wayne’s World,What a goose….....

    • KimL says:

      02:03pm | 22/10/12

      About time someone cut that baby bonus. I wonder how many of these children who don’t have enough enough to eat, were produced for the baby bonus. It was spent on holidays overseas, big screen tv’s, drugs, partying ect. Not by all women but I can imagine by more than what any of us would think

    • Richard says:

      02:30pm | 22/10/12

      Drop the Baby Bonus as it no longer seems productive.

    • DAve Charlesworth says:

      04:01pm | 22/10/12

      Nice one Richard!!

    • Christian Real says:

      06:02pm | 22/10/12

      Kim
      Trouble is that they didn’t go far enough, the baby bonus should have been completely cut out all together.
      Let’s not forget that John Howard brought the baby bonus in as a vote buying exercise at the taxpayer’s expense.

    • DocBud says:

      02:17pm | 22/10/12

      “The Government had to save a lot of money”

      Only because they spent a lot of money based on wishful thinking revenue forecasts.

    • Shane From Melbourne says:

      02:25pm | 22/10/12

      Cancel Paid Parental Leave since it is an issue between the employer and employee only. Problem solved.

    • SOTON says:

      02:30pm | 22/10/12

      And pluck a duck was named as the worlds very bestest treasurer - pigs arse!

    • PJ says:

      02:38pm | 22/10/12

      Swan’s sweating on his Commodity prices, which have fallen below his budget costs for middle class welfare vote buying handouts.

      If only he hadn’t introduced the Carbon and MRRT taxes, he might still of had a Mining Industry to help him out!

      Too late now, Australian Mining is opting for Africa. Growth there this year went from -16.8 percent to +32 percent the same period Ferguson and Carr admitted we’d lost our Mining Boom.

    • Freeman says:

      02:48pm | 22/10/12

      Hey Mal this piece should be filed under News…... from back in July.

      Only you and Wayne Swan were pretending this bogus surplus was ever going to happen and It goes to your credibility as a supposed political commentator.

    • Matt says:

      02:49pm | 22/10/12

      One way to bring the budget into surplus (a very big surplus) would be to dump all middle class welfare. Rather than reduce things like the Baby Bonus for subsequent children, perhaps they should dump the entire scheme.

      There are plenty of other middle class welfare payments which could be cut, such as the first home owners grant. If $7000 is the difference between having a mortgage and not having a mortgage, perhaps a person shouldn’t have one!

    • I hate pies says:

      03:38pm | 22/10/12

      Or, they could cut lower class welfare. You do realise that “middle class welfare” is merely a rebate for the people that actually pay tax. It’s a bit rich coming from those that don’t pay tax to demand that those who do pay tax pay more so that those who don’t pay tax can have more taxpayers money.

    • Mattb says:

      04:41pm | 22/10/12

      Yep. Dump the lot. no ridiculous baby bonus, no handouts or “rebates” to families earning over $50,000, no maternity leave scheme. If you earn under 50,000 then you should be barred from having children until you improve you financial position. You want a child, you pay for it and you pay the same taxes as those that don’t have children.

      If you cant afford to have a child in these circumstances, DON’T HAVE ONE. Howard and the coalition started the “leech breeding program”, the Labor party have continued it. Now, after 5 years of the worst world economic downturn in history, its time to put an end to it.

      And i’m fu*kin sick to death of the “I’m entitled to it because I pay taxes” brigade that I hate pies is sticking up for here. Wait for them to arrive with their pathetic little ‘my kids will be looking after you in retirement” rhetoric. ICB. Those kids will end up with the same entitlement mentality as their parents and we’ll be supporting an entire generation of leeches…

    • Admiral Ackbar says:

      05:06pm | 22/10/12

      “You want a child, you pay for it and you pay the same taxes as those that don’t have children.”

      What!? Personal responsibility and equality Mattb? That’s crazy talk.

    • I hate pies says:

      05:28pm | 22/10/12

      Bully for you Mattb - I’m f*cking sick of self entitled whingers whinging about how the government gives money back to the taxpayers rather than the non-taxpayers. I’d be quite happy to pay less tax and give less to people who don’t deserve it and aren’t entitled to it.
      I’m all for scrapping “middle class welfare” - get rid of the lot. The only welfare in this country should be a minimal dole that people have to work for after 6 months. Just don’t confuse it with lower class welfare - the middle class are most likely paying your wages. The biggest problem this country has is too few are paying for too many, and the too many, people like Mattb, whinge when the too few get a bit of a reprieve. When welfare is factored in hardly anyone who earns $50k or less is actually paying any tax at all.

    • Expat Ozzie says:

      05:36pm | 22/10/12

      I hate pies: I’m an above average income earner and have payed tax my entire life. I want middle class welfare cut much the same as the two Matt’s here.

      The first home owners grant has a lot to answer for regarding the current level of house prices. I’m also in favor of tightening the tax breaks at the top. I earn quite a bit and through legitimate tax breaks end up paying less tax then most of the people that work for me. I’d say many of the lower middle income earners are the ones that get screwed the most when it comes to paying tax.

    • Shane From Melbourne says:

      05:42pm | 22/10/12

      @I hate pies- If that is is the case, then where is the rebate for single and childless couples who pay tax? That’s right no rebate, just endless subsidizing of middle class family welfare for the breeder brigade

    • Lance says:

      02:50pm | 22/10/12

      The thing that I find interesting is that when Labor took over we had a massive war chest, a surplus, and things were good, yet Swan gets praised for guiding us through the GFC.  Swan didn’t do anything, it was Costello who left us in a position of strength so that Swan could spend it all.

      Like here in QLD, Labor have cooked the books so badly, that if the Libs do take over after the next election they are going to have one massive mess to clean up. So I kinda hope that Labor do win the next election so that they have to answer for their waste and creative accounting and for running this country into the ground.

    • kml says:

      03:41pm | 22/10/12

      @Lance

      Don’t worry Lance the Libs will be in this time next year.
      There will be no carbon tax
      No Mrrt
      All welfare will be slashed
      No NBN
      Cuts to education
      Cuts to hospitals
      Medicare levy will be returned
      Dental care will be returned like previous Howard government
      Majority of government jobs gone
      Tax cuts for corporate business and the wealthy
      No asylum boats coming to our shores
      No foreign investment
      Gonksi Report axed we don’t need one
      Super Trawler can resume
      Marine Parks minimised
      Shooting allowed in our National Parks
      Fines for being in a union
      Fines for striking
      No penalty rates

      So then we wait for a $20 billion surplus and when that arrives a consideration will be made for the NDIS, sounds bloody great.

    • Steve says:

      05:47pm | 22/10/12

      @klm.
      Or we could encourage business and investment + the men and women that make it happen. With more money and greater tax revenue, we wouldn’t have to “axe” anything.
      When Labor / Unions smash business money quickly dries up, happens every time.

    • PJ says:

      02:54pm | 22/10/12

      That the Gillard Government is clueless on the economy is summarised by their downplaying of their loss of our Mining Boom.

      To mitigate the calamity they caused, Both Swan and Carr have told us we do not need a Mining boom, they claimed it only supplied 2 percent of the jobs to our economy.

      Well it’s a matter of public record that the indirect impact of the mining boom is 10 times it’s direct impact.

      Even though it’s being driven off to Africa, this year to date Bloomberg reports: “Business investment accounted for about 17 percent of Australia’s gross domestic product in the first half this year a….... driven by mining projects, according to the RBA paper.”

      Ha ha don’t need an Industry that contributes 17% to our Gross Domestic Product do we!!!

      You’ll never know the truth of it!

    • DJ says:

      03:42pm | 22/10/12

      what LNP office do you work in PJ? Lots of post straight of the bat

    • Karen from Qld says:

      02:55pm | 22/10/12

      And every time a fully laden boat looms on the horizon the budget black hole gets a little deeper. Of our acquired debt over the last 5 years I wonder just how much can be attributed to the very regular irregular maritime arrivals

    • Alex says:

      02:56pm | 22/10/12

      What a surprise they cannot meet another promise. Who’s to blame now? Well this time it’s the rest of the world.. Not the the huge taxes imposed on industry and mining sector which made China look somewhere else (Africa).
      Come on at least get a bit of realism into these articles instead of ALP patriotism.

    • earl says:

      02:58pm | 22/10/12

      In 6 months, there has been a decline in revenue forecasts of 4 billion, and yet over 4 years this decline extrapolates to 11 billion (forward estimates). Now the question is who is doing forecasting - they should be sacked and we should find better forecasters, especially as the finance department spends 1.2billion on staff/resources.

      By the way, perhaps the answer is have a nationwide contest to find the best forecasters - and pay them the salary of the previous forecaster (Australia’s Got a Forecaster or something like that) - clearly what we have here is not proper economics but pure politicking.

    • Monty says:

      03:10pm | 22/10/12

      I don’t know why people in government have this fetish for producing budget surpluses. A surplus doesn’t necessarily mean you’re good at managing an economy and a surplus at all costs can be a devastatingly bad thing.

    • earl says:

      03:41pm | 22/10/12

      Surplus suggests that you have a sustainable economy. Whether it’s good or bad depends on the cycle you are in… Having been in deficit in boom times, can we get to surplus during the bust?

    • Esteban says:

      05:32pm | 22/10/12

      Budget surpluses are your primary repayment source for the debt from your budget deficits.

      Paying back in the good times for what you borrowed in the bad times is not really a fettish.

      If the surplus (paying the debt back) is going to be a devastingly bad thing then maybe it shouldn’t be borrowed in the first place?

    • TrueOz says:

      03:11pm | 22/10/12

      “But this is what happens to a 21st century economy exposed to global markets which dip and dive frequently and have almost instantaneous effects on domestic economies.”

      ...it’s also what happens to a 21st century economy which is presided over by economically illiterate numbskulls, like Swanee.

    • Kingy says:

      03:11pm | 22/10/12

      Revenue forecasts were sourced from Treasury - the same one that JH will have to work with should he become Federal Treasurer.
      Deteriorating terms of trade dictate that savings have to made and will have to be made again if promises are to be kept.
      Posters here want a balanced budget. Hang onto your hats, guys and gals! If the books have to be balanced and promises kept by either WS or JH we’re in for quite a ride.
      By the by, the net government debt is worth five weeks of GDP. Any of you folk ever run a mortgage?
      Finally, the Opposition, aka TA, hasn’t said it will oppose any particular saving/revenue raising measure proposed by WS. And I just love it when Joe sweats - that glistening lip last seen on The 7.30 Report.

    • Esteban says:

      04:04pm | 22/10/12

      Debt/GDP comparisons is very useful in comparing the different debt levels of nations with different GDP’s.

      That is the end of the use of looking at debt/GDP. Wayne Swann has latched onto using Australia’s relatively low Debt/GDP to try and make the case that our debt is easily managed.

      Government debt does not get paid back from GDP. Government debt gets paid back from budget surpluses. After 5 years of deficits totaling something like $150 billion we have a forecast surplus of $1.5 billion.

      So you might like to believe the line of our debt being 5 weeks GDP but in truth it is 100 years of $1.5 billion dollar surpluses.

      Honestly comparing our debt to GDP to make it look small is like a BHP employee going into a bank for a loan and instead of using their own income as a source of repayments they show the bank the earnings of BHP.

      Kingy ask yourself if this debt of 5 weeks GDP is trivial why do we need tax increases and budget cuts?

      Also after all these tax increases and cuts in services how come only 1% of the debt will be repaid?

      Wayne Swann does not want you asking yourself these questions Kingy

    • Over IT! says:

      04:25pm | 22/10/12

      “And I just love it when Joe sweats - that glistening lip last seen on The 7.30 Report. ” Errgh, enough!
      As for “Revenue forecasts were sourced from Treasury - the same one that JH will have to work with should he become Federal Treasurer”
      JH will [probably] do as well as when JH/Costello (the previous PM of course) paid back the ALP/Keating/etc $90bn (unadjusted for 2012 $s) debt - and managed to give the current ALP/Rudd?Gillard a very comfy start….. just sayin’

    • Over IT! says:

      04:25pm | 22/10/12

      “And I just love it when Joe sweats - that glistening lip last seen on The 7.30 Report. ” Errgh, enough!
      As for “Revenue forecasts were sourced from Treasury - the same one that JH will have to work with should he become Federal Treasurer”
      JH will [probably] do as well as when JH/Costello (the previous PM of course) paid back the ALP/Keating/etc $90bn (unadjusted for 2012 $s) debt - and managed to give the current ALP/Rudd?Gillard a very comfy start….. just sayin’

    • Kingy says:

      06:14pm | 22/10/12

      @Esteban
      I don’t think we disagree, Esteban - surpluses are a good thing. It would be disingenuous to suggest, though, that GDP is not ultimately a factor in the sum Government revenue.
      What a pity our Tax/GDP ratios under the present Goverment aren’t at the high levels of the Howard/Costello era or we would have sorted things out nicely by now.
      Real Governent spending down a massive 4.4% in 2012-13 should help to mitigate the downward revision of the terms of trade though.

      @ Over IT!
      A large proportion of the debt that Howard/Costello inherited was passed on from the Fraser/ Howard years and most of the debt paid off was done so by one off asset sales which, of course, passed the debt to the private sector…... just saying
      Gee! When Joe gets a sweat up ....

    • maria says:

      03:19pm | 22/10/12

      Shit is happening again in a country who has all the commodities the world wants.

      Something must be wrong and you don’t need a crystal ball when you think that a country like Saudi Arabia -Dubai…. who have only one commodity oil can buy the world , build the highest tower in the world and we are struggling to have the best infrastructures with more than 2 000 000 people struggling to make ends meet.

      Switzerland does not have any oil or good recources it did not participate in most european wars did not do any colonizing but they are richest country in the world is this only because of swiss banks or are there anything else?

      and most of these countries have real borders too.

      Time for a direct democracy and stop once and for all our mafiacracy in which we are irrelevant.

    • Jack says:

      05:54pm | 22/10/12

      Good reply Maria, I’m astonihed that the media never talk your language.
      Political parties- media same rubbish.

    • pa_kelvin says:

      06:54pm | 22/10/12

      Jack and Maria ...Like two peas in a pod…..

    • Where did all these bloody chickens come from Wayn says:

      03:19pm | 22/10/12

      Has anyone noticed that the commentary about our “Government debt is easily managed”  has got a bit quieter lately?

      I guess “easily managed” has been redefined by the dictionary Mal??

    • David C says:

      04:02pm | 22/10/12

      government debt isnt the issue here yet. The debt is all in private hands. If you look at total external debt you see we are in a bad situation in this country, as a % of GDP we are worse than the US.
      Just remember private debt becomes public debt very quicly ie Ireland and Greece

    • Where did these bloody chickens come from Wayne ? says:

      04:30pm | 22/10/12

      Private debt is not the problem. Private debt has private income to repay it.

      At this time private debt is being being repaid quite nicely without undue stress. Our banks are not reporting an upswing in bad debts. Some commentators are saying that private debt is being repaid to quickly because of the new austerity.

      There is absolutely no indication that the Government needs to bail out any of our banks (let alone the debate about if they should even do it).

      The only debt we have a problem with is Government debt.

      Apart from selling assets the only way a Government can source loan repayments is from budget surpluses. The fact that the present level of debt represents about 100 years of budget surpluses* and withdrawing money to repay debt strangles the economy i would suggest that we have a problem.

      *current debt $150 billion - forecast surplus $1.5 billion

    • Fact Checker says:

      05:54pm | 22/10/12

      Oh yes, it’s all about government debt
      The 10 Countries Deepest in Debt
      Feb 2012
      1. Japan
      Debt as a percentage of GDP: 233.1 percent
      General government debt: $13.7 trillion
      2. Greece
      Debt as a percentage of GDP: 168.2 percent
      General government debt: $489 billion
      3. Italy
      Debt as a percentage of GDP: 120.5 percent
      General government debt: $2.54 trillion
      4. Ireland
      Debt as a percentage of GDP: 108.1 percent
      General government debt: $225 billion
      5. Portugal
      Debt as a percentage of GDP: 101.6 percent
      General government debt: $257 billion
      6. Belgium
      Debt as a pct. of GDP: 97.2%
      General government debt: $479 billion
      7. United States
      Debt as a pct. of GDP: 85.5%
      General government debt: $12.8 trillion
      8. France
      Debt as a pct. of GDP: 85.4%
      General government debt: $2.26 trillion
      9. Germany
      Debt as a pct. of GDP: 81.8%
      General government debt: $2.79 trillion
      10. United Kingdom
      Debt as a pct. of GDP: 80.9%
      General government debt: $1.99 trillion

      Australia less than 18%
      Ranks around 140 place below this mob of the ten worst.

    • Esteban says:

      06:43pm | 22/10/12

      Bank manager- I have called you in today because you seem to be struggling with your loan repayments.

      Borrower . I am doing great. Everyone else on my street uses their credit card to borrow more just to make their repayments. They are all in complete financial shit compared to me.

      Bank manager- Oh well that’s OK then. Have a nice day.

    • David C says:

      03:50pm | 22/10/12

      There is soemthing not right about the tax changes from quarterly to monthly. How can they “save” 5 billion in the first year by doing that?

    • MH says:

      04:43pm | 22/10/12

      Another day another press release from Mal on behalf of the government. 

      All governments use a few tricks to present information in the best possible political light but Wayne really is plumbing new depths here.  Management of the nation’s finances and economy is now wholly subservient to the ALP’s re-election campaign. 

      The press gallery should be collectively up in arms at the transparent manipulation and accounting sleight-of-hand but if the mindless initial regurgitations from Mal and Phil Coorey are anything to go by we may be waiting a while…

    • mikem says:

      05:22pm | 22/10/12

      For an idea of what will probably happen to the economy if the Liberals become the government after the next election we need look no further than the UK after the Conservatives won power.  Plenty of slashing and burning which has given them a double dip recession and higher unemployment but very little action taken to curb the practices that led to the GFC.  Cue Mr Abbott for the Australian sit-com version.

    • nihonin says:

      05:58pm | 22/10/12

      mikem, didn’t the Labor Leader say his party would be doing pretty much the same thing if/when they achieve government again in the UK.  Bit of balance would be a good thing, or can I please use the standard Labor sycophant call of ‘they’re all the same’, to make my point.

 

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