Now that the US appears to have avoided its fiscal cliff (albeit briefly), I’m sure we all await an update from the Treasurer on the status of his “failure is not an option” budget surplus-now-deficit.
Despite emphatically claiming for the last 2 years that his government “has delivered a surplus in 2012-13”, Mr Swan snuck in a quiet “surplus now unlikely” statement just before Christmas. I guess we now know that failure is indeed an option for Labor.
But while many of us were visiting family, working our way through the leftover Christmas ham, and taking a well-earned rest, our fearless Treasurer was working doubly hard - to apportion blame.
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Wayne Swan had been hoping desperately to break a 23-year hoodoo. A Labor government had not delivered a surplus since Paul Keating was Treasurer in 1989. But, in the shadow of Christmas, he’s had to give up the dream, break an election promise and admit he’s now likely to chalk up his fifth deficit, with the red ink totalling more than $170 billion.
It was Labor that made getting the books back into the black a test of its economic credibility. It was a “guarantee”, said Julia Gillard. It would be delivered “come hell or high water”, said Swan.
“You can’t run this country if you can’t manage its Budget,” the Prime Minister said in April last year. They are the political quotes that will now haunt the ALP and be used by the Opposition to attack the competency and truthfulness of the Prime Minister.
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A key aspect of our system of government is an impartial public service. In fact, this impartiality is enshrined in the Australian Public Service Act 1999, where it states:
(1) The APS Values are as follows:
(a) the APS is apolitical, performing its functions in an impartial and professional manner.
When this impartiality is undermined, our system of government is undermined. But this means very little to the Gillard Labor Government. This week, we have seen Wayne Swan direct Treasury officials to cost Coalition policies for no other reason than to try and discredit his political opponents. If this is not undermining the impartiality of the public service, then I don’t know what is.
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Here’s one number you won’t hear Wayne Swan spruiking: $173,315,000,000. That’s the amount of red ink officially booked by the federal Treasurer for his first four Budgets.
Since inheriting a surplus of almost $20 billion from Peter Costello, Swan has handed down four of the biggest Budget deficits on record - $27 billion, $54.8 billion, $47.7 billion and this week the final accounts were released for last financial year showing another deficit of $43.7 billion.
Yet the government members were congratulating themselves when Swan and Finance Minister Penny Wong announced that the latest figure wasn’t quite as bad as the $44.4 billion predicted just five months ago. Never mind that Swan had originally said it would be only a $22 billion deficit - you have to search through the ghosts of Budgets past to find that long abandoned number.
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Yesterday’s mini-budget tells an economic story but it is primarily a political document.
Outwardly designed to position the nation against the turbulence of a troubled world, its real unspoken mission is positioning Labor for the 2013 election.
At its core is Julia Gillard’s fear that carrying even a small deficit into the election that year, which most economists say would be perfectly justified and even prudent, would allow Tony Abbott to say Labor had never delivered a surplus and never would.
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That 2012-13 projected Budget surplus of just $1.5 billion is tea money in Australia’s $1.2 trillion economy. If someone in Treasury has a whip-around to feed the parking meters the Budget could end up back in deficit.
Well, not quite, but the existence of the surplus - should it actually come into reality - will be that perilous, and perhaps that transitory.
But the fact its existence is contemplated at all is remarkable in a global economy where many industrialised nations are on the brink of recession and would be delighted with even a manageable budget shortfall.
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Let us first consider what Wayne Maxwell Swan said on the 10th of March 2009. He stated that “the emerging economies of China and India are now expected to slow markedly”. Because of this, Wayne Maxwell Swan stated “it will be necessary to increase Government borrowing”.
The result was Wayne Maxwell Swan increased by $125 billion the amount able to be borrowed by reason of the Commonwealth Inscribed Stock Act 1911 and the Loans and Securities Act 1919. This resulted in the nation’s credit card having a $200 billion limit.
Now as we know, China did not go into recession so neither did we, in fact China hardly missed a beat but Australia has now gained the ignominy clearly spelt out by Dr Ken Rogoff of Harvard when he noted the countries with the greatest cumulative increase in real public debt since 2007.
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Note: Liberal MP Sophie Mirabella and Labor MP Richard Marles are among our favourite contributors to The Punch, and we have asked them to write a piece every Friday during this five-week election campaign giving their take on events.
The most talked-about aspect of the federal election campaign so far would have to be Labor’s vacuous and meaningless slogan “moving forward”.
Ms Gillard is too scared of the mess she left behind as Deputy Prime Minister to look back.
She cannot ask the Australian people to vote for her as Prime Minister when she is unable to defend her credentials as Deputy Prime Minister. And while I may earn the ire of many by even mentioning it again - given the Prime Minister’s nauseating repetition of the slogan (dubbed “mo-fo” by the twitteratti) – I have a suggestion that would lend it some meaning and accuracy. A simple addendum: “Moving forward at a cost of $100 million every day”.
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Well, I hope you all feel comfortable that you now owe $140 billion. If you take our population as approximately 22 million, that means you owe in excess of $6300 for each man, woman and child in Australia.
I will keep talking about debt until people realise the dangerous position it puts us in. We are borrowing in excess of $1 billion each week. We see every night on the news the problems of other countries that have not dealt with their debt but have waited for the inevitable when the debt deals with you. How could we be so foolish as a nation to be mounting up debt the way we are?
Then, to all intents and purposes, nationalise half of the sector of our economy which has actually kept us from the jaws of recession – the mining sector. This is something that would be more appropriate for Hugo Chavez or Evo Morales or Castro in Cuba. Australia hasn’t experienced this sort of insanity since the failed approach by the Labor party when they decided to nationalise the banking industry in 1949.
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Anthony Albanese has become one frustrated little bunny.
The Coalition opposed Rudd Labor’s wild cash splash which will leave Australians in debt for a generation or more.
So Lord Albo has been angrily lashing out at any Nationals or Liberal MP who has the temerity not to oppose any Federal Government spending in their local areas.
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I suspect there was a garbage bin full of “Rudd Recession” posters and TV Ads in Malcolm Turnbull’s office last week. Crosby Texter must have been furious. They were gearing up for the mother of all scare campaigns. Instead they are left with a second rate scare campaign on debt.
This is how it goes … 18 months ago there was no debt. Now debt is out of control. It’s $300 billion! Be afraid! Blame Labor! Of course 18 months ago there was no global recession. But don’t expect Malcolm to tell you that. Or how much he would spend. That would destroy the scare campaign.
Why? Because Malcolm would borrow almost exactly the same amount - $275 billion. That’s what makes this scare campaign more like Scary Movie than Wolf Creek.
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You may remember that great carpet ad with the late Pro Hart, where together with his dog Rembrandt, he totally trashes a rug with pasta, red wine, chocolate sauce and cake. He splashes it about, rolls around in it, and even fires a shot gun at it. The cleaner then walks in and famously says, in that great accent, Oh Mr Hart, what a mess!
The only difference I can see between the Rudd Government’s approach to fiscal policy and Pro Hart’s carpet antics, is at least Pro Hart produced a work of art (of sorts).
For the past eighteen months, Kevin and Wayne have been splashing around cash and rolling around on the carpet in others people’s money, like there is no tomorrow. They’ve taken a shot gun to the surplus, like Pro did with the cake, and splattered it all over the room.
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It wasn’t in the speech, it wasn’t even in the Budget At-a-glance or Highlights document, and it wasn’t anywhere in the 77 pages of press releases distributed last night – if you were looking for the size of the deficit you had to go to page 5 of the Budget Overview document.
Wayne Swan managed to get through 3876 words to the House of Representative last night without letting on the Australian Government was about to embark on a $57.5 billion deficit for 2009-10…
September 2008: Malcolm Farr writes in The Daily Telegraph that Kevin Rudd is considering taking on net debt for the first time in 12 years. Government goes ballistic in its denials. Newspoll shows ALP 55% - Coalition 45%
October 2008: Rudd announces the first stimulus package and says the cash will be distributed by Christmas. Punters are comfortable with the $10 billion bottom line. Newspoll shows ALP 54% - Coalition 46%.
November 2009: Rudd spills the worst-kept secret in Government - that the Budget will go into “temporary deficit”. Newspoll two weeks later shows ALP 59% - Coalition 41%.
December 2008: Harvey Norman reports bumper Christmas sales, up 9 per cent on previous year. Kevin Rudd Santa Clause jokes start. Newspoll shows ALP 59% - Coalition 41%....
Here’s a confronting concept to grapple with first thing in the morning: opposition assistant treasury spokesman Tony Smith saying that Kevin Rudd’s deficit will last longer than the Second World War.
Or so long that, if your first child is born on budget night next Tuesday, they will have enrolled at primary school by the time the Budget is back in the black.
The Daily Telegraph’s Sue Dunlevy reports this morning that next week’s economic statement may contain a deficit figure as high as $70 billion, $10 billion higher than most other estimates in the pre-budget marketplace. Wayne Swan and Kevin Rudd remain sanguine about the enormity of this figure.
But there’s one very big problem with their laid-back approach.
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