Size doesn’t matter, it’s how you use it
When Joe Hockey produced his first fiscal statement, the December 2013 MYEFO, he did everything he could to make the debt and deficit look as bad as possible, making spending and revenue decisions (including giving $8.8 billion to the RBA) which increased the 2013-14 deficit by $16.8 billion.
His projection for 2016-17, after three Coalition budgets, was a deficit of $17.7 billion, net debt of $280.5 billion (15.7 per cent of GDP) and a face value of Commonwealth Government Securities on issue (gross debt) of around $460 billion.
Moving forward to Scott Morrison’s May 2016 budget and we find an estimated deficit of $37.1 billion in 2016-17, net debt is expected to be $326.0 billion (18.9 per cent of GDP rising to 19.2% next year) and CGS on issue is expected to be $497 billion rising to $581 billion in 2019-20 and $640 billion by the end of the medium term (2026‑27).
Three years at the helm and, not only they have only made things worse, our standard of living has gone backwards.
Morrison tries to blame the Senate but that argument doesn’t add up.
In December last year, Finance Minister Mathias Cormann said nearly 90 per cent of all the budget measures had been passed.
Cuts to universities announced by the Abbott/Hockey partnership that did not get through the Senate are included in this budget. This is a $2 billion ‘saving’ starting with a $100 million cut in the next year, increasing to half a billion for each of the following two years, and nearly $800 million a year by 2020.
Another saving is deferral of the child care subsidies promised in the last budget, they’ve been pushed backward another year pending approval of cuts to family benefits.
It seems they are counting the savings of measures not passed by the Senate but not the cost of stalled promises.
The biggest spending cut in Morrison’s budget is actually a diversion of funds already in the Social Services portfolio to save money for the future of the National Disability Insurance Scheme. So the saving will eventually become expenditure, but beyond the forward estimates.
They also increased the public service efficiency dividend, which is leading to even more job losses.
These were the ten biggest savings in the budget in $m:
1 National Disability Insurance Scheme Savings Fund 2,186
2 Higher Education Reform – further consultation 1,982
3 Public Sector Transformation and the Efficiency Dividend 1,424
4 Jobs for Families Package – deferred implementation 1,103
5 Aged Care Provider Funding – further revision of the Aged Care Funding Instrument 1,152
6 Medicare Benefits Schedule – pause indexation 925
7 Asset Recycling Initiative – return of unallocated funds 854
8 Youth Employment Package – Work for the Dole – reform 494
9 Industry Skills Fund – efficiencies 223
10 Job Commitment Bonus – cessation 242
Every time you hear the phrase “we must live within our means”, or you are told something is “unsustainable”, remember that this government has committed to spending $400 billion over the next twenty years on war toys.
To increase Newstart by $50 a week would cost about $2 billion a year. Funding years 5 and 6 of the Gonski reforms would cost about $4.5 billion.
Just the weapons for the new submarines will cost us $5-6 billion. The only time an Australian submarine has fired in anger was four unsuccessful attacks on Turkish ships in 1915 before being damaged by a Turkish gunboat and scuttled by her crew. The weapons for the fighter jets will cost another $7 billion.
They are spending over $43 billion on “key enablers” for the military yet baulk at spending on key enablers for society.
It is often said that size doesn’t matter, it’s how you use it.
Governments should not be afraid to take on debt to invest in productivity enhancing ventures but if they continue to waste money on things that bring no return then it is inevitable that we will go backwards.
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13 comments
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John Kelly
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townsvilleblog
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jim
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Backyard Bob
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Kaye Lee
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Steve Laing - makeourvoiceheard.com
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jim
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Anomander
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Kaye Lee
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Bollocks
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jimhaz
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Michael Hitchins
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Don A Kelly
Return to home pageThe situation now, is far worse than when Tony Abbott and Joe Hockey told us in 2013 that we had a budget emergency; when a compliant media sucked up every word, too lazy to object. How is it that the economy can be in such a poor state today, worse than in 2013, and the same people are telling us a completely different story and once more, getting away with such blatant dishonesty?
Our “budget emergency” LNP manufactured, would be alleviated if the corporations who refuse to pay tax to this country were made to pay even a token amount such as a mandatory 15% of income. Why do the Australian workforce including those of us who earn under $80,000 p.a. always get saddled with the debt that others benefit from. We badly need this AIM Network to expose the truth for Australian citizens, because the MSM won’t in most cases do it. Our standard of living is slipping because when workers go for a pay rise they are bullied down to 2% when at least 5% is needed, wage growth has been the slowest on record this year, and low income families like mine are really feeling as though another deep recession is just around the corner. Even if we achieve a progressive Labor government in July they will have a hell of a job to get this staid economy moving again, at least they have pledged to collect taxes from those who constantly avoid paying to their country, the responsible amount of tax, and continue to parasite the Australian “people.”
Anything good for Australia is quickly branded as luney left wing by this hard right wing Liberal liars all backed up by the Murdoch media even our transition to a new economy….” energy minister Josh Frydenberg, among others, have been highly critical of Labor’s more ambitious renewable energy policy, and they have been attacking it with the full and vocal support of the Murdoch media, desperate to link growing renewables to economic catastrophe. http://reneweconomy.com.au/2016/is-the-coalition-talking-up-wind-and-solar-or-talking-them-down-84349
It is often said that size doesn’t matter, it’s how you use it.
Curious. What does this mean, exactly? 🙂
A big debt is not necessarily a bad thing provided you know how to spend it wisely
The issue is that much of the problem is hidden from sight. There are so many unemployed professionals here in WA, courtesy of flooding the market with cheap iron ore, but you don’t see them demonstrating or even shouting about it, and they will still no doubt vote Liberal in July (if they haven’t joined the ranks of the mentally ill before that point).
For all his talk, Turnbull has no plan. And he undermines his talk by his actions. How can we have an innovative, agile economy with a third world internet? Or without a big push towards free energy? Instead we are putting our economy on a war footing! Buying warplanes, building warships. WTF.
But a lazy media pander to the two-party system because it makes their gig so much easier. They would rather talk about the froth than the coffee. Key issues are quickly forgotten when the next piece of froth emerges. And still four weeks of this crap to go.
Could the “our” Government hold too much sway on just whats get to be headline news.?.
Considering how much money they are prepared to blow on extravagant military toys, one could assume they are over-compensating.
Ya think?
“Let’s see now… Goldman Sachs 90%, Israel 70%, Legarde 50%, Me 50% …”
“What are you doing Malcolm?”
“Just working out next years budget.”
“Ok, don’t forget Murdoch 50%”.
“Shit… Tony, there’s not enough money”.
“Just tell them Labor lied about the state of the economy and we’re going to have to cut back on welfare and raise all the taxes.”
“That’s a good idea but do you think they’ll fall for it?”
“When I was PM I did the same thing and almost got away with it so now that they’re conditioned, just go ahead and do whatever it is that pleases you”.
“Hmmm, wonder how much I’d get for Tasmania…”
[Every time you hear the phrase “we must live within our means”, or you are told something is “unsustainable”, remember that this government has committed to spending $400 billion over the next twenty years on war toys]
Maybe global warming outcomes and resource depletion will put nations on a continuous war footing. We could end up with a world arms race and a resulting lack of spending on GW prevention.
Now we know they could spend halve the above, 200b, on global warming, but they may regard such endeavours as hopeless as we are such a small player and world population and consumption demand keeps increasing. Under such a GW prevention based system the rich could lose out on coal/oil investment income or lose status to the new renewables companies, and as they cannot tolerate that, instead of prevention they protect their interests via the military method (copying off the US again) which taxpayers pay for, not them. Well after it becomes essential that large scale remedial actions must occur, taxpayers will need to pay for that as well.
I’m not particularly serious about the above, but we are talking about, and competing against in terms of distribution, those with strong psychopathic tendencies.
I know its asking a lot but it’d be nice if the conversation could turn away from neo-liberalism and their economic ideology and lies.
what they are doing to the economy is going to push us headlong into a depression. unfortunately talking about deficits and government debt, even if you’re decrying liberal management of the economy, is playing into neoliberal economic rhetoric.
I know its preached everywhere, so its hard to take a step back and start from the foundations, especially when ‘economists’, the same blindsided by the GFC, are still used as informed sources for some reason, but there is no risk of Australia running out of money, ever.
with that in mind, how can we ever have debt problems if we can never run out of money?
taxes don’t pay for anything, they are used to control inflation and guide spending.
every time the federal government spends money on something they are spending Australian dollars into existence, from thin air, approved by the houses of government.
I beg of you to stop talking about a non existent deficit and debt and instead focus on what the government are doing with Australia as a country, do we want to punish the most vulnerable, give hand outs to the already rich, dismantle our public services, buy faulty weapons, buy any weapons even, what do we want?
talking about the federal government financial statement like it has any relation to a household or business budget is a grave mistake and one that limits the conversation to their point of view when it is comprehensively incorrect.
Michael…I agree 100%. The problem is that the neo-liberal groupthink has permeated into the public debate. Tell a lie often enough and it becomes accepted as fact. Get a person young enough and you can get them to believe anything.