Government approves Santos Barossa pipeline and sea dumping

The Australia Institute Media Release Environment Minister Tanya Plibersek’s Department has approved a…

If The Jackboots Actually Fit …

By Jane Salmon If The Jackboots Actually Fit … Why Does Labor Keep…

Distinctions Without Difference: The Security Council on Gaza…

The UN Security Council presents one of the great contradictions of power…

How the supermarkets lost their way in Oz

By Callen Sorensen Karklis Many Australians are heard saying that they’re feeling the…

Purgatorial Torments: Assange and the UK High Court

What is it about British justice that has a certain rankness to…

Why A Punch In The Face May Be…

Now I'm not one who believes in violence as a solution to…

Does God condone genocide?

By Bert Hetebry Stan Grant points out in his book The Queen is…

As Yemen enters tenth year of war, militarisation…

Oxfam Australia Media Release As Yemen enters its tenth year of war, its…

«
»
Facebook

Tag Archives: deficit

Chris Bowen misses an opportunity.

Yesterday Chris Bowen addressed the National Press Club to announce a Labor initiative to have the independent Parliamentary Budget Office prepare the forecasts to be used in government budget and fiscal statements to allow for greater transparency, accountability and rigour.

He started well by talking about the Charter of Budget Honesty and how Joe Hockey has manipulated the figures to inflate the debt and deficit. He mentioned Hockey’s decision to give $8.8 billion to the RBA which was designed to maximise the deficit, attribute it to Labor, whilst hoping for increased dividends in the future. He also mentioned the effect of Hockey’s manipulation of assumptions about key projections like unemployment, inflation, terms of trade, and GDP growth.

Bowen briefly ran over the comparison of PEFO projections with MYEFO – the former being prepared independently by the secretaries of Treasury and Finance, the latter being a propaganda sheet prepared by Hockey and Corman.

I was optimistic for once. This is exactly what needs to be highlighted in the media because it is what this government is basing all its rhetoric on. The attack on the ‘leaners’ is necessary to avoid saddling our children with an unpayable debt. Apparently we don’t mind burdening them with an unpayable personal debt to pay for their tertiary education but we can’t have public debt because…ummm…we are the knights of No and we want a surplus.

But it went downhill from there.

Instead of continuing in this vein, Chris Bowen then went to great lengths to explain that this was not a criticism of Treasury for whom he has the highest regard. He backed away from direct criticism of Hockey’s lies, concentrating on what the PBO would do and who they would collaborate with. This was what stuck in people’s minds. The introductory part of the speech, by far the most important aspect, was forgotten and not one question by the ‘journalists’ afterwards related to Hockey’s deceit.

Straight afterwards on ABC24, Lyndall Curtis interviewed Matthias Corman who had already been out that morning pre-empting Bowen’s speech. In his usual fashion, regardless of what he was asked, Corman repeated his preprepared lines like a doll having the string in its back pulled. “Layboor’s debt and deficit disaster leaving us with $123 billion in deficits, debt spiralling to $667 billion, and no credible path back to surplus.” Despite Chris Bowen’s introduction, Curtis, like all other journalists, allowed this to pass without question.

So there we were, back where we started with Corman’s mantra ringing in our ears.

Bowen’s answers to the questions that were asked was entirely inadequate. Having admitted there was a budget problem, Bowen was asked how Labor intended to address it. His response – “I’m not going to reveal our policies today. We are in the process of carefully developing them and rest assured you will all know them well before the next election and they will be fully costed.” What a fizzer. Where was the vision for the future? Where was the promise of a better way? Where were the ideas even if the detail was still to be determined?

When asked about negative gearing, Chris nearly got a hernia twisting away from the question and talking instead about housing affordability whilst making it clear that he was not suggesting specific changes to taxation. When pressed further about the very low numbers of first home buyers, he waffled on unconvincingly about stamp duty and construction.

The speech was the wrong way around. He should have started with the changes he wanted to make with the PBO and then outlined why he wanted those changes by listing the duplicity engaged in in the preparation of MYEFO.

Just for the record:

PEFO gives independent predictions using Labor policies. MYEFO gives Hockey’s assessment using Coalition policies.

PEFO shows a cumulative deficit of $54.6 billion over the forward estimates with a predicted surplus of $4.2 billion in 2016-17.

MYEFO shows a cumulative deficit of $122.7 billion with no surplus predicted over the forward estimates.

PEFO states, in 2013-14, net debt for the Australian Government general government sector is estimated to be $184.0 billion (11.7 per cent of GDP) and is projected to return to zero in 2023-24.

Hockey’s MYEFO predicts, nay BLARES, a debt of $667 billion. This figure is quoted ad nauseum every time you press the button on Matthias Corman’s belly. This is a projection of the GROSS debt in a DECADE under COALITION policies.

Let me make that absolutely crystal clear…this is a projection of the future with the Coalition’s decisions to axe the carbon tax which, according to MYEFO, “will reduce receipts by $6.3 billion over the forward estimates period” and the repeal of the minerals resource rent tax which “reduces receipts by $3.4 billion over the forward estimates period”. Add in the decisions to repeal the changes to the FBT and superannuation taxation and to gift $8.8 billion to the RBA, and also the payment to Rupert Murdoch of $882 million from the tax department, as well as the PPL that won’t go away and billions for Direct Inaction, and I would contend that Hockey and Corman OWN that projected debt. Increased spending on defence, searching for missing planes, attending memorial services whenever and wherever you can…these are all discretionary decisions made by this government.

Gross debt was approx. $280 billion when the Coalition took over. It is now $337.686 billion. Since September 30 2013, they have been borrowing over $157 million extra a day.

This article quotes the numbers presented in recent fiscal documents. I wish Chris Bowen had rammed it home a bit harder because Joe is setting us up to say “look how much I have saved” when the numbers tell a different story.

Voter Directed Learning

I have never been a politician but I have always been big on giving advice. In my opinion, this government has things completely arse up and, being an experienced adviser myself, I blame their advisers.

Many politicians have few qualifications or expertise that can inform them about the intricacies of the departments that they represent. Christopher Pyne, for example, went from President of the Young Liberals to Parliament. At the age of 25, with less than two years’ work as a solicitor under his belt, he entered Federal Parliament and now, over 20 years later, he is being paid by us to make crucial decisions about education that will affect generations of children. He has chosen to ignore the expert advice from the Gonski panel because it is “too expensive”.

Photo by The Office Time Machine

Photo by The Office Time Machine

We hear daily how courageous our government considers itself to be, out there in the trenches “selling” the budget. That terminology really grates on me. The snake oil merchants will say anything to sell their product, as shown by how they played their own colleagues in the National Party by threatening to scrap the diesel fuel rebate to trick them into agreeing to increasing the fuel excise. How clever of them (so they think).

And I wonder who came up with the afterthought of a “medical research” slush fund to sell the co-payment. It of course has the added benefit of reducing the deficit by getting sick people to hand over $20 billion that will just sit there to make Hockey’s numbers look better. Yet this is sold to us as a way to make “medicare more sustainable”? I am sick to death of hearing “nothing is free”. Have they forgotten that we all pay a medicare levy already and were happy to increase that to pay for the NDIS, which they then try to tell us was unfunded?

So….onto my advice to this government. I think they need some voter directed learning.

Get rid of all your current advisers and stop thinking that image and spin and “selling the message” are more important than the message itself. Be advised by experts who do not have political or business conflicts of interest. Respect the knowledge and experience of public servants who have served many masters. Don’t hamstring your real negotiators in favour of dragging round a planeful of businessmen and journalists for photo opportunities.

Once you have cleared the decks of toxic influences like that odious Textor creature, start thinking about what you actually want to achieve. All I hear from this government is “get rid of debt and deficit”. That isn’t a goal. It may be the best means to achieve a goal, though that is questionable, but it is not a goal within itself. They are just numbers on a fiscal statement.

Think how we can improve our society. We need to close the gap for our Indigenous people, we need to educate our children, we need healthcare to remain universally available, we need to protect our environment, we need to keep people employed and lift people from poverty, we need to develop new industries for the future, we need to provide a safety net for those who fall on hard times, and to provide for an aging population both in care and in utilising their skills and experience, we need affordable childcare and housing and public transport. These are the things we should be striving for.

The next step is to work out how to raise the money for the programs to achieve these goals. Obviously it is preferable to increase our income rather than cutting spending. That should be investigated first. After you maximise your income you THEN look at prioritising the expenditure of that income to achieve your goals.

Stop demonising debt. It is just silly. Every successful business and individual uses debt to their advantage. Borrowing to invest in ventures that help you achieve your goals is a normal course of events. One must assess the value of the investment, the possible return it will bring, and one’s ability to service the loan.

Stop selling profitable assets to eliminate debt. The only reason someone sells a profitable business is because they want to invest the money in another more profitable venture, or they want to retire and live off the proceeds of the sale. You don’t get rid of a source of revenue to get rid of a debt. It makes no sense.

Government assets are usually sold for less than their potential value. If it is not a profitable asset then buyers pay very low prices for white elephants unless they have future potential for development. If it is a profitable business, then you can be sure that the buyer thinks they will make a greater profit which will usually be at the expense of services and jobs.

Abbott has had to admit that our economy is in good shape currently so the words crisis and emergency should not be used – they are incorrect. We do not need a fire sale.

I think everyone can see that adjustments need to be made to prepare for the future. That will always be the case in government. You cannot be so set in stone on one course of action when you are at the mercy of volatile world markets. What we need are long term goals with the ability to make short term reactions to even out the effects of changes in the global economy. We are relatively well-placed for the reaction part, but we are sadly lacking in any long term planning.

There are many reasons this budget stinks and why the sheisters are having trouble finding anyone to buy their spin. They are giving up revenue hand over fist to pander to their financial backers while hitting the poorest and most vulnerable to tighten their belts for the sake of the nation and sacrificing many long term projects that are already underway.

There are countless articles showing how billions in revenue could be easily raised, not least of which would be just cutting concessions to the rich and getting them to pay the tax they are supposed to.

Lobbyists for average Australians are being undermined at every turn. The Human Rights Commissioner for the Disabled – sacked. Countless health advisory groups and social welfare groups – disbanded. Indigenous and refugee advocacy groups – defunded. Unions – demonised.

Policies are being dictated by the mining companies, the big polluters, the gambling industry, the big banks, and the big pharmaceutical companies.

Not one of these groups has any motive other than to maximise their profits. They will only consider social cost if regulated to do so. This government is very obviously an arm of big business and is using our money to further their profits and any trivial window dressing will not hide that fact.

March on June 24. We need to remind them that we hold more votes than all their rich backers and lobbyists combined and the resources at their disposal are part of our common wealth.

Maths is a marvellous thing

Like climbing mountains, maths is a marvelous thing. It is objective rather than a matter of opinion. It can’t be argued with. A fact is a fact.

But like many other powerful tools, maths can be used for evil in the hands of the unscrupulous.

Take our present government – please.

On a Liberal Party page called “The Prime Minister – securing Australia’s economic future” our fearless leader makes certain claims.

“When the Coalitions (sic) last left office, Australia had a $20 billion surplus and $50 billion in the bank but over six years, Labor squandered this and ran up five record deficits and a further $123 billion in projected deficits and gross debt headed towards $667 billion.”

Firstly, how many Coalitions do we have? There is the one with various forms of the National/Country party – are there other agreements I should know about?

Now, how about those numbers.

From the 06-07 Budget papers:

“Net debt, which reached zero in 2005-06, improved by $25.4 billion over the financial year to -$30.8 billion”.

From the 07-08 Budget papers:

“Over 2007‑08, the level of Australian Government net debt improved to reach ‑$42.9 billion by 30 June 2008”.

Labor won the election on November 24, 2007, so the Coalition left a net debt somewhere between -$30.8 and -$42.9 billion – not the $50 billion claimed by Mr Abbott.

In 2006-07, the Australian Government general government sector recorded an underlying cash surplus of $17.2 billion, not quite the $20 billion claimed but that could have been the case by the time of the election.

When Mr Abbott said we had $50 billion in the bank when these “Coalitions” left office he was speaking about net debt, albeit somewhat inaccurately. Gross debt is another matter. The Howard government never eliminated gross government, and never once since Federation has any government eliminated gross government debt. Nor should it and no government ever will. As at 30 June 2007, our gross debt was $58.284 billion.

In the first decade of the century, Australia struck it lucky. A voracious global appetite for commodities meant that we could sell unimaginable quantities of our mineral resources at unimaginable prices. The result was a windfall to our public coffers of at least $180 billion over and above long-term GDP growth trend over the six years from 2002 to 2008.

In 2001-02, a ton of exported thermal coal sold for around US$27. A ton of iron ore went for US$13. By 2008-09, these prices had reached US$131 and US$106, increases of fivefold and eight-fold respectively.

In 2001-02, we exported 90 million tons (mt) of thermal coal and 165 mt of iron ore. By 2008-09, these figures were 115 mt and 363 mt. Eight years into the decade, growth in exports of these two commodities alone were delivering an extra $49 billion in national income to Australia each year. The gold price increased by 600% from 2001 to 2011, while the value of our liquid natural gas exports almost doubled over the same period to $11.1 billion.

What Tony also fails to mention is that $61 billion of the reduction in net debt came from the sale of Publicly Traded Enterprises (PTEs) between 1993 and 2006.

Telstra $45.6 billion

Commonwealth Bank of Australia $6.8 billion

Airports $8.3 billion

Qantas $2.1 billion

Having a look at the profits of these companies (OK maybe not Qantas), one wonders whether we should have shown less haste in selling off our assets to reduce a debt that could have been paid off from the profits these companies make. We would also be able to afford a real NBN because we wouldn’t be paying Telstra billions for the privilege.

And it’s not like the Howard government stopped borrowing money. Even though they were raking money in from the mining boom and the sale of assets, including most of our gold reserve at rock bottom prices, the Howard government went to capital markets on no fewer than 400 occasions to borrow money.

Between March 1996 and November 2007, there were 135 lines of bonds that were taken to market in various bond tenders which were issued with a face value of $51 billion, while there were over 280 T-Note tenders with a face value of over $220 billion.

Indeed, in the three months before the November 2007 election, the Howard government went to the bond market on 8 separate occasions to borrow money with a series of bond tenders. Even during the election campaign, just 11 days from polling day, it borrowed an additional $300 million in bond tender number 236. In the final term of the Howard government, from October 2004 to November 2007, there were 43 bond tenders or times the government borrowed money. If we had tens of billions in the bank, why was he still borrowing right up until the death?

In its last five years, the Howard government spent $250 billion, including $133 billion in new spending and $117 billion in tax cuts. Australians could be sitting on a $300 billion sovereign wealth fund to rival the oil-rich nation of Kuwait if we had banked the budget windfall of the now deflating mining boom.

Compared with gross debt, net debt is a better measure of a government’s overall indebtedness as it also captures the amount of debt owed to the government. Which begs the question as to why Hockey and Abbott use net debt when referring to Howard and gross debt (projected in ten years’ time no less) when referring to Labor?

For some historical perspective, gross Australian Government debt increased from around 40 per cent of GDP in 1939 to around 120 per cent of GDP in 1945. By 1974, it had declined to around 8 per cent of GDP.

Net debt reached 10.4 per cent of GDP in 1985-86. It took only three years (from 1986-87 to 1989-90) to reduce net debt by around 6 percentage points of GDP.

Ignoring the war years, net debt peaked at 18.1% of GDP in 1995-96. According to Mr Hockey’s own budget, gross debt in May 2014 was $319 billion and, in 2014-15, net debt for the Australian government is estimated to be $226 billion (13.9 percent of GDP) as opposed to the $667 billion bullshit.

Tony tells us that Labor ran up 5 record deficits. Whilst this may be true if you look at scary numbers with lots of zeroes after them, it is completely false if we talk percentages of GDP. For example, the deficit in 83-84 was 4.2% of GDP, as was the peak deficit in 2010 at the height of the stimulus spending. Since 2010 the deficit has been decreasing and was 1.2% of GDP in 2013.

Then there is Tony’s claim that Labor left “a further $123 billion in projected deficits and gross debt headed towards $667 billion”.

This claim is based on MYEFO which can only be described as a Coalition propaganda sheet rather than any sort of realistic fiscal outlook so I will treat that document with the ignore which it deserves and go back to PEFO which was an independent assessment of our fiscal outlook just before the change of government, based on Labor policies.

According to PEFO, the cumulative underlying cash balance (total deficit) over the forward estimates was $54.6 billion with a surplus in 2016-17. Mr Hockey’s budget shows a cumulative deficit over the same period of $107.4 billion – a deterioration of $53 billion in 9 months, with no surplus predicted over the forward estimates.

Mr Abbott then goes on to say:

“Our plan will strengthen the economy, create jobs and reduce Labor’s debt by almost $300 billion. We need to take action now or an even greater burden will fall on our kids’ generation. Now, the Labor Party is desperately trying to scare people by spreading untruths about the Budget. For example, they won’t tell you that funding for schools and hospitals increases each and every year under our Budget. And that the rate of the pension will continue to go up twice a year, every year.”

By Mr Hockey’s own words, the debt is projected to rise to $226 billion in the next financial year – reduce Labor’s debt by $300 billion? I don’t think so.

And speaking of our kids, how about the danger you are placing them in, both physical and fiscal, by taking no action on climate change.

And what the Coalition won’t tell you is about the myriad of cuts to health and education and pensions. Yes, there will be increases on current funding each year but they will be much smaller than previously agreed to and many programs and concessions have been cut. They also do not take into account population increase which necessitates yearly increases in funding regardless of any reforms.

Joe Hockey said “Of the 17 top surveyed IMF countries, Labor left us with the fastest growth in spending of anyone in the world … and they left us with the third highest growth in debt of anyone in the top 17”. This is true if you look at percentage increases but if you spent $10 last week and then $20 this week, that represents a 100% increase, so these figures mean nothing without context.

Saul Eslake, chief economist at Bank of America Merrill Lynch, says Mr Hockey’s comments “represent only a partial summary of what the IMF actually says in this section of it its report”. He says Mr Hockey omits one important conclusion, “namely that Australia would still have the second-lowest general government net debt as a per cent of GDP among the countries shown by 2018”.

In its generally upbeat assessment of Australia’s economic position, the IMF says “gross debt is expected to peak at around 32 percent of GDP in 2015 and is among the lowest in advanced nations”.

Elsewhere, in the fund’s recommendations for Australia’s fiscal policy, it says “Australia’s modest public debt gives the authorities scope to delay their planned return to surpluses in the event of a sharp deterioration in the economic outlook”.

There is only one side of politics trying to scare people by spreading untruths. Maths doesn’t lie.

 

Like what we do at The AIMN?

You’ll like it even more knowing that your donation will help us to keep up the good fight.

Chuck in a few bucks and see just how far it goes!

Your contribution to help with the running costs of this site will be gratefully accepted.

You can donate through PayPal or credit card via the button below, or donate via bank transfer: BSB: 062500; A/c no: 10495969

Donate Button

Let’s be absolutely crystal clear about this

Photo by The Daily Telegraph

Photo by The Daily Telegraph

If you click on the official Prime Minister of Australia government page the first thing you will read is:

“Over six years, Labor ran up a $667 billion debt on the nation’s credit card.”

Aside from wishing that the Prime Minister of Australia had a more visionary or engaging opening line, it is a bald faced lie and that isn’t a good way to convince people to trust you.

You will be subjected to a rolling slide show of Tony, Joe and Matthias, photographed in various serious looking poses. Is anyone else getting sick of these photos of Tony sitting at tables with people surrounded by lots of booklets and oversize graphs? Is that supposed to convince me that he knows what he is doing? Because he has his photo taking wearing a white lab coat trying to look into a microscope am I to say oh well the $7 co-payment must be a good idea?

But back to the lie.

“Ran” indicates past tense – in fact Tony Abbott specifically states that this happened “over six years”. What he fails to mention is that the figure of $667 billion was a projection for possible debt in ten years’ time from Hockey’s MYEFO report produced last December, and it included increased Coalition spending decisions like the $8.8 billion gift to the RBA and all the interest that will cost us, and the foregone revenue from the carbon and mining taxes, and changed assumptions about future unemployment – in other words it was a political exercise designed to come up with as big a number as they could so they could then justify draconian measures as they claim to be reducing it.

Using the term “nation’s credit card” is purely designed to cause fear. The nation doesn’t have a credit card. In fact we actually print money and can do so if we have to as they have done in the US. Credit cards can get individuals into serious debt and the interest rate is crippling. Using that term makes people think of that rather than a sensible understanding of how government finances work.

While the Coalition continues to peddle this lie I will continue to remind people of the truth because the Australian people have a right to know the real state of our finances. And because nothing pisses me off more than getting lied to about important stuff.

So what is the truth?

The independent pre-election economic and fiscal outlook’s (PEFO) medium term projections, using long-standing methodology, show that on Labor’s policy settings the Budget reaches a modest surplus in 2016-17, surplus grows to 1% of GDP in 2020-21 and net debt returns to zero in 2023-24.

The latest Budget update shows net government debt for 2013-14 of $191.5bn, or 12.1% of Australia’s GDP (not $667 billion Mr Abbott). By contrast, net government debt in advanced economies around the world averages 74.7%, according to the International Monetary Fund.

Gross debt in 2023‑24 is projected to be $389 billion with surpluses projected to build to over one per cent of GDP by 2024-25. There are no surpluses predicted over the forward estimates, there is a higher debt, and surplus of 1% 4 years later than predicted by PEFO using Labor policies.

After the GFC hit, the deficit peaked at $54.5bn, or 4.2% of GDP, in 2009-10 – less than half the advanced country average. In 2012-13, the federal deficit was $18.8bn or 1.2% of GDP, compared to an advanced economy average of 4.9%.

The claim that Labor left “fiscal time bombs” and secret cuts and spending is another blatant lie. In the 2013-14 Budget, Labor took the unprecedented step of releasing 10 year figures for the National Disability Insurance Scheme and Gonski school reforms, demonstrating how they were funded over the long term. Those figures, as well as the efficiency dividends on the public service, were there for all to see. The fact is that Tony’s election promises were made knowing this but, as we saw, working out how to pay for his promises was not on his mind.

Australia is one of only 10 economies in the world with AAA ratings from all three agencies – in the company of other countries with strong public finances like Germany, Canada, Sweden, Singapore and Switzerland. This status shows our finances are considered to be stronger than those of the vast majority of advanced economies – including the US, the UK, Japan, France and New Zealand.

Despite headlines to the contrary, and ill-informed statements by the Prime Minister, the agencies have confirmed our credit rating with a stable outlook.

I hesitate to compare government finances with individual or business finances, but I will say this. When you go into significant debt, you usually aren’t looking to pay it off completely the next week. The decision to go into debt is made by looking at your assets, your ability to service the debt, and the value of the investment of the debt.

We do need to make some changes. There will never be a time when fine-tuning isn’t needed because we live in an ever-changing world with an often volatile global economy. Situations change requiring adjustments to be made.

We are not in any sort of crisis. We have the luxury to be able to do long term planning to meet the challenges of the future whereas so many other countries are having to make decisions for the short term as a matter of survival.

Tony Abbott is looking for a legacy for himself rather than for our nation. He wants to say the debt was huge and I made it smaller and he doesn’t care if he has to lie about figures to make this look true. If he really wanted to reduce debt why on earth would he stubbornly insist on his paid parental leave scheme? Why wouldn’t he look at negative gearing and superannuation tax concessions and capital gains reductions? Why would he buy 58 fighter jets that won’t be in service until sometime next decade?

The “Infrastructure Prime Minister” is building the Abbott Highway to Hell to speed up the path to destruction and he is more than happy to sacrifice anyone who can’t help him along his way.

 

“The visionary lies to himself, the liar only to others.”

The Charter of Budget Honesty was introduced to stop incoming governments from claiming the previous government lied about the true state of the nation’s finances. The heads of the Treasury and the Finance Department are required to put out their own set of numbers, the Pre-Election Fiscal Outlook (PEFO), during the election campaign. This gives a neutral baseline against which we can assess the new government’s figures. PEFO is the only set of Budget forecasts that truly belong to the bureaucrats – all other documents (like the Budget) are issued by ministers.

The outlook in PEFO was remarkably close to the figures in the Economic Statement issued by Chris Bowen and Penny Wong just before the election was called. The public servants in PEFO projected the Budget balance out for a decade. They found that the Budget was on track, before the election, to return to surplus in 2016-17 and keep improving from there, eventually hitting a surplus of about 1% of GDP by 2023 with net debt approaching zero.

Despite the Charter and the neutral numbers in PEFO, Joe Hockey still played the Budget black hole card. The new government’s mini-Budget (MYEFO) contained dramatically bigger deficits than the bureaucrats’ PEFO projections, with no surpluses in sight.

The line Hockey has been pushing is that not only did Labor hide the level of deficits in the current budget cycle, but that it left a series of hidden spending commitments in the unpublished years beyond forward estimates.

“From 2017-18, payments are projected to increase substantially (a real increase of almost 6 per cent in just one year) because Labor back-ended expenditure in a number of key areas and hid it from the public.”

Strange…this member of the public was able to find all those figures without the aid of any staff. In fact PEFO specifically says “Specific program estimates are included across the ten years for DisabilityCare Australia, the National Plan for School Improvement, and the Nation Building 2 and Nation Building 3 programs.”

Labor in fact revealed the funding for the National Disability Insurance Scheme in the budget last May, with new spending broken down out to 2019.

“The Australian Government will provide $19.3 billion over seven years from 2012-13 to roll out DisabilityCare Australia across the country. This brings the Australian Government’s total new investment in DisabilityCare Australia to $14.3 billion over the period.

The Australian Government will provide funding of $11.7 billion to DisabilityCare Australia in 2019‑20, the first year after full national rollout. This represents 53 per cent of the $22.2 billion total cost of running DisabilityCare Australia, with the States and Territories providing the remaining funding.”

This was to be funded by the increase to the Medicare levy.

Likewise the spending for the Gonski reforms was spelled out in detail as was its funding.

“The Budget provides an additional $9.8 billion over six years from 2014‑15 for new needs-based school funding arrangements.

To ensure that the National Plan for School Improvement will be fully funded, the Government has needed to make tough decisions — redirecting savings from higher education, self-education tax deductions and business taxation; and better targeting family payments.

In addition, a range of national partnerships for education will be ceased (or not renewed) and funding will be redirected to the National Plan for School Improvement. As well as helping pay for this historic reform, these saving decisions will also will help improve the position of the budget in the next few years.”

Labor copped a lot of flack for its proposed cuts to university funding, which were really a smaller increase rather than an actual cut. The reason they are opposing these savings now is because they made the cuts to fund education reforms, not to spend on roads.

Hockey also bemoaned supposed hidden funding increases to foreign aid and defence.

“The fact is Labor’s left us with a massive forecast increase in foreign aid, a massive increase in defence – for example in one year, there’s meant to be a real increase in defence spending of 13 per cent, a 66 per cent increase in foreign aid.”

The increase in foreign aid was also in the budget papers - it was actually a reduction on previously proposed spending, with the government’s Millennium Development Goal commitment to lifting foreign aid to 0.5% of gross national income put back another year to 2017. The government spelt out its planned increase in foreign aid up to and including 2017-18.

As Crikey pointed out in April,

“Labor invited the Prime Minister to spell out the government’s MDG policy, which he duly did: aid is to reach 0.5% of GNI when the budget returns to surplus. Which raises the question of why, in Hockey’s Mid-Year Economic and Fiscal Outlook in December, Hockey left Labor’s MDG aid funding increase intact, in defiance of the government’s own policy. The answer, of course, was that it would inflate the budget deficit for 2017 and beyond.”

And on defence, the budget tells us that defence spending for the 2014-15 financial year will rise by $2.3 billion to $29.3 billion, a real increase of 6.1%, with a commitment to building defence spending to two percent of GDP within a decade. So it seems that wasn’t a nasty surprise either.

Interestingly, the Labor budget also said “Government has chosen not to offset the hit to revenue in the near term, as it would come at significant cost to jobs and growth.”

In a budget press release, Joe Hockey said

“While the former Government left Australians with $123 billion of deficits and no path back to surplus, our budget repair efforts have meant that deficits in our first four years are now projected to be $60 billion, with a surplus of well over one per cent of GDP projected by 2024-25.”

Ummmm, according to Treasury and Finance, Labor policies would have got us to surplus in 2016-17 with a surplus of 1% of GDP by 2023.

Hockey goes on to say

“Gross government debt is now forecast to be $389 billion in 2023-24, compared with the $667 billion left behind by the former Government. This reduction in projected debt of nearly $300 billion also assumes that we provide future tax relief to address bracket creep.”

I am not sure why he keeps talking about gross debt, I assume because it is a bigger number, but he really should look at the government’s own website which says

“The August 2013 Pre-Election Economic and Fiscal Outlook (PEFO) estimated that net debt would rise to 11.7% of GDP in 2013–14 and peak in 2014–15 at 13.0% of GDP. These levels of net debt are not unprecedented in Australia. Between 1970–71 and 2011–12, net debt level as a percentage of GDP exceeded 10.0% ten times (mainly in the 1990s)..…compared with other advanced economies, Australia’s net debt levels are comparatively low, and have been for some time.

The PEFO projected a return to surplus of 0.1% in 2015–16.

Although Australia’s fiscal balance fell to a low in the context of the GFC, its structural budget balance is reasonable compared to other advanced economies.”

When Hockey says that Labor left us with a debt of $667 billion, he is quoting a figure from his own MYEFO document which included his decisions to cut revenue from the mining tax, the carbon tax, the 15% tax on superannuation income over $100,000 a year, and the Fringe Benefits Tax rort on novated leases.

It also included his inexplicable decision to hand $8.8 billion of borrowed money to the Reserve Bank. The sale of Medibank Private - a $4-5 billion contribution to the budget - will be spent on roads because Abbott wants to be an “infrastructure prime minister”, when it could cut the budget deficit or the debt. That could be $13-14 billion off the deficit and debt right there - or an interest saving of more than half-a-billion dollars a year. Scrap the company tax decrease, scrap the Paid Parental Leave scheme, close a few corporate tax loopholes and tax concessions for the wealthy and we would be well on the way to addressing the challenges of the future.

So what it boils down to is that Hockey confected a large future debt to justify ripping the heart out of our most vulnerable so he can say he is being “responsible” by getting the young, the sick, the unemployed, the elderly, the disabled, the single parents, and anyone else who doesn’t have a voice, to pay for his claim that he might improve his own fictional bottom line in ten years’ time.

In the mean time we will give up the Gonski reforms, the real NBN, all action on climate change, environmental safeguards, research, renewable energy, hospital funding, universal healthcare, the ABC…all while sending a large percentage of the population into poverty.

The carbon tax doesn’t sound so bad now, does it?

“I’m not upset that you lied to me, I’m upset that from now on I can’t believe you.”

― Friedrich Nietzsche

 

Like what we do at The AIMN?

You’ll like it even more knowing that your donation will help us to keep up the good fight.

Chuck in a few bucks and see just how far it goes!

Donate Button