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Transfield shares go up and so does the debt

LABOR CRASHES THROUGH PREVIOUS DEBT LIMIT TOPPING QUARTER OF A TRILLION DOLLARS

October 12, 2012

Joint Media Statement: Andrew Robb and Joe Hockey

The Gillard Government has driven up Australia’s credit card to a record $256.4 billion according to latest Australian Office of Financial Management (AOFM) figures.

The previous debt ceiling of $250 billion was raised by Labor to $300 billion in the May budget further confirming its inability to curb its debt addiction.

Shadow Treasurer Joe Hockey, in a Liberal Party eNewsletter 27 July 2013, comments on the ALP’s “debt” TV commercial:

Kevin Rudd and Labor have increased Australia’s debt limit from $75 billion, to $200 billion, to $250 billion and now to $300 billion. The Treasury has told us that debt will hit $290 billion by Christmas, just $10 billion shy of the current legislated limit.

Only the Coalition will get the Budget back into the black, start to pay down Labor’s debt, and implement our economic Plan to grow the economy and create jobs.

Australians can’t afford another three years of Labor’s reckless spending.

Debt is certain to exceed $425 billion by Christmas

As at last Friday, 28 August 2015, gross government debt was $384.7 billion – the highest level ever recorded. This represents an increase of $111 billion from the level inherited by the Abbott government in September 2013. It is just as well Treasurer Joe Hockey scrapped the debt ceiling legislation early in the Abbott government’s term because he would now be having to introduce legislation to have the ceiling raised beyond $400 billion, a figure that will be exceeded before year end.


With the gross debt increasing by over $1 billion per week under the Abbott government, we have seen funding slashed to health, education, Indigenous Affairs, countless NGOs and charities, the CSIRO, the ABC, the NBN, and many other crucial areas.

We have seen the superannuation guarantee rise put on hold and the low income co-contribution abandoned. I’m not sure if axing the schoolkids bonus has passed yet. Family Benefit, after being reduced, is now being dangled as a sweetener again. Getting rid of the carbon and mining taxes cost low income earners in various different ways. Thousands of public service jobs have gone, as have many more in manufacturing and mining

So what have we got for the increased spending?

Plenty of money for defence and national security.

Since its election, the Government has invested more than $22 billion in Defence capability projects. The Government will provide Defence with $31.9 billion in 2015–16 and $132.6 billion over the Forward Estimates. This is an increase of $9.9 billion over the Forward Estimates when compared to the 2014–15 Budget and represents record expenditure on Defence.

Apparently Border Force is to have 6,000 officers. Taxi drivers beware! Perhaps some of those retrenched public servants could apply, provided they are willing to wear a black uniform, take an oath, use force, and fire a gun.

And lots of money for offshore detention.

Transfield has been providing services on Nauru, which has 637 asylum seekers, since September 2012, and on Manus Island since early 2014. Its existing $2.2 billion contract with the Department of Immigration for both centres will expire on October 31. Despite the many incidents and reports criticising the running of the detention camps, Transfield has just been awarded a further five year contract. The announcement saw Transfield shares rise by 9%.

Tony Shepherd, the head of Abbott’s Commission of Audit, was chairman of Transfield and had spent over a decade on the board, quitting only in October 2013 to take up the job as Commissioner.

Mr Shepherd left with more than 200,000 Transfield shares, allocated to his family superannuation fund, on top of his final salary of $380,000.

In a move strikingly similar to Dyson Heydon judging himself, Treasurer Joe Hockey and Finance Minister Mathias Cormann left it up to the audit commissioners to rule on potential conflicts of interest among themselves.

Shepherd now heads the WestConnex Delivery Authority which will award contracts to build the proposed Sydney toll road, co-funded by the Abbott government. He is also a director of the international arm of Virgin Australia.

Not that I am suggesting anything untoward in this tight knit circle.

“Mates help each other, they do not tax each other.” – Tony Abbott, February 23, 2011.

 

27 comments

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  1. Greg

    I sent this to WA News today:
    Dear WA News Editor,
    The fact that politicians are paying off houses with taxpayer funds is old news. Here is some that even you had no idea of: On June 24 2015 a call by Senator John Williams for a royal commission was defeated in parliament. The royal commission would have exposed the criminals in the financial services sector. The next day (June 25) Senator Williams announced on a national TV program, verbatim: ‘I understand the reason why the Government did not support the motion.’ The reason was immediately revealed by the program’s presenter, verbatim: ‘The financial services sector gave $1.2 million to the Federal Liberal and Labor parties last year.’
    Greg

  2. Möbius Ecko

    This government has just announced it will not go ahead with the Bank Deposit Tax thus depriving itself of $2billion in revenue. It of course made this decision after consulting with the banks, who didn’t want it.

    That’s not the worst part of this bad decision. The tax was a part of an insurance for banks against another global downturn. By this government scrapping this tax it now means that tax payers will have to fully bail out the banks if another GFC or major downturn hits. We all know how well bailing out the banks worked for most other counties. The banks are still laughing all the way to the banks.

  3. Kaye Lee

    Greg, from the article Joe got so upset about…..

    The members of the North Sydney Forum, whose membership gets them access to Joe Hockey in return for hefty donations, include National Australia Bank as well as the influential Financial Services Council, whose chief executive is former NSW Liberal leader John Brogden.

    The FSC’s members, including financial advice and funds management firms, stand to benefit from the changes to the Future of Financial Advice (FOFA) laws being considered by the federal government, which would involve a winding back of consumer protections introduced by Labor.

    The National Australia Bank would also benefit from the changes.

    The chairman of the North Sydney Forum is John Hart, who is also the chief executive of Restaurant and Catering Australia – a hospitality industry lobby group whose members stand to benefit from a government-ordered Productivity Commission review of the Fair Work Act that is expected to examine the issue of penalty rates.

    Mr Hart also sits on Prime Minister Tony Abbott’s Business Advisory Council.

  4. Kaye Lee

    Why we pay for reviews and advice is beyond me…….

    The financial system inquiry, led by former Commonwealth Bank chief executive David Murray, calls for the examination of a raft of tax breaks that he says distort borrowing, including negative gearing, capital gains tax concessions and dividend imputation.

    He takes a particular aim at tax breaks for housing, saying it “tends to encourage leveraged and speculative investment” and “is a potential source of systemic risk for the financial system and the economy”.

    Mr Murray said capital gains concessions were a tax subsidy for the wealthy and that a reduction “would lead to a more efficient allocation of funding in the economy”.

    “All else being equal, the increase in the after-tax return is larger for individuals on higher marginal tax rates,” he said.

    He called for the end of generous tax breaks on super, saying they were not “well targeted to achieve provision of retirement incomes” but instead were being used to reduce tax.

    He said the fact that super earnings are taxed at 15 per cent in the accumulation phase, but are untaxed in retirement,“can act as a barrier to funds offering ‘whole-of-life’ superannuation products and increases costs in the superannuation system”.

    Even Tony Shepherd said super concessions are too generous for the top income-earners and need to change.

    Association of Superannuation Funds of Australia chief executive Pauline Vamos agreed that tax concessions for superannuation were benefiting the wealthy and needed to stop.

    But Tony says “Nope, nope, nope”

  5. Möbius Ecko

    I tried to find the original source so you might have better luck Kaye.

    Current account had a record blow out with Balance of Payments. The area of greatest growth in government spending was as you state Defence. There was a bunch of figures and percentages with the article.

  6. Kaye Lee

    Australia’s trade position has collapsed dramatically, with the June quarter current account deficit blowing out 41 per cent to $19 billion.

    The market had been expecting a deficit to widen from the previous quarter’s $13.5 billion, but the $5.5 billion deterioration was well beyond the most pessimistic forecast.

    The result leaves Australia’s net foreign debt hovering just below $1 trillion.

    Net foreign debt now stands at $976 billion.

    Citi economist Josh Williamson said the figures would cut a larger than expected 0.6 per cent from GDP figures which will be released on Wednesday.

    Mr Williamson noted that public sector demand and an increased expenditure on defence were the main factors that could stop the economy contracting in the June quarter.

    “Government consumption increased by 2.2 per cent in the June quarter from more defence spending that was probably related to operational expenses in the Middle East conflict,” he said.

    http://www.abc.net.au/news/2015-09-01/account-deficit-collapses-as-net-debt-approaches-1-trillion/6740328

    Kevin built school halls to stimulate the economy, Tony goes to war.

  7. Kaye Lee

    Iron ore exports fell 8 per cent – or by $1.6 billion – in the June quarter, with volumes down 2 per cent and prices down 6 per cent, the ABS said on Tuesday.

    Coal slumped 11 per cent, with volumes down 8 per cent and prices 4 per cent lower.

    The commodities rout – which augurs badly for the government’s hopes of a politically pain-free return to budget surplus – was not offset by any major improvement in rural exports.

    Farm exports rose just $11 million to $11.3 billion, with volumes down 1 per cent and prices up 1 per cent.

    It seems signing free trade agreements isn’t helping us too much and relying on coal and iron ore is madness.

  8. Terry2

    Mobius Ecko

    I heard Hockey on the Bank Deposit tax which, as most of us know, was instituted to recognise the guarantee on bank deposits that the federal government extends to all of us : it was supposed to be an insurance premium paid by the banks in return for this guarantee.

    Now that he has scrapped that quite sensible measure I sincerely hope that he isn’t going to withdraw the government guarantee; have you heard anything on that ?

  9. Kaye Lee

    In a statement from the Commonwealth Bank, it said it welcomes the Government’s decision to maintain current arrangements for funding of the Financial Claims Scheme, in line with recommendations of the Financial System Inquiry.

    Commonwealth Bank Chief Executive Ian Narev said: “Today’s policy decision strikes the right balance between maintaining confidence and supporting economic growth. The Australian banking system is strong and resilient without the need to impose additional costs on savers and investors.

    “We congratulate the Government for its constructive consultation on this important policy decision, as demonstrated throughout the FSI process.”

    It always scares me when the banks like it.

  10. jimhaz

    [WestConnex Delivery Authority which will award contracts to build the proposed Sydney toll road, co-funded by the Abbott government]

    My guess is that this project is why they rushed through the outstanding issues on the China Trade deal so as to include unregulated Chinese trade staff on major projects. It means net profits should double for the WestConnex team.

    It will be expanded to include the building of large blocks of units over underground areas. What a cash cow for the WealthConners this will be.

  11. Matters Not

    Perhaps a little bit off topic but it’s an important insight from one who has been there, done that.

    The key fact is that, contrary to government assertions, the agreement does not require labour market testing to determine whether Australian workers are available before issuing visas to Chinese workers.

    China has not insisted on the abandonment of labour market testing, by which project proponents wanting to bring in overseas workers must first ascertain the availability of Australian workers to do the job. But the Abbott government has left open the option of not requiring labour market testing, at its own discretion, on a case-by-case basis. Under the agreement the Australian government’s application of labour market testing does not require concurrence by the Chinese side. The flaw in the agreement is not of China’s making; it is there because the Australian government wanted to put it there.

    Those ministers who assert that union claims about the absence of mandatory labour market testing are ill informed are themselves ill informed. Or they have deliberately chosen to misrepresent the facts.

    Got that, it’s not China’s doing. It’s Abbott et al playing silly buggers and not protecting Australian jobs.

    It’s from Craig Emerson who was deep in the negotiations for years. Worth a read.

    http://craigemersoneconomics.com/economic-notes/2015/9/1/clearing-the-fta-labour-thicket

  12. bobrafto

    Transfield has been providing services on Nauru, which has 637 asylum seekers, since September 2012, and on Manus Island since early 2014. Its existing $2.2 billion contract with the Department of Immigration for both centres will expire on October 31. Despite the many incidents and reports criticising the running of the detention camps, Transfield has just been awarded a further five year contract.

    If the boats have stopped and supposedly no more arrivals does this mean that the refugees we have locked up like animals in Nauru and Manus are there forever?

    We have really stooped that low in our lack of compassion for our fellow human beings.

  13. Roswell

    Rosemary, we need to be a bit more like Switzerland, where the people have a lot more say. It’s like a democracy that is governed up instead of down.

  14. Matters Not

    One of Abbott’s favourite mantras is: We got rid of the mining tax. But in fact they didn’t. I wonder how many of the punters know that there is still a tax on profits generated from the sale of marketable petroleum commodities (MPCs). It’s called the petroleum resource rent tax (PRRT) and it applies to:

    crude oil

    sales gas

    condensate

    liquefied petroleum gas

    ethane

    shale oil; and any other

    product declared by regulation to be an MPC.

    Now the removal of the ‘mining tax’ was supposed to cause a boom in the mining sector. The fact that it didn’t is beside the ‘ideological’ point. The ‘truth’ is that it should have. This actual failure should be seen as an ‘aberration’ or perhaps an ‘exception’ that simply proves the point that cutting taxes encourages increased economic activity.

    So when will the ‘market theorists’ demand the removal of the petroleum resource rent tax (PRRT) so that we really are open for business.

    Or is that what Hockey has in mind? You know simply foregoing a billion or two.

  15. Kaye Lee

    Coalition senators have rejected a further investigation into the Australian backed detention centre on Nauru as a “waste of Senate and Government resources”, despite their government launching extensive investigations canvassing the health impacts of wind farms and whether food certification processes such as halal fund terrorism and a 9th investigation into pink batts.

  16. keerti

    The long term effect of the australian fascist party and it’s friends is most likely to be a two strata level of population. Those with lots and those with bugger all. There is little or no integrity left in australian politics, no charismatic leadership, no long term direction and the stink of corruption abounds. How bad does it need to get before australians stand up and start believing in something other than short term gain and the pursuit of money.

  17. tet02

    It would be an interesting exercise to see if any members of the government who were “in the know” about the Transfield contract being renewed recently purchased a swag of Transfield shares. The greed and corruption that seems to be endemic in the Liberal Party would seem to make it a sure thing.

  18. Kaye Lee

    tet02,

    You mean like Gina Rinehart investing in dairy farms just before we signed the free trade agreement with China? Her friendship with Barnaby is paying off.

    Rinehart’s Hope Dairies, which was buying as much as 5000 hectares of dairy farms in the Mary Valley in Queensland’s south east, had been progressing well since she joined forces with Chinese industrial giant China National Machinery Industry Corporation in a $500 million joint venture to export infant milk powder.

    In January Rinehart added to her portfolio with a joint venture position in WA’s Bannister Downs Dairy, which included family-owned companies, Northcliffe dairy farmers Mathew and Suzanne Daubney’s Bannister Downs Dairy. That investment would centre on the construction of a $20 million purpose-built processing facility.

    Gerry Harvey has also got in on the act.

    BRW Rich Lister and retailer Gerry Harvey is set to become the latest billionaire ploughing money into Australia’s dairy farming sector with a stake of up to $80 million headed for the highly regarded Coomboona Holsteins operation in Victoria.

    Harvey’s investment in the 2000-hectare Coomboona property, north west of Shepparton, was likely to involve the construction of three huge sheds milking 6000 cows with the modern feeding method known as total mixed ration.

    his tentative investment in Coomboona Holsteins was being discussed as a significant event for the sector because of the scale of the new facility and its total mixed ration feeding method which significantly reduced labour costs.

  19. Kaye Lee

    Transfield are going to see the Bishop because they are angry about Fr Rod Bower’s sign “Hesta Divests Transfield. Good on ya!” and his tweet “Don’t invest in evil”.

    “It is beyond belief that Transfield, a company that has presided over Australian concentration camps amidst allegations of child sexual abuse, rape, torture and murder, could be awarded an extended contract,” Father Bower said. “It is indicative of the delusion that now operates in the Abbott government, and the consequences of unchecked power. This level disregard for human suffering is reminiscent of the worst days of the church now being exposed by the royal commission.”

    http://www.smh.com.au/federal-politics/political-news/hell-exists-and-its-on-nauru-priest-angers-transfield-over-asylum-seeker-church-signs-20150901-gjd1rl.html#ixzz3kXSUEyWi

  20. Terry2

    I find it incomprehensible that this government would grant a new five year contract to run the Nauru and Manus gulags when the community generally seems to be moving towards closing down these shameful facilities – and both sides of politics are to blame for this situation.

    Listening to Gillian Triggs yesterday she said that there were some 650 people on Nauru (including children) and less than 1000 on Manus, average time in detention is fifteen months and despite the pretence of processing and resettlement, as we know only four have been resettled in Cambodia at enormous expense.

    Surely we can find it in our hearts to bring these remaining people to Australia and allow them to settle here.

    I’ve written to my federal member asking for these obscene offshore prisons to be closed.

  21. kayla

    Matters Not re labour market testing
    Whether the China FTA goes ahead as is or not (excuse me here) matters not. Simply because the current rules for labour market testing for 457 visas barely exist. Now, all an employer needs to do is put a vacancy ad on their own web site to satisfy their labour market testing obligations.
    Not all that long ago it was far more stringent, proof of testing efforts and results of that testing had to be supplied. (I used to work in recruitment)
    I have yet to find when these changes were made and by whom.

  22. Mark Needham

    Ah, isn’t it good. All this debt. I am converted. As I am told, that debt is good.
    Bring on the debt.
    Mark Needham

  23. Kaye Lee

    Mark,

    Debt means nothing without context. Our richest person in Australia regularly goes into debt to finance her projects. It all depends how the money is invested, just as it does for our government. Going into debt to go to war in the Middle East is of no benefit to us. Going into debt to build a high speed rail or the NBN brings such social and productivity gains that there is a return on investment. Interest rates are at record lows. And, being a sovereign currency, we can always just credit an account with the RBA if we need money. We don’t even have to issue bonds and pay interest. We are only constrained by our productive capacity and since we have unemployment and an oversupply of resources, the time is right to invest in game changing infrastructure as well as health, education and research.

  24. Möbius Ecko

    My god. The very big business that have been canning Labor from the day it was elected and through the GFC, ranting about debt, is now calling on this government to inject money into the economy to stimulate growth. Of course if they do then this government will be hailed as being brave and heroic with the debt they accrue as being “good debt”.

    Then we have Hockey today saying Australia’s economic position is the envy of the world when he said the opposite when Labor successfully steered us through the GFC. Our position is now much worse because of Hockey.

    I also like the way Hockey constantly states we should not talk down the economy when that’s all he did in opposition.

  25. Matters Not

    Mark Needham said:

    As I am told, that debt is good.

    Not only good but necessary if one wants to ‘grow’ and ‘expand’ without access to one’s own capital reserves. Take BHP as an example, in its 135 year history it’s never been ‘debt free’ because it’s of the view that there’s more money to be made by borrowing monies to invest and therefore generate resulting ‘profits’ over and above the cost of borrowing.

    That’s the private sector view in a nutshell. Just ask Warren Buffett.

    At a personal level, I am currently debt free, but that certainly wasn’t always the case. Without debt, I wouldn’t have bought a house, for example, or investment properties and the like. Further, if someone could guarantee me a further lifespan of a few decades or so, and I was still in employment, then I would be in debt again. Confident of the future.

    But leaving aside, individual circumstances and company imperatives, you seem to suggest that government debt is somehow a problem. On the other hand, I suggest that a government without ‘debt’ (and a nation in need of utilising its productive forces to meet real needs) is a very big problem, given that sovereign governments, as Modern Monetary Theorists point out, can create ‘currency’ as, and if, the need arises.

    Governments aren’t like you and me. The United Kingdom hasn’t been debt free for 300 years. The United States hasn’t been debts free for more than a century.

    Can I suggest that without ‘debt’, BHP, myself, the US, UK and a whole host of ‘others’ would be in much worse circumstances?

    http://krugman.blogs.nytimes.com/2015/08/14/r-e-s-p-e-c-t/

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