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What Madness is This?

Image by smh.com.au

Image by smh.com.au

There is strong support to suggest that Australia’s hosting of the G20 in November this year is not going to bode well for Tony Abbott. One suspects that our reputation in two key areas, that of economic management and climate change, will take a hit. When the finance ministers of the world’s richest countries together with the European Union and the IMF gather to discuss future plans, we are going to look very odd indeed. The central themes established by the government to host the summit will be growth and a more resilient world economic platform dedicated to preventing the circumstances that could lead to another GFC. Intrinsic to these themes and as unavoidable as a giraffe in my kitchen, is the question of climate change.

Much can be said about the how and why of Australia avoiding a post GFC recession. But the government that navigated our journey through that calamity is not the government we have today. And today’s government does not share the economic fundamentals the previous government employed to achieve that result.

Much can be said about our advances in climate change management and the previous government’s courage in pioneering landmark reform. But today’s government does not share the scientific fundamentals the previous government employed to achieve that result either.

What madness is this that we have a functioning carbon price mechanism in place providing valuable revenue that the present government, so ideologically blindsided, wants to dismantle? Worse still, what madness is it to replace what is a successful, responsible, future-focused initiative with a scheme that is totally reliant on the goodwill of our community conscious corporate leaders and which plans to pay them for their dedication and commitment to a better world? What madness! What ideological clap trap!

On the question of economic management, most of the G20 countries are debt laden and far more so than Australia. Economists use the ‘Debt to GDP ratio’ as a quick guide to assess the relative merits of a country’s financial standing. This ratio simply reveals how much we owe against how much we produce. Without it, to simply say we owe $X would not mean anything. It needs to be compared with something. The USA’s debt to GDP ratio is 100%. Japan’s is 230%, Germany is 80% The UK is 90%. By contrast, Australia’s debt to GDP ratio is 25%. Up until now, Australia has been seen as a leading light in fiscal management in a post GFC environment. Our debt to GDP ratio is our report card to the world. It makes our treasury bonds currently paying 3% look very attractive. It reflects a highly responsible level of fiscal management.

Predicated on nothing more than the emotive outcry from a compliant media determined to bring the previous government down, the regressive, tight fiscal policies of the Abbott government are going to threaten that. Furthermore, they will be viewed as unhelpful by representatives from Europe, the US and China as well as the IMF. While the rest of the G20 is still in recovery mode and engaging in incentive programs, we are ruling a red line underneath that sort of activity. That would be okay if all other factors that kept us in a growth pattern remained in play. But those factors aren’t in play anymore. Our revenues are down and we are forsaking healthy revenue streams associated with responsible climate change programs. We are proposing wasteful spending on corporate incentives that are the reverse of every sound idea currently circulating the globe and we are proposing a continuation of unnecessary and expensive middle class welfare policies. And, we are continuing to borrow to pay for this. This money should be used for infrastructure, not welfare. It should be employed in value adding, not indulgence.

It seems that within the corridors of power in Canberra a systematic agenda is underway to dismantle as much of the machinery upon which both the issues of growth and global economic stability are reliant. It seems we are navigating a course in reverse of that, one that more or less parallels isolation.

This is not the direction the G20 will want to take. For them it is far too soon. It is leading us into an unemployment spiral and recessionary pattern while the rest of the G20 goes in the opposite direction. Already we have overtones of disapproval from Christine Lagarde, chief of the IMF, a political conservative, who has diplomatically chided Abbott on the removal of the carbon tax. “Australia was very much at the forefront, Australia was pioneering in this field and I would hope that it continues to be a pioneer,” she said. “I do think that climate change issues and progress in that regard are critical and are not just fantasies, they are real issues.” Therein lies the essential contradiction in the aims of the G20 and the present direction our government is taking us.

While the US Secretary of State, John Kerry recently stated that climate change was a “weapon of mass destruction”, Tony Abbott travels to drought stricken rural areas and hoses the problem down by claiming that these things happen every few years. While the US and China seek ways to implement tighter emission controls, Abbott appoints Dick Warburton, a climate change denier to review our 2020 renewable energy target.

What madness!

 

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41 comments

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  1. Terry2

    Hey, at least we have good relations with Indonesia: I just heard it from Julia Bishop !

  2. bobrafto

    What Madness?

    I think I can put a term to that:

    drum roll please……

    The Mad Tone’s Tea Party.
    .

  3. Kaye Lee

    Christine Lagarde is doing a Q&A program with Tony Jones tonight. A must watch.

  4. Billy moir

    Thanks for the info. Unfortunately the rabbott and little billy has put a block on such information and I am led to believe any mail with the word ‘independent’ goes straight into spam.

  5. Fed up

    The madness is unbelievable. One should catch up on the efforts yesterday of Dutton on 7.30 and Pyne Lateline.

    Wonder what they have is store for us today. It appears the Iran has called our ambassador in. Yes, it was an Iranian that died on Manus.

    Have to give with Tanya, they has a hide. Still, this government does have much to explain.

  6. John Kelly

    Reblogged this on THE VIEW FROM MY GARDEN and commented:

    Much can be said about the how and why of Australia avoiding a post GFC recession. But the government that navigated our journey through that calamity is not the government we have today. And today’s government does not share the economic fundamentals the previous government employed to achieve that result.

  7. Stephen Tardrew

    It ain’t over yet. Climate change denial; unsupportable austerity; Smithian dead deregulation; rigid dogmatism and unbendable rigor mortise. Privatization of Government asset and further reduction in income. Guess who will pay for that. Hint it ain’t them. Great start LNP.

    Where have all the toxic assets gone? The balance sheets of all US banks are rigged and covered by supposed growth and profit reflected in current profit and loss statements. Quantitative easing was a gift to the banks to cover their debts but they invested the money by gambling in the investment sector to enhance their profit and loss statements. When will the Fed begin to resell the smelly toxic asset and how much crap is left on the books of the Banks. Balance sheets anybody. Rubbery auditing. Winding back of Dod Frank: something is still rotten in Denmark.

    We have been warned.

    We survived by standing alone now we want to join the pack when the pack has moved on. I think my head is going to explode.

  8. Bart Hayes

    Unhelpful? How about downright destructive!

  9. diannaart

    The new LNP – next they’ll claim their agenda hurts them more than it hurts us.

  10. CMMC

    The stripe of crazed U.S.-style Libertarianism is showing in the Abbott regime.

    Shutting down that Healthy Foods website (Fiona Nash) and defunding the Alcohol and Other Drugs Council are hallmarks of this extremist mindset
    .

  11. Dominic Gladheart

    The wing-nut will be forever recognised by his catch all slogan “Shit happens!” No matter how he says it, it means the same thing. Shit happens!

  12. Pingback: What Madness is This? | lmrh5

  13. whatismore

    The madness is reinforced by Ho Jo’s article in today’s Australian Financial Review in which he tries to cover his ignorance of economic matters by gobbledygook from govt press releases.

  14. DC

    The amount this government will be spending each year on its maternity leave policy that favours the wealthy, would be more than enough to replace our entire national grid with renewable energy every four years!

    Apparently the era of entitlement is over. And expecting Australia to invest in its own energy security and become part of the solution to the biggest global threat the world has seen would be just expecting too much. As would expecting a first world NBN or education system. We have to be realistic I mean after after 6 years of Labor in charge the Coalition were left to deal with a huge mess including;

    Lower unemployment than Howard/Costello achieved

    Lower inflation than Howard/Costello achieved

    A lower government spending ratio than Howard/Costello achieved

    An improvement to the structural deficit in Howard/Costellos budget

    The Lowest Government debt to GDP among OECD nations (which for those who are unaware, includes all the worlds most advanced economies)

    The only nation among OECD nations to have avoided negative growth during the GFC.

    Australia’s Economy improving in its rank among OECD nations, which went from being 6th in the world at The end of the Hawke/Keating Era, back down to 10th place after Howard was finished, and then to an all time high of being the number one ranking economy in the world by 2010 (and this is according to the OECD a conservative organisation).

    The highest credit rating Australia has ever achieved (AAA rating by all 3 international rating agencies) awarded in 2010

    An overall reduction in national CO2 emissions for the first time in Australia’s history

    More infrastructure investment than under Howard/Costello

    Investment into improving our Education System

    And lets not forget, an out of control boat person problem that was “all Rudd’s fault” and nothing at all to do with conflicts overseas that has blown out to become an issue of “sovereign borders” because the number of boat arrivals has now risen to a staggering 3% of our national migrant intake (that same national migrant intake that was increased under Howard to support big business and that Gina Reignhart would like to see increased now so that she can employ foreign workers on Australian mines at a lower cost per worker)

    The list goes on an on and on….. Lucky we have grown ups in charge now.

    …..oh Save us action man Tony and funny fat man Hockey! Greg Hunt will protect our future by paying polluters, action man and the Julie Bishop are gaining us respect and admiration overseas the sort of silver tongue charm and subtle persuasion that they are known for. Christopher Pyne (who is totally NOT GAY!!!) is helping our most disadvantaged schools by freeing them from the “red tape” (and funding) that has been holding them back, and “Mr Broadband” has so much integrity left now doesn’t he?

  15. Rob

    The concepts of recovery mode and how they enhance the G20 countries debt is still up for discussion. John Kelly’s leading remarks of knowing how to fix the problem by providing different levels of detail from the past successes of the last system of spending, is linked to a different time of financial crisis (GFC).

    Looking at financial charts, at least those that are useful will require guidelines and frameworks that are yet to be put into application. John estimates what that should look like calling it madness to hear any suggestions from the Australian Treasurer & the Treasury management team because… well Kelly knows best and he is totally unbiased in his specific objections!

  16. margaret Millar

    I agree John–It is ridiculous! As a so called civilised country we must endeavour to cut carbon emmission and help save our one and only precious planet from excessive climate change. We are not really aware of how seasons may change and could cause the destruction of our natural systems that we all rely upon for food and health, for agriculture and industry etc. Our children’s future is at stake. Let us save our planet!

    .

  17. Rob

    Thanks for the update DC, I still put forward you are only concentrating on the successes which i am not discrediting. Note that only because there was financial black ink in the Government’s Treasury that any of these successes could have proceeded to build any infrastructure or save our bacon in the GFC and the list goes on and on…
    Remember, at this point we hope to move forward not backward so supporting big business and welfare seems part of the answer as long as we can prevent reckless spending or cuts. Also Australia cannot offer an illogical “catch 22” loop in climate change solutions. Maybe I will add the completion of NBN would be a bonus.

  18. Fed up

    I think we have been told that Medibank, and the later version Medicare, is unsustainable since the days of Whitlam.

    Agree, maybe the levy is too low. Yes

    Yes, we have been hearing such dire announcements for 30 years.

    We are among the lowest spenders on health than most other countries.

  19. Fed up

    How can one keep up with this government. We have Medicare to worry about., Have not even had the time to look at what Turnbull has announced with NBN lite/fraud.

    Where does one focus.

    Pyne=Education
    Dutto=Medicare
    Morrison=PNG
    Hockey=Confused about what he is saying.
    Bishop=Insulting all within her path
    MacFarlane=Being sold out by his government

  20. Fed up

    Please do not forget all those interest rate rises in a row, that occurred beside massive private debt.

  21. Fed up

    We have it from the horse’s mouth. Abbott is a leopard that does not change his spots.

  22. Browbeaten

    Rob
    I do not subscribe to either political party idealogically and I agree that the coffers which the previous Labor Govt spent were there as a result of The Howard governments economic management.
    I agree that there was much in the application of Policy by the Rudd/Gillard govt. That was less than efficient.
    But I cannot ignore what appears irrefutable evidence that the current government is beholden to the Murdoch media, bereft of a sense of moral compass, ill equipped intellectually or idealogically to positively govern in the interests of all Australians, apparently willing to break with numerous international conventions on human rights and so dogmatically fixated on an “us and them” mentality that they appear zealously fixated on creating a recession and class war.
    As an apolitical observer who is genuinely worried by this government’s air if entitlement and dismissal of the concerns voiced by an increasing number of the electorate, can you honestly tell me, regardless of the alternative that you BELIEVE the Abbott govt is doing a responsible job?

  23. Terry2

    A couple of thoughts about Dutton’s confusing comments on Medicare:

    1. the current levy is 1.5% and is probably to low but remember the NDIS levy will go on top once it is established.

    2. Dutton says that the wealthy can afford to pay more for Medicare but they already do, the 1.5% is on gross income.

    3. A co-payment is rubbish as most GP’s do not charge the schedule fee and with my GP the consultation fee is $55 and the Medicare rebate is $35; the co-payment is already $20.

    4. A co-payment is not payable at bulk billing doctors if there are any in your area: in my case there are none within easy driving distance.

    5. If you want to put more money into Medicare, scrap the private health insurance company subsidy (30% of their income comes from a taxpayer subsidy at a cost of $5.5 billion per annum and growing).

  24. mars08

    “What madness is this?”

    Is it any wonder the Coalition was so reluctant to discuss policy before the election?

  25. Fed up

    We now have China strongly condemning our treatment of asylum seekers.

  26. Trevor Vivian

    Mad
    In the nuclear age mad stands for mutually assured destruction.

    It was designated as such so as to provide a brake on a Nuclear 1st strike intention and the total destruction of a nuclear response.

    How does mad fit for Abbott and the wreckers in government.

    Abbott appears intent on dismantling much of the known and introducing unknown outcomes

    These outcomes of the Abbott wrecking corporation include mutually assured destruction.

    Included in the fiscal menu they have chosen is a recession and doing whatever to destroy union. Of course this appears not to include unions like AMA and other professional nominallly right wing organisations.

    All this comes under the general heading “the best friend ……… ever had”.

    Mad as these pricks are for sure.

    End GST on power bills.

  27. Fed up

    Terry2 One hundred percent agreement.

  28. bobrafto

    The govt created a public schooling system and the govt created a public health system.

    If folks want to go outside the system it should be user pays because the Age of Entitlement is over.

    Just imagine how much richer this country would be if we didn’t have to subsidize the rich. Just imagine affordable infrastructure,roads, NBN, high speed rail etc which in turn would create more wealth but we are held back because of that Age of entitlement of the rich.

  29. The Turnip Boy

    bobrafto – The Sisters of St Joseph (Mary McKillop’s mob) started “free education” and the government of the day tried to exclude it…

  30. Rob

    @Browbeaten putting aside further argument about “irrefutable evidence that the current government is beholden to the Murdoch media”. Many groups are lobbying about Human Rights being broken by Australia have I believe had the effect they intended by discrediting the methods and motives of the Australia Governments and sometimes Australians generally.

    The people smugglers were happy for the profit-rich route to transport the fleeing war torn refugees even though they siphoned off many men, women and… horror… children in hidden locations for domestic chores and sex slavery catering those with influence and money along the Asia/Indonesia and the Australia smuggling lines.
    How many actually reach our shores from those “smuggled” is hushed about in police and political circles. (I know this sounds far-fetched but smugglers trade in humans wherever there is misery and desperation or so called ethic-cleansing, it has become a multi-billion industry).

    The few star smugglers caught in Indonesia recently was just window dressing and only the tip of the human smuggling iceberg because people in higher places are careful that their names will not be openly broadcasted. This does not MEAN I am for the treatment we see dished out to those seeking refuge in Australia.

    I believe the Australia Government is the elected Government at this time whether they are responsible doing their job, whether Murdoch’s anti-Labor/Greens and LNP’s well-being media push has helped or not I am not predicting their immediate downfall as some in these posts. The alternative if they want to be known as that, I think could also be doing a much better job but I am not a politician.
    Recession is looming I am not convinced this has much to do with what we are doing in Government though if you want to help me understand associated financial decisions. i would read and study your every word Browbeaten. I mean this for the purposes of Australia’s goal to remain an AAA rated nation.

    About class war diatribe that has spread around the online news and blogs laterly: I am glad for freedom of speech and seek it’s process in every media form though some real dumb steps of logic prevail, and often the abuse given to some poor uninformed posting person is a practise in discrimination or at the least enthusiastic bullying.

    Ta…B.

  31. Fed up

    It is not free education. It is not free health. It is access to health and education provided by the taxpayer.

    It allows these services to be available to all.

    Both are essential for our society to survive and prosper.

    Yes, healthy and educate adults are able to stand on their own feet. Yes, it also meets the needs of industry.

    Sounds like common sense to me. Has nothing to do with unreasonable, so called entitlements.

    I believe that all have a duty, to ensure they use the system, to educate themselves to their full potential. I believe one has an obligation to keep oneself healthy, to enable one to fully partake in society.

    It is the role of government to see that the services are distributed in a fair and equitable manner, to the benefit of all.

    One does not focus on what is spent, or whether we can afford it. That is stupid talk.

    No, governments need to concentrate on what society needs to operate and thrive. Yes, it is about whether we cannot afford to spend.

    One m needs to look at government spending, as an investment in the people and the country’s future.

    We have a situation where for a decade, we have seen our mining industries receive super windfall profits. Profits they have made, by digging the ore people own out of the ground. Yes, we the people own that ore.

    These massive super windfall profits have led to a high dollar.

    That has meant that over time, the rest of the industry, especilaay manufacturing in this country has not been able to thrive. In fact is disappearing.

    The fact that most are in strife, through no fault of their own.

    Yes, the industry can transform themselves, but under these conditions, need outside assistance. Yes, government help.

    If we did as Finland did, with similar profits, I think of oil, taxing the companies, to obtain the money, to assist them that were being harmed.

    Yes, if we had that MRRT early in the piece, our industries might be thriving now.

  32. Fed up

    QandA now on, and should not be missed.

  33. Fed up

    What did Turnbulll have to say about his fraudband update today.

    Abbott seems to be in disagreement with Dutton today.

  34. DC

    @Rob & Browbeaten, don’t be so quick to credit Howard or Costello for the paper surplus. Labor actually made an improvement to the “STRUCTURAL” deficit in Howard/Costellos budget.

    A “cyclical” surplus is not necessarily a “structural” one. A cyclical surplus is a surplus during a business boom, a structural surplus is when the government’s revenue exceeds its outlays over the entire business cycle from boom to bust.

    Howard/Costello may have delivered a small “cyclical” surplus on paper during a time when we had a global debt fueled economic boom led by a strong US economy and strong US dollar (and a mining boom at the same time) but this was not a structural surplus because it was achieved by neglecting the countries infrastructure needs and by selling off public owned revenue earning assets such as airports, the National Rail Corporation, Dasfleet, Telstra, the remaining share of the Commonwealth Bank and many others. All of this made his budget look good at the expense of all future budgets. If that wasn’t bad enough, Howard also sold 167 tonnes of Australia’s gold reserves for $2.4 billion (when the price of gold was low). Had the gold been sold in 2011, when the nation needed cash during the global financial crisis, it would have fetched about $7.4 billion

    Now do you understand why the Howard/Costello economic wisdom is just an urban myth?

    If you have any doubts that what I’m saying is true, ask yourself, if their surplus was so important then how come we got a higher credit rating under Labor than we ever got under the Coalition – AAA rating by all 3 international rating agencies (not just an arbitrary measure but one that determines the interest rate Australia’s government can borrow funds at). And ask yourself why Australia’s economy dropped from 6th in the world in the Keating days back down to 10th in the world by the time Howard was voted out, and since then it rose to the highest ranking economy in the world?

  35. Rob

    @DC I find the perspective you are coming from of suggesting that two surplus financial sources are either “cyclical and/or structural’ is still dependent on the US economy.

    Howard/Costello did sell up many of Australia’s public assets but these were losing huge amounts of cash daily. Blame government mismanagement or just stupid political decisions that forced Howard into a corner or principles of economy life that are opposite to Labors.

    Whether you disagree with their methods or think it was arbitrary in the application you have to admit the Howard government work hard to limit the growing debt that was crushing Australia at the time. Even if selling Australia’s gold reserve was probably a mistake, it is easier to be critical of such a desperate act in hindsight.

    As i said before I don’t discredit the good work of the Labor Government though I wish they would stick to only one leader.

  36. Zofia

    Fed Up

    I think you’ll find it’s Norway which set up a sovereign wealth fund with the revenue from its North Sea oil and gas production, not Finland.
    The Norwegians have had the good sense to put away this money for future generations.

  37. revolutionarycitizen

    “@Rob & Browbeaten, don’t be so quick to credit Howard or Costello for the paper surplus. Labor actually made an improvement to the “STRUCTURAL” deficit in Howard/Costellos budget.”

    Bull****, and I am not one for vulgarity but they are the two greatest lines of cow manure ever typed here or anywhere.

    Howard/Costello did not create a structural deficit, that idea is predicated on two things, one the tax cuts Howard/Costello legislated would have been enough to cover what Rudd/Gillard/Swan spent and that nothing those three did increased underlying government spending, both are mountains of cow pie.

    Swan’s idea of fixing the structural deficit was to move as much of the government borrowings beyond the forward estimates period, and whatever he couldn’t move that far ahead he moved beyond the election date to save himself the embarrassment. Further-more Wayne “never a surplus” Swan enjoyed the greatest revenue growth period of any government in Australia’s history, the revenue inflows to Treasury were twice the rate of GDP growth, a staggering 20+% increase in total revenues in 6 years! And he still didn’t have enough money. And on top of that he agreed to increase direct welfare spending by 30% in 6 years, on-top of the doubling of Medicare payments over 10 years, and when that wasn’t enough, he introduced a totally government funded PPL, agreed to NDIS that will reach a peak spend of over $20B just beyond the forward estimates period, and then agreed to add school funding on top of that.

    All this nonsense that the ALP somehow were fixing any underlying budget issue is wilful ignorance, John Howard and Peter Costello left the Treasury with the problem of what to do with a growing budget surplus for the entirety of the forward estimates period. And for those that think the ALP did something wonderful by raising the tax free threshold, had Costello still been treasurer that threshold would now be around $25,000 and the Future Fund would be valued at over $100B.

    Sorry, but Wayne “explain economics to me with a flow-chart” Swan is a chump who was taking directions from two even greater chumps. What the ALP should have done was offer Keating whatever bribes he wanted, even so far as granting him total immunity for life for any past crimes or any future ones, and had him parachuted back in as leader the moment Rudd looked like being knifed.

    All the ALP managed to do in 6 years of running the economy was see unemployment go from 4% to 6%, gross government borrowings increase by 600% over the same period, and the complete and utter destruction of the government’s fiscal position.

    They’re a bloody disgrace to their legacy.

  38. Fed up

    Zofia, yes, that was amiss of me. Carelessness on my part, Comment still stands though.

  39. DC

    @ revolutionarycitizen, if those Assets were losing money then how could they have been sold for a profit?
    It must really hurt you to find out that despite the holy Surplus the Coalition could not get a AAA credit rating from all 3 credit agencies. Why so? because of the reasons I outlined above. Howard’s surplusses were not sustainable but instead were dependent on the global boom lasting forever (no GFC to ever happen) and a bottomless pit of government assets to hock off when they needed some coin.

    In other words, they were cyclical not structural.

    Wayne Swan enjoyed the greatest revenue growth period of any government in Australia’s history did he?
    I could have sworn that was Howard in charge back then. Who was in charge when the GFC hit?

    Its true that Swan never got a surplus. Its also true that a surplus is not always desirable and certainly not during a global recession…

    And…(this little truth must really piss you off): Wayne Swan is the only treasurer in Australia’s history to have been in the Job when Australia was awarded a AAA credit rating by all 3 global rating agencies and that was not awarded until 2011. So far from being seen as a budget emergency, international financiers were willing to lend more to Australia at a lower rate because under Swan, Australia was more able to service its debt than under Costello. Go on try to dispute that,

    and while your’e at it how about this one to (you might want to sit down for this)….

    Labors’ Government Expendature pending/GDP ratio was………LOWER than Howard /Costello

    As were unemployment rates, interest rates, inflation rates, and overall taxation to GDP was also lower under Labor than it was in Howards era.

  40. Rob

    DC I went a-looking (googling that is) for Fitch Rating’s on Australia’s fiscal standing at the time of when Rudd took government in Dec 2007 and also before this date to confirm what Fitch were saying about Australia’s economic standing after years of digging deep by Howard/Costello.
    Below is a first a quote from SMH news around the period of the crowing from Wayne Swan about Australia being upgraded to an AAA credit rating by the big 3 global credit agencies such as Fitch Ratings who stated:

    “Australia has built up the capacity to absorb shocks due to a combination of low public debt, a free floating exchange rate and liberal trade and labour markets,”… This allowed authorities to run strong countercyclical policies during downturns, and the economy to adjust… and “The Financial Times analysts say the expulsion of the US, the UK and France from the 9As club has led to a contraction in the stock of government bonds deemed the safest, from almost $US11 trillion at the start of 2007 to just $4 trillion now.”

    Read more: http://www.smh.com.au/federal-politics/political-news/australias-credit-rating-still-aaaok-20130329-2gyct.html#ixzz2twZyFpxu

    I suggest part of Australia’s stable credit rating successes have come because of the downgrades of sovereign’s credit ratings of different larger economies. And the “strong demand from developing Asia” as well the fiscal disciplines set in place by the Howard/Costello which gave Rudd huge surpluses and Australia being rated AA+ at the time.

    Fitch Ratings May 2008 states:

    “The upswing in the commodities cycle remains supportive of Australia’s GDP growth during the current cycle of global economic deceleration. Strong demand from developing Asia for iron ore and metallurgical coal, steel and gold as well as
    increased mine production capacity, all point to higher resource exports in 2008‐
    2009.

    The positive terms of trade shock has translated into bumper fiscal revenues
    for the newly elected Labour government. Together with ongoing tight discipline
    over fiscal spending, the government will deliver its eleventh successive year of
    fiscal surplus during 2008‐09.

    The upcoming budgetary stance focuses on supporting the government’s long‐term objectives of expanding the economy’s supply‐side capacity via increasing labour participation through tax reform initiatives and boosting infrastructure spending to raise productivity levels. These longer term measures tie in with the authorities’ anti‐inflationary stance and help to transfer part of the terms of trade boost from commodities to other parts of the economy.”

    https://www.commbank.com.au/about-us/group-funding/articles/fitch-australia.pdf

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